Blender Bites Limited (BITE-CF) 6-K Interim Financial Statements

Journey Resources Corp.

August 31, 2008
(Expressed in Canadian Dollars)

Consolidated Financial Statements

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 an auditor has not reviewed the financial statements.

The accompanying unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.

2

JOURNEY RESOURCES CORP.

Consolidated Balance Sheets

(Expressed in Canadian Dollars)

	August 31,		November 30,
	2008		2007
	$		$
ASSETS	(Unaudited)		(Audited)
CURRENT
Cash	76,521		448,401
Accounts Receivable	1,366		1,366
GST Recoverable	9,007		16,156
Share Subscriptions Receivable	-		10,000
Prepaid Expenses	11,096		59,174
	97,990		535,097
Marketable Securities (Note 4)	313,689		478,170
Due from Joint Venture Partner	125,001		52,821
Reclamation Bond (Note 5)	6,818		6,818
Property and Equipment (Note 6)	241,505		300,003
Mineral Properties (Note 7)	5,246,836		3,249,024
	6,031,839		4,621,933
LIABILITIES
CURRENT
Accounts Payable and Accrued Liabilities	463,006		173,262
Short-Term Loans (Note 8)	1,521,845		200,000
	2,159,851		373,262
Deferred Gain on Contribution to Joint Venture (Note 7c)	175,064		178,502
SHAREHOLDERS’ EQUITY
Share Capital (Note 10)	11,094,090		10,029,591
Contributed Surplus (Note 10)	1,532,719		1,222,406
Accumulated Other Comprehensive Loss	(95,891	)	(76,409	)
Deficit	(8,658,994	)	(7,105,419	)
	3,871,924		4,070,169
	6,031,839		4,621,933
Nature and Continuance of Business (Note 1)
Commitment (Note 11)
Subsequent Events (Note 15)

Approved by the Directors:
“Jatinder Bal”	“Robert Bryce”
Jatinder (Jack) Bal, Director	Robert Bryce, Director

3

JOURNEY RESOURCES CORP.

Consolidated Statements of Operations and Deficit

(Expressed in Canadian Dollars)

(Unaudited)

	For the three months ended				For the nine months ended
			August 31				August 31
	2008		2007		2008		2007
	$		$		$		$
EXPENSES
Accounting and Audit	15,973		-		45,507		-
Advertising and Communications	3,635		9,141		19,024		12,930
Amortization	23,035		683		69,108		2,051
Consulting Fees	65,000		23,251		228,700		102,473
Filing and Transfer Agent Fees	10,921		7,224		32,437		33,974
Interest on Short-Term Loan (Note 8)	67,500		-		113,500		-
Investor Relations	69,230		155,644		222,698		457,528
Legal	22,485		-		51,374		-
Management Fees (Note 9)	21,000		21,000		63,000		63,000
Miscellaneous Expenditures on Written-off Property	8,262		-		8,262		-
Office	53,861		42,557		159,887		132,589
Professional Fees	-		19,511		-		59,871
Rent	12,550		9,275		36,976		37,039
Stock Based Compensation (Note 10)	-		(26,349	)	499,111		57,108
Travel	15,513		4,059		86,623		17,009
	388,964		265,996		1,636,207		975,572
LOSS BEFORE OTHER ITEMS	(388,964	)	(265,996	)	(1,636,207	)	(975,572	)
Interest Income	366		33		366		378
Gain on Sale of Marketable Securities	-		68,862		(29,811	)	118,928
Administrative and Office Support
Fee Income (Note 9)	60,000		-		90,000		-
Amortized Gain on Contribution to Joint Venture
(Note 7c)	1,146		-		3,438		-
Operator Management Fee Income	99		-		3,429		-
Rental Income	-		-		15,210		-
NET LOSS FOR THE PERIOD	(327,353	)	(197,101	)	(1,553,575	)	(856,266	)
Deficit, Beginning of the Period	(8,331,641	)	(5,401,598	)	(7,105,419	)	(4,742,433	)
DEFICIT, END OF THE PERIOD	(8,658,994	)	(5,598,699	)	(8,658,994	)	(5,598,699	)
BASIC AND DILUTED LOSS PER SHARE	(0.01	)	(0.01	)	(0.04	)	(0.04	)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING	39,609,806		28,849,824		38,373,594		26,899,853

4

JOURNEY RESOURCES CORP.

