Ireland (IRLD) 10-Q 2009 Q2 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[ x ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedJune 30, 2009

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to ________

COMMISSION FILE NUMBER000-50033

IRELAND INC.
(Exact name of registrant as specified in its charter)

NEVADA	91-2147049
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2441 West Horizon Ridge Parkway, Suite 100
Henderson, Nevada	89052
(Address of principal executive offices)	(Zip Code)

(702) 932-0353
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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.   [ x ] Yes   [ ]No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   [ ] Yes   [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company[ x ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   [ ]Yes   [ x ] No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:As of August 10, 2009, the Registrant had 97,010,087 shares of common stock outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the six months ended June 30, 2009 are not necessarily indicative of the results that can be expected for the year ending December 31, 2009.

As used in this Quarterly Report, the terms “we,” “us,” “our,” “Ireland,” and the “Company” mean Ireland Inc. and its subsidiaries, unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless otherwise indicated.

2

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

		June 30, 2009			December 31, 2008
ASSETS
Current assets
Cash	$	722,527		$	2,565,823
Refunds receivable		-			27,394
Prepaid expenses		126,147			141,335
Total current assets		848,674			2,734,552
Property and equipment, net		3,580,314			3,378,177
Mineral properties		31,948,053			31,948,053
Reclamation bonds		908,368			933,088
Deposits		22,200			22,200
Total non-current assets		36,458,935			36,281,518
Total assets	$	37,307,609		$	39,016,070
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	301,129		$	89,543
Accounts payable - related party		159,498			50,417
Accrued payroll and related taxes		12,651			11,799
Due to related party		23,290			23,290
Total current liabilities		496,568			175,049
Long-term liabilities
Accrued reclamation and remediation costs		275,338			275,338
Deferred tax liability		8,357,940			9,066,600
Total long-term liabilities		8,633,278			9,341,938
Total liabilities		9,129,846			9,516,987
Stockholders' equity
Common stock, $0.001 par value; 400,000,000 shares
authorized, 97,010,087 shares, issued and outstanding		97,010			97,010
Additional paid-in capital		36,064,585			36,059,449
Accumulated deficit during exploration stage		(7,983,832	)		(6,657,376	)
Total stockholders' equity		28,177,763			29,499,083
Total liabilities and stockholders' equity	$	37,307,609		$	39,016,070

See Accompanying Notes to these Consolidated Financial Statements
F-2

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

														For the period from
														February 20, 2001
														(Date of Inception)
		For the three months ended						For the six months ended						Through
		June 30, 2009			June 30, 2008			June 30, 2009			June 30, 2008			June 30, 2009
Revenue	$	-		$	-		$	-		$	-		$	-
Operating expenses
Mineral exploration and evaluation expenses		687,033			643,569			1,274,738			841,189			4,850,848
Mineral exploration and evaluation
expenses - related party		135,000			235,000			240,000			340,000			1,766,314
General and administrative		248,356			323,230			478,576			639,700			2,813,560
Depreciation		10,901			2,806			21,736			5,445			42,095
Mineral and property holding costs		15,000			15,000			30,000			51,000			380,500
Mineral and property holding costs -
reimbursed to related party		-			-			-			-			295,000
Write-off of mineral rights		-			-			-			-			14,000
Total operating expenses		1,096,290			1,219,605			2,045,050			1,877,334			10,162,317
Loss from operations		(1,096,290	)		(1,219,605	)		(2,045,050	)		(1,877,334	)		(10,162,317	)
Other income (expense)
Interest income		2,617			30,820			10,360			104,026			275,657
Interest expense		(300	)		-			(426	)		-			(426	)
Total other income (expense)		2,317			30,820			9,934			104,026			275,231
Loss before income taxes		(1,093,973	)		(1,188,785	)		(2,035,116	)		(1,773,308	)		(9,887,086	)
Income tax benefit		381,183			405,187			708,660			549,172			1,903,254
Net loss	$	(712,790	)	$	(783,598	)	$	(1,326,456	)	$	(1,224,136	)	$	(7,983,832	)
Loss per common share - basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.01	)
Weighted average common shares outstanding -
Basic and diluted		97,010,087			97,010,087			97,010,087			94,081,491

See Accompanying Notes to these Consolidated Financial Statements
F-3

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(UNAUDITED)

							Accumulated
							Deficit During			Total
	Common Stock				Additional		Exploration			Stockholders'
	Shares		Amount		Paid-in Capital		Stage			Equity
Balance, December 31, 2008	97,010,087	$	97,010	$	36,059,449	$	(6,657,376	)	$	29,499,083
Amortization of stock options issued
to employee over vesting period	-		-		5,136		-			5,136
Net loss, June 30, 2009	-		-		-		(1,326,456	)		(1,326,456	)
Balance, June 30, 2009	97,010,087	$	97,010	$	36,064,585	$	(7,983,832	)	$	28,177,763

See Accompanying Notes to these Consolidated Financial Statements
F-4

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

								For the period from
								February 20, 2001
								(Date of inception)
		For the six months ended						through
		June 30, 2009			June 30, 2008			June 30, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,326,456	)	$	(1,224,136	)	$	(7,983,832	)
Adjustments to reconcile loss from operating
to net cash used in operating activities:
Depreciation		21,736			5,445			42,095
Write-off of mineral rights		-			-			14,000
Consulting accrual		-			-			15,000
Stock based expenses		5,136			39,410			1,561,211
Changes in operating assets and liabilities:
Refunds receivable		27,394			-			27,394
Prepaid expenses		23,765			(242,993	)		(267,645	)
Other assets		-			-			(2,200	)
Reclamation deposit		24,720			(28,762	)		(925,042	)
Mineral property acquisition costs		-			(188,791	)		(1,022,663	)
Accounts payable and accrued liabilities		334,311			214,803			382,468
Deferred income taxes		(708,660	)		(549,172	)		(1,903,254	)
Accrued reclamation and remediation costs		-			-			275,338
Net cash used in operating activities		(1,598,054	)		(1,974,196	)		(9,787,130	)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property and equipment		(245,242	)		(785,713	)		(2,494,730	)
Net cash used in investing activities		(245,242	)		(785,713	)		(2,494,730	)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from stock issuance		-			1,000			13,239,750
Stock issuance costs		-			-			(243,653	)
Proceeds from borrowings from related party		-			-			8,290
Net cash provided by financing activities		-			1,000			13,004,387
NET CHANGE IN CASH		(1,843,296	)		(2,758,909	)		722,527
CASH AT BEGINNING OF PERIOD		2,565,823			8,759,605			-
CASH AT END OF PERIOD	$	722,527		$	6,000,696		$	722,527
		-
		-
SUPPLEMENTAL INFORMATION
Interest Paid	$	426		$	-		$	426
Income Taxes Paid	$	-		$	-		$	-
Non-cash investing and financing activities:
Assets acquired for common stock and warrants issued
for mineral properties	$	-		$	21,359,351		$	21,584,351
Net deferred tax liability assumed	$	-		$	10,261,194		$	10,261,194

See Accompanying Notes to these Consolidated Financial Statements
F-5

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
	Basis of presentation– The accompanying unaudited financial statements have been prepared in accordance with Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the Form 10-K for the year ended December 31, 2008 of Ireland Inc. (the “Company”).
	The interim financial statements present the consolidated balance sheets, statements of operations, stockholders’ equity, and cash flows of the Company. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States.
	These financial statements have been prepared by the Company without audit, and include all adjustments (which consist solely of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of financial position and results of operations. Certain information and footnotes disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2008.
	In preparing these interim financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through August 12, 2009, the date the financial statements were issued.
	Description of business– The Company is considered an exploration stage company since its formation and the Company has not yet realized any revenues from its planned operations. The Company is primarily focused on the acquisition and exploration of mining properties. Upon identification of commercially minable reserves, the Company expects to actively prepare the site for its extraction and enter the development stage.
	History– The Company was incorporated on February 20, 2001 under the laws of the State of Nevada under the name Merritt Ventures Corp. On December 19, 2005, the Company changed its name to Ireland Inc.
	Going concern- The accompanying financial statements have been prepared assuming the Company will continue as a going concern.
	The Company incurred cumulative net losses since date of inception of $7,983,832 from operations as of June 30, 2009, and has no revenue. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties. Management has plans to seek additional capital through private placements and public offerings of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
	Principles of consolidation– The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, CBI Acquisition, Inc. (CBIA) (including its wholly-owned single-member LLC subsidiary Columbus Salt Marsh LLC (CSM)) and Rand Metals LLC (Rand). Significant intercompany accounts and transactions have been eliminated.

F-6

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
	Exploration costs- Mineral exploration costs are expensed as incurred.
	Mineral rights- The Company capitalizes acquisition and option costs of mineral property rights. The amount capitalized represents fair value at the time the mineral rights were acquired.
	The Company capitalizes acquisition and option costs of mineral rights as tangible assets. Upon commencement of commercial production, the mineral rights will be amortized using the unit-of- production method over the life of the mineral rights. If the Company does not continue with exploration after the completion of the feasibility study, the mineral rights will be expensed at that time.
	Mineral property acquisition costs– Costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred either to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The periodic evaluation of carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.”
	Property and equipment– Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 3 to 39 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).
	The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of property and equipment or whether the remaining balance of property and equipment should be evaluated for possible impairment. If events and circumstances warrant evaluation, the Company uses an estimate of the related undiscounted cash flows over the remaining life of the property and equipment in measuring their recoverability.
	Impairment of long-lived assets– The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under SFAS No. 144 if events or circumstances indicate that their carrying amount might not be recoverable. As of June 30, 2009 exploration on these properties is progressing in accordance with the Company’s plan of operations and no events or circumstances have happened to indicate the related carrying values of the properties may not be recoverable. When the Company determines a SFAS 144 impairment analysis should be done, the analysis will be performed using the rules of EITF 04-03, “Mining Assets: Impairment and Business Combinations.”

