U.s. Silver (CYLQF) 40FR12B Initial registration of securities (Canada)

Exhibit 99.7

U.S. SILVER CORPORATION CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2011

In thousands of U.S. Dollars

(Unaudited)

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim financial statements; they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.  The accompanying unaudited interim consolidated financial statements of the Company have been prepared by management and approved by the Audit Committee and Board of Directors of the Company.  The Company's independent auditors have not performed a review of these financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity's auditors.

August 11, 2011

U.S. Silver Corporation

Consolidated Balance Sheets

(unaudited)

(In thousands of U.S. dollars)

	June 30, 2011			December 31, 2010
	$			$
Assets
Current assets
Cash		21,785			5,435
Restricted Cash		1,500			3,016
Receivables and related embedded derivatives		10,854			12,678
Inventory (Note 5)		5,709			5,786
Prepaid expenses		11			205
		39,859			27,120
Non-current assets
Restricted Cash		115			115
Property, plant and equipment (Note 6)		49,494			46,687
Deferred income tax assets		2,953			3,893
Total assets		92,421			77,815
Liabilities
Current liabilities
Accounts payable		8,596			3,435
Derivatives		-			3,639
Income taxes payable		240			228
		8,836			7,302
Non-current liabilities
Other long-term liabilities		297			276
Employee Benefits		4,490			4,481
Asset retirement obligation		3,189			2,843
Deferred income tax liability		345			480
Total liabilities		17,157			15,382
Equity
Share capital (Note 7)		72,676			70,598
Contributed surplus		7,316			7,488
Accumulated other com prehensive income		456			267
Deficit		(5,184	)		(15,920	)
		75,264			62,433
Total liabilities and equity		92,421			77,815

The accompanying notes are an integral part of these consolidated interim financial statements.

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U.S. Silver Corporation

Consolidated Statement of Comprehensive Income

(Unaudited)

(In thousands of U.S. dollars)

	June 30, 2011 $ (3 months)			June 30, 2010 $ (3 months)			June 30, 2011 $ (6 months)			June 30, 2010 $ (6 months)
Revenues		30,843			14,489			49,928			29,508
Cost of sales		(18,539	)		(11,970	)		(29,400	)		(25,062	)
		12,304			2,519			20,528			4,446
General and administrative		(1,098	)		(909	)		(1,803	)		(1,362	)
Exploration costs		(706	)		(368	)		(1,337	)		(645	)
Selling and marketing		(23	)		(68	)		(99	)		(87	)
Loss on hedge derivatives		(1,316	)		(410	)		(1,926	)		(591	)
Foreign exchange gain		(13	)		37			(37	)		(22	)
Operating profit		9,148			801			15,326			1,739
Finance costs		234			(28	)		132			(70	)
Net finance costs		234			(28	)		132			(70	)
INCOME BEFORE INCOME TAXES		9,382			773			15,458			1,669
Provision for deferred income taxes		(2,844	)		(137	)		(4,722	)		(435	)
NET INCOME		6,538			636			10,736			1,234
Other comprehensive income (loss)
Unrealized gain (loss) on available-for sale securities, net of taxes of $nil (2010 $nil)		-			27			-			(38	)
Foreign currency translation differences on foreign operations, net of taxes  $nil (2010 $nil)		1			(94	)		189			5
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		6,539			569			10,925			1,201
Earnings per share:
Basic	$	0.02		$	0.00		$	0.04		$	0.00
Diluted	$	0.02		$	0.00		$	0.03		$	0.00
# of basic shares		291,935,896			251,355,600			288,517,182			250,990,797
# of diluted shares		322,123,370			275,038,930			318,704,656			274,408,292

The accompanying notes are an integral part of these consolidated interim financial statements.