Consolidated Statements of Comprehensive Loss and

Other Accumulated Comprehensive Loss

For the Nine Months Ended August 31, 2008 and 2007

(Expressed in Canadian Dollars)

(Unaudited)

	2008		2007
	$		$
COMPREHENSIVE LOSS:
Net Loss for the Period	(1,553,575	)	(856,266	)
Other Comprehensive Income (Loss)	(95,891	)	62,937
- unrealized gain on marketable securities
Comprehensive Income (Loss) for the Period	(1,649,466	)	(793,329	)
ACCUMULATED OTHER COMPREHENSIVE LOSS:
Balance, Beginning of the Period	(76,409	)	-
Sale of Marketable Securities	(1,350	)	-
Other Comprehensive Income (Loss) for the Period	(18,132	)	62,937
Balance, End of the Period	(95,891	)	62,937

5

JOURNEY RESOURCES CORP.

Consolidated Statements of Cash Flows

(Expressed in Canadian Dollars)

(Unaudited)

	For the three months ended				For the nine months ended
			August 31,				August 31,
	2008		2007		2008		2007
	$		$		$		$
CASH WAS PROVIDED FROM (UTILIZED
FOR):
OPERATING ACTIVITIES
Net Loss for the Period	(327,353	)	(197,101	)	(1,553,575	)	(856,266	)
Non-Cash Items:
Amortization	23,035		683		69,108		2,051
Stock Based Compensation	-		(26,349	)	499,111		57,108
Loss (Gain) on Marketable Securities	-		(68,862	)	29,811		(118,928	)
Amortized Gain on Contribution to Joint Venture	(1,146	)	-		(3,438	)	-
Non-Cash Interest Expense	60,000		-		91,000		-
	(245,464	)	(291,629	)	(867,983	)	(916,035	)
Change in Non-Cash Working Capital Accounts
(Note 12)	246,902		113,794		272,790		(396,704	)
	1,438		(177,835	)	(595,193	)	(1,312,739	)
FINANCING ACTIVITIES
Shares Issued for Cash	404,900		-		637,400		1,283,160
Share Subscriptions	(345,000	)	50,000		-		168,000
Option Payment Received	-		-		-		320,872
Share Issue Costs	(30,699	)	(1,152	)	(30,699	)	(63,392	)
Proceeds from Sale of Marketable Securities	-		231,754		115,187		337,964
Short-Term Loans Advances	959,845		200,000		1,261,845		200,000
	989,046		480,602		1,983,733		2,246,604
INVESTING ACTIVITIES
Purchase of Equipment	1,953		(242,674	)	(10,609	)	(246,832	)
Mineral Properties Costs	(975,137	)	(126,245	)	(1,749,811	)	(666,829	)
	(973,184	)	(368,919	)	(1,760,420	)	(913,661	)
DECREASE IN CASH	17,300		(66,152	)	(371,880	)	20,204
Cash, Beginning of the Period	59,221		116,830		448,401		30,474
CASH, END OF THE PERIOD	76,521		50,678		76,521		50,678
Supplemental Cash Flow Information (Note 12)

6

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 1 – NATURE AND CONTINUANCE OF BUSINESS

Journey Resources Corp. (the “Company”) is a mineral exploration resource company incorporated under the laws of the Province of British Columbia, Canada on March 29, 2000 under the name Access West Capital Corporation. On June 12, 2002, the Company changed its name to Journey Unlimited Omni Brand Corporation, and on November 4, 2005, to Journey Resources Corp.

The Company is presently in the business of the acquisition, exploration and development of mineral properties. It presently owns mining concessions in Guerrero State, Mexico, and mineral claims in Idaho, U.S.A. and Peru.

These financial statements have been prepared in accordance with Canadian generally accepted accounting principles on a going concern basis, which assumes the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future. The Company continues to incur operating losses, and has a consolidated deficit of $8,707,994 as at August 31, 2008.