F-7

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
	Various factors could impact the Company’s ability to achieve its exploration program. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models used to assess impairment. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically.
	Material changes to any of these factors or assumptions discussed above could result in future impairment charges to operations.
	Reclamation and remediation costs (asset retirement obligation)- The Company accrued costs associated with environmental remediation obligations in accordance with Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations.” In accordance with SFAS No. 143, the Company records a liability for the present value of the estimated environmental remediation costs in the period in which the liability is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset. The liability will be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability will be reduced.
	The Company accrues costs associated with environmental remediation obligation when it is probable that such costs will be incurred and they are reasonably estimable. Estimates for reclamation and other closure costs are prepared in accordance with SFAS No. 5 “Accounting for Contingencies,” or Statement of Position 96-1 “Environmental Remediation Liabilities.” Costs of future expenditures for environmental remediation are not discounted to their present value unless subject to a contractually obligated fixed payment schedule. Such costs are based on management’s current estimate of amounts to be incurred when the remediation work is performed, within current laws and regulations.
	Future reclamation and environmental-related expenditures are difficult to estimate, in many circumstances, due to the early stage nature of the exploration project, and uncertainties associated with defining the nature and extent of environmental disturbance and the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology. The Company periodically reviews accrued liabilities for such reclamation and remediation costs as evidence becomes available indicating that the liabilities have potentially changed. Changes in estimates are reflected in the statement of operations in the period an estimate is revised.
	Accruals for reclamation and environmental matters totaled $275,338 at June 30, 2009 and December 31, 2008. The Company is in the exploration stage and is unable to determine the estimated timing of these expenditures relating to these accruals at this time. It is reasonably possible the ultimate cost of reclamation and remediation could change in the future, and that changes to these estimates could have a material effect on future operating results as new information becomes known. For additional information, see Note 11.

F-8

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
	Fair value of financial instruments– The Company’s financial instruments consist of accounts payable and accrued liabilities. The carrying value of these financial instruments approximates their fair value based on their liquidity or their short-term nature. The Company is not exposed to significant interest or credit risk arising from these financial instruments.
	Revenue recognition- Revenues are recognized during the period in which the revenues are earned. Costs and expenses are recognized during the period in which they are incurred.
	Use of estimates- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from these estimates.
	Earnings (loss) per share- The Company follows SFAS No. 128, “Earnings Per Share” and SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,” which establish standards for the computation, presentation and disclosure requirements for basic and diluted earnings per share for entities with publicly-held common shares and potential common stock issuances. Basic earnings (loss) per share are computed by dividing net income by the weighted average number of common shares outstanding. In computing diluted earnings per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities, such as stock options and warrants. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. Weighted average of common stock equivalents, which include stock options and warrants to purchase common stock, on June 30, 2009 and 2008 that were not included in the computation of diluted EPS, because the effect would be antidilutive, were 19,335,428 and 17,835,798, respectively.
	Expenses of offering- The Company accounts for specific incremental costs directly to a proposed or actual offering of securities as a direct charge against the gross proceeds of the offering.
	Income taxes– The Company accounts for income taxes under SFAS No. 109, “Accounting for Income Taxes” using the liability method, recognizing certain temporary differences between the financial reporting basis of the Company’s liabilities and assets and the related income tax basis for such liabilities and assets. This method generates either a net deferred income tax liability or asset for the Company, as measured by the statutory tax rates in effect. The Company derives its deferred income tax provision or benefit by recording the change in either the net deferred income tax liability or asset balance for the year. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax will not be realized.

F-9

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (continued)
	On July 13, 2006, the FASB issued interpretation No. 48, “Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109, and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than 50% likelihood of being sustained. Additionally, FIN 48 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, and disclosure and transition. The Company adopted the provision of FIN 48 on January 1, 2007, which did not have any impact on the consolidated financial statements.
	For acquired properties, that do not constitute a business as defined in EITF 98-03 “Determining Whether a Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business”, deferred income tax liability is recorded on GAAP basis over income tax basis using statutory federal and state rates. The resulting estimated future federal and state income tax liability associated with the temporary difference between the acquisition consideration and the tax basis is computed in accordance with EITF 98-11 and SFAS 109, and is reflected as an increase to the total purchase price which is then applied to the underlying acquired assets in the absence of there being a goodwill component associated with the acquisition transactions in accordance with EITF 98-11 and SFAS 109.
	Stock-based compensation- On December 16, 2004, the FASB issued SFAS No. 123R, “Share- Based Payment”, which replaces SFAS No. 123, “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. Under SFAS No. 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods include prospective and retroactive adoption options. Under the retroactive option, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The prospective method requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS No. 123R, while the retroactive methods would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. The Company adopted the requirements of SFAS No. 123R for the fiscal year beginning after December 31, 2004.

F-10

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (continued)
	New accounting pronouncements– The FASB has issued FASB Statement No. 168, The “FASB Accounting Standards CodificationTM”and the Hierarchy of Generally Accepted Accounting Principles. Statement 168 establishes the FASB Accounting Standards CodificationTM(Codification) as the single source of authoritative U.S. generally accepted accounting principles (U.S. GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. Statement 168 and the Codification are effective for financial statements issued for interim and annual periods ending after September 15, 2009.
	The FASB has issued FASB Statement No. 167, “Amendment to FASB Interpretation No. 46(R)”. Statement 167 is a revision to FASB Interpretation No. 46 (Revised December 2003), “Consolidation of Variable Interest Entities”, and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance. Statement 167 will require a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements. Statement 167 will be effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009, or January 1, 2010, for a calendar year- end entity. Adoption of this statement is not expected to have a material impact on the Company’s consolidated financial statements.
	The FASB has issued FASB Statement No. 166, “Accounting for Transfers of Financial Assets”. Statement 166 is a revision to FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities”, and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risk related to the transferred financial assets. It eliminates the concept of a “qualifying special- purpose entity”, changes the requirements for derecognizing financial assets, and requires additional disclosures. Statement 166 enhances information reported to users of financial statements by providing greater transparency about transfers of financial assets and an entity’s continuing involvement in transferred financial assets. Statement 166 will be effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009, or January 1, 2010, for a calendar year- end entity. Adoption of this statement is not expected to have a material impact on the Company’s consolidated financial statements.
	The FASB has issued FASB Statement No. 165, “Subsequent Events”. Statement 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet but before financial statements are issued or are available to be issued. Specifically, Statements 165 provides: (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. Statement 165 is effective for interim or annual financial periods ending after June 15, 2009, and shall be applied prospectively. The required disclosures of this statement have been incorporated into the Company’s consolidated financial statements.

F-11

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (continued)
	In April 2009, FASB Staff Position (FSP) No. FAS 107-1 and APB 28-1 was issued to amend SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”, to require disclosures about fair value of financial instruments for interim reporting period as well as in annual financial statements. This FSP also amends APB Opinion No. 28, “Interim Financial Reporting”, to require those disclosures in summarized financial information at interim reporting periods. FSP No. 107-1 and APB 28-1 is effective for interim reporting periods ending after June 15, 2009. Adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
	In April 2009, FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”, was issued to provide additional guidance for estimating the fair value in accordance with SFAS No. 157, “Fair Value Measurements”, when the volume and level of activity for the asset or liability have significantly decreased. This FSP also provides guidance on identifying circumstances that indicate a transaction is not orderly. FSP No. 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, and shall be applied prospectively. Adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
	In April 2009, FSP No. 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies”. This FSP amends the guidance in FASB Statement No. 141 to require that assets acquired and liabilities assumed in a business combination that arise from contingencies be recognized at fair value if fair value can be reasonably estimated. If fair value of such asset or liability cannot be reasonable estimated, the asset or liability would generally be recognized in accordance with FASB Statement No. 5, “Accounting for Contingencies”, and FASB Interpretation (FIN) No. 14, “Reasonable Estimation of the Amount of a Loss”. This FSP eliminates the requirements to disclose an estimate of the range of outcomes of recognized contingencies at the acquisition date. This FSP also requires that contingent consideration arrangements of an acquiree assumed by the acquirer in a business combination be treated as contingent consideration of the acquirer and should be initially and subsequently measured at fair value in accordance with Statement 141R. This FSP is effective for assets and liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of this statement had little or no effect on the Company’s consolidated financial position, results of operations, and disclosures.
	In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Post- Retirement Benefit Plan Assets” (“FSP FAS 132(R)-1”), which amends FASB Statement No. 132 “Employers’ Disclosures about Pensions and Other Post-Retirement Benefits” (“FAS 132”), to provide guidance on an employer’s disclosures about plan assets of a defined benefit pension or other post- retirement plan. The objective of FSP FAS 132(R)-1 is to require more detailed disclosures about employers’ plan assets, including employers’ investment strategies, major categories of plan assets, concentrations of risk within plan assets, and valuation techniques used to measure the fair value of plan assets. FSP FAS 132(R)-1 is effective for the Company’s fiscal year beginning January 1, 2009. Upon initial application, the provisions of this FSP are not required for earlier periods that are presented for comparative purposes. The adoption of this statement had little or no effect on the Company’s consolidated financial position, results of operations, and disclosures.

F-12

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
	In November 2008, the EITF reached consensus on Issue No. 08-6, “Equity Method Investment Accounting Considerations” (“EITF 08-6”), which clarifies the accounting for certain transactions and impairment considerations involving equity method investments. The intent of EITF 08-6 is to provide guidance on (i) determining the initial carrying value of an equity method investment, (ii) performing an impairment assessment of an underlying indefinite-lived intangible asset of an equity method investment, (iii) accounting for an equity method investee’s issuance of shares, and (iv) accounting for a change in an investment from the equity method to the cost method. EITF 08-6 is effective for the Company’s fiscal year beginning January 1, 2009 and is to be applied prospectively. The adoption of this statement had little or no effect on the Company’s consolidated financial position, results of operations, and disclosures.
	In June 2008, the EITF reached consensus on Issue No. 07-5, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF 07-5”). EITF 07-5 clarifies the determination of whether an instrument (or an embedded feature) is indexed to an entity’s own stock, which would qualify as a scope exception under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”). EITF 07-5 is effective for the Company’s fiscal years beginning January 1, 2009. Early adoption for an existing instrument is not permitted. The adoption of this statement had little or no effect on the Company’s consolidated financial position, results of operations, and disclosures.
	In May 2008, the FASB issued FSP No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FAS 133. Convertible debt instruments within the scope of FSP APB 14-1 are not addressed by the existing APB 14. FSP APB 14-1 requires that the liability and equity components of convertible debt instruments within the scope of FSP APB 14-1 be separately accounted for in a manner that reflects the entity’s nonconvertible debt borrowing rate. This requires an allocation of the convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The difference between the principal amount of the debt and the amount of the proceeds allocated to the liability component will be reported as a debt discount and subsequently amortized to earnings over the instrument’s expected life using the effective interest method. FSP APB 14-1 is effective for the Company’s fiscal year beginning January 1, 2009 and will be applied retrospectively to all periods presented. The adoption of this statement had little or no effect on the Company’s consolidated financial position, results of operations, and disclosures.
	In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”) which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets” (“FAS 142”). The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under FAS 142 and the period of expected cash flows used to measure the fair value of the asset under FASB Statement No. 141, “Business Combinations” (“FAS 141”). FSP 142-3 is effective for the Company’s fiscal year beginning January 1, 2009 and will be applied prospectively to intangible assets acquired after the effective date. The adoption of this statement had little or no effect on the Company’s consolidated financial position, results of operations, and disclosures.

