Royal Mines and Minerals (RYMM) 10-Q 2011 Q1 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 endedJuly 31, 2010

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

For the transition period from ________ to ________

COMMISSION FILE NUMBER000-52391

ROYAL MINES AND MINERALS CORP.
(Exact name of registrant as specified in its charter)

NEVADA	20-4178322
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Suite 112, 2580 Anthem Village Dr.
Henderson, NV	89052
(Address of principal executive offices)	(Zip code)

(702) 588-5973
(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.
Yes [X]    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. 229.405 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[   ]    No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:As of September 3, 2010, the Registrant had 111,785,352 shares of common stockoutstanding.

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 three months ended July 31, 2010 are not necessarily indicative of the results that can be expected for the year ending April 30, 2011.

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

2

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
BALANCE SHEET
(Unaudited)

		As of			As of
		July 31, 2010			April 30, 2010
ASSETS
Current assets
Cash and cash equivalents	$	26,665		$	37,559
Loan receivable		480,000			400,000
Total current assets		506,665			437,559
Property and equipment, net		203,536			218,601
Intellectual property, net		140,000			150,000
Mineral properties		35,800			35,800
Other assets		5,500			5,500
Total non-current assets		384,836			409,901
Total assets	$	891,501		$	847,460
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	52,026		$	16,937
Accounts payable - related party		105,000			87,000
NVRM payable		90,000			90,000
Loans payable - related party		498,855			245,277
Accrued interest - related party		131,591			121,123
Total current liabilities		877,472			560,337
Long-term debt		-			-
Total liabilities		877,472			560,337
Commitments and contingencies
Stockholders' equity (deficit)
Common stock, $0.001 par value; 300,000,000 shares        authorized, 111,785,352 and 111,785,352 shares,        respectively, issued and outstanding		111,785			111,785
Preferred stock, $0.001 par value; 100,000,000 shares        authorized, zero shares issued and outstanding		-			-
Additional paid-in capital		9,770,178			9,770,178
Accumulated deficit during exploration stage		(9,867,934	)		(9,594,840	)
Total stockholders' equity (deficit)		14,029			287,123
Total liabilities and stockholders' equity (deficit)	$	891,501		$	847,460

See Accompanying Notes to Financial Statements
F-1

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)

								For the Period
								July 13, 2005
								(Date of Inception)
		For the Three Months Ended						Through
		July 31, 2010			July 31, 2009			July 31, 2010
Revenue	$	14,285		$	41,811		$	83,284
Operating expenses
Mineral exploration and evaluation expenses		124,356			263,484			2,387,098
Mineral exploration and evaluation expenses - related party		30,000			-			605,500
General and administrative		46,490			37,033			2,519,794
General and administrative - related party		51,000			111,000			3,954,282
Depreciation and amortization		25,065			46,515			447,467
Total operating expenses		276,911			458,032			9,914,141
Loss from operations		(262,626	)		(416,221	)		(9,830,857	)
Other income (expense):
Other income		-			-			99,115
Interest income		-			-			4,551
Interest expense		(10,468	)		(13,777	)		(140,743	)
Total other income (expense)		(10,468	)		(13,777	)		(37,077	)
Loss from operations before provision for income taxes		(273,094	)		(429,998	)		(9,867,934	)
Income tax benefit		-			-			-
Net loss	$	(273,094	)	$	(429,998	)	$	(9,867,934	)
Loss per common share - basic and diluted:
Net loss	$	(0.00	)	$	(0.01	)
Weighted average common shares outstanding -    Basic and diluted		111,785,352			73,087,461

See Accompanying Notes to Financial Statements
F-2

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)

								Accumulated
								Deficit During			Total
	Common Stock				Additional			Exploration			Stockholders'
	Shares		Amount		Paid-in Capital			Stage			Equity (Deficit)
Balance, July 13, 2005	-	$	-	$	-		$	-		$	-
Issuance of common stock for cash, $0.001 per share	1,000		1		-			-			1
Net loss	-		-		-			(174,500	)		(174,500	)
Balance, April 30, 2006	1,000		1		-			(174,500	)		(174,499	)
Issuance of common stock for cash, $0.001 per share	12,500,000		12,500		-			-			12,500
Issuance of common stock for cash, $0.01 per share	7,800,000		7,800		70,200			-			78,000
Issuance of common stock for mineral property options, $0.01 per share	1,050,000		1,050		9,450			-			10,500
Issuance of common stock for cash, $0.10 per share	1,250,000		1,250		123,750			-			125,000
Issuance of common stock for cash, Reg. S - Private Placement, $0.10 per share	1,800,000		1,800		178,200			-			180,000
Issuance of common stock in acquisition of intellectual property and equipment, $0.10 per share	2,000,000		2,000		198,000			-			200,000
Net loss	-		-		-			(517,768	)		(517,768	)
Balance, April 30, 2007	26,401,000	$	26,401	$	579,600		$	(692,268	)	$	(86,267	)
Issuance of common stock for cash and subscriptions received, Reg. S - Private Placement, $0.25 per share	2,482,326		2,482		618,100			-			620,582
Issuance of common stock for cash, Reg. D - Private Placement, $0.25 per share	3,300,000		3,300		821,700			-			825,000
Issuance of common stock in reverse acquisition of Centrus Ventures Inc.	13,968,926		13,969		(77,164	)		-			(63,195	)
Issuance of stock options for 4,340,000 shares of common stock to three officers and five consultants.	-		-		3,583,702			-			3,583,702
Net loss	-		-		-			(5,256,444	)		(5,256,444	)
Balance, April 30, 2008	46,152,252	$	46,152	$	5,525,938		$	(5,948,712	)	$	(376,622	)
Issuace of common stock for cash, Reg. S - Private Placement, $0.50 per share; with attached warrants exercisable at $0.75 per share	200,000		200		99,800			-			100,000
Issuance of common stock in satisfaction of debt, $0.30 per share, with attached warrants exercisable at $0.50 per share.	450,760		451		134,777			-			135,228
Issuance of stock options for 5,000,000 shares of common stock to two officers and nine consultants.	-		-		342,550			-			342,550
Issuace of common stock for cash, $0.05 per share, with attached warrants exercisable at $0.10 per share.	9,140,000		9,140		447,860			-			457,000
Issuance of common stock in satisfaction of loans made to the Company, $0.05 per share, with attached warrants exercisable at $0.10 per share.	12,400,000		12,400		607,600			-			620,000

See Accompanying Notes to Financial Statements
F-3

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)

							Accumulated			Total
					Additional		Deficit During			Stockholders'
	Common Stock				Paid-in		Exploration			Equity
	Shares		Amount		Capital		Stage			(Deficit)
Issuance of common stock in satisfaction of debt, $0.05 per share, with attached warrants exercisable at $0.10 per share.	1,336,840		1,337		65,505		-			66,842
Issuance of common stock to one officer as compensation pursuant to the management consulting agreement.	3,000,000		3,000		117,000		-			120,000
Net loss	-		-		-		(1,717,000	)		(1,717,000	)
Balance, April 30, 2009	72,679,852	$	72,680	$	7,341,030	$	(7,665,712	)	$	(252,002	)
Issuance of common stock in satisfaction of loans made to the Company, $0,05 per share, with attached warrants exercisable at $0.10 per share.	2,000,000		2,000		98,000		-			100,000
Issuance of common stock in satisfaction of debt, $0.05 per share, with attached warrants exercisable at $0.10 per share.	500,000		500		24,500		-			25,000
Issuance of common stock for warrants excercised, $0.10 per share, in satisfaction of debt for legal services.	295,000		295		29,205		-			29,500
Issuance of common stock for options excercised, $0.05 per share, in satisfaction of debt for legal services.	750,000		750		36,750		-			37,500
Issuance of common stock to investor relations services firm pursuant to terms of consulting agreement.	1,500,000		1,500		-		-			1,500
Issuance of common stock in satisfaction of loans to the Company, $0.10 per share, with attached warrants excercisable at $0.20 per share.	3,500,000		3,500		346,500		-			350,000
Issuance of stock options for 7,000,000 shares of common stock to two directors and nine consultants.	-		-		391,478		-			391,478
Issuance of common stock for options excercised, $0.05 per share, in satisfaction of debt for legal services.	900,000		900		44,100		-			45,000
Issuance of common stock in satisfaction of loans to the Company, $0.05 per share, with attached warrants exercisable at $0.10 per share.	19,400,000		19,400		950,600		-			970,000
Issuace of common stock for cash, $0.05 per share, with attached warrants exercisable at $0.10 per share.	8,280,000		8,280		405,720		-			414,000
Issuance of common stock in satisfaction of debt, $0.05 per share, with attached warrants exercisable at $0.10 per share.	1,775,500		1,775		87,000		-			88,775
Issuance of common stock for options excercised, $0.05 per share, in satisfaction of debt for legal services.	100,000		100		4,900		-			5,000
Issuance of common stock for warrants excercised, $0.10 per share, in satisfaction of debt for legal services.	105,000		105		10,395		-			10,500
Net loss	-		-		-		(1,929,128	)		(1,929,128	)
Balance, April 30, 2010	111,785,352	$	111,785	$	9,770,178	$	(9,594,840	)	$	287,123
Net loss	-		-		-		(273,094	)		(273,094	)
Balance, July 31, 2010	111,785,352	$	111,785	$	9,770,178	$	(9,867,934	)	$	14,029