The Company's ability to continue operations is uncertain and is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete exploration and development, and upon future profitable production or proceeds from disposition of these properties. The outcome of these matters cannot be predicted at this time. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue operations.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a)	Interim financial statements
	These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles and follow the same accounting policies and methods of application as the annual financial statements. These interim consolidated financial statements do not include in all respects the annual disclosure requirements of generally accepted accounting principles and should be read in conjunction with the most recent annual statements.
b)	Basis of Consolidation
	The consolidated financial statements include the accounts of the Company, its wholly-owned Mexican subsidiary, Minerales Jazz S.A. de C.V. (Note 4), its wholly-owned Peruvian subsidiary, Minera Journey Resources Peru S.A.C. incorporated on September 18, 2007, and two wholly-owned inactive subsidiaries, Journey Unlimited Equipment Inc. (Canada) and Journey Unlimited Equipment Inc. (U.S.A.). All inter-company transactions and balances have been eliminated.
	The Company’s 50% interest in the Vianey Mine Joint Venture, which is subject to joint control, is consolidated on a proportionate basis, whereby the Company includes in these consolidated financial statement its proportionate share of the assets, liabilities, revenues and expenses of the joint venture (Note 7c).
c)	Foreign Currency Translation
	The Company’s foreign operations are determined to be of an integrated nature and are translated into Canadian dollars using the temporal method. Under this method, monetary assets and liabilities are translated at the rate of exchange in effect as at the balance sheet date and non-monetary assets and liabilities are translated at their applicable historical rates. Revenues and expenses are translated at the average rates prevailing for the year, except for amortization which is translated at the historical rates associated with the assets being amortized. Foreign exchange gains and losses from the translation of foreign operations are reflected in operations for the current year.

7

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

d)	Marketable Securities
	The Company has classified its marketable securities as available-for-sale financial assets which are carried on the balance sheet at their fair value. Fair value is based on quoted market prices. Unrealized gains or losses on the change in fair value are recognized in other comprehensive income until the marketable securities are sold, at which time the cumulative gains or losses previously recognized in accumulated other comprehensive income are recognized in net income.
e)	Property and Equipment
	Property and equipment are recorded at cost and amortized at the following rates on a declining balance basis, except in the year of acquisition, when one half of the rates are used and on a straight-line basis for leasehold improvements:

Computer Equipment	30 - 55%
Exploration Equipment	30%
Furniture and Fixtures	20%
Leasehold improvements	20%

f)	Mineral Properties
	The Company’s mineral properties are in the exploration stage and therefore, the Company capitalizes all expenditures related to the acquisition, exploration and development of mineral properties until such time as the properties are placed into commercial production, abandoned, sold or considered to be impaired in value. Costs of producing properties are amortized on a unit-of-production basis based on proven and probable reserves. Costs of abandoned properties are written off to operations. Proceeds received on the sale of interests in mineral properties are credited to the carrying value of the mineral properties, with any excess included in operations. Adjustments to carrying value due to impairment are charged to operations.
	Property option payments received are credited against the cost of mineral properties. Where option payments received exceed the recorded acquisition costs of mineral claims, the amount in excess of the capitalized costs is credited to operations.
	The Company has not yet determined the amount of reserves available on the properties owned. The recoverability of the capitalized costs for mineral properties is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain financing to complete development of the properties and on future production or proceeds of disposition. The Company assesses the impairment of a mineral property whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Recoverability of the capitalized costs is then determined by a comparison of the carrying amount of the property to future undiscounted net cash flows expected to be generated by the mineral property. If a mineral property is considered to be impaired, that property is written down to its estimated net realizable value.
	Although the Company has taken steps to verify the title to mineral properties in which it has an interest in accordance with general industry standards, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and therefore title may be affected.