F-13

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
	The FASB issued FASB Staff Position (FSP) FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for that Asset Is Not Active”. The FSP clarifies the application of FASB Statement No. 157, “Fair Value Measurements”, in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. The FSP is effective October 10, 2008, and for prior periods for which financial statements have not been issued. Revisions resulting from a change in the valuation technique or its application should be accounted for as a change in accounting estimate following the guidance in FASB Statement No. 154, “Accounting Changes and Error Corrections”. However, the disclosure provisions in Statement 154 for a change in accounting estimate are not required for revisions resulting from a change in valuation techniques or its application. The adoption of this statement had no material effect on the Company’s consolidated financial position, results of operations, and disclosures.
	On March 19, 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities.” This statement is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The adoption of this statement had little or no effect on the Company’s consolidated financial position, results of operations, and disclosures.
	In February 2008, the FASB staff issued Staff Position No. 157-2 “Effective Date of FASB Statement No. 157” (“FSP FAS 157-2”). FSP FAS 157-2 delayed the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The provisions of FSP FAS 157-2 are effective for the Company’s fiscal year beginning January 1, 2009. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The adoption of this statement had little or no effect on the Company’s consolidated financial position, results of operations, and disclosures.
	In December 2007, the FASB issued Statement of Financial Accounting Standard No. 141(R) (“SFAS 141(R)”), “Business Combinations,” which amends SFAS No. 141, and provides revised guidance for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed, and any noncontrolling interest in the acquiree. It also provides disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for the Company’s fiscal year beginning January 1, 2009 and is to be applied prospectively. The adoption of this statement had little or no effect on the Company’s consolidated financial position, results of operations, and disclosures.
	In December 2007, the FASB issued Statement of Financial Accounting Standard No. 160 (“SFAS 160”), “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51” which establishes accounting and reporting standards pertaining to ownership interests in subsidiaries held by parties other than the parent, the amount of net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS 160 is effective for the Company’s fiscal year beginning January 1, 2009. The adoption of this statement had little or no effect on the Company’s consolidated financial position, results of operations, and disclosures.

F-14

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2.	PROPERTY AND EQUIPMENT
	Property and equipment consisted of the following as of June 30, 2009 and December 31, 2008:

		June 30,		December 31,
		2009		2008
Furniture and fixtures	$	8,921	$	8,921
Computers and equipment		34,657		33,591
Land		30,000		30,000
Site improvements		99,631		99,631
Site equipment		99,997		99,997
Vehicles		23,595		23,595
Construction in progress:
Building		500,000		500,000
Site improvements		2,254,017		2,034,167
Site equipment		571,591		568,634
		3,622,409		3,398,536
Less accumulated depreciation		42,095		20,359
	$	3,580,314	$	3,378,177

	Depreciation expense was $21,736 and $5,445 for the six months ended June 30, 2009 and 2008, respectively.
3.	IRELAND CLAIM
	On November 30, 2004, the Company entered into a mineral property purchase agreement to acquire a 100% undivided interest in one mineral claim located in the Yellow Pine Mining District in Clark County, Nevada, known as the Ireland Claim, for a total consideration of $6,000.
	The Company has not determined whether the mineral claim contains mineralized material and has consequently written off all mineral rights acquisition costs to operations during the previous financial periods.
	Subsequent to June 30, 2009, the Company has elected to not retain the Ireland Claim, by choosing to not pay the 2009 maintenance fee to Bureau of Land Management in August 2009, as it is not considered a core asset to the Company’s business plan going forward.

F-15

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

4.	COLUMBUS PROJECT
	As of December 31, 2007, the Company had earned a 15% interest by satisfying its option agreement requirements and had the right to merge with the corporation holding the remaining 85% interest in the Columbus Project in Esmeralda County, Nevada.
	Pursuant to the option assignment agreement dated March 30, 2007, as amended August 8, 2007, the Company granted a 5% net smelter return royalty to Nanominerals Corp (NMC), one of the principal stockholders of the Company.
	On February 20, 2008, the Company, through its wholly-owned subsidiary CBIA, acquired a 100% interest in the Columbus Project, including an option for additional mining claims, by way of merger with the owner of the Columbus Project, Columbus Brine Inc. (CBI). Under the terms of the Merger Agreement, the Company issued an aggregate of 10,440,087 shares of its common stock, and 5,220,059 share purchase warrants to the former shareholders of CBI. Each share purchase warrant issued by the Company entitles the holder to purchase one additional share of the Company’s common stock at a price of $2.39 per share for a period of 5 years. This acquisition supersedes the option agreement.
	The following table reflects the recorded purchase consideration for the Columbus Project:

Purchase price:
Common stock issued	$	20,000,000
Fair value of warrants issued		1,359,351
Acquisition costs		600,000
Total purchase price		21,959,351
Net deferred income tax liability assumed		10,261,194
	$	32,220,545

In accordance with EITF 04-03 paragraph 2 and EITF 98-11 the purchase price of $32 million was allocated to the assets acquired and liabilities assumed, based on their respective fair values at the date of acquisition. The purchase price allocated to the real properties was based on fair market values determined using an independent real estate appraisal firm (Arden Salvage Company) and the fair value of the remaining assets acquired and liabilities assumed were based on management’s best estimates taking into account all available information at the time.

F-16

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

4.	COLUMBUS PROJECT(continued)
	The following table reflects the components of the Columbus Project:

Allocation of acquisition cost:
Mineral properties (including deferred tax liability
assumed of $10,261,194)	$	31,948,053
Property, plant and equipment		202,430
Deposits		44,720
Cash		6,570
Prepaid expenses		24,925
Accounts payable		(6,153	)
Total	$	32,220,545

Pursuant to the terms of the acquisition of CBI, the Company issued an aggregate of 10,440,087 shares of common stock and 5,220,059 share purchase warrants to the former shareholders of CBI. Each share purchase warrant issued by the Company entitles the holder to purchase one additional share of the Company’s common stock at a price of $2.39 per share for a period of 5 years. Each warrant provides the holder with a cashless right of exercise. If the holder chooses to utilize this cashless exercise right, the total number of shares that the holder will be entitled to exercise will be determined by the following formula: [( A–B ) C] ÷Awhere:

A = the average closing price of the Company’s common stock during the five trading days prior to exercise.

B = the exercise price of $2.39.

C = the maximum number of shares of the Company’s common stock issuable upon exercise of the warrants.

If the holder chooses to utilize the cashless exercise right, the holder must do so with respect to all of the unexercised warrants held by him.

The Company will have the right to accelerate the expiration date of the warrants at any time after August 19, 2010 if the average closing price of the Company’s common stock over any 20 consecutive trading days is equal to or greater than 150% of the exercise price. If the Company exercises this acceleration right, the expiration date for the warrants will be accelerated to 30 days after the Company sends out notice that it is exercising the acceleration right.

The Company estimated the fair value of warrants issued in connection with the acquisition of CBI using the Binomial Lattice pricing model.

The Company applied EITF 98-03 with regard to the acquisition of the Columbus Project. The Company determined that the acquisition of the Columbus Project did not constitute an acquisition of a business, as that term is defined in EITF 98-03, and the Company recorded the acquisition as a purchase of assets.

F-17

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

4.	COLUMBUS PROJECT(continued)
	The Company believes the acquisition of the Columbus Project was beneficial because it provides for 100% ownership of the properties and fosters greater opportunity to finance and further develop the project.
	This merger was treated as a statutory merger for tax purposes whereby, CBIA was the surviving merger entity.
5.	RED MOUNTAIN PROJECT
	The Red Mountain Project located in San Bernardino, California is subject to an underlying option assignment agreement dated March 15, 2007. Under the terms of this agreement, to earn a 60% interest, the Company is required to pay $5,000 per month until December 31, 2011 and spend an aggregate of $1,200,000 in additional qualifying expenditures by December 31, 2011.
	The Company may at any time during the life of the Red Mountain Project, earn a 100% interest, by paying $100,000, issuing shares of common stock with an aggregate value of $1,400,000 and issuing share purchase warrants to purchase up to an additional 25% of the number of shares of common stock to be issued. If the project achieves commercial production, the Company will be required to pay an additional $100,000, issue shares of common stock with an aggregate value of $2,400,000 and issue share purchase warrants to purchase up to an additional 25% of the number of shares of common stock to be issued.
	Pursuant to the option assignment agreement dated March 30, 2007, as amended August 8, 2007, the Company granted a 5% net smelter return royalty to NMC.
6.	STOCKHOLDERS’ EQUITY
	During the six months ended June 30, 2009, the Company’s stockholders’ equity activity consisted of amortization of stock based compensation over vesting period.

F-18

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7.	STOCK OPTION PLAN AND WARRANTS
	On March 27, 2007, the Board of Directors adopted the 2007 Stock Incentive Plan (the “Plan”). Under the terms of the Plan, options to purchase up to 6,000,000 shares of the common stock of the Company, subject to an increase each quarter equal to 15% of the increase in the total number of outstanding shares during the previous quarter, may be granted to officers, directors, employees and eligible consultants.
	Expenses for the six months ended June 30, 2009 and 2008 related to the granting and vesting of stock options were $5,136 and $39,410, respectively and are included in general and administrative expense and mineral exploration and evaluation expense.

Stock options– During the six months ended June 30, 2009, the Company did not grant stock options. As of June 30, 2009 stock options outstanding totaled 3,954,719 with a weighted average exercise price of $0.15 per share.

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2009:

			Weighted
	Number of		Average
	Shares		Exercise Price
Balance, December 31, 2008	3,954,719	$	0.15
Options granted and assumed	--		--
Options expired	--		--
Options forfeitures	--		--
Options exercised	--		--
Balance, June 30, 2009	3,954,719	$	0.15

The Company utilizes the Binomial Lattice pricing model to estimate the fair value of options granted. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders.

F-19

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7.	STOCK OPTION PLAN AND WARRANTS(continued)
	The following table summarizes the status of the Company’s unvested shares as of June 30, 2009 and changes during the six months ended June 30, 2009:

			Weighted Average
	Number of		Grant Date
	Shares		Fair Value
Unvested, December 31, 2008	37,500	$	0.55
Options granted	--		--
Options vested	--		--
Options forfeited	--		--
Unvested, June 30, 2009	37,500	$	0.55

As of June 30, 2009, there was $1,701 of total unrecognized compensation cost related to unvested stock options. This cost is expected to be fully recognized in 2009.