See Accompanying Notes to Financial Statements
F-4

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)

								For the Period
								July 13, 2005
								(Date of Inception)
		For the Three Months Ended						Through
		July 31, 2010			July 31, 2009			July 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(273,094	)	$	(429,998	)	$	(9,867,934	)
Adjustments to reconcile loss from operating to net      cash used in operating activities:
Depreciation and amortization		25,065			46,515			447,467
Stock based expenses		-			-			1,095,447
Stock based expenses - related party		-			-			3,342,283
Changes in operating assets and liabilities:								-
Other current assets and liabilities		-			(8,933	)		(12,683	)
Other assets		-			-			(5,500	)
Loan receivable		(80,000	)		-			(480,000	)
Accounts payable and accrued interest		35,089			(64,325	)		544,890
Accounts payable and accrued interest- related party		28,468			46,148			278,481
Net cash used in operating activities		(264,472	)		(410,593	)		(4,657,549	)
CASH FLOW FROM INVESTING ACTIVITIES
Cash paid on mineral property claims		-			-			(25,300	)
Cash acquired on reverse merger		-			-			2,306
Purchase of fixed assets		-			(18,734	)		(591,003	)
Net cash used in investing activities		-			(18,734	)		(613,997	)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from stock issuance		-			-			2,813,581
Share subscriptions		-			-			-
Proceeds / (Payments) on long-term debt		-			-			-
Proceeds / (Payments) on borrowings - related party		253,578			487,580			2,484,630
Net cash provided by financing activities		253,578			487,580			5,298,211
NET CHANGE IN CASH		(10,894	)		58,253			26,665
CASH AT BEGINNING OF PERIOD		37,559			1,819			-
CASH AT END OF PERIOD	$	26,665		$	60,072		$	26,665
SUPPLEMENTAL INFORMATION
Interest Paid	$	-		$	1,093		$	3,833
Income Taxes Paid	$	-		$	-		$	-
SUPPLEMENTARY DISCLOSURE FOR NON-CASH
INVESTING AND FINANCING ACTIVITIES
Acquisition of intellectual property for stock	$	-		$	-		$	200,000
Acquisition of mineral property for stock	$	-		$	-		$	10,500
Stock issued in reverse acquisition of Centrus Ventures Inc.	$	-		$	-		$	(63,195	)
Stock issued in satisfaction of debt	$	-		$	25,000		$	25,000
Stock issued in satisfaction of loans made to the Company	$	-		$	100,000		$	100,000
Stock issued as compensation	$	-		$	-		$	120,000

See Accompanying Notes to Financial Statements
F-5

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2010

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES
	Basis of Presentation– These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. The Company’s fiscal year-end is April 30.
	Description of Business– The Company is considered an exploration stage company. The Company's primary objectives are to 1) commercially extract and refine precious and base metals from its own and others mining assets, 2) joint venture, acquire and develop projects in North America, and 3) generate ongoing revenues from the licensing of its proprietary, environmentally-friendly lixiviation process. The Company has not yet realized significant revenues from its primary objectives.
	History– The Company was incorporated on December 14, 2005 under the laws of the State of Nevada. On June 13, 2007, the Company incorporated a wholly-owned subsidiary, Royal Mines Acquisition Corp., in the state of Nevada.
	On October 5, 2007, Centrus Ventures Inc. (Centrus) completed the acquisition of Royal Mines Inc. (“Royal Mines”). The acquisition of Royal Mines was completed by way of a “triangular merger” pursuant to the provisions of the Agreement and Plan of Merger dated September 24, 2007 (the “First Merger Agreement”) among Centrus, Royal Mines Acquisition Corp. (“Centrus Sub”), a wholly owned subsidiary of Centrus, Royal Mines and Kevin B. Epp, the former sole executive officer and director of Centrus. On October 5, 2007, under the terms of the First Merger Agreement, Royal Mines was merged with and into Centrus Sub, with Centrus Sub continuing as the surviving corporation (the “First Merger”).
	On October 6, 2007, a second merger was completed pursuant to an Agreement and Plan of Merger dated October 6, 2007 (the “Second Merger Agreement”) between Centrus and its wholly owned subsidiary, Centrus Sub, whereby Centrus Sub was merged with and into Centrus, with Centrus continuing as the surviving corporation (the “Second Merger”). As part of the Second Merger, Centrus changed its name from “Centrus Ventures Inc.” to “Royal Mines And Minerals Corp.”(“the Company”). Other than the name change, no amendments were made to the Articles of Incorporation.
	Under the terms and conditions of the First Merger Agreement, each share of Royal Mines’ common stock issued and outstanding immediately prior to the completion of the First Merger was converted into one share of Centrus’ common stock. As a result, a total of 32,183,326 shares of Centrus common stock were issued to former stockholders of Royal Mines. In addition, Mr. Epp surrendered 23,500,000 shares of Centrus common stock for cancellation in consideration of payment by Centrus of $0.001 per share for an aggregate consideration of $23,500. As a result, upon completion of the First Merger, the former stockholders of Royal Mines owned approximately 69.7% of the issued and outstanding common stock.
	As such, Royal Mines is deemed to be the acquiring enterprise for financial reporting purposes. All acquired assets and liabilities of Centrus were recorded at fair value on the date of the acquisition, as required by the purchase method of accounting, and the tangible net liabilities were debited against equity of the Company. There are no continuing operations of Centrus from the date of acquisition.
	Going Concern- As of July 31, 2010, the Company has incurred cumulative net losses of approximately $9,867,934 from operations and has negative working capital of $370,807. The Company is still in the exploration stage and has not fully commenced its mining and minerals processing operations, raising substantial doubt about its ability to continue as a going concern.
	The ability of the Company to continue as a going concern is dependent on the Company raising additional sources of capital and the successful execution of the Company’s objectives. The Company will seek additional

F-6

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2010

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
	sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
	Use of Estimates- The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
	Cash and Cash Equivalents- The Company considers all investments with an original maturity of three months or less to be a cash equivalent.
	Property and Equipment- Property and equipment are 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 10 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 fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.
	Mineral Property Rights– 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. Evaluation of the carrying value of capitalized costs and any related property and equipment costs would be based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15,Impairment or Disposal of Long-Lived Assets.
	Exploration Costs– Mineral exploration costs are expensed as incurred.
	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 ASC 360-10-35-17,Measurement of an Impairment Loss, if events or circumstances indicate that their carrying amount might not be recoverable. As of July 31, 2010 exploration progress is on target with the Company’s exploration and evaluation plan and no events or circumstances have happened to indicate the related carrying values of the properties may not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of ASC 930-360-35,Asset Impairment, and 360-10-15-3 through 15-5,Impairment or Disposal of Long-Lived Assets.

F-7

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2010

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
	Various factors could impact our ability to achieve forecasted production schedules. 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.
	Asset Retirement Obligation- The Company follows ASC 410,Asset Retirement and Environmental Obligations, which requires that an asset retirement obligation (“ARO”) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset. The cost of the tangible asset, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the asset. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. The fair value of the ARO is measured using expected future cash flow, discounted at the Company’s credit-adjusted risk-free interest rate. To date, no significant asset retirement obligation exists due to the early stage of exploration. Accordingly, no liability has been recorded.
	Fair Value of Financial Instruments- Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The Company’s financial instruments consist of mineral property purchase obligations. These obligations are classified within Level 2 of the fair value hierarchy as their fair value is determined using interest rates which approximate market rates. 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. Revenue from licensing our technology is recognized over the term of the license agreement. Costs and expenses are recognized during the period in which they are incurred.

Research and Development - All research and development expenditures are expensed as incurred.