8

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

g)	Asset Retirement Obligation
	The Company records the fair value of a liability for an asset retirement obligation, including site closure and reclamation costs associated with exploration activities on its mineral properties, in the period in which it is incurred if a reasonable estimate of fair value can be made. The Company records the estimated present value of future cash flows associated with site closure and reclamation as a liability when the liability is incurred and increases the carrying value of the related assets by that amount. The liability is accreted over time for changes in the fair value through charges to accretion expense. The costs capitalized to the related assets are depleted to earnings in a manner consistent with the underlying assets.
	As at August 31, 2008 and 2007, the Company has determined that it does not have any material obligations for asset retirement obligations.
h)	Impairment of Long-Lived Assets
	Long-lived assets are reviewed by the Company for possible impairment whenever events or changes in circumstances indicate that carrying value of an asset may not be recoverable. An impairment loss is recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flow expected to result from the use of the asset and its eventual disposition. As at August 31, 2008 and November 30, 2007, management believes there has been no impairment of the Company’s long-lived assets, with the exception of the Empire Mine Project for which the Company recorded a writedown of $810,226 during the year ended November 30, 2007 (Note 7b).
i)	Revenue Recognition
	As the Company is the operator of the Vianey Mine Joint Venture (Note 7c), operator management fee income is charged to the joint venture partner based on 5% of the joint venture partner’s portion of the exploration and development expenditures. Operator management fee income is recognized once the related expenditures have been incurred and collection is reasonably assured.
	Interest income and administrative and office support fee income is recognized when earned and collection is reasonably assured.
j)	Comprehensive Income
	Comprehensive income is the change in net assets from transactions related to non-shareholder sources. The Company presents gains and losses which would otherwise be recorded as part of net earnings in “other comprehensive income” until it is considered appropriate to recognize them into net earnings. The Company presents comprehensive income and its components in a separate financial statement that is displayed with the same prominence as other financial statements.
k)	Loss Per Common Share
	Basic loss per common share is calculated using the weighted average number of shares issued and outstanding during the year. Diluted loss per share is the same as basic loss per share as the effect of issuance of shares on the exercise of stock options and warrants is anti-dilutive.
l)	Comparative Figures
	Certain comparative figures have been reclassified to conform with the financial statement presentation adopted for the current year. These reclassifications have no effect on the net loss for the periods ended August 31, 2008 and 2007.

9

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

m)	Share Capital and Stock Based Compensation
	The Company records proceeds from share issuances net of related share issue costs. Share capital issued for non- monetary consideration is recorded at an amount based on the quoted market value of the Company’s shares on the date of share issuance.
	The Company grants stock options to management, directors, employees and consultants. The Company recognizes compensation expense for options and broker warrants issued under the fair value based method in accordance with CICA Handbook Section 3870 “Stock-Based Compensation and Other Stock-Based Payments”. The fair value of each option grant is estimated on the date of the grant and recognized over the vesting period, with the offsetting amounts credited to contributed surplus. The Company estimates the fair value of each grant using the Black-Scholes option-pricing model.
	Consideration received on the exercise of stock options is recorded as share capital and the related contributed surplus amount is transferred to share capital.
n)	Use of Estimates
	The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant areas requiring the use of management estimates include the assessment of recoverability of mineral properties and property and equipment, the determination of the amortization period of property and equipment, the estimated amount of accrued liabilities and asset retirement obligations, the realization of future tax assets, and the determination of the fair value of stock-based compensation. Actual results may differ from these estimates.
o)	Income Taxes
	The Company accounts for income taxes using the asset and liability method, whereby future tax assets and liabilities are determined based on differences between the financial reporting and the tax bases of assets and liabilities. These differences are measured using substantially enacted tax rates and laws that will be in effect when the differences are expected to reverse. Income tax assets, including the benefit of income tax losses available for carry-forward, are only recognized to the extent that it is more likely than not that the Company will ultimately realize those assets.
p)	Changes in accounting policies
	On December 1, 2007, the Company adopted the following provisions of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Sections. There was no material impact on the Company’s financial condition or operating results as a result of the adoption of these new standards:
	a)	Section 3862 – Financial Instruments – Disclosures, which replaces Section 3861 and provides expanded disclosure requirements that provide additional detail by financial asset and liability categories (see Note 13).
	b)	Section 3863 – Financial Instruments – Presentation, to enhance financial statement users’ understanding of the significance of financial instruments to an entity’s financial position, performance and cash flows (see Note 13).

10

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

p)	Changes in accounting policies (Continued)
	c)	Section 1535 – Capital Disclosures, which establishes standards for disclosing information about an entity’s capital and how it is managed (see Note 14). Under this standard, the Company will be required to disclose the following:
		•	qualitative information about its objectives, policies and processes for managing capital;
		•	summary quantitative data about what it manages as capital;
		•	whether during the period it complied with any externally imposed capital requirement to which it is subject; and
		•	when the Company has not complied with such externally imposed capital requirements, the consequences of such non-compliance.
	d)	Section 1400 – General Standards of Financial Statement Presentation, to include requirements for management to assess and disclose an entity’s ability to continue as a going concern (see Note 1).