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U.S. Silver Corporation

Consolidated Statements of Changes in Equity

(unaudited) 

(In thousands of U.S. dollars)

	Share Capital		Contributed surplus			Accumulated other comprehensive income			Deficit			Total Equity
	$		$			$			$			$
Balance – January 1, 2011		70,598		7,488			267			(15,920	)		62,433
Net income for the period		-		-			-			10,736			10,736
Other comprehensive income (net of tax):		-		-			189			-			189
Comprehensive income for the period		-		-			189			10,736			10,925
Employee share options:
Value of services recognized		-		301			-			-			301
Proceeds on issuing shares		2,078		(473	)		-			-			1,605
Balance – June 30, 2011		72,676		7,316			456			(5,184	)		75,264
Balance – January 1, 2010		63,730		6,307			-			(19,128	)		50,909
Net income for the period		-		-			-			1,234			1,234
Other comprehensive income (net of tax):		-		-			(33	)		-			(33	)
Comprehensive income for the period		-		-			(33	)		1,234			1,201
Employee share options:
Value of services recognized		-		56			-			-			56
Proceeds on issuing shares		270		(43	)		-			-			227
Balance – June 30, 2010		64,000		6,320			(33	)		(17,894	)		52,393

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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U.S. Silver Corporation

Consolidated Statements of Cash Flows

(unaudited) 

(In thousands of U.S. dollars)

	June 30, 2011			June 30, 2010
	$			$
	(6 months)			(6 months)
Cash flow provided by (used in)
Operating activities
Net income for the period
Adjustments for:		10,736			1,234
Depreciation, depletion and amortization (Note 6)		3,442			3,238
Rehabilitation provision - accretion		346			38
Unrealized Foreign exchange gain		189			22
Deferred income tax		805			437
Other long-term liabilities		21			28
Employee Benefits		9			(141	)
Share-based compensation		301			56
Changes in items of working capital:
Receivables and related embedded derivatives		1,824			(1,180	)
Inventory		77			2,130
Prepaid expenses		194			147
Accounts payable and accrued liabilities		5,173			333
Derivative-related as sets and liablities		(3,639	)		(1,042	)
Net cash generated from operating activities		19,478			5,300
Investing activities
Purchase of property, plant and equipment (Note 7)		(1,736	)		(1,061	)
Investment in mining properties (Note 7)		(4,513	)		(3,926	)
Restricted cash as security		1,516			-
Net cash used in investing activities		(4,733	)		(4,987	)
Financing activities
Revolving advances facility, advances		-			10,242
Revolving advances facility, repayments		-			(10,930	)
Proceeds from exercise of options and warrants		1,605			228
Net cash generated from (used in) financing activities		1,605			(460	)
Effect of exchange rate changes on cash and cash equivalents		-			(50	)
Increase (decrease) in cash and cash equivalents		16,350			(197	)
Cash – Beginning of period		5,435			2,510
Cash  – End of period		21,785			2,313
Cash paid for income tax		(220	)		-
Cash paid for interest		-			(17	)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

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U.S. Silver Corporation

Notes to Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2011 and 2010

(Unaudited) (In thousands of US Dollars)

1.  GENERAL INFORMATION

U.S. Silver Corporation and its subsidiaries (together the company or U.S. Silver) is involved in the exploration, development and extraction of high-grade silver-copper-lead metals in Idaho, United States. U.S. Silver is domiciled in Canada and incorporated under the laws of the province of Ontario. The address of its registered office is 401 Bay Street, Suite 2702, Toronto, Ontario, M5H 2Y4, Canada.

2.  BASIS OF PRESENTATION

(In thousands of U.S. Dollars)

a.   Statement of Compliance

The company prepares its financial statements in accordance with Canadian generally accepted accounting principles as set out in the Handbook of the Canadian Institute of Chartered Accountants (“CICA Handbook”). In 2010, the CICA Handbook was revised to incorporate International Financial Reporting Standards (“IFRS”), and require publicly accountable enterprises to apply such standards effective for years beginning on or after January 1, 2011.  Accordingly, the company has commenced reporting on this basis in these interim consolidated financial statements. In the financial statements, the term “Canadian GAAP” refers to Canadian GAAP before the adoption

of IFRS.

These condensed interim consolidated financial statements have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, including IAS 34 and IFRS 1. The accounting policies followed in these interim financial statements are the same as those applied in the company’s interim financial statements for the period ended March 31, 2011.  The company has consistently applied the same accounting policies throughout all periods presented, as if these policies had always been in effect.  Note 4 discloses the impact of the transition to IFRS on the company’s reported equity as at June 30, 2010 and comprehensive income for the three and six months ended June 30, 2010, including the nature and effect of significant changes in accounting policies from those used in the company’s consolidated financial statements for the year ended December 31, 2010.