Earnings (Loss) Per Share - The Company follows ASC 260,Earnings Per Share,and ASC 480,Distinguishing Liabilities from 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

F-8

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2010

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
	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. Common stock equivalents, which include stock options and warrants to purchase common stock, on July 31, 2010 that were not included in the computation of diluted EPS because the effect would be antidilutive were 68,688,100.
	Income Taxes- The Company accounts for its income taxes in accordance with ASC 740,Income Taxes, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
	For acquired properties that do not constitute a business as defined in ASC 805-10-55-4,Definition 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 ASC 740-10-25-51,Acquired Temporary Differences in Certain Purchase Transactions that are Not Accounted for as Business Combinations, 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.
	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.
	Stock-Based Compensation– The Company accounts for share based payments in accordance with ASC 718,Compensation - Stock Compensation, which 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. In accordance with ASC 718-10-30-9,Measurement Objective – Fair Value at Grant Date, the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. 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. The compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.
	Recent Accounting Standards– From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s financial statements upon adoption.
	Effective July 1, 2009, the FASB Accounting Standards Codification (ASC) (Topic 105, “Generally Accepted Accounting Principles”), became the single source for authoritative nongovernmental U.S. generally accepted accounting principles. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The ASC does not change US GAAP but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. Effective September 15, 2009, all public filings of the Company will reference the ASC as the sole source of authoritative literature.

F-9

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2010

1.	DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES(continued)
	In January 2010, the FASB issued ASU 2010-06,Improving Disclosures About Fair Value Measurements, which requires reporting entities to make new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. ASU 2010-6 is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010. The Company does not have any assets or liabilities classified as Level 3. The Company has adopted the Level 1 and Level 2 amendments accordingly. As the update only pertained to disclosures, it had no impact on the Company’s financial position, results of operations, or cash flows upon adoption.
	In February 2010, the FASB issued ASU 2010-09,Subsequent Events (Topic 855), Amendment to Certain Recognition and Disclosure Requirements, to remove the requirement for SEC filers to disclose the date through which an entity has evaluated subsequent events. This change removes potential conflicts with current SEC guidance and clarifies the intended scope of the reissuance disclosure provisions. The update was effective upon its date of issuance, February 24, 2010, and the Company has adopted the amendments accordingly. As the update only pertained to disclosures, it had no impact on the Company’s financial position, results of operations, or cash flows upon adoption.
2.	LOAN RECEIVABLE
	Between October 8, 2009 and July 31, 2010, the Company advanced $480,000 to Golden Anvil, in accordance with the toll processing agreement dated December 3, 2009, bearing no interest and secured by Golden Anvil’s interest in shipments of concentrate, their land and their facilities.
3.	PROPERTY AND EQUIPMENT
	Property and equipment consists of the following:

		As of		As of
		July 31, 2010		April 30, 2010
Process, lab and office equipment	$	411,734	$	411,734
Site Equipment		179,269		179,269
Less: accumulated depreciation		387,467		372,402
	$	203,536	$	218,601

4.

INTELLECTUAL PROPERTY

On April 2, 2007 the Company entered into a Technology and Asset Purchase Agreement (“NVRM Agreement”) with Robert H. Gunnison and New Verde River Mining Co. Inc. (“NVRM”), whereby the Company acquired equipment and the technology for lixiviation of metals from ore utilizing thiourea stabilization (“Intellectual Property”). The equipment and intellectual property were acquired with the issuance of 2,000,000 shares of the Company’s $0.10 per share common stock and a future cash payment of $300,000, for a purchase price of $500,000. The purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values at the date of acquisition. The intellectual property was valued at $200,000 and will be amortized quarterly on a straight-line basis over a 5 year period starting with the recognition of revenue from the licensing of the Company’s technology. The Company recorded $10,000 of amortization expense for the three months ended July 31, 2010 and 2009.

F-10

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2010

5.	MINERAL PROPERTIES
	As of July 31, 2010 and April 30 2010, mineral properties totaling $35,800, consist of twenty-one (21) mining claims located south of Searchlight, Nevada in the Piute Valley. On January 28, 2007, the Company entered into mineral option agreements to acquire an 87.5% interest in twenty-four (24) mining claims with the issuance of 1,050,000 shares of the Company’s common stock on the date of signing of the option agreement, with the provision that the Company issue an additional 420,000 and 210,000 shares on the fifth anniversary and tenth anniversary, respectively, of the signing of the option agreement if the Company wishes to acquire legal interest to the mining claims. The transaction was valued at an agreed upon price of $10,500. Annual renewal fees are capitalized. Each mining claim is comprised of 160 acres. In August 2008 the Company did not pay the renewal fee on four (4) of the mining claims after confirming title to the claims were void due to not being properly located and being subject to prior segregation.
	On March 16, 2007 the Company entered into a lease agreement of property with one (1) mining claim, for a term of twenty years, for exploration and potential mining production on 20 acres in Searchlight, Nevada. The Company paid a one-time signing bonus of $5,000 upon execution of the agreement and pays a $4,000 rental fee each August. The Company will also pay an annual royalty equal to five (5) percent of the net profit from any mining production on the property.
	Mining claims are capitalized as tangible assets in accordance with Emerging Issues Task Force abstract 04-02. Upon completion of a bankable feasibility study, the claims will be amortized using the unit-of-production method over the life of the claim. If the Company does not continue with exploration after the completion of the feasibility study, the claims will be expensed at that time.
6.	ACCOUNTS PAYABLE - RELATED PARTY
	As of July 31, 2010 and April 30, 2010, accounts payable – related party consisted of $105,000 and $87,000, respectively, due to directors and officers of the Company for consulting fees.
7.	NVRM PAYABLE
	As of July 31, 2010 and April 30, 2010, NVRM payable consists of $90,000, payable to New Verde River Mining and Robert H. Gunnison pursuant to the NVRM Agreement noted above (see Note 4). Mr. Gunnison signed an extension agreement extending the payment deadline to June 30, 2011. The payable bears 6% interest annually.
8.	LOANS PAYABLE AND ACCRUED INTEREST – RELATED PARTY
	As of July 31, 2010 and April 30, 2010, loans payable – related party of $498,855 and $245,277, respectively, consists of borrowings, directly and indirectly, from one director and one affiliate (5% or greater beneficial owner) of the Company. The balances bear 10% interest, are unsecured and are due on demand. As of July 31, 2010 and April 30, 2010, accrued interest – related party was $131,591 and $121,123, respectively.
9.	COMMITMENTS AND CONTINGENCIES
	Lease obligations– The Company has operating leases for its corporate office and plant facility. Future minimum lease payments under the operating leases as of July 31, 2010 are as follows:

Fiscal year ending April 30, 2011	$	51,795
Fiscal year ending April 30, 2012	$	56,307
Fiscal year ending April 30, 2013	$	64,740
Thereafter	$	21,972

F-11

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2010

9.	COMMITMENTS AND CONTINGENCIES(continued)
	Legal proceedings– The Company is not a party to any legal proceeding and, to our knowledge, no other legal proceedings are pending, threatened or contemplated.
10.	STOCKHOLDERS’ EQUITY
	Common and Preferred Stock:
	As of July 31, 2010 and April 30, 2010, there were 111,785,352 shares of common stock outstanding and zero shares of preferred stock outstanding. Outstanding shares of common stock consist of the following:
	a)	On March 16, 2006, the Company issued 1,000 shares of common stock to one individual for cash at $0.001 per share.
	b)	On November 30, 2006, the Company issued 12,500,000 shares of common stock to three individuals for cash at $0.001 per share.
	c)	On December 29, 2006, the Company issued 7,800,000 shares of common stock for cash at $0.01 per share.
	d)	On January 10, 2007, the Company issued 1,050,000 shares of common stock for the purchase of 7/8ths interest in 24 minerals claims at $0.01 per share.
	e)	On February 28, 2007, the Company issued 1,250,000 shares of common stock to three individuals for cash at $0.10 per share.
	f)	On March 31, 2007, the Company issued 1,800,000 shares of common stock to four individuals for cash at $0.10 per share.
	g)	On April 2, 2007, the Company issued 2,000,000 shares of common stock to one individual, in connection with the NVRM Agreement, for the purchase of intellectual property and equipment.
	h)	On May 31, 2007, the Company closed a private placement offering for proceeds of $620,582, of which $505,114 was received and recorded as share subscriptions received as of April 30, 2007. The Company issued 2,482,326 shares of common stock, at $0.25 per share, to non-U.S. investors pursuant to Regulation S of the Securities Act of 1933.
	i)	On June 4, 2007, the Company closed a private placement offering for proceeds of $825,000 and issued 3,300,000 shares of common stock, at $0.25 per share, to accredited U.S. investors pursuant to Regulation D of the Securities Act of 1933.
	j)	On October 5, 2007, the Company issued 13,968,926 shares of common stock in the reverse acquisition of Centrus Ventures Inc.
	k)	On September 3, 2008, the Company completed a private placement of 200,000 units at a price of $0.50 per unit for total proceeds of $100,000. Each unit is comprised of one share of common stock and one-half of one share purchase warrant. Each whole share purchase warrant will entitle the holder to purchase one additional share of common stock at a price of $0.75 per share for a period ending September 2, 2010.
	l)	On November 15, 2008, under the terms of a settlement agreement, the Company issued 450,760 units at a price of $0.30 per unit, with each unit consisting of one common share and one share purchase warrant of the Company. Each warrant is exercisable to purchase an additional common share at a price of $0.50 per