NOTE 3 – BUSINESS ACQUISITION

On April 11, 2005, the Company entered into a share purchase agreement (“the Agreement”) with Murcielago Capital S.A. (“Murcielago”) to acquire 5,000,000 common shares (out of a total of 5,050,000 issued and outstanding shares) of Minerales Jazz S.A. de C.V. (“Minerales Jazz”), a private Mexican mining exploration company. The main asset held by Minerales Jazz is the Vianey Mine concession, located in Guerrero State, Mexico.

Upon signing the Agreement, the Company made a cash payment of $150,000, issued 900,000 common shares valued at $360,000, and granted 100,000 share purchase warrants valued at $3,336. Each share purchase warrant entitled the holder to acquire one common share of the Company at a price of $0.40 per share. The warrants were not exercised and expired on July 20, 2006. During the year ended December 31, 2005, the Company incurred professional and sponsorship fees related to the purchase of Minerales Jazz in the amount of $82,383 which have been included in acquisition costs.

On September 11, 2006, the Company exercised its option to purchase the remaining 50,000 common shares of Minerales Jazz by making a nominal cash payment of $10.

On June 06, 2007, the Company issued an additional 500,000 common shares to Murcielago upon the completion of a recommended work program. This share issuance represented contingent consideration, and the fair value of these common shares of $185,000 has been recognized as subsequent additional acquisition costs in 2007.

11

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 3 – BUSINESS ACQUISITION (Continued)

Total acquisition costs recorded are $780,729. The acquisition has been accounted for by the purchase method with the fair value of the consideration paid being allocated to the identifiable assets acquired and liabilities assumed on July 20, 2005 as follows:

	$
Net Identifiable Assets Acquired:
Mineral Property	777,484
Other Assets	3,245
	780,729
Consideration paid:
Cash	150,010
Fair Value of Shares Issued	545,000
Fair Value of Share Purchase Warrants Issued	3,336
Acquisition Costs	82,383
	780,729

These consolidated financial statements include the results of operations of Minerales Jazz commencing from July 20, 2005, the date of acquisition.

In addition, the Company has agreed to issue 800,000 common shares on or after that date which is seven business days following the earlier of (i) the completion of an economically viable pre-feasibility study on the Vianey Mine, and (ii) the commencement of commercial production. This conditional share issuance is considered contingent consideration, the outcome of which cannot be determined without reasonable doubt. Consequently, no amount is recognized for this portion of the acquisition until the contingency is resolved and the shares are issued or become issuable.

NOTE 4 – MARKETABLE SECURITIES

As of August 31, 2008, the Company owned 1,600,000 (November 30, 2007 – 2,100,000) common shares of Wits Basin Precious Minerals Inc. (“Wits Basin”). These shares are listed on the Over-The-Counter Bulletin Board in the United States and are subject to resale restrictions under the US Securities Law, unless the Company exercises its piggyback rights with Wits Basin to register these shares with the US Securities and Exchange Commission.

In March 2008, the Company sold 500,000 of Wits Basin shares for gross proceeds of $115,187.

Unrealized loss of $95,891 on the available for sale securities for the period ended August 31, 2008 is reported in Other Comprehensive Loss in the current period. There is no tax impact resulting from these adjustments in Other Comprehensive Loss as the Company has sufficient unrecorded future income tax assets available to offset future income tax liabilities.

NOTE 5 – RECLAMATION BOND

During the year ended November 30, 2006, the Company deposited US$5,800 (CDN$6,818) with the United States Department of Agriculture Forest Service for future mineral claim site reclamation costs associated with the Musgrove Creek Gold Project (Note 7a).

12

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 6 – PROPERTY AND EQUIPMENT

		Accumulated	Net Book
	Cost	Amortization	Value
	$	$	$
August 31, 2008
Computer Equipment	9,410	5,027	4,383
Exploration Equipment	343,268	116,650	226,618
Furniture and Fixtures	6,735	1,928	4,807
Office Improvements	6,547	850	5,697
	365,960	124,455	241,505
November 30, 2007
Computer Equipment	8,768	2,978	5,790
Exploration Equipment	341,128	51,169	289,959
Furniture and Fixtures	5,455	1,201	4,254
	355,351	55,348	300,003