The accounting policies applied in these interim consolidated financial statements are based on IFRS effective for the year ended December 31, 2011, as issued and outstanding as of August 11, 2011, the date the Board of Director’s approved the statements.  Any subsequent changes to IFRS that are given effect in the company’s annual consolidated financial statements for the year ending December 31, 2011 could result in restatement of these interim consolidated financial statements, including transition adjustments recognized on change-over to IFRS.

The condensed interim consolidated financial statements should be read in conjunction with the company’s Canadian GAAP annual financial statements for the year ended December 31, 2010 and the company’s interim financial statements for the quarter ended March 31, 2011 prepared in accordance with IFRS applicable to interim financial statements.

b.   Basis of measurement

The interim consolidated financial statements have been prepared under the historical cost basis convention except for the revaluation of certain financial assets and financial liabilities to fair value.

c.   Functional and presentation currency

The functional currency of U.S. Silver, the Canadian domiciled parent company, is the Canadian dollar.  The functional currency of the company’s two U.S. subsidiaries is the United States Dollar (USD).

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U.S. Silver Corporation

Notes to Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2011 and 2010

(Unaudited) (In thousands of US Dollars)

These condensed interim consolidated financial statements are presented in USD.   All financial information presented in USD has been rounded to the nearest thousand unless otherwise stated.

3.  ACCOUNTING STANDARDS ISSUED BUT NOT YET APPLIED

International Accounting Standard 19, Employee Benefits (“IAS 19”)

IAS 19 is amended to reflect (i) significant changes to recognition and measurement of defined benefit pension expenses and termination benefits, and (ii) expanded disclosure requirements and is in effect for annual periods beginning on or after January 1, 2013 with early application permitted.  The company has not yet assessed the impact of this amendment nor determined whether it will adopt the amendment early.

4.    Transition to IFRS

The effect of the company’s transition to IFRS is summarized in this note as follows:

Reconciliation of equity and comprehensive income as previously reported under Canadian GAAP to IFRS

Equity	Note	Jun 30, 2010
	4b	$
Equity as reported under Canadian GAAP			54,312
Rehabilitation provision	iii		(830	)
Rehabilitation cost	iii		(76	)
Employee future benefits	iv		34
Pens ion adjustment OCI	iv		-
Explorations and evaluations	vi		(1,046	)
Equity as reported under IFRS			52,394

Comprehensive income	Note 4b	Six months ended Jun 30, 2010			Three months ended  Jun 30, 2010
		$			$
As reported under Canadian GAAP			615			118
Accretion of decommissioning and restoration provisions	iii		(43	)		(14	)
Employee future benefits	iv		283			125
Employee future benefits	iv		-			-
Stock-based compensation	v		361			336
Explorations and evaluations	vi		(16	)		4
As reported under IFRS			1,200			569

Explanatory notes

i.	In accordance with IFRS 1 (first time adoption of IFRS) transitional provisions, the company has elected to reset the cumulative translation account, which includes gains and losses arising from the translation of foreign operations, to zero at the date of transition to IFRS.
ii.	In accordance with IFRS 1 transitional provisions, the company elected to apply IFRS relating to business combinations prospectively from January 1, 2010.  There were no adjustments arising from this election as all acquired assets and liabilities conformed to IFRS.

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U.S. Silver Corporation

Notes to Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2011 and 2010

(Unaudited) (In thousands of US Dollars) 