F-12

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2010

10. STOCKHOLDERS’ EQUITY(continued)

	share for a period of two (2) years from the date of issuance. The units were issued pursuant to the provisions of Regulation S promulgated under the Securities Act of 1933.
m)	On February 24, 2009, the Company issued 9,140,000 units for $457,000 in cash, 12,400,000 units for $620,000 ($400,000 from one director) in loans made to the Company and 1,336,840 units to retire $65,505 in corporate indebtedness under three separate private placement offerings. Each unit was comprised of one share of the Company’s common stock and one share purchase warrant, with each warrant entitling the holder to purchase an additional share of common stock for a period of two years at an exercise price of $0.10 per share. The Company also entered into a management consulting agreement with an officer of the Company, and pursuant to the terms of the agreement issued an aggregate of 3,000,000 restricted shares of its common stock.
n)	On July 16, 2009, the Company issued 2,000,000 units for $100,000 in loans made to the Company and 500,000 units to retire $25,000 in corporate indebtedness for consulting services under two separate private placement offerings. Each unit was comprised of one share of the Company’s common stock and one share purchase warrant, with each warrant entitling the holder to purchase an additional share of common stock for a period of two years at an exercise price of $0.10 per share.
o)	On August 4, 2009, the Company issued 295,000 shares of common stock for warrants exercised at $0.10 per share and 750,000 shares of common stock for options exercised at $0.05 per share in satisfaction of debt for legal services.
p)	On August 14, 2009, the Company issued 1,500,000 shares of common stock to an investor relations services firm pursuant to the terms of the consulting agreement.
q)	On August 18, 2009, the Company issued 3,500,000 units, for $350,000 in loans made to the Company by one director, at a price of $0.10 per unit, with each unit consisting of one share of common stock and one share purchase warrant, with each warrant entitling the holder to purchase one additional share of common stock at a price of $0.20 per share for a period of two years from the date of issue.
r)	On December 15, 2009, the Company issued 900,000 shares of common stock for options exercised at $0.05 per share in satisfaction of debt for legal services.
s)	On January 31, 2010, the Company issued 19,400,000 units for $970,000 ($900,000 from one director) in loans made to the Company, 8,280,000 units for $414,000 in cash and 1,775,500 units to retire $88,775 in corporate indebtedness, at a price of $0.05 per unit, with each unit consisting of one share of common stock and one share purchase warrant, with each warrant entitling the holder to purchase one additional share of common stock at a price of $0.10 per share for a period of two years from the date of issue.
t)	On February 26, 2010, the Company issued 105,000 shares of common stock for warrants exercised at $0.10 per share and 100,000 shares of common stock for options exercised at $0.05 per share in satisfaction of debt for legal services.

11.

STOCK INCENTIVE PLANS

2010 Stock Incentive Plan- Effective December 7, 2009, the Company adopted the 2010 Stock Incentive Plan (the “2010 Plan"). The 2010 Plan allows the Company to grant certain options to its directors, officers, employees and eligible consultants. A total of 10,000,000 shares of the Company’s common stock are available for issuance under the 2010 Plan. However, the Company may increase the maximum aggregate number of shares of the Company’s common stock that may be optioned and sold under the 2010 Plan provided the

F-13

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2010

11.	STOCK INCENTIVE PLANS(continued)
	maximum aggregate number of shares of common stock that may be optioned and sold under the 2010 Plan shall at no time be greater than 12.5% of the total number of shares of common stock outstanding.
	On December 8, 2009, the Company granted non-qualified stock options under the 2010 Plan for the purchase of 7,000,000 shares of common stock at $0.05 per share. The nonqualified stock options were granted to various officers, directors and consultants, are fully vested and expire December 7, 2011. As of July 31, 2010, 1,000,000 options under the 2010 Plan have been exercised.
	From the date of inception through July 31, 2010, compensation expense related to the granting of stock options under the 2010 Plan was $391,478 and is included in general and administrative expense. The Company calculated the value of the options using the Black-Scholes option pricing model using the following assumptions: a risk-free rate of 1.00%, volatility of 252%, estimated life of 2 years and closing stock price of $0.06 per share on the date of grant.
	2009 Stock Incentive Plan- Effective January 12, 2009, the Company adopted the 2009 Stock Incentive Plan (the “2009 Plan"). The 2009 Plan allows the Company to grant certain options to its directors, officers, employees and eligible consultants. A total of 5,000,000 shares of the Company’s common stock are available for issuance under the 2009 Plan.
	On January 16, 2009, the Company granted non-qualified stock options under the 2009 Plan for the purchase of 5,000,000 shares of common stock at $0.05 per share. The nonqualified stock options were granted to various officers, directors and consultants, are fully vested and expire January 15, 2011. As of July 31, 2010, 750,000 options under the 2009 Plan have been exercised.
	From the date of inception through July 31, 2010, compensation expense related to the granting of stock options under the 2009 Plan was $342,550 and is included in general and administrative expense. The Company calculated the value of the options using the Black-Scholes option pricing model using the following assumptions: a risk-free rate of 1.00%, volatility of 316%, estimated life of 2 years and closing stock price of $0.07 per share on the date of grant.
	Effective December 7, 2009, the Company suspended the 2009 Plan. No new options may be granted under the 2009 Plan and the 2009 Plan will be terminated once all outstanding options granted under the 2009 Plan have been exercised, expired or otherwise terminated.
	2008 Stock Incentive Plan- Effective February 1, 2008, the Company adopted the 2008 Stock Incentive Plan (the “2008 Plan"). The 2008 Plan allowed the Company to grant certain options to its directors, officers, employees and eligible consultants. A total of 4,600,000 shares of the Company’s common stock were available for issuance under the 2008 Plan.
	On February 1, 2008, the Company granted non-qualified stock options under the 2008 Plan for the purchase of 4,340,000 shares of common stock at $0.74 per share. The nonqualified stock options were granted to various officers, directors and consultants, were fully vested and expired January 31, 2010. All 4,340,000 stock options expired without exercise.
	Compensation expense related to the granting of stock options under the 2008 Plan was $3,583,702 and is included in general and administrative expense. The Company calculated the value of the options using the Black-Scholes option pricing model using the following assumptions: a risk-free rate of 4.50%, volatility of 107%, estimated life of 2 years and closing stock price of $1.22 per share on the date of grant.

F-14

ROYAL MINES AND MINERALS CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JULY 31, 2010

12.	RELATED PARTY TRANSACTIONS
	For the three months ended July 31, 2010 and 2009, the Company incurred $81,000 and $111,000, respectively, in consulting fees expense from companies with a common director or officer.
13.	SUBSEQUENT EVENTS
	Between August 1, 2010 and August 25, 2010, the Company loaned Golden Anvil an additional $120,000 to permit Golden Anvil to complete its refurbishment and relocation of its mineral processing plant in Nayarit, Mexico. On August 25, 2010, the Company entered into a loan agreement with Golden Anvil, covering the total $600,000 advanced by the Company to Golden Anvil. The loan bears no interest and matures on December 31, 2011. Golden Anvil has agreed to grant security over its equipment and mineral claims to secure the indebtedness under the loan agreement. The loan agreement replaces the loan provisions of the toll processing agreement dated December 3, 2009 (see Note 2).

F-15

ITEM 2. MANAGEMENT'S DISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTS OF OPERATIONS.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report 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. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information. We advise you to carefully review the reports and documents, particularly our Annual Reports, Quarterly Reports and Current Reports, that we file from time to time with the United States Securities and Exchange Commission (the “SEC”).

OVERVIEW

We were incorporated on December 14, 2005 under the laws of the State of Nevada. We are an exploration stage company and our primary objectives are to: (i) commercially extract and refine precious metals from mined ore at our Phoenix Facility; (ii) joint venture, acquire and develop mining projects in North America; and (iii) generate ongoing revenues from the licensing of our proprietary, environmentally-friendly lixiviation.

We are focusing our business on toll processing mined ore for third party mining companies at our processing and refining plant located in Phoenix, Arizona (the “Phoenix Facility”). Our Phoenix Facility is a compact, modular, cost efficient, turn-key operation, with a capacity to process up to 10 tons per day. In processing ore at our Phoenix Facility, we utilize our environmentally friendly proprietary technology for the lixiviation of minerals using thiourea stabilization (the “Lixiviation Technology”). The use of thiourea stabilization is more environmentally friendly than cyanide or sulfuric acid, which have traditionally been used for this purpose. See “Phoenix Facility and Lixiviation Technology” below.

We entered into a Toll Processing Agreement with Golden Anvil, SA de CV (“Golden Anvil”) to process concentrates at our Phoenix Facility. We have also entered into a Letter of Intent with Golden Anvil with respect to a proposed 50/50 joint venture. See “Golden Anvil” below.

We also plan to engage in the exploration and development of our Piute Valley Property located in Clark County, Nevada. Our Piute Valley Property is a potential gold project that consists of a mineral lease covering 20.61 acres of patented claims (the “Smith Lease”) and an option to acquire a 7/8^th interest in 20 unpatented claims (the “BLM Claims”) located near the Smith Lease. Each BLM Claim is comprised of 160 acres. See “The Piute Valley Property” below.

We are actively seeking to enter into agreements to license our Lixiviation Technology to third parties and we are also seeking to enter into joint ventures with third parties to explore and develop additional mining projects. There are no assurances that we will be able to license our Lixiviation Technology or enter into joint ventures for the exploration and development of additional mining projects.

RECENT CORPORATE DEVELOPMENTS

The following corporate developments occurred since our fiscal year ended April 30, 2010:

Golden Anvil Loan Agreement

On August 25, 2010, we entered into a loan agreement (the “Loan Agreement”) with Golden Anvil. The Loan Agreement covers the $600,000 we advanced to Golden Anvil to permit Golden Anvil to refurbish and relocate its mineral processing plant in Nayarit, Mexico which concentrates ores from Golden Anvil’s mineral property. Concentrates from Golden Anvil are processed at our facility in Phoenix, Arizona. The loan bears no interest and matures on December 31, 2011.

3

Golden Anvil has agreed to grant security over its equipment and mineral claims to secure the indebtedness under the Loan Agreement. We are in the final stages of negotiating a memorandum of understanding with Golden Anvil to joint venture the concentrating plant and mineral claims. In the event that a joint venture is successfully concluded, which is not assured, our loan to Golden Anvil may be converted into a contribution to the joint venture.

2011 Stock Incentive Plan

Effective September 7, 2010, we adopted the 2011 Stock Incentive Plan (the “2011 Plan"). The 2011 Plan allows us to grant certain options to our directors, officers, employees and eligible consultants. A total of 16,700,000 shares of our common stock are available for issuance under the 2011 Plan. We may increase the maximum aggregate number of shares that may be optioned and sold under the 2011 Plan provided the maximum aggregate number of shares that may be optioned and sold under the 2011 Plan shall at no time be greater than 15% of the total number of shares of common stock outstanding.

Stock Option Grants

On September 7, 2010, we granted non-qualified stock options to acquire an aggregate of 6,000,000 shares of our common stock under the 2011 Stock Incentive Plan to various officers, directors and consultants. Each of the options was granted with an exercise price of $0.02 per share and expires on September 6, 2014. Of the 6,000,000 options granted, we granted 1,200,000 options to Ian Matheson, our Chief Executive Officer and director, 1,200,000 options to Jason Mitchell, our Chief Financial Officer and Director, and 1,200,000 options to Michael Boyko, a member of our Board of Directors.

PHOENIX FACILITY AND LIXIVIATION TECHNOLOGY

We acquired our interest in the Lixiviation Technology and our Phoenix Facility on April 2, 2007 under the terms of a Technology and Asset Purchase Agreement (the “Technology Agreement”) with New Verde River Mining Co., Inc. (“New Verde”) and Robert H. Gunnison. In consideration of the Lixiviation Technology and the Phoenix Facility, we paid and issued the following:

(a)	$300,000 to New Verde for the purchase of the equipment within the Phoenix Facility as follows:
	(i)	$175,000 upon execution of the Technology Agreement (which amount has been paid); and
	(ii)	$125,000 of which $90,000 is outstanding.
(b)	issued 2,000,000 shares to Mr. Gunnison for the Lixiviation Technology.

Concurrent with the acquisition of the Lixiviation Technology and the Phoenix Facility, we entered into an Employment Agreement dated April 2, 2007 (the “Employment Agreement”) with Robert H. Gunnison whereby Mr. Gunnison agreed to act as our Production Manager commencing on April 2, 2008. In consideration of Mr. Gunnison’s services, we pay Mr. Gunnison a salary of $120,000 per annum.

On March 13,2009, we entered into the Payment Extension and License Agreement with New Verde and Mr. Gunnison whereby New Verde and Mr. Gunnison agreed to extend the deadline for the balance owed to New Verde to June 30, 2010. In consideration of the extension, we agreed to pay interest at 6% per annum on the balance owing to New Verde. We also agreed to grant New Verde and Mr. Gunnison a non-exclusive worldwide license on the Technology (the “License”). The License will only take effect in the event of the termination of the employment agreement between Mr. Gunnison and the Company. New Verde and Mr. Gunnison will not be permitted to assign or sub-license without our prior written approval. On July 22,2010, we entered into a payment extension with New Verde and Mr. Gunnison whereby New Verde and Mr. Gunnison agreed to extend the deadline for the balance owed to New Verde to June 30, 2011. In consideration of the extension, we agreed to extend the accrual of interest at 6% per annum on the balance owing to New Verde.

Our Phoenix Facility is an industrial building of approximately 9,809 square feet located in Phoenix, Arizona. The Phoenix Facility is designed as a compact, modular, cost efficient, turn-key operation, with a capacity of processing 10 tons of ore per day. In processing ore at our Phoenix Facility, we utilize our Lixiviation Technology, being a closed loop, zero liquid discharge, leach extraction process. Below is a basic diagram on the processing of ore at our Phoenix Facility.

4

We recently received approximately 400 oz of high grade gold placer concentrate from a private party that we refined into 351 oz of gold dore bars. We earned a 5% processing fee for our service.

THE PIUTE VALLEY PROPERTY

The Piute Valley Property is a potential gold project consisting of the Smith Lease and the BLM Claims. We intend to focus our operations on the Smith Lease based on its development and status.

The Smith Lease is a leased patented mineral claim covering approximately 20.61 acres located in Clark County, Nevada. We acquired our interest in the Smith Lease upon entering into a Restatement and Amendment to Lease Agreement dated April 12, 2007 (the “Lease Agreement”) with Erline Y. Smith, Trustee, Erline Y. Smith Trust and Lawana Hooper (collectively referred to as the “Lessors”). Under the terms of the Lease Agreement, we were granted the right to explore, and if proved feasible, develop the Smith Lease. These rights were granted as a lease for a term of 20 years. As consideration for the Smith Lease, we agreed to do the following:

(a)	pay $5,000 to the Lessors upon execution of the Lease Agreement (which amount has been paid);
(b)	pay an annual rental fee of $1,000 to the Lessors per each five acre parcel of the Smith Lease (we have paid the annual rental fee through August 13, 2011); and
(c)	pay an annual royalty equal to five percent of “net smelting profit” from production. Net smelting profit is defined as the net profit derived from the sale of metals and minerals produced from the Smith Lease.

In addition to the Smith Lease, our BLM Claims consist of an option to acquire a 7/8^th undivided interest in 20 mineral claims, covering approximately 3,200 acres located in Clark County, Nevada. Readers are cautioned that eight of the BLM Claims appear to be invalid due to conflicts with patented claims or more senior claims. We are investigating this further in order to determine the exact extent of the conflict with these claims

Under the terms of various option agreements entered into in January 2007 (the “Option Agreements”) with certain optionors (the “Optionors”), we are required to issue to the Optionors the following consideration in order to maintain and exercise our option on the BLM Claims:

5

(a)	1,050,000 shares of common stock on execution of the Option Agreements (which shares have been issued);
(b)	an additional 420,000 shares of common stock on the fifth anniversary of the Option Agreements; and
(c)	an additional 210,000 shares of common stock on the tenth anniversary of the Option Agreements.

GOLDEN ANVIL

Letter of Intent with Golden Anvil

On October 21, 2009, we entered into a letter of intent with Golden Anvil with respect to the formation and funding of a proposed joint venture for the exploration, development and production of gold and silver from mineral concessions (the "Mineral Concessions") owned by Golden Anvil located in the State of Nayarit, Mexico. The Mineral Concessions are currently being mined sporadically at a rate of 50 tons per day. A concentration plant on the Mineral Concessions is currently producing approximately 24 tons of concentrate per month. Concentrates from Golden Anvil are currently being processed at our Phoenix Facility.

Subject to each party satisfactorily completing its due diligence review, the parties intend to enter into a joint venture agreement. The proposed principal terms of the joint venture agreement are as follows:

(a)	We will acquire a 50% undivided interest in the joint venture by providing funding of $3,000,000 (the "Funding") as follows:
	(i)	$1,500,000 to purchase additional equipment and to refurbish and relocate the concentration plant currently located on the Mineral Concessions to an area with better power and access;
	(ii)	$500,000 for Golden Anvil to pay its current liabilities, late taxes and mining duties; and
	(iii)	$1,000,000 (the "Repurchase Loan") loaned to Golden Anvil, with no interest, to fund the costs of a repurchase of the outstanding shares of Golden Anvil (the "Share Repurchase").
(b)	Revenue from the joint venture shall be split proportionate to ownership. However, 25% of the share of revenue accruing to Golden Anvil will go towards the payment of the Repurchase Loan until paid in full, and in any event, the Repurchase Loan shall be repaid within 12 months from the date of funding.

Under the terms of the Letter of Intent, we had until December 20, 2009 to complete our due diligence to determine if we wished to proceed with the proposed joint venture. Under the terms of the Toll Processing Agreement dated for reference December 3, 2009, the Due Diligence Period was extended to February 15, 2010. On March 12, 2010, we entered into an extension agreement dated for reference February 15, 2010 with Golden Anvil whereby the Due Diligence Period was further extended to April 30, 2010. We are currently engaged in discussions with Golden Anvil to further extend the Due Diligence Period.

There is no assurance that the proposed transaction will be completed as planned or at all. If we elect to proceed after completion of due diligence, there is no assurance we will be able to obtain the necessary financing.

Toll Processing Agreement with Golden Anvil

On December 4, 2009, we entered into a Toll Processing Agreement dated for reference December 3, 2009 with Golden Anvil. Under the terms of the Toll Processing Agreement, we have agreed to process

6

concentrates delivered by Golden Anvil to our Phoenix Facility for a per ton fee of $500 plus 8% of the value of the precious metals recovered and to loan $400,000 to Golden Anvil, (which amount has been advanced) to pay Golden Anvil’s costs to acquire additional land for relocation of its concentrating facilities, and to fund the relocation and upgrading of Golden Anvil’s ore concentrating facilities (the “Land Purchase and Facilities Relocation Loan”). Our loans will be secured by Golden Anvil’s land and ore concentrating facilities. In addition, concentrates shipped to the Phoenix Facility to date secure an advance of $70,000 previously made to Golden Anvil.

In the event that we are able to consummate our proposed joint venture under the Letter of Intent:

(a)	the Land Purchase and Facilities Relocation Loan will be considered a portion of our contribution requirement under the proposed joint venture and Golden Anvil will not be required to repay such loans; and
(b)	all concentrates produced by the joint venture will be shipped to the Phoenix Facility and processed by us on the same terms as the initial shipment and prior shipment until such time as the proposed joint venture may establish its own refining facility in Mexico.

In the event that we are not able to consummate our proposed joint venture under the Letter of Intent:

(a)	The Land Purchase and Facilities Relocation Loan shall be repaid to us out of 15% of the amounts payable to Golden Anvil in respect of concentrates shipped to the Phoenix Facility; and
(b)	Golden Anvil will continue to ship to us all concentrates produced by Golden Anvil until one year following the repayment of the Land Purchase and Facilities Relocation Loan.

As of the date of this Quarterly Report, Golden Anvil has delivered 23 tons of concentrates to us. We have produced approximately 25 oz of gold and over 400 oz of silver from the original three shipments (23 tons) of concentrate generated at the Golden Anvil project in Mexico. We are focused on improving the amount of time it takes to separate and extract precious metals from the concentrate. Accordingly, we have hired experts to assist us in optimizing the total percentage of precious metals recovered from the concentrate. However, the optimization of our process has been slowed while we await additional concentrates from Golden Anvil.

On August 25, 2010, we entered into a Loan Agreement with Golden Anvil that covers the $600,000 previously advanced to Golden Anvil to permit Golden Anvil to refurbish and relocate its mineral processing plant in Nayarit, Mexico which concentrates ores from Golden Anvil’s mineral property. The loan bears no interest and matures on December 31, 2011. Golden Anvil has agreed to grant security over its equipment and mineral claims to secure the indebtedness under the Loan Agreement. We are in the final stages of negotiating a memorandum of understanding with Golden Anvil to joint venture the concentrating plant and mineral claims. In the event that a joint venture is successfully concluded, which is not assured, our loan to Golden Anvil may be converted into a contribution to the joint venture.

We have hired a professional mining engineer to evaluate the progress of the Golden Anvil concentration plant and to review the mine site and related historic data. The concentration plant expects to begin operations within 45 days at a projected production rate of 200 tons of head ore per day, resulting in 75 tons of concentrate per month.

PLAN OF OPERATION

Our plan of operation over the next twelve months is to focus our financial resources on the continued development of our ore processing business at our Phoenix Facility. We will continue to seek out to enter into ore processing agreements with third party mining companies to process ore at our Phoenix Facility. However, there are no assurances that we will be able to enter into any additional ore processing agreements with third party mining companies on terms acceptable to us or at all.

7

We anticipate that over the next twelve months our plan of operation for our Phoenix Facility and the Piute Valley Property will consist of:

1.	Upgrading our Phoenix Facility by installing another vibratory drum mill and filter press to increase the process rate at the Phoenix Facility to 2,000 lbs per hour. We anticipate that we will require $400,000 in order to implement these upgrades at our Phoenix Facility.
2.	Implementing our drilling program of prime targets on the Smith Lease. The implementation of this drilling program may require the filing of a Notice with the Federal Bureau of Land Management. We anticipate that this drilling program will cost approximately $500,000. The completion of this drilling program will depend on obtaining sufficient funds for the drilling and mineral analysis.
3.	Proceeding with the purchase of a larger concentrator to be installed on the Smith Lease, subject to raising substantial financing and having a third party concentration technology evaluate the material from our pilot product test. If we are able to raise financing and purchase a concentrator, of which there is no assurance, we plan to commence the processing of mined material on the property.
4.	Exploring strategic partnerships for the exploration of the additional Piute Valley Property.

As of July 31, 2010, we had cash in the amount of $26,665. Accordingly, we do not have sufficient resources to meet the ongoing costs of our Phoenix Facility, the anticipated costs of completing our plan of operation for our Phoenix Facility, the Smith Lease or meeting the administrative costs of operating our business for the next twelve months. In order to complete our plan of operation, we will be required to obtain substantial financing from the sale of our common stock, of which there is no assurance.

RESULTS OF OPERATIONS

Three Months Summary
		Three Months Ended					Percentage
		July 31, 2010			July 31, 2009		Increase / (Decrease)
Revenue	$	14,285		$	41,811		(65.8)%
Operating Expenses		(276,911	)		(458,032	)	(39.5)%
Interest Expense		(10,468	)		(13,777	)	(24.0)%
Net Loss	$	(273,094	)	$	(429,998	)	(36.5)%

Revenues

During the three months ended July 31, 2010 and 2009, we earned revenues of $14,285 and $41,811, respectively. We are currently in the exploration stage of our business. We have begun to process ore at our Phoenix Facility; however, our initial income from the use of our Phoenix Facility has been minimal. We can provide no assurances that we will earn significant revenue from the processing of ore at our Phoenix Facility or that we will discover commercially exploitable levels of mineral resources on our Piute Valley Property, or if such resources are discovered, that we will be able to enter into commercial production of our Piute Valley Property.

Expenses

The major components of our operating expenses for the three months ended July 31, 2010 and 2009 are outlined in the table below:

		Three Months Ended			Percentage
					Increase /
		July 31, 2010		July 31, 2009	(Decrease)
Mineral exploration and evaluation expenses	$	124,356	$	263,484	(52.8)%

8

Mineral exploration and evaluation expenses – related party		30,000		-	n/a
General and administrative		46,490		37,033	25.5%
General and administrative – related party		51,000		111,000	(54.1)%
Depreciation and amortization		25,065		46,515	(46.1)%
Total Expenses	$	276,911	$	458,032	(39.5)%

Our operating expenses for the three months ended July 31, 2010 decreased as compared to the three months ended July 31, 2009. The decrease in our operating expenses primarily relates to 1) the shut down of our exploration and development program on the Smith Lease in July 2009 and 2) the decrease in consulting fees.

Mineral exploration and evaluation expenses primarily consisted of rent, processing extraction costs, consulting fees and labor expenses in connection with our Phoenix Facility, as well as subcontractor costs with our exploration program on the Smith Lease in 2009.

During the three months ended July 31, 2010, our general and administrative and general and administrative related party expenses primarily consisted of: (i) monthly consulting fees paid to our Chief Executive Officer, Mr. Matheson and to our Chief Financial Officer, Mr. Mitchell; and (ii) legal and accounting fees in connection with meeting our reporting requirements under the Securities Exchange Act of 1934 (the “Exchange Act”).

We anticipate that our operating expenses will increase significantly as we implement our plan of operation for our Phoenix Facility and our Piute Valley Property.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital
							Percentage
		At July 31, 2010			At April 30, 2010		Increase / (Decrease)
Current Assets	$	506,665		$	437,559		15.8%
Current Liabilities		(877,472	)		(560,337	)	56.6%
Working Capital Deficit	$	(370,807	)	$	(122,778	)	202.0%

Cash Flows
		Three Months Ended
		July 31, 2010			July 31, 2009
Net Cash Used in Operating Activities	$	(264,472	)	$	(410,593	)
Net Cash Used In Investing Activities		-			(18,734	)
Net Cash Provided By Financing Activities		253,578			487,580
Net Increase (Decrease) in Cash During Period	$	(10,894	)	$	58,253

As at July 31, 2010, we had a working capital deficit of $370,807 as compared to a working capital deficit of $122,778 as at our year ended April 30, 2010. The increase in our working capital deficit is primarily due to: (i) an increase in accounts payable due to our lack of capital to meet our ongoing expenditures; and (ii) the fact that our sole source of financing was short term loans totaling $253,578. The loans bear interest at a rate of 10% per annum and are due on demand.

FINANCING REQUIREMENTS

Currently, we do not have sufficient financial resources to complete our plan of operation for the next twelve months. As such, our ability to complete our plan of operation is dependent upon our ability to obtain additional financing in the near term.

9

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. Our Board of Directors have approved the following private placement offerings:

(a)	U.S. Private Placement: Board of Directors approved a U.S. private placement of 6,000,000 Units at a price of $0.05 per Unit to persons who are accredited investors as defined in Regulation D of the Securities Act (the “U.S. Private Placement”). Each Unit consists of one share of our common stock and one share purchase warrant, with each warrant entitling the subscriber to purchase an additional share of our common stock for a period of one year following the date of the issuance at a price of $0.10 per share. To date, we have received cash proceeds and settled indebtedness of $80,000 under the U.S. Private Placement.
(b)	Foreign Private Placement: Our Board of Directors also approved a foreign private placement offering of 4,000,000 Units at a price of $0.05 per Unit to persons who are not “U.S. Persons” as defined in Regulation S of the Securities Act (the “Foreign Private Placement”). The Units issued in the Foreign Private Placement will be on the same terms as the U.S. Private placement. To date, we have received cash proceeds and settled indebtedness of $192,775 under the Foreign Private Placement.
(c)	Section 4(2) Private Placement: Our Board of Directors also approved a Section 4(2) private placement of 30,000,000 Units at a price of $0.05 per Unit in a transaction not involved in a public offering (the “Section 4(2) Private Placement”). The Units issued in the Section 4(2) Private Placement will be on the same terms as the U.S. Private placement. To date, we have received cash proceeds and settled indebtedness $1,200,000 under the Section 4(2) Private Placement.

There is no assurance that we will be able to complete the sale of any additional securities under these offerings. Even if we complete the sale of all the securities offered under these private placement offerings, there is no assurance that we will satisfy all of our working capital requirements for the next twelve months or that these funds will be sufficient to complete our planned exploration or development programs.

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

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 disclosed in Note 1 to our interim financial statements included in this Quarterly Report.

Mineral Property Rights – 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. 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. Evaluation of the carrying value of capitalized costs and any related property and equipment costs would be based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15,Impairment or Disposal of Long-Lived Assets.

Exploration Costs – Mineral exploration costs are expensed as incurred.

10

Revenue Recognition – Revenues are recognized during the period in which the revenues are earned. Revenue from licensing our technology is recognized over the term of the license agreement. Costs and expenses are recognized during the period in which they are incurred.

Research and Development – All research and development expenditures are expensed as incurred.

ITEM 3.              QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4T.            CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of July 31, 2010 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the Evaluation Date.

Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended July 31, 2010 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

11

PART II - OTHER INFORMATION

ITEM 1.              LEGAL PROCEEDINGS.

We are not a party to any other legal proceedings and, to our knowledge, no other legal proceedings are pending, threatened or contemplated.

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 operation.

If we do not obtain additional financing, we may not be able to continue our operations at our Phoenix Facility or complete our exploration and development programs on the Piute Valley Property.

As at July 31, 2010, we had cash on hand of $26,665 and accumulated net loss of $9,867,934 since inception. Our plan of operation calls for significant expenses in connection with the operation of our Phoenix Facility and the exploration and development of our Piute Valley Property. If we are unable to raise sufficient financing, there is a substantial risk that we will be unable to meet payments of principal and interest to our creditors and pay our consultants and contract labor. In addition, we will require substantial financing in order to implement our plan of operation over the next twelve months.

On January 27, 2010, our Board of Directors approved a U.S. private placement of 6,000,000 Units for proceeds of $300,000 (the “U.S. Private Placement”), a foreign private placement of 4,000,000 Units for proceeds of $200,000 (the “Foreign Private Placement”) and a Section 4(2) private placement offering of 30,000,000 Units for proceeds of $1,500,000 (the “Section 4(2) Private Placement”). To date, we have raised cash proceeds and settled indebtedness of $80,000 under the U.S. Private Placement, $192,775 under the Foreign Private Placement and $1,200,000 under the Section 4(2) Private Placement. However, there is no assurance that we will be able to complete the sale of any additional securities under these private placement offerings. Even if we complete the sale of all of the securities offered under these private placement offerings, there is no assurance that this will satisfy all of our working capital requirements for the next twelve months or that these funds will be sufficient to complete our planned exploration and development programs.

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

We have commenced earning revenues, although minimal, from the processing of ore at our Phoenix Facility. Our primary business activities have involved the acquisition of the Piute Valley Property, the exploration and development on the Piute Valley Property and the commencement of operations at our Phoenix Facility. 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 our operating expenses will increase prior to our earning significant revenues, we may never achieve profitability.

Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses prior to realizing any significant 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 operation of our Phoenix Facility or the exploration and development of our mineral property 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.

12

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

The search for valuable minerals as a business is extremely risky. We may not find commercially exploitable reserves of precious metals on our mineral claims. Exploration for minerals is a speculative venture, necessarily involving substantial risk. The expenditures to be made by us in the upcoming exploration of the mineral claims 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. In such a case, we would be unable to complete our business plan.

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

The search for valuable minerals involves numerous hazards. As a result, if and when we conduct 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.

There is no assurance that our due diligence requirements will be satisfied or that we will be able to reach a joint venture agreement with Golden Anvil under the terms of the Letter of Intent.

There is no assurance that the proposed transaction with Golden Anvil will be completed as planned or at all. We may decide to neither conduct due diligence of Golden Anvil nor proceed with the joint venture agreement with Golden Anvil. Even if we decide to proceed with the joint venture, there is no assurance that we will be able to reach an agreement or that we will have sufficient financing to proceed in a joint venture agreement.

Even if we discover commercial reserves of precious metals on our Piute Valley Property, we may not be able to successfully obtain commercial production.

Our Piute Valley Property does not contain any known bodies of ore. If our exploration programs are successful in discovering ore of commercial tonnage and grade, we will require additional funds in order to place those mineral claims into commercial production. At this time, there is a risk that we will not be able to obtain such financing as and when needed.

In order to maintain our rights to the Piute Valley Property, 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 our rights to the Piute Valley Property, we will be required to make annual filings with federal and state regulatory authorities. Currently the amount of these fees is minimal; 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 the Piute Valley Property. A failure by us to meet the annual maintenance requirements under federal and state laws could result in the loss of our rights to the Piute Valley Property.

As we undertake exploration of our Piute Valley Property, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration program.

There are several government regulations that materially restrict the exploration of minerals. We may 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.

13

Certain work to be performed on our mineral projects may require us to apply for permits from federal, state or local regulatory bodies.

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 as disclosed above, which could have a negative effect on our business.

If we receive positive results from our exploration program and we decide to pursue commercial production, we may be subject to an environmental review process that may delay or prohibit commercial production.

If the results of our geological exploration program indicate commercially exploitable reserves, and we decide to pursue commercial production of our mineral property, we may be subject to an environmental review process under environmental assessment legislation. 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 did not approve our mine or if the costs of compliance with government regulation adversely affected the commercial viability of the proposed mine.

If we are unable to hire and retain key personnel, we may not be able to implement our business plan and our business will fail.

Our success will largely depend on our ability to hire highly qualified personnel with experience in geological exploration. These individuals may be in high demand and we may not be able to attract the staff we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired. Our failure to hire key personnel when needed could have a significant negative effect on our business.

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

The most likely source of future financing presently available to us is through the issuance of our common stock. The only other anticipated alternative for the financing of further exploration would be the offering by us of an interest in our properties to be earned by another party or parties carrying out further exploration thereof, which is not presently contemplated. Issuing shares of our common stock, for financing purposes or otherwise, will dilute the interests of our existing stockholders.

Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.

Our common stock is considered to be a “penny stock” since it does not qualify for one of the exemptions from the definition of “penny stock” under Section 3a51-1 of the Exchange Act. Our common stock is a “penny stock” because it meets one or more of the following conditions (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a “recognized” national exchange; (iii) it is not quoted on the Nasdaq Stock Market, or even if so, has a price less than $5.00 per share; or (iv) is issued by a company that has been in business less than three years with net tangible assets less than $5 million.

The principal result or effect of being designated a “penny stock” is that securities broker-dealers participating in sales of our common stock will be subject to the “penny stock” regulations set forth in Rules 15-2 through 15g-9 promulgated under the Exchange Act. For example, Rule 15g-2 requires broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document at least two business days before effecting any transaction in a penny stock for the investor's account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor.

14

This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult and time consuming for holders of our common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

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

Other than as previously disclosed in our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q or our Current Reports on Form 8-K, we have not completed any unregistered sales of equity securities during the fiscal quarter ended July 31, 2010.

ITEM 3.              DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 5.              OTHER INFORMATION.

2011 Stock Incentive Plan

Effective September 7, 2010, we adopted the 2011 Stock Incentive Plan (the “2011 Plan"). The 2011 Plan allows us to grant certain options to our directors, officers, employees and eligible consultants. A total of 16,700,000 shares of our common stock are available for issuance under the 2011 Plan. We may increase the maximum aggregate number of shares that may be optioned and sold under the 2011 Plan provided the maximum aggregate number of shares that may be optioned and sold under the 2011 Plan shall at no time be greater than 15% of the total number of shares of common stock outstanding.

Stock Option Grants

On September 7, 2010, we granted non-qualified stock options to acquire an aggregate of 6,000,000 shares of our common stock under the 2011 Stock Incentive Plan to various officers, directors and consultants. Each of the options was granted with an exercise price of $0.02 per share and expires on September 6, 2014. Of the 6,000,000 options granted, we granted 1,200,000 options to Ian Matheson, our Chief Executive Officer and director, 1,200,000 options to Jason Mitchell, our Chief Financial Officer and Director, and 1,200,000 options to Michael Boyko, a member of our Board of Directors.

ITEM 6.              EXHIBITS.

Exhibit
Number	Description of Exhibits
2.1	Agreement and Plan of Merger dated September 24, 2007 among the Company, Royal Mines Acquisition Corp., Royal Mines Inc. and Kevin B. Epp.(4)
2.2	Agreement and Plan of Merger dated October 6, 2007 between the Company and Royal Mines Acquisition Corp.(5)
3.1	Articles of Incorporation.(1)
3.2	Certificate of Change Pursuant to NRS 78.209 increasing the authorized capital of common stock to 300,000,000 shares, par value $0.001 per share.(2)
3.3	Bylaws.(1)
3.4	Articles of Merger between the Company and Royal Mines Acquisition Corp.(5)
4.1	Form of Share Certificate.(1)
10.1	Mineral Property Option Agreement dated January 28, 2007 between Eugene E. Phebus and Royal Mines Inc.(5)
10.2	Mineral Property Option Agreement dated January 28, 2007 between Charles G. Moore and Royal Mines Inc.(5)
10.3	Mineral Property Option Agreement dated January 10, 2007 between James E. Sharp and Royal Mines Inc.(5)

15

Exhibit
Number	Description of Exhibits
10.4	Mineral Property Option Agreement dated January 28, 2007 between Ben Barnes and Royal Mines Inc.(5)
10.5	Mineral Property Option Agreement dated January 28, 2007 between Walter Simmons II and Royal Mines Inc.(5)
10.6	Mineral Property Option Agreement dated January 28, 2007 between Leo Corbet and Royal Mines Inc.(5)
10.7	Mineral Property Option Agreement dated January 28, 2007 between William Tao and Royal Mines Inc.(5)
10.8	Mineral Property Option Agreement dated January 28, 2007 between Dr. Wilbur J. Guay and Royal Mines Inc.(5)
10.9	Mineral Property Option Agreement dated January 28, 2007 between Olivia Tearnan and Royal Mines Inc.(5)
10.10	Mineral Property Option Agreement dated January 28, 2007 between Jim Mack and Royal
	Mines Inc.(5)
10.11	Mineral Property Option Agreement dated January 28, 2007 between Ron Manarey and Royal Mines Inc.(5)
10.12	Mineral Property Option Agreement dated January 28, 2007 between William Lintz and Royal Mines Inc.(5)
10.13	Technology and Asset Purchase Agreement dated April 2, 2007 among New Verde River Mining Co., Inc., Robert H. Gunnison and Royal Mines Inc.(5)
10.14	Restatement and Amendment to Lease Agreement dated April 12, 2007 among Erline Y. Smith, Trustee, Erline Y. Smith Trust, Lawana Hooper and Royal Mines Inc.(5)
10.15	AV Executive Suites Service Agreement dated September 13, 2007 between Royal Mines Inc. and Anthem Village Executive Suites, LLC.(5)
10.16	Residential Lease Agreement of La Cienega Office.(5)
10.17	Lease Agreement dated June 6, 2007 among McKendry Enterprises Inc., Profit Sharing Plan and Retirement Trust and Royal Mines Inc.(5)
10.18	2008 Stock Incentive Plan.(6)
10.19	Non-Qualified Stock Option Agreement between the Company and William C. Tao.(6)
10.20	Non-Qualified Stock Option Agreement between the Company and Jason S. Mitchell.(6)
10.21	Extension Agreement between the Company and Robert H. Gunnison.(7)
10.22	Settlement Agreement and Mutual Release dated effective November 15, 2008 between the Company and William C. Tao.(8)
10.23	Extension Agreement dated November 18, 2008 between the Company and Robert H. Gunnison.(9)
10.24	2009 Stock Incentive Plan.(10)
10.25	Form of Non-Qualified Stock Option Agreement for Directors and Executive Officers.(10)
10.26	Management Consulting Agreement dated February 24, 2009 between the Company and Jason S. Mitchell.(11)
10.27	Payment Extension and License Agreement dated March 13, 2009 between New Verde River Mining Co., Inc., Robert H. Gunnison and the Company.(12)
10.28	Proprietary Intellectual Property License Agreement dated March 24, 2009 between the Company and Greene Lyon Group, LLC.(13)
10.29	Consulting Agreement dated August 14, 2009 between the Company and Mirador Consulting, Inc.(14)
10.30	Brecheisen License Agreement dated August 12, 2009 between Brecheisen Company, Inc., Keith D. Brecheisen, Lorna J. Brecheisen and the Company.(15)
10.31	Letter of Intent dated October 21, 2009 between the Company and Golden Anvil, SA de CV.(16)
10.32	First Amendment of Lease Agreement dated November 20, 2009 among McKendry Enterprises Inc., Profit Sharing Plan and Retirement Trust and Royal Mines Inc.

16

Exhibit
Number	Description of Exhibits
10.33	Toll Processing Agreement dated December 3, 2009 between the Company and Golden Anvil, SA de CV.(17)
10.34	2010 Stock Incentive Plan.(17)
10.35	Form of Non-Qualified Stock Option Agreement for Directors and Executive Officers.(17)
10.36	Extension Agreement dated for reference February 15, 2010 between the Company and Golden Anvil, SA de CV.(18)
10.37	Loan Agreement between Royal Mines And Minerals Corp. (Lender) and Golden Anvil, SA de CV (Borrower).(19)
10.38	Extension Agreement dated July 22, 2010, between Robert H. Gunnison (Lender) and Royal Mines and Minerals Corp (Borrower)
10.39	2011 Stock Incentive Plan
14.1	Code of Ethics.(3)
31.1	Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.
31.2	Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.
32.1	Certification of Chief Executive Officer as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
32.2	Certification of Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

Notes:

(1)	Filed with the SEC as an exhibit to our Registration Statement on Form SB-2 originally filed on August 17, 2006, as amended.
(2)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed June 12, 2007.
(3)	Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed July 30, 2007.
(4)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on September 28, 2007
(5)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed October 12, 2007.
(6)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed February 5, 2008.
(7)	Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed September 15, 2008.
(8)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed November 18, 2008.
(9)	Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed December 15, 2008.
(10)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed January 16, 2009.
(11)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed February 26, 2009.
(12)	Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed March 17, 2009.
(13)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed March 26, 2009.
(14)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed August 17, 2009.
(15)	Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed September 14, 2009.
(16)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed November 3, 2009.
(17)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed December 10, 2009.
(18)	Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed March 16, 2010.
(19)	Filed with the SEC as an exhibit to our Current Report on Form 8-K filed August 31, 2010.

17

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.

			ROYAL MINES AND MINERALS CORP.
Date:	September 13, 2010	By:	/s/ K. Ian Matheson
			K. IAN MATHESON
			Chief Executive Officer
			(Principal Executive Officer)
Date:	September 13, 2010	By:	/s/ Jason S. Mitchell
			JASON S. MITCHELL
			Chief Financial Officer
			(Principal Accounting Officer)