NOTE 7 – MINERAL PROPERTIES

	November 30,		Joint Venture	November 30,		August 31,
	2006	Additions	Adjustments	2007	Additions	2008
	$	$	$	$	$	$
(a) Musgrove Creek Gold
Project, Idaho, USA
Acquisition Costs	373,752	85,300	-	459,052	38,500	497,552
Exploration Expenditures:
Administrative	8,797	18,394	-	27,191	22,805	49,996
Assay	48,085	4,456	-	52,541	11,186	63,727
Drilling	246,159	133,261	-	379,420	9,051	388,471
Field Supplies	2,663	8,244	-	10,907	7,278	18,185
Geochemical Survey	91,991	109,258	-	201,249	-	201,249
Geological	54,529	42,092	-	96,621	37,125	133,746
Maintenance Fees	11,073	-	-	11,073	-	11,073
Staking and Recording	6,766	11,629	-	18,395	11,459	29,854
	843,815	412,634	-	1,256,449	137,404	1,393,853

13

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 7 – MINERAL PROPERTIES (Continued)

	November 30,				Joint Venture		November 30,				August 31,
	2006		Additions		Adjustments		2007		Additions		2008
	$		$		$		$		$		$
(b) Empire Mine Project
Idaho, USA
Acquisition Costs	522,269		50,000		-		572,269		-		572,269
Exploration Expenditures:
Administrative	18,483		27,998		-		46,481		-		46,481
Assay	58,391		86,155		-		144,546		-		144,546
Drilling	500,412		-		-		500,412		-		500,412
Engineering	34,271		47,740		-		82,011		-		82,011
Field Costs	167,569		6,252		-		173,821		-		173,821
Geochemical	-		7,876		-		7,876		-		7,876
Geological	125,192		37,803		-		162,995		-		162,995
Staking and Recording	-		19,815		-		19,815		-		19,815
Writedown Property	-		(810,226	)	-		(810,226	)	-		(810,226	)
	1,426,587		(526,587	)	-		900,000		-		900,000
(c) Vianey Mine Silver
Project, Guerrero State,
Mexico
Acquisition Costs	622,484		185,000		(583,666	)	223,818		-		223,818
Option Payments Received	(219,037	)	(187,936	)	406,973		-		-		-
Exploration Expenditures:
Administrative	19,279		6,000		(21,969	)	3,310		12,750		16,060
Drilling	225,325		108,681		(334,006	)	-		-		-
Engineering	-		-		15,000		15,000		-		15,000
Field and Exploration	169,509		38,175		(156,467	)	51,217		120,786		172,003
Geological	52,905		14,000		(43,989	)	22,916		37,856		60,772
Fees and Permits	-		-		5,328		5,328		5,481		10,809
Recovery from Optionee	(359,820	)	(687,515	)	1,047,335		-		(68,579	)	(68,579	)
	510,645		(523,595	)	334,539		321,589		108,294		429,883
(d) Silver Mountain
Project, Peru
Acquisition Costs	-		758,632		-		758,632		6,070		764,702
Exploration Expenditures:
Administrative	-		12,000		-		12,000		-		12,000
Assay	-		354		-		354		-		354
Geological	-		-		-		-		18,885		18,885
	-		770,986		-		770,986		24,955		795,941

14

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 7 – MINERAL PROPERTIES (Continued)

	November 30,		Joint Venture	November 30,		August 31,
	2006	Additions	Adjustments	2007	Additions	2008
	$	$	$	$	$	$
(e) Silveria Project, Peru
Acquisition Costs	-	-	-	-	478,000	478,000
Exploration Expenditures:
Administrative	-	-	-	-	93,364	93,364
Assay	-	-	-	-	77,234	77,234
Field and Exploration	-	-	-	-	255,445	255,445
Legal	-	-	-	-	48,056	48,056
Geological	-	-	-	-	737,170	737,170
Permits and License	-	-	-	-	37,890	37,890
	-	-	-	-	1,727,159	1,727,159
	2,781,047	133,438	334,539	3,249,024	1,997,812	5,246,836