Stock options/warrants– During the six months ended June 30, 2009 the Company did not grant any stock warrants.

On June 17, 2009, the Company extended the expiration date for the outstanding warrants issued by the Company under its foreign and US private placement offerings completed in 2007 to June 30, 2012. No other changes were made with respect to the terms and conditions of the warrants.

The Company determined that the amendment to extend the expiration date of the private placement warrants which were originally issued as part of equity transactions, did not result in an expense to the Company. The warrants were not a component to any debt transaction, registration agreement or services rendered to the Company.

The following table summarizes information about options/warrants activity during the six months ended June 30, 2009:

			Weighted
	Number of		Average
	Shares		Exercise Price
Balance, December 31, 2008	19,335,428	$	1.20
Options/warrants granted and assumed	--		--
Options/warrants expired	--		--
Options/warrants forfeitures	--		--
Options/warrants exercised	--		--
Balance, June 30, 2009	19,335,428	$	1.20

F-20

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8.	INCOME TAXES
	The Company is a Nevada corporation and is subject to federal income taxes. Nevada does not impose a corporate income tax.
	The income tax benefit consisted of the following at June 30, 2009 and 2008,

		June 30, 2009			June 30, 2008
Income tax benefit based on statutory tax rate	$	(712,291	)	$	(621,196	)
Non-deductible and other		1,523			3,017
Change in valuation allowance		2,108			(714,571	)
Rate change		--			(22,419	)
Release of valuation allowance related to acquisition		--			805,997
Income tax benefit	$	(708,660	)	$	(549,172	)

Significant components of the Company’s net deferred income tax assets and liabilities at June 30, 2009 and December 31, 2008 were as follows:

		June 30,			December 31,
		2009			2008
Deferred income tax assets:
Net operating loss carryforward	$	2,709,251		$	2,000,591
Option compensation		546,424			544,626
Reclamation and remediation costs		96,368			96,368
Gross deferred income tax asset		3,352,043			2,641,585
Valuation allowance		(641,287	)		(639,179	)
		2,710,756			2,002,406
Deferred income tax liabilities:
Property, plant & equipment		1,505			1,815
Acquisition related liabilities		11,067,191			11,067,191
Net deferred income tax liability	$	8,357,940		$	9,066,600

A valuation allowance for deferred tax related to option compensation and accrued reclamation and remediation costs was established for net deferred tax assets not allocated to offset acquisition related deferred tax liabilities due to the uncertainty of realizing these deferred tax assets based on conditions existing at June 30, 2009 and December 31, 2008.

Deferred income tax liability was recorded on GAAP basis over income tax basis using statutory federal rate with the corresponding increase in the purchase price allocation to the assets acquired.

The resulting estimated future federal income tax liability associated with the temporary difference between the acquisition consideration and the tax basis as computed in accordance with EITF 98-11 and SFAS 109, is reflected as an increase to the total purchase price which has been applied to the underlying mineral and Columbus project assets in the absence of there being a goodwill component associated with the acquisition transactions in accordance with EITF 98-11 and SFAS 109.

F-21

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8.	INCOME TAXES(continued)
	The Company had cumulative net operating losses of approximately $7,740,716 and $5,713,177 as of June 30, 2009 and December 31, 2008, respectively for federal income tax purposes. Cumulative net operating losses from December 31, 2006 and previous years are effectively nil due to the annual limitation imposed by the Internal Revenue Code of 1986 as a result of the ownership percentage change limitations. The net operating loss carryforwards will be expiring between 2027 and 2029.
	As of January 1, 2007, the Company did not have any unrecognized tax benefits. The adoption of FIN 48 did not result in any cumulative effect adjustment to the January 1, 2007 balance of the Company’s accumulated deficit. Upon adoption of FIN 48, the Company did not accrue for interest and penalties as there were no unrecognized tax benefits. If interest and penalties were to be assessed, we would charge interest to interest expense, and penalties to general and administrative expense. It is not anticipated that unrecognized tax benefits would significantly increase or decrease within 12 months of the reporting date.
	The Company and its subsidiary file income tax returns in the United States. These tax returns are subject to examination by taxation authorities provided the years remain open under the relevant statues of limitations, which may result in the payment of income taxes and/or decrease its net operating losses available for carryforwards. The Company is no longer subject to income tax examinations by US federal tax authorities for years prior to 2005. While the Company believes its tax filings do not include uncertain tax positions, the results of potential examinations or the effect of changes in tax law cannot be ascertained at this time. The Company currently has no tax years under examination.

F-22

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9.	PROPERTY RENTAL AGREEMENTS AND LEASES
	The Company through its subsidiary CBIA has a lease agreement for mining claims with DDB Syndicate, an entity owned by related parties, including Douglas D.G. Birnie, Chief Executive Officer of the Company, Mr. Chizmar, a former director of the Company, three former officers and directors of CBI, Geotech Mining Inc., Jack Corp. and Wiser Corp. Geotech Mining Inc., Jack Corp. and Wiser Corp. are affiliates of Nanominerals Corp.
	The DDB Syndicate has leased the DDB Claims to CSM, a wholly owned subsidiary of the Company. The mining lease agreement (the DDB Agreement), between the DDB Syndicate and CSM, provide CSM with a lease, extending for approximately 5 years, with an option to purchase the DDB Claims at any time during the lease period. To maintain the lease rights, CSM paid the DDB Syndicate $130,000 by June 30, 2008, with annual rental payments thereafter of $30,000 per year, payable on June 30, 2009, 2010, and 2011 respectively. CSM may exercise its option to purchase the DDB Claims by paying a purchase price of $400,000, less any rental payments made by CSM prior to exercising the option, or paying the DDB Syndicate $10, plus the grant of a 2% royalty of net smelter returns on the DDB Claims.
	The following table summarizes the rental payments under the mining lease agreement:

June 30, 2010	$	30,000
June 30, 2011		30,000
	$	60,000

	The Company had made $30,000 in rental payments during the six months ended June 30, 2009, which consists of $3,651 in payments to each of the eight owners of DDB Syndicate including reimbursement of expenses of $794 to a company controlled by Douglas D.G. Birnie.
10.	COMMITMENTS AND CONTINGENCIES
	Lease obligations– The Company rents office space in Henderson, Nevada. The lease terms expired on September 1, 2008 and the Company continues to rent the existing space under month-to-month terms for $4,625 per month.
	Rental expense, resulting from this operating lease agreement, was $27,750 and $19,575 for the six months ended June 30, 2009 and 2008, respectively.

F-23

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

11.	ENVIRONMENTAL AND RECLAMATION ACTIVITIES
	The liabilities accrued for the reclamation and remediation costs at June 30, 2009 and December 31, 2008, were as follows:

		June 30,		December 31,
		2009		2008
Exploration properties:
Columbus	$	275,338	$	275,338
Reclamation and remediation costs, long-term	$	275,338	$	275,338

The activity in the accrued reclamation and remediation cost liability for the six months ended June 30, 2009, was as follows:

Balance, December 31, 2008	$	275,338
Accruals for estimated costs		--
Balance, June 30, 2009	$	275,338

	The Company maintains reclamation bonds with the Bureau of Land Management in the amount of $908,368 and $933,088 as of June 30, 2009 and December 31, 2008, respectively.
12.	CONCENTRATION OF CREDIT RISK
	The Company maintains its cash accounts in three financial institutions. Cash accounts at these financial institutions are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per financial institution. Additionally, through the financial institutions’ participation in the FDIC’s Transaction Account Guarantee Program, all non-interest bearing checking accounts are fully guaranteed by the FDIC for the entire amount in the account through December 31, 2009. Coverage under the Transaction Account Guarantee Program is in addition to and separate from the coverage available under the FDIC’s general deposit insurance rules.
	The Company has never experienced a material loss or lack of access to its cash accounts; however, no assurance can be provided that access to the Company’s cash accounts will not be impacted by adverse conditions in the financial markets. At June 30, 2009, the Company had deposits in excess of FDIC insured limits in the amount of $102,320.

F-24

IRELAND INC.

(AN EXPLORATION STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

13.	RELATED PARTY TRANSACTIONS
	During the six months ended June 30, 2009, the Company utilized the services of NMC to provide technical assistance and financing related activities. These services related primarily to the Columbus project and the Red Mountain project. NMC is the Company’s largest shareholder, owning approximately 41.4% of the Company’s outstanding common stock.
	In addition to the above services, NMC provided dedicated use of its laboratory, instrumentation, milling equipment and research facilities. NMC provided invoices for these fees plus expenses.
	For the six months ended June 30, 2009, the Company incurred total fees and reimbursements of expenses to NMC of $210,000 and $37,446, respectively, for a total of $247,446.
	At June 30, 2009, the Company had an outstanding balance due to NMC of $132,498. The Company also had an outstanding balance for accrued compensation to Douglas D.G. Birnie, its executive officer of $27,000 payable to a company wholly owned by Douglas D.G. Birnie. Accounts payable – related party totaled $159,498 as of June 30, 2009.
	The Company has the mining claim lease for the DDB Claims as further discussed in Note 9.
14.	CONCENTRATION OF ACTIVITY
	For the six months ended June 30, 2009, the Company purchased services from three major vendors Arrakis, Inc., AuRic Metallurgical Labs, LLC, and NMC that exceeded more than 10% of total purchases and amounted to approximately $466,146, $188,800, and $247,446, respectively.

F-25

ITEM 2. MANAGEMENT'S DISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTS OF OPERATIONS.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q constitute "forward-looking statements.” These statements, identified by words such as “plan,” "anticipate,” "believe,” "estimate,” "should,” "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption "Part II, Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. We advise you to carefully review the reports and documents we file from time to time with the United States Securities and Exchange Commission (the “SEC”), particularly our periodic reports filed with the SEC pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”).

OVERVIEW

We are a minerals exploration and development company focused on the discovery and extraction of precious metals from mineral deposits in the Southwestern United States.

In February 2008, we acquired our lead project, a prospective gold, silver and calcium carbonate property located in Esmeralda County, Nevada that we call the “Columbus Project.” The Columbus Project consists of 19,680 acres of placer mineral claims, including a 380 acre permitted mine site (60-acre mill site and mill facility, and 320-acre mine site). Our current permits currently allow us to mine up to 792,000 tons per year to 40 feet in depth for the purpose of extracting precious metals and calcium carbonate from the permitted mine site. Results from our 2008 drilling program have also led us to identify 3 new areas with significant mineralization. We also have a mineral lease covering, and the option to acquire, an additional 22,640 acres of placer mineral claims adjoining the current project area (the “DDB Claims”).