iii.	Similar to Canadian GAAP, when a decommissioning and site rehabilitation provision  (environmental rehabilitation provisions) is established, the company is required to set up a corresponding asset and depreciate it over the remaining useful life of the asset.   Any changes in the rehabilitation provision are added to or subtracted from the cost of the asset to which the obligation relates.    In accordance with IFRS 1 transitional provisions, the company elected to take a simplified approach to calculate and record the asset related to the rehabilitation provision in the opening IFRS consolidated balance sheets.    The rehabilitation provision on the transition date calculated in accordance with IFRS is discounted back to the date when the provision first arose, at which date the corresponding asset is set up.   This asset is then depreciated to its carrying amount at the transition date.
	Over time the provision is impacted by the unwinding of the discount rate used to determine its carrying value.  This unwinding amount is referred to as accretion and is recognized in the statement of income as a finance cost.   Likewise the rehabilitation cost is amortized.
iv.	Under Canadian GAAP, past service costs arising from plan amendments were deferred and amortized on a straight-line basis over the lesser of the average remaining service period of employees active at the date of amendment and the date that mine operations were assumed to cease. IFRS requires all vested past service costs to be immediately recognized into earnings.
	In addition, on transition to IFRS, the company has elected that actuarial gains (losses) be recognized in full in the period in which they occur in other comprehensive income and retained earnings without recycling to the statement of income in subsequent periods.
v.	In accordance with IFRS 1 transitional provisions, the Company elected to apply IFRS relating to share-based payments retrospectively to outstanding stock options that had not vested prior to January 1, 2010.
	Subsequent to the transition date, decreases in the amortization of the fair value of vested stock options were required under IFRS.
vi.	Exploration costs, incurred before a company has obtained the legal rights to explore a specific area and before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, are expensed in the year that they are incurred. Management has determined that under IFRS the Group’s accounting policy for exploration and evaluation assets is that exploration expenditures should be expensed and only capitalized to Mineral Properties after the completion of a feasibility study.

5.  INVENTORY

	June 30,		Dec 31,
	2011		2010
	$		$
Concentrate		3,714		3,775
Materials and supplies		1,995		2,011
		5,709		5,786

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U.S. Silver Corporation

Notes to Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2011 and 2010

(Unaudited) (In thousands of US Dollars) 

6.  PROPERTY, PLANT AND EQUIPMENT

	Mining			Mining
	properties			equipment			Building			Total
	$			$			$			$
Period ended June 30, 2011
Opening net book value		39,943			6,379			365			46,687
Additions		4,513			1,620			116			6,249
Disposals		-			-			-
Depreciation for the period		(2,600	)		(766	)		(76	)		(3,442	)
Closing net book value		41,856			7,233			405			49,494
At June 30, 2011
Cost		58,019			12,958			670			71,647
Accumulated depreciation		(16,163	)		(5,725	)		(265	)		(22,153	)
		41,856			7,233			405			49,494

7.SHARE CAPITAL

	Number of shares
		(000s)	$
Opening balance at January 1, 2011		286,643		70,598
Issued on exercise of stock options and warrants		6,075		2,078
Balance at June 30, 2011		292,718		72,676
Opening balance at January 1, 2010		250,626		63,730
Issued on exercise of stock options		1,527		2,655
Balance at June 30, 2010		252,153		66,385

Stock options

The Company uses the fair value method of accounting for all stock-based payments to employees, directors and officers.   Under this method, the company recorded a stock compensation expense of $301 for the quarter ended June 30, 2011 (June 30, 2010 - $28) with a corresponding credit to contributed surplus.  The fair value of the stock options granted at the date of the grant using the modified Black-Scholes pricing model assumes risk-free interest rates of 1.4% (2010 – 1.85%), no dividend yield, expected life of 5 years (2010 – 2 years) with an expected price volatility of 88.5% (2010 - 47.7%). Volatility is determined using daily volatility over the expected life of the options.  A forfeiture rate of 5.52% is applied (2010 – 5.51%) and as at June 30, 2011, there was $2,152 of unamortized stock compensation expense (June 30, 2010 - $343). During the quarter, options to acquire 125,624 (June 30, 2010 – 25,000) common shares were exercised for total proceeds of $44 (June 30, 2010 - $3). Upon exercise of these options, the fair value of the options in contributed surplus of $6 (June 30, 2010 - $5) was added to share capital.