a)	Musgrove Creek Gold Property
	On June 13, 2007, the Company fulfilled all of its obligations under an option agreement (the “Agreement”) with Roxgold Inc. (formerly Wave Exploration Corp.) and Wave Mining Inc. and acquired all rights, title and interest to the Musgrove Creek Gold Property (“Musgrove Property”). The Musgrove Property consists of 47 unpatented claims situated in the Cobalt Mining District, Lemhi County, Idaho, USA.
	In 2006, the Company staked and recorded an additional 40 claims contiguous to the Musgrove Property.
	Under the terms of the Agreement, the Company assumed the underlying lease agreement dated June 12, 2003 with respect to certain mineral claims that comprise the Musgrove Property. The underlying lease has a 10 year term and can be renewed for two successive terms of 10 years provided that the conditions of the lease are met. The Company is required to pay annual lease payments to the underlying lesser which progressively increase from US$25,000 paid on the third anniversary of the lease to a maximum of US$50,000 per year for the duration of the lease. These claims are subject to an underlying 2% production royalty and a lump sum payment of US$1,000,000 upon completion of a feasibility study. In addition, the Company is required to incur minimum annual exploration expenditures of US$100,000 on the property during the term of the lease. As at August 31, 2008, the Company has paid a total of US$90,000 for the third, fourth and fifth annual lease payments to the underlying lesser, and has incurred a total of $896,301 of exploration expenditures on the property.
b)	Empire Mine Property
	On May 29, 2006, the Company signed an option agreement with Trio Gold Corp. (“Trio”) to acquire a 50% lease interest in certain mining claims known as the Empire Mine Property (“Empire Property”). The Empire Property consists of 23 patented mining claims, 6 mill-site claims and 21 unpatented mining claims situated in the Alder Creek Mining District, Custer County, Idaho, USA. On January 09, 2007, the Company staked and recorded an additional 10 claims contiguous to the Empire Property.

15

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 7 – MINERAL PROPERTIES (Continued)

b)	Empire Mine Property (Continued)
	Under the terms of the agreement, the Company earned a 50% lease interest in the property by making a non- refundable deposit of US$50,000, a cash payment of $200,000, and issuing 700,000 common shares of the Company. In addition, the Company issued 200,000 common shares valued at $58,000 as a finder’s fee.
	On June 26, 2006, Trio was served with a Statement of Claim asserting they were in breach of the underlying lease agreement with respect to the ownership of the mineral claims. Trio filed a Statement of Defense and Counterclaim on July 20, 2006. The Company’s interest in the Empire Mine is wholly derived from its option agreement with Trio, and in the event that Trio’s interest in the Empire Mine is terminated, the interest of the Company will also be terminated.
	On September 27, 2007, the Company and Trio entered into an amended agreement whereby the Company made additional cash payments totalling $50,000. In exchange, Trio agreed to defer the exploration expenditure requirement under the original agreement, pending the outcome of the litigation between Trio and the underlying lessor.
	On February 27, 2008, the Company and Trio entered into a settlement agreement with the underlying lessor and land owners, whereby a new lessee will purchase 100% right, title and interest in the Empire Mine property from the Company and Trio for a total of $1,000,000, pending completion of a satisfactory due diligence review and subject to court approval. The Company will pay $100,000 to Trio upon receipt of the $1,000,000 settlement. As a result of this settlement, the Company has written off $810,226 in costs incurred with respect to the project as at November 30, 2007.
c)	Vianey Mine Silver Property – Joint Venture
	On April 11, 2005, the Company acquired 100% of Minerales Jazz, the beneficial holder of the Vianey Mine concession (Note 4). The Vianey Property is held pursuant to an exploitation concession issued on May 5, 1979 by the government of Mexico and will expire in 2029, unless renewed.
	On June 28, 2006, the Company signed an Option Agreement with Wits Basin whereby the Company granted Wits Basin the option to acquire up to a 50% interest in the Vianey Property. On December 18, 2006, Wits Basin earned a 25% interest in the Vianey Property by issuing 600,000 of its common shares (with a fair value of $219,037) to the Company and incurring US$500,000 in exploration expenditures. The Company also issued 100,000 common shares, with a fair value of $30,000, as a finder’s fee in fiscal 2006.
	Pursuant to the Option Agreement, the Company and Wits Basin entered into a joint venture arrangement with a 75% and 25% interest respectively, for the exploration and development of the Vianey Mine Silver Project. The Company is the operator of the project.
	On October 31, 2007, Wits Basin exercised its option to earn an additional 25% interest to increase its total interest to 50% in the Vianey Property by paying US$100,000 in cash and issuing a total of 2,100,000 of its common shares (500,000 shares with a fair value of $187,936 received on January 09, 2007 and 1,600,000 shares with a fair value of $366,643 received on October 29, 2007). The joint venture exploration and development arrangement has been changed accordingly with 50% interest owned by the Company and the remaining 50% interest owned by Wits Basin.

16

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 7 – MINERAL PROPERTIES (Continued)

	The use of the proportionate consolidation method has resulted in a deferred gain of $178,502 on the contribution of the Company’s interest in the Vianey Mine Property to the joint venture. The deferred gain is amortized on a straight line basis over a term of 40 years, and as such, as of August 31, 2008, the amortized gain totalled $8,268.
	As at August 31, 2008, the Company has included its 50% share of the mineral property costs of the joint venture, in the Company’s consolidated financial statements.
	The joint venture has no other assets or liabilities as at August 31, 2008, and has no revenues or expenses for the period from inception on December 18, 2006 to August 31, 2008.
d)	Silver Mountain Property
	On October 18, 2007, the Company, through its wholly owned Peruvian subsidiary, Minera Journey Resources Peru SAC, acquired 100% interest in the Silver Mountain property in Peru.
	The Company paid $80,000 and issued 2,500,000 common shares with a fair value of $625,000. In addition, 200,000 common shares of the Company valued at $50,000 were paid as a finders' fee.
	The Company will pay a 1% net smelter royalty upon commencement of commercial production of the Property.
e)	Silveria Property
	On February 05, 2008, the Company through its wholly-owned Peruvian subsidiary entered into an option and joint venture agreement (amended on March 17, 2008 and on September 26, 2008 (Note 15)) with Grenville Gold Corporation (“Grenville”) to acquire up to a 75% interest in the Silveria property, located in the Huarochiri Province of Peru. The Company paid $200,000 upon signing a letter of intent on December 13, 2007. Grenville was a related company with a common director until March 12, 2008 at which date the director resigned from the boards of both Grenville and the Company.
	Under the terms of the agreement, the Company may earn up to 75% interest in the Silveria property by fulfilling the following funding and expenditure requirements:
	i)	funding of $1,300,000 (requirement subsequently met) towards development and exploration expenditures on the Property and issuance of 1,000,000 common shares (issued, Note 10v) on or before June 30, 2008 (the “Approval Date”);
	ii)	funding of a further $1,500,000 on or before three months following the Approval Date, at which time the Company will have earned a 25% interest in the property and a joint venture will be formed;
	iii)	funding of a further $3,000,000 on or before eight months following the Approval Date, at which time the Company will have earned another 25% interest for a total of 50% joint venture interest in and to the property; and
	iv)	funding of a further $6,000,000 towards expenditures on the Property and an additional option payment of $1,000,000 to Grenville on or before January 31, 2011, at which time the Company will have earned another 25% interest for a total 75% joint venture interest in and to the property. Grenville shall, however, have a one- time option to elect to fund the equivalent amount of $6,000,0000 in order to maintain its 50% interest in and to the property, and have the joint venture continue to run on a 50/50 basis.

17

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 7 – MINERAL PROPERTIES (Continued)

The Company issued 400,000 shares as finder’s fees on this acquisition (Note 10v).

In 2008, Grenville filed a lawsuit against High Ridge Resources Inc. for slander to title of the Bella Rubia mineral exploration properties, which form part of the Silveria Project. The outcome of the legal proceedings is uncertain and its resolution will determine whether there is a loss or impairment of the Company’s interest in the Silveria Project.

NOTE 8 – SHORT TERM LOANS

a)	On August 27, 2007, the Company entered into a Loan Agreement for $200,000 by way of a promissory note for a period of one year in connection with the purchase of a diamond drill.
	The loan was secured by the registration of a charge on the drill in the name of the Lender. The Loan is repayable on or before August 27, 2008 ($100,000 was subsequently paid (Note 15)), and bears interest at a rate of 15% per annum. In addition, the Company issued 100,000 bonus shares with a value of $31,000 on the day of issuance (Note 10).
	For the period ended August 31, 2008, the Company paid interest totalling $22,500.
b)	The advance of $261,845 from related company with a common director, is unsecured, non-interest bearing, and has no specified terms of repayment.
c)	On June 30, 2008, the Company entered into a Loan Agreement for $1,000,000 by the way of promissory note. The Loan bears interest of 3% per month. In addition, the Company will pay lender a due diligence fee of $25,000 and a commitment fee of $26,500 on the payment date.
	The Loan is secured by the pledge of 722,000 common shares of the Company held by the President of the Company and 1,600,000 Wits Basin common shares owned by the Company (Note 4). As of August 31, 2008, the accrued interest totalled $