In addition to the Columbus Project, we own the right to acquire a prospective gold, silver and tungsten property located in San Bernardino County, California that we call the “Red Mountain Project.” We also own a mineral property located in Clark County, Nevada known as the “Ireland Claim.” However, we have decided to allow the Ireland Claim to lapse on September 1, 2009 as we do not consider it to be a core asset of our business.

RECENT CORPORATE DEVELOPMENTS

The following significant developments occurred since the completion of our last fiscal quarter ended March 31, 2009:

1.

On June 17, 2009, we extended the expiration date for the outstanding warrants issued by us under our foreign and US private placement offerings completed in 2007 (the “2007 Foreign Offering” and the “2007 US Offering”, respectively). Each warrant issued under the 2007 Foreign Offering and 2007 US Offering entitled the holder to purchase one share of our common stock at a price of $1.00 per share for a period of 2 years after the date of issuance, subject to our right to accelerate the expiration date of the warrants if our common stock trades at a weighted average price over $3.50 for 20 consecutive trading days. If we choose to exercise our acceleration rights, the accelerated expiry date will be thirty (30) days after we send out notices of the acceleration. We have extended the expiration date for all of the outstanding warrants issued under the 2007 Foreign Offering and the 2007 US Offering to June 30, 2012, subject to the acceleration rights described above. No other changes were made with respect to the terms and conditions of the warrants.

2.

On June 24, 2009, we appointed Mark H. Brennan as a member of our Board of Directors. Mr. Brennan was appointed to fill the vacancy on our Board of Directors created by the resignation of Lawrence E. Chizmar, Jr. on November 4, 2008.

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	Mr. Brennan, age 49, has served as the President of his own consulting firm, the Brennan Consulting Group, through which he has managed a number of long-term, multi-year management and operations consulting engagements in various business sectors. In addition to his ongoing management consulting practice, Mr. Brennan has also founded and operated a number of private companies beginning in the early 1990’s. Mr. Brennan is the founding Chairman of the Vegas Valley Angels, a non-profit organization of accredited investors whose purpose is to search out, invest in, mentor and foster the development of new and developing companies located in the southwestern United States. Mr. Brennan is also an active member of the Board of Advisors for both the Nevada Center for Entrepreneurship and Technology (NCET), and the University of Nevada Las Vegas Center for Entrepreneurship. Mr. Brennan holds an MBA from the Harvard Business School and a MA in Management from National University. Early in Mr. Brennan’s career he served his country for eight years as a fighter pilot and instructor pilot with the United States Air Force after earning his BS degree from the United States Air Force Academy.
3.	Effective July 1, 2009, we raised our compensation for independent directors to: (i) a monthly payment of $2,500; and (ii) a quarterly issuance of restricted stock awards with a market value of $7,500. In lieu of the quarterly issuance of restricted stock awards, a director may accept stock options to purchase shares of our common stock with a market value of $15,000.
4.	In addition to Mr. Brennan’s monthly compensation as an independent director, we issued to Mr. Brennan, on August 11, 2009, stock options to purchase 250,000 shares of our common stock at an exercise price of $0.48 per share. 50,000 of the options vested immediately and the remaining balance of the options will vest at a rate of 50,000 options commencing on December 31, 2009 and every six months thereafter.
5.	Our Board of Directors approved a private placement offering of up to 10,000,000 units at a price of $0.45 per unit to “accredited investors” as such term is defined under Regulation D of the Securities Act (the “U.S. Offering”) and a concurrent foreign private placement offering of up to 5,500,000 units on the same terms to persons who are not “U.S. Persons” as such term is defined under Regulation S of the Securities Act (the “Foreign Offering”). Each unit is comprised of one share of our common stock and one-half share purchase warrant. Each full share purchase warrant will entitle the holder to purchase one additional share of our common stock at a price of $0.75 per share expiring June 30, 2012. After June 30, 2010, we will have the right to accelerate the expiration date of the warrants if the volume weighted average price for the shares on our principal market is above $3.00 per share for twenty consecutive trading days. The U.S. Offering and the Foreign Offering are set to terminate on August 31, 2009, unless otherwise extended by the Board of Directors. There is no assurance that these private placement offerings or any part of them will be completed.
	The above does not constitute an offer to sell or a solicitation of an offer to buy any of our securities in the United States. The securities have not been registered under the United States Securities Act of 1933, as amended and may not be offered or sold within the United States or to U.S. persons unless an exemption from such registration is available.

COLUMBUS PROJECT PROPERTY UPDATES

During the first quarter of 2009, test results received from independent consultants McEwen Geological LLC of Arvada, Colorado (“McEwen”) from our 2008 drilling program led us to identify 3 new areas with significant mineralization. The 2008 drilling program involved the drilling of 39 holes to depths ranging from 200 to 400 feet below the surface. Over 1,000 samples were collected by McEwen under Chain of Custody (“COC”) standards and delivered for testing and analysis to independent consultants Arrakis Inc. of Denver, Colorado (“Arrakis”) and independent consultants AuRIC Metallurgical Laboratories of Salt Lake City, Utah (“AuRIC”). The drill samples were analyzed using a caustic fusion technique, and the results reported were from the extracted precious metals.

Based on these test results, we have expanded our original mineralized area (Zone A) from 380 acres to 2,530, and subdivided the mineralized areas of Zone A into three potentially surface minable subsections: Zone A – Permitted Mine Area (covering the 380 acre permitted mine site); Zone A – West (covering holes

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S1A to S2A, and holes S8A to S11A); and Zone A – Central (covering holes S5A to S7A, and S14A to S17A). In addition, we have identified a new area of significant mineralization covering 1,068 acres located approximately 3 miles south of the Zone A – Permitted Mine Area that we now call Zone B. Zone A and Zone B appear to be unbounded on all sides.

2008 Drilling Results – Zone A

A total of 25 contiguous holes were drilled next to the Zone A – Permitted Mine Area. The weight mean average grade for the mineralized intercepts identified in the 25 holes drilled was approximately 0.047 opt Au equivalent.

Hole ID1	Depth Drilled (ft)	Mineralized Interval2 (ft)	Thickness (ft)	Au (opt)	Ag (opt)	Au (opt)3 Equivalent
S1A	195’	50’ to 150’	100’	0.038	0.132	0.039
S2A	202’	10’ to 40’	30’	0.032	0.134	0.034
		60’ to 100’	40’	0.031	0.132	0.031
		160’ to 202’	42’	0.049	0.209	0.052
S3A	201’	100’ to 140’	40’	0.027	0.094	0.028
S4A	404’	250’ to 404’	154’	0.037	0.166	0.039
S5A	201’	0’ to 70’	70’	0.033	0.112	0.034
		160’ to 201’	41’	0.036	0.111	0.038
S6A	200’	0’ to 60’	60’	0.037	0.180	0.035
		120’ to 170’	50’	0.045	0.332	0.049
S7A	400’	0’ to 20’	20’	0.052	0.409	0.057
		130’ to 170’	40’	0.038	0.299	0.042

^{_______________________________
1} Holes S20A to S22A did not contain sufficient samples above our cut off grade of 0.020 opt Au equivalent to define any mineralized intercepts.
² Mineralized Intervals were determined using a 0.020 opt Au equivalent cut-off.
³ Au equivalent calculated using: $900/oz Au, $12/oz Ag.

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Hole ID1	Depth Drilled (ft)	Mineralized Interval2 (ft)	Thickness (ft)	Au (opt)	Ag (opt)	Au (opt)3 Equivalent
		240’ to 400’	160’	0.027	0.152	0.029
S8A	201’	0’ to 201’	201’	0.049	0.238	0.052
S9A	404’	50’ to 404’	354’	0.062	0.302	0.066
S10A	181’	0’ to 20’	20’	0.046	0.214	0.049
		110’ to 170’	60’	0.050	0.382	0.055
S11A	202’	40’ to 80’	40’	0.027	0.137	0.029
S12A	400’	60’ to 90’	30’	0.042	0.238	0.045
		130’ to 370’	240’	0.045	0.272	0.048
S13A	200’	100’ to 120’	20’	0.024	0.133	0.025
S14A	340’	0’ to 40’	40’	0.058	0.413	0.063
		90’ to 110’	20’	0.071	0.465	0.077
S15A	200’	0’ to 60’	60’	0.037	0.295	0.041
		150’ to 200’	50’	0.048	0.374	0.053
S16A	200’	0’ to 60’	60’	0.037	0.270	0.04
		100’ to 150’	50’	0.059	0.396	0.065
S17A	200’	0’ to 30’	30’	0.060	0.568	0.067
		60’ to 90’	30’	0.069	0.725	0.079
S18A	200’	150’ to 190’	40’	0.044	0.367	0.049
S19A	200’	0’ to 20’	20’	0.053	0.350	0.057
		90’ to 200’	110’	0.034	0.231	0.037
S23A	200’	60’ to 80’	20’	0.054	0.389	0.059
		130’ to 200’	70’	0.040	0.302	0.044
S24A	200’	170’ to 190’	20’	0.041	0.341	0.045
S25A	200’	20’ to 60’	40’	0.042	0.223	0.044
Weight Mean Average for All Drill Hole Intercepts				0.044	0.257	0.047

2008 Drilling Results – Zone B

A total of 14 holes were drilled in Zone B. Zone B is located approximately 3 miles south of the Zone A –Permitted Mine Area. The weight mean average grade for the mineralized intercepts identified in the 14 holes drilled in Zone B was approximately 0.044 opt Au equivalent.

Hole ID	Depth Drilled (ft)	Mineralized Interval4 (ft)	Thickness (ft)	Au (opt)	Ag (opt)	Au (opt)5 Equivalent
S1B	400’	10’ to 400’	390’	0.045	0.234	0.047
S2B	200’	50’ to 160’	110’	0.034	0.179	0.036
S3B	275’	90’ to 275’	185’	0.039	0.237	0.042
S4B	200’	170’ to 200’	30’	0.021	0.093	0.022
S5B	200’	50’ to 200’	150’	0.041	0.167	0.044
S6B	400’	240’ to 270’	30’	0.036	0.206	0.038
		310’ to 400’	90’	0.033	0.181	0.036
S7B	200’	0’ to 200’	200’	0.037	0.160	0.039
S8B	350’	0’ to 350’	350’	0.040	0.187	0.042
S9B	200’	0’ to 200’	200’	0.048	0.244	0.051
S10B	400’	0’ to 310’	310’	0.040	0.254	0.043
		360’ to 400’	40’	0.080	0.265	0.083
S11B	200’	0’ to 140’	140’	0.042	0.224	0.044
S12B	200’	0’ to 60’	60’	0.057	0.318	0.061
		150’ to 200’	50’	0.026	0.095	0.027
S13B	400’	0’ to 100’	100’	0.053	0.246	0.056

^{_____________________________
4}Mineralized Intervals were determined using a 0.020 opt Au equivalent cut-off.
⁵ Au Equivalent calculated using: $900/oz Au, $12/oz Ag.

6

		170’ to 250’	80’	0.026	0.102	0.027
		290’ to 350’	60’	0.052	0.252	0.055
S14B	280’	80’ to 100’	20’	0.023	0.138	0.024
		140’ to 280’	140’	0.045	0.231	0.048
Weight Mean Average for All Drill Hole Intercepts				0.041	0.212	0.044

Bulk Leach Test Results – Zone A – Permitted Mine Area

In the first quarter of 2009, AuRIC conducted a bulk leach test on 1,738 pounds of material extracted from the Zone A – Permitted Mine Area by Arrakis under COC standards. No mineral processing operations, such as crushing, grinding, drying or screening, were performed on the sample prior to leaching. The material was analyzed using a caustic fusion technique and reported head grades of 0.055 ounces per ton (opt) gold (Au) and 0.520 opt silver (Ag). The material was then leached, resulting in the extraction of 0.047 opt Au and 0.464 opt Ag into solution. The precious metals were subsequently collected on resins and processed to produce Au and Ag bullion, for a net extraction of 0.038 opt Au and 0.385 opt Ag. This represents leach extraction of 86.2% of Au into solution and 69.1% of Au recovered as metal. This also represents leach extraction of 89.2% of Ag into solution and 74% of Ag recovered as metal. The overall extraction was 0.043 opt Au equivalent. Upon completion of the test, the precious metal beads were delivered to us. We will commission further testing in order to optimize net metal recovery.

Bench Leach Test Results – Zone B

In the second quarter of 2009, AuRIC conducted bench scale leach tests on composite drill samples taken from Zone B. The tested materials were composited from previously submitted and analyzed drill samples taken during our 2008 drilling program. The results of these bench scale leach tests were consistent with the results obtained from the bulk leach test conducted on materials extracted from the Zone-A Permitted Mine Area in the first quarter of 2009.

Zone B – Drill Hole Sample Composite Results

Bench Scale Test	Drill Hole	Interval (ft)	Au Equivalent6 Head Grade (opt)	% Recovered into Solution	Au Equivalent Recovered into Solution (opt)
3359C	S1B	40’ to 140’	0.041	91.0%	0.037
3360C	S9B	0’ to 50’	0.074	90.0%	0.066
3362C	S12B	0’ to 50’	0.057	80.6%	0.046

The composite samples were taken from three holes in Zone B representing drilling depths of 100 feet, 50 feet and 50 feet, respectively. AuRIC created 5.5 pound composites for each of the three mineralized intervals tested. The composites were then assayed using a caustic fusion technique, and then leached. The leach results indicate that the mineralogy of the Zone A-Permitted Mine Area and Zone B are consistent with each other.

New Estimates of Material Extractable Using Surface Dredge Operations

New operational cost estimates, results from our 2008 drilling program and geological modeling by McEwen have led us to conclude that the surface dredge mining method currently being used at our pilot production facility being operated in the Zone A – Permitted Mine Area could economically be used to mine to a depth of 200 feet. Based on this 200 foot depth, we have estimated that up to 199.5 million (M) tons of material could potentially be extracted from the newly identified mineralized areas Zone A – West, Zone A – Central and Zone B. The average grade of all of the samples within this 199.5 M tons approximates 0.041 opt Au equivalent.

^{_____________________________
6} Au equivalent calculated using: $900/oz Au, $12/oz Ag

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Location	Potentially Mineable Acres7	Depth (ft)	Thickness (ft)	Potentially Minable Material
Zone A – Permitted Mine Area	270	3’ to 40’	37’	14.8 M tons
Zone A – West	475	0’ up to 200’	Up to 200’	50.0 M tons
Zone A – Central	550	0’ up to 90’	Up to 90’	41.5 M tons
Zone B – (Holes S7B to S13B)	555	0’ up to 200’	Up to 200’	108 M tons

We believe that the sedimentary materials underlying the three newly identified mineralized areas are substantially similar to the sedimentary materials found in the Zone A – Permitted Mine Area where our pilot production operation is located. The full extent of the mineralization in Zone A and Zone B has yet to be determined by further drilling and drill sample analysis. There is no assurance that the test results that we have received to date will be indicative of actual extraction rates to be found throughout the Columbus Project. Additional exploration work will be required before proven or probable reserves can be established. We intend to conduct additional bench scale and bulk sample tests in both Zone A and Zone B.

BLM Approval Obtained for 2009 Drill Program

In the second quarter of 2009, we received approval from the Bureau of Land Management (the "BLM") to conduct a 30-hole drill program on the Columbus Project. The drill program is scheduled to consist of 30 holes to be drilled to depths ranging from 200 feet to 400 feet below the surface. We hope that this drill program will expand the Zone A and Zone B mineralized zones and provide us with a greater definition of the mineralization within these zones.

PLAN OF OPERATION

During our 2009 fiscal year, we intend to proceed with our exploration and development programs for the Columbus Project and the Red Mountain Project. However, to provide us with maximum financial flexibility, we have elected to postpone the drilling program at the Red Mountain Project until 2010. We continue to believe that the Red Mountain Project is an excellent prospect for us.

We have decided to allow the Ireland Claim to lapse on September 1, 2009 as we do not consider it to be a core asset of our business.

The Columbus Project

Our technical program for the Columbus Project has two primary objectives: (a) to prove the mineral resources/minable reserves, and (b) to determine the commercial feasibility of mining and extracting precious metals from the project.

a.

Determining Project Resources / Reserves: The goal of the drilling program is to determine whether there are sufficient reserves on the Columbus Project for economic viability. In the 2008 drill program, the holes were drilled to depths ranging from 200 feet to 400 feet. We have completed drilling on, and received the results for, all 39 holes, which are reported above. In 2009, subject to our ability to obtain permits and additional financing, we intend to conduct an additional 60 hole drilling program for the Columbus Project that we hope will provide greater definition of the mineralization at the Columbus Project.

b.

Project Feasibility: We currently have a production permit from the Bureau of Land Management (the “BLM”) for the Columbus Project. The production permit allows us to extract precious metals and produce calcium carbonate on the 380 acre (320 acre mine site and 60 acres of mill sites) Zone A- Permitted Mine Area located at the Columbus Project at a mine rate of up to 792,000 tons per year. The mine site and mill sites are located in Zone A on the northern edge of the area of interest identified by our surface sampling program.

^{_____________________________
7} Acreage expected to be surface minable in an economical manner.

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We are currently using a dredge mining method to mine and transfer material to the pilot plant at the Columbus Project. The material is mined and handled as a slurry throughout the production process. This production process has, to date, proven to be very successful and is our preferred method of mining as the cost per ton of material mined is low.

Bench and bulk leach tests are being conducted at off-site facilities by independent consultants. Upon completion of these tests we will operate our on-site pilot production plant on an ongoing basis unless our production process is proven to be commercially unviable.

If the operation of this pilot production facility proves to our satisfaction that the Columbus Project is economically viable, we will seek to expand the production process or construct additional production circuits within the mill site to increase production capacity. The production model for the Columbus Project is anticipated to be a low cost, high volume mining operation.

Readers are cautioned that, although we believe that the results of our exploration activities to date are sufficiently positive to proceed with the installation and operation of a pilot production circuit for the Columbus Project, we have not yet established any probable or proven reserves. There is no assurance that we will be able to establish that any commercially extractable ore reserves exist on the Columbus Project or that we will enter into commercial production.

We anticipate spending approximately $2,486,787 on our exploration and development program for the Columbus Project in the second half of 2009.

The Red Mountain Project

Sampling and Drilling Program: We initiated a surface sampling program on the Red Mountain Project in 2008. We have postponed the drilling program on the Red Mountain Project until we obtain additional financing. See “Financing Requirements.”

We anticipate that we will spend approximately $47,500 on our exploration program for the Red Mountain Project in 2009.

Cash Requirements

We have budgeted for the following expenditures in the third and fourth quarters of 2009:

Columbus Project
•	Drilling Exploration Program and Obtaining Reserve Estimates	$	1,090,567
•	Pre-feasibility and Feasibility Program		1,346,220
•	Property Maintenance Costs		50,000
	Total for Columbus Project	$	2,486,787
Red Mountain Project
•	Property Acquisition and Maintenance Costs	$	47,500
•	Sampling Exploration Program		0
	Total for Red Mountain Project	$	47,500
General and Administration
	Total for General and Administration	$	645,617
Total Cash Expenditures		$	3,179,904

As of June 30, 2009, we had cash in the amount of $722,527 and a working capital surplus of $352,106. This amount is substantially less than the total expenditures that we have budgeted for our 2009 fiscal year. We estimate that our current financial resources are sufficient to allow us to meet the anticipated costs of our exploration and development programs for the first half of our 2009 fiscal year. However, actual costs could be greater than we have anticipated. We will require additional financing in order to fully complete our exploration and development plans for 2009. In order to meet our expenditure requirements for the second half of the fiscal year of 2009, our Board of Directors approved a U.S. Offering of up to 10,000,000 units at a

9

price of $0.45 per unit and a concurrent Foreign Offering of up to 5,500,000 units at a price of $0.45 per unit for aggregate proceeds of $6,975,000. There is no assurance that these private placement offerings or any part of them will be completed.

RESULTS OF OPERATIONS

Three Months and Six Months Summary

		Three Months Ended June 30					Percentage			Six Months Ended June 30					Percentage
							Increase /								Increase /
		2009			2008		(Decrease)			2009			2008		(Decrease)
Revenue	$	-		$	-		n/a		$	-		$	-		n/a
Operating Expenses		(1,096,290	)		(1,219,605	)	(10.1	) %		(2,045,050	)		(1,877,334	)	8.9	%
Other Income (Expense)		2,317			30,820		(92.5	) %		9,934			104,026		(90. 5	) %
Income Tax Benefit		381,183			405,187		(5.9	) %		708,660			549,172		29. 0	%
Net Loss	$	(712,790	)	$	(783,598	)	(9.0	) %	$	(1,326,456	)	$	(1,224,136	)	8.4	%

Revenue

We have not earned any operational revenues since our inception and we do not anticipate earning revenues until our mineral properties enter into commercial production, of which there are no assurances. Our pilot production plant at the Columbus Project is currently being operated for pre-feasibility testing purposes only. We are currently in the exploration stage of our business and we can provide no assurances that we will be able to establish the existence of probable or proved mineral reserves on our properties, or if such reserves are established, that we will be able to enter into commercial production.

Operating Expenses

Our operating expenses for the three and six months ended June 30, 2009 and 2008 consisted of the following:

		Three Months Ended						Six Months Ended
		June 30			Percentage			June 30			Percentage
					Increase /						Increase /
		2009		2008	(Decrease)			2009		2008	(Decrease)
Mineral exploration and evaluation expenses	$	687,033	$	643,569	6.8	%	$	1,274,738	$	841,189	51.5	%
Mineral exploration and evaluation expenses – related party		135,000		235,000	(42.6	) %		240,000		340,000	(29.4	) %
General and administrative		248,356		323,230	(23.2	) %		478,576		639,700	(25.2	) %
Depreciation		10,901		2,806	288.5	%		21,736		5,445	299.2	%
Mineral and property holding costs		15,000		15,000	0.0	%		30,000		51,000	(41.2	) %
Total Operating Expenses	$	1,096,290	$	1,219,605	(10.1	) %	$	2,045,050	$	1,877,334	8.9 %

Operating expenses for our second fiscal quarter ended June 30, 2009 decreased slightly as compared to our second fiscal quarter ended June 30, 2008. Operating expenses decreased as a result of decreases in general and administrative expenses and mineral exploration and evaluation expenses – related party.

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The item “Mineral exploration and evaluation expenses – related party” represents (a) amounts paid or reimbursed to Nanominerals Corp. for exploration work conducted on the Columbus and Red Mountain Projects, Nanominerals is our largest shareholder, owning approximately 41.4% of our outstanding common stock; and (b) amounts paid in respect of the DDB Claims to the DDB Syndicate, an entity owned by related parties.

During the fiscal quarter ended June 30, 2009, we incurred fees payable to Nanominerals of $105,000 for technical and financing related services relating primarily to the Columbus and Red Mountain Projects. In addition, we incurred $27,498 in respect to reimbursable expenses paid for by Nanominerals. At June 30, 2009, we were indebted to Nanominerals in the amount of $132,498 for unpaid fees and reimbursable expenses.

We made $30,000 in rental payments to the DDB Syndicate under the terms of our lease agreement for the DDB Claims. The DDB Syndicate is a mining syndicate made up of a company controlled by Douglas D.G. Birnie (our President and Chief Executive Officer and a member of our Board of Directors), Lawrence E. Chizmar (a former member of our Board of Directors and a former director of CBI), three former officers, directors and affiliates of CBI, and three companies affiliated with Nanominerals. The $30,000 in rental payments made to the DDB Syndicate consisted of $3,651 paid to each member of the DDB Syndicate, including $794 paid to a company controlled by Mr. Birnie for the reimbursement of legal and government filing fees related to the DDB Claims.

We also had an outstanding balance for accrued compensation due to Douglas D.G. Birnie (our President and Chief Executive Officer and a member of our Board of Directors) in the amount of $27,000, payable to a company controlled by Mr. Birnie.

The decrease in general and administrative expenses is primarily attributable to a decrease in consulting fees, stock based compensation expense, and a reallocation of executive and employee compensation to mineral exploration and evaluation expenses. During the second quarter of 2009, our President and Chief Executive Officer and our operations manager spent a large amount of time directly managing our exploration and development activities at the Columbus Project. As a result, a portion of their compensation was allocated to mineral exploration and evaluation expenses instead of general and administrative.

We anticipate that our operating expenses will continue to increase significantly as we pursue our exploration and development programs for the Columbus Project and the Red Mountain Project.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital
							Percentage
		At June 30, 2009			At December 31, 2008		Increase / (Decrease)
Current Assets	$	848,674		$	2,734,552		(69.0 ) %
Current Liabilities		(496,568	)		(175,049	)	183.7 %
Working Capital	$	352,106		$	2,559,503		(86.2 ) %

Cash Flows
		Six Months Ended June			Six Months Ended June
		30, 2009			30, 2008
Cash Flows used in Operating Activities	$	(1,598,054	)	$	(1,974,196	)
Cash Flows used in Investing Activities		(245,242	)		(785,713	)
Cash Flows from Financing Activities		-			1,000
Net Decrease in Cash During Period	$	(1,843,296	)	$	(2,758,909	)

At June 30, 2009 we had a working capital surplus of $352,106 as compared to a working capital surplus of $2,559,503 at December 31, 2008. The decrease in our working capital surplus is primarily attributable to the

11

fact that: (i) we had no sources of revenue during the period; and (ii) we incurred substantial expenses in the exploration and development of the Columbus Project.

Financing Requirements

We will require additional financing if we are to complete our proposed exploration and development programs for 2009. In order to meet these expenditure requirements, our Board of Directors approved a U.S. Offering of up to 10,000,000 units at a price of $0.45 per unit to “accredited investors” as such term is defined under Regulation D and a concurrent Foreign Offering of up to 5,500,000 units on the same terms to persons who are not “U.S. Persons” as such term is defined under Regulation S. Each unit is comprised of one share of our common stock and one-half share purchase warrant. Each full share purchase warrant will entitle the holder to purchase one additional share of our common stock at a price of $0.75 per share expiring June 30, 2012. After June 30, 2010, we will have the right to accelerate the expiration date of the warrants if the volume weighted average price for the shares on our principal market is above $3.00 per share for twenty consecutive trading days.

Our ability to obtain additional financing will be subject to a number of factors, including the variability of market prices for gold and silver, investor interest in our mineral projects, and the performance of equity markets in general. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. If we are not able to obtain financing when needed or in an amount sufficient to enable us to complete our programs, we may be required to adjust our exploration and development plans depending upon our existing capital resources.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are also disclosed in the notes to our unaudited consolidated financial statements for the six months ended June 30, 2009 included in this Quarterly Report on Form 10-Q.

Mineral Rights

We capitalize acquisition and option costs of mineral property rights. The amount capitalized represents fair value at the time the mineral rights were acquired. We capitalize acquisition and option costs of mineral rights as tangible assets. Upon commencement of commercial production, the mineral rights will be amortized using the unit-of-production method over the life of the mineral rights. If we do not continue with exploration after the completion of a feasibility study, the mineral rights will be expensed at that time.

Exploration Costs

Mineral exploration costs are expensed as incurred.

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Mineral Property Acquisition Costs

Costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred either to develop new ore deposits, expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. We evaluate the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The periodic evaluation of carrying value of capitalized costs and any related property and equipment costs are based upon expected future cash flows and/or estimated salvage value in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets.”

Reclamation and Remediation Costs (Asset Retirement Obligation)

We accrued costs associated with environmental remediation obligations in accordance with Statement of Financial Accounting Standards (SFAS) No. 143, “Accounting for Asset Retirement Obligations.” In accordance with SFAS No. 143, we record a liability for the present value of the estimated environmental remediation costs in the period in which the liability is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset. The liability will be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced.

We accrue costs associated with environmental remediation obligation when it is probable that such costs will be incurred and they are reasonably estimable. Estimates for reclamation and other closure costs are prepared in accordance with SFAS No. 5 “Accounting for Contingencies,” or Statement of Position 96-1 “Environmental Remediation Liabilities.” Costs of future expenditures for environmental remediation are not discounted to their present value unless subject to a contractually obligated fixed payment schedule. Such costs are based on management’s current estimate of amounts to be incurred when the remediation work is performed, within current laws and regulations.

Future reclamation and environmental-related expenditures are difficult to estimate, in many circumstances, due to the early stage nature of the exploration project, and uncertainties associated with defining the nature and extent of environmental disturbance and the application of laws and regulations by regulatory authorities and changes in reclamation or remediation technology. We periodically review accrued liabilities for such reclamation and remediation costs as evidence becomes available indicating that the liabilities have potentially changed. Changes in estimates are reflected in the statement of operations in the period an estimate is revised.

Accruals for reclamation and environmental matters totaled $275,338 at June 30, 2009 and December 31, 2008. We are in the exploration stage and are unable to determine the estimated timing of these expenditures relating to these accruals at this time. It is reasonably possible the ultimate cost of reclamation and remediation could change in the future, and that changes to these estimates could have a material effect on future operating results as new information becomes known. For additional information, see Note 11 of the financial statements included with this Quarterly Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

As of June 30, 2009, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the

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effectiveness of the design and operation of our disclosure controls and procedures. These controls and procedures are based on the definition of disclosure controls and procedures in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934.

Based on that evaluation as of June 30, 2009, our management, including the CEO and CFO concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Management, including our CEO and CFO, have concluded that our disclosure controls and procedures provide reasonable assurance that the controls and procedures will meet their desired control objectives. In designing and evaluating our control system, management recognized that any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control system must reflect the fact that there are resource constraints, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any that may affect our operations have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

During the second quarter of 2009, there were no changes in the Company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operations.

Although we have begun operation of a pilot production module for the Columbus Project, there is no assurance that this project is commercially feasible.

We have begun pilot production operations on the Columbus Project. This pilot production module is part of our pre-feasibility study for the Columbus Project, and is designed to evaluate the commercial viability of the Columbus Project. There is no assurance that the results of our pre-feasibility program will result in a decision to enter into commercial production.

Additional exploration work is required before proved or probable reserves can be established.

We intend to report the results of our exploration activities promptly after those results have been received and analyzed. However, there is no assurance that the test results reported by us will be indicative of extraction rates throughout our mineral properties. We have not yet established proved or probable reserves on the Columbus Project or on our other mineral properties and additional exploration work will be required before proved or probable reserves can be established.

We will likely require additional financing to complete our exploration and development programs for our mineral projects.

We expect to spend approximately $3,179,904 on the exploration and development of our Columbus and Red Mountain Projects and the general costs of operating and maintaining our business and mineral properties during the third and fourth quarter of 2009. As of June 30, 2009, we had cash on hand of $722,527. We will need to obtain additional financing in order to complete our proposed exploration and development programs for 2009. Accordingly, our Board of Directors approved a U.S. Offering of up to 10,000,000 units at a price of $0.45 per unit and a concurrent Foreign Offering of up to 5,500,000 units at a price of $0.45 per Unit for gross proceeds of $6,975,000. However, there is no assurance that the U.S. Offering and Foreign Offering or any part of them will be completed. Even if the full amounts of the U.S. Offering and the Foreign Offering are sold, we anticipate that we will require additional financing in order to complete our exploration and development plans for the Columbus Project and the Red Mountain Project. In addition, the actual costs of completing those programs could be greater than anticipated of completing those programs could be greater than anticipated.

Our ability to obtain future financing will be subject to a number of factors, including the variability of market prices for gold and silver, investor interest in our mineral projects, and the performance of equity markets in general. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. If we are not able to obtain financing when needed or in an amount sufficient to enable us to complete our programs, we may be required to scale back our exploration and development programs.

If we complete additional financings through the sale of our common stock, our existing stockholders will experience dilution.

The most likely source of future financing presently available to us is through the sale of shares of our common stock. The only other anticipated alternative for the financing of further exploration would be the offering by us

15

of an interest in our mineral properties to be earned by another party or parties carrying out further exploration thereof, which is not presently contemplated. In addition, if our management decides to exercise the right to acquire a 100% interest in the Red Mountain Project, we will be required to issue significantly more shares of our common stock. Issuing shares of our common stock, for financing purposes or otherwise, will dilute the interests of our existing stockholders.

In order to maintain the rights to our mineral properties, we will be required to make annual filings with federal and state regulatory agencies and/or be required to complete assessment work on those properties.

In order to maintain the rights to our mineral projects, we will be required to make annual filings with federal and state regulatory authorities. Currently the amount of these fees is nominal; however, these maintenance fees are subject to adjustment. In addition, we may be required by federal and/or state legislation or regulations to complete minimum annual amounts of mineral exploration work on our mineral properties. A failure by us to meet the annual maintenance requirements under federal and state laws could cause our mineral rights to lapse.

Because we are an exploration stage company, we face a high risk of business failure.

To date, our primary business activities have involved the acquisition of mineral claims and the exploration and development on these claims. We have not earned any revenues as of the date of this report. Potential investors should be aware of the difficulties normally encountered by exploration stage companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.

Because we anticipate that our operating expenses will increase prior to earning revenues, we may never achieve profitability.

Prior to exiting the exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the exploration of our mineral claims and the production of minerals thereon, if any, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we may not be able to ever generate any operating revenues or achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

Because of the speculative nature of exploration of mining properties, there is substantial risk that no commercially exploitable minerals will be found.

The search for valuable minerals as a business is extremely risky. Although we have been encouraged by the results of the exploration work conducted by us to date, further exploration work is required before proven or probable reserves can be established, and there are no assurances that we will be able to establish any proven or probable reserves. Exploration for minerals is a speculative venture, necessarily involving substantial risk. The expenditures to be made by us may not result in the discovery of commercial quantities of ore. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts.

Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages if and when conducting mineral exploration activities.

The search for valuable minerals involves numerous hazards. As a result, when conducting exploration activities we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material adverse effect on our financial position.

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Even if we establish proven or probable reserves on our mineral claims, we may not be able to successfully reach commercial production.

We anticipate using a low cost, high volume surface dredge operation to mine the Columbus Project. Our pre-feasibility program for the Columbus Project is designed to test and optimize our planned mining process for the Columbus Project. There is no assurance that this pre-feasibility program will result in a decision to enter into commercial production. In addition, expanding our production facilities to accommodate commercial operations is expected to require substantially more financial resources than what we currently have available to us.

There is a risk that we will not be able to obtain such financing if and when needed.

Even if we can successfully reach commercial production, any change to mining laws or regulations or levy of additional taxes in the future may make our planned production process nonviable economically.

Several bills have been introduced by the US federal government that would levy resource taxes on mineral exploration companies. Any levy of additional taxes would have an adverse effect on our business. In addition, laws and regulations governing the exploration of mineral properties and the mining process are subject to change. Changes to mining laws and regulations that would have the effect of increasing the cost of mineral exploration and mining activities would adversely impact our business.

We are subject to compliance with government regulations. The costs of complying with these regulations may change without notice, and may increase the anticipated cost of our exploration and development programs.

There are several government regulations that materially restrict the exploration of minerals. We will be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. While our planned exploration program budgets for regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from carrying out our exploration program.

In addition, if our applications for permits from the relevant regulatory bodies are denied, we may not be able to proceed with our exploration and development programs.

If we decide to pursue commercial production, we may be subject to an environmental review process that may delay or prohibit commercial production.

Our planned method for mining the Columbus Project is not expected to generate any significant long term environmental impact. However, we have not yet had a comprehensive environmental review conducted on our planned mining operations for the Columbus Project.

Compliance with an environmental review process may be costly and may delay commercial production. Furthermore, there is the possibility that we would not be able to proceed with commercial production upon completion of the environmental review process if government authorities do not approve our mine or if the costs of compliance with government regulation adversely affected the commercial viability of the proposed mine.

The market for our common stock is limited and investors may have difficulty selling their stock.

Our shares are currently traded on the over the counter market, with quotations entered for our common stock on the OTC Bulletin Board under the symbol “IRLD.” However, the volume of trading in our common stock is currently limited. As a result, holders of our common stock may have difficulty selling their shares.

Because our common stock is a penny stock, stockholders may be further limited in their ability to sell their shares.

Our shares constitute a penny stock under the Securities Exchange Act of 1934 and are expected to remain classified as a penny stock for the foreseeable future. Classification as a penny stock makes it more difficult for

17

a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his or her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares will be subject to Rules 15g-2 through 15g-9 of the Exchange Act. Rather than having to comply with these rules, some broker-dealers will refuse to attempt to sell a penny stock.

No Assurance That Forward Looking Assessments Will Be Realized.

Our ability to accomplish our objectives and whether or not we are financially successful is dependent upon numerous factors, each of which could have a material effect on the results obtained. Some of these factors are in the discretion and control of management and others are beyond management’s control. The assumptions and hypothesis used in preparing any forward-looking assessments contained herein are considered reasonable by management. There can be no assurance, however, that any projections or assessments contained herein or otherwise made by management will be realized or achieved at any level.

FOR ALL OF THE AFORESAID REASONS AND OTHERS SET-FORTH AND NOT SET-FORTH HEREIN, AN INVESTMENT IN OUR SECURITIES INVOLVES A CERTAIN DEGREE OF RISK. ANY PERSON CONSIDERING TO INVEST IN OUR SECURITIES SHOULD BE AWARE OF THESE AND OTHER FACTORS SET-FORTH IN THIS REPORT AND IN THE OTHER REPORTS AND DOCUMENTS THAT WE FILE FROM TIME TO TIME WITH THE SEC AND SHOULD CONSULT WITH HIS/HER LEGAL, TAX AND FINANCIAL ADVISORS PRIOR TO MAKING AN INVESTMENT IN OUR SECURITIES. AN INVESTMENT IN OUR SECURITIES SHOULD ONLY BE ACQUIRED BY PERSONS WHO CAN AFFORD TO LOSE THEIR TOTAL INVESTMENT.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

The following exhibits are either provided with this Quarterly Report or are incorporated herein by reference:

Exhibit
Number	Description of Exhibit
3.1	Articles of Incorporation.(1)
3.2	Certificate of Amendment to Articles - Name Change from Merritt Ventures Corp. to Ireland Inc.(2)
3.3	Certificate of Change – 4-for-1 Stock Split.(3)
3.4	Bylaws.(1)
10.1	2007 Stock Incentive Plan.(4)
10.2	Assignment Agreement dated for reference as of March 29, 2007, among Nanominerals Corp., the Company and Lorrie Archibald.(4)

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Exhibit
Number	Description of Exhibit
10.3	Letter Agreement dated July 22, 2006 among Columbus Brine Inc., Columbus S.M. LLC and Nanominerals Corp., assigned to the Company by Nanominerals Corp.(11)
10.4	Letter Agreement dated March 15, 2007 between Red Mountain Mining and Nanominerals Corp., assigned to the Company by Nanominerals Corp.(11)
10.5	Agency Agreement dated effective as of June 19, 2007 between the Company and S & P Investors, Inc.(5)
10.6	Amendment Agreement to Assignment Agreement among the Company, Nanominerals Corp. and Lorrie Archibald, dated for reference as of August 8, 2007.(6)
10.7	Consulting Agreement between the Company and RJ Falkner & Company, Inc., dated for reference as of November 5, 2007.(7)
10.8	Consultant Non-Qualified Stock Option Agreement between the Company and R. Jerry Falkner, dated effective as of November 5, 2007.(7)
10.9	Agreement and Plan of Merger dated December 14, 2007 among the Company, Columbus Brine Inc., John T. Arkoosh, William Maghan and Lawrence E. Chizmar, Jr.(8)
10.10	Amendment Agreement to Agreement and Plan of Merger entered into on January 31, 2008 among the Company, CBI Acquisition, Inc., Columbus Brine Inc., John T. Arkoosh, William Maghan and Lawrence E. Chizmar, Jr.(9)
10.11	Mining Lease Agreement dated November 30, 2007 between DDB Syndicate and Columbus S.M., LLC.(12)
14.1	Code of Ethics.(10)
21.1	List of Subsidiaries.(13)
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	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.
32.2	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.
99.1	Diagram of Columbus Project Pilot Production Process.(13)

(1)	Filed as an exhibit to our Registration Statement on Form SB-2 originally filed on April 18, 2002, as amended.
(2)	Filed as an exhibit to our Annual Report on Form 10-KSB for the year ended December 31, 2005 filed on April 12, 2006.
(3)	Filed as an exhibit to our Current Report on Form 8-K filed on April 30, 2007.
(4)	Filed as an exhibit to our Annual Report on Form 10-KSB for the year ended December 31, 2006 filed on April 5, 2007.
(5)	Filed as an exhibit to our Current Report on Form 8-K filed on June 21, 2007.
(6)	Filed as an exhibit to our Current Report on Form 8-K filed on August 14, 2007.
(7)	Filed as an exhibit to our Current Report on Form 8-K filed on November 9, 2007.
(8)	Filed as an exhibit to our Current Report on Form 8-K filed on December 20, 2007.
(9)	Filed as an exhibit to our Current Report on Form 8-K filed on February 6, 2008.
(10)	Filed as an exhibit to our Annual Report on Form 10-KSB for the year ended December 31, 2003, filed on September 28, 2004.
(11)	Filed as a Schedule to Exhibit 10.2.
(12)	Filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2007 filed on March 31, 2008.
(13)	Filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2008 filed on March 26, 2009.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			IRELAND INC.
Date:	August 12, 2009	By:	/s/ Douglas D.G. Birnie
			DOUGLAS D.G. BIRNIE
			Chief Executive Officer, President and Secretary
			(Principal Executive Officer)
Date:	August 12, 2009	By:	/s/ Robert D. McDougal
			ROBERT D. MCDOUGAL
			Chief Financial Officer and Treasurer
			(Principal Financial Officer)