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U.S. Silver Corporation

Notes to Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2011 and 2010

(Unaudited) (In thousands of US Dollars)

	Number			Weighted Average Exercise Price (CA$)
Balance, January 1, 2010		17,629,475			0.34
Granted		7,468,750			0.22
Exercised		(3,862,488	)		0.22
Cancelled		(1,261,666	)		0.42
Forfeited		(720,002	)		0.17
Balance, December 31, 2010		19,254,069			0.32
Granted		7,690,000			0.53
Exercised		(2,949,879	)		0.24
Forfeited		(150,002	)		0.17
Balance, June 30, 2011		23,844,189			0.40

Summary of Options Outstanding as of June 30, 2011

					Exercisable
				Outstanding
					Weighted			Weighted
Exercise		Options	Expiry	Weighted Average	Average	Options		Average
Price CA$		Outstanding	Date	Remaining Life (Years)	Price CA$	Exercisable		Price CA$
$	0.10	1,090,000	Nov. 2013	2.4	0.10	1,090,000	$	0.10
	0.13	1,845,011	Oct. 2014	3.3	0.13	228,332		0.13
	0.13	1,200,000	July 2014	3.0	0.13	1,200,000		0.13
	0.14	400,000	Mar. 2014	2.8	0.14	400,000		0.14
	0.15	1,500,000	Feb. 2014	2.6	0.15	1,000,000		0.15
	0.18	200,000	Dec. 2014	3.5	0.18	200,000		0.18
	0.225	5,305,844	June 2015	4.0	0.225	3,172,480		0.225
	0.235	33,334	Aug. 2015	4.1	0.235	--		0.235
	0.40	1,390,000	Dec. 2011	0.5	0.40	1,390,000		0.40
	0.40	250,000	Jul. - 2013	2.0	0.40	250,000		0.40
	0.53	6,490,000	Jun. – 2016	5.0	0.53	--		0.53
	0.54	1,200,000	May - 2016	5.0	0.54	66,666		0.54
	0.73	660,000	Aug. 2012	1.1	0.73	660,000		0.73
	0.75	300,000	Mar. 2012	0.7	0.75	300,000		0.75
	0.79	200,000	Mar. 2013	1.7	0.79	200,000		0.79
	0.81	780,000	Nov. 2012	1.4	0.81	780,000		0.81
	1.19	1,000,000	May 2012	0.8	1.19	1,000,000		1.19
		23,844,198				11,937,478

Warrants

The warrants that are issued and outstanding as at June 30, 2011 are as follows:

Number of Warrants	Exercise Price (CA$)	Warrant Type	Issuance Date	Expiry Date	Fair Value
13,793,641	0.155	Investors	July 2009	July 16,2014	$	376,842
176,928	0.160	Broker Unit	July 2009	July 16,2011		4,331
353,886	0.155	Broker	July 2009	July 16,2014		15,035
10,056,000	0.350	Investor	Sept. 2010	Aug. 29, 2011		1,248,479
1,593,900	0.260	Broker	Sept. 2010	Aug. 29, 2011		263,471
16,974,355						1,908,158

8.   RELATED PARTIES

There are no related party transactions to report for the quarter.

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U.S. Silver Corporation

Notes to Condensed Interim Consolidated Financial Statements

For the six months ended June 30, 2011 and 2010

(Unaudited) (In thousands of US Dollars)

Key management personnel

Compensation of key management personnel for the second quarter ended June 30, 2011 was $305 (2010 -$240). Compensation costs include salaries and other post-retirement benefits.

The Company has identified its directors and senior officers as key management personnel.

9.    INCOME TAX

Income tax expense is recognized based on management’s best estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual rate used for the year ended December 31, 2010 was 31% and the six months ended June 30, 2011 was 31%.

10.  ECONOMIC DEPENDENCE

The Company`s two customers are Xstrata and Teck Cominco accounting for 100% of sales of $30,843 (June 30, 2010 - $14,489) during the second quarter and 98% of the trade receivables balance at June 30, 2011.

11.  SUBSEQUENT EVENTS

On July 28th, 2011 the Company issued a Notice of Acceleration to all warrant holders from a bought deal private placement that closed on September 29, 2010, subject to the terms, covenants, conditions and provisions of the September 29, 2010 warrant indenture.  The Company has also issued an acceleration notice to all holders of broker options issued on September 29, 2010.  As the common shares of US Silver have traded above $0.45 for twenty consecutive trading days since June 29, 2011, US Silver has provided notice to all warrant and broker option holders that the warrants and broker options will expire at 5:00 pm (Toronto time) on August 29, 2011, being no less than 30 days following the date of the acceleration notice.  The Company originally issued 13,282,500 warrants exercisable at a price of $0.35 and 1,593,900 broker options exercisable at $0.26 as part of the bought deal private placement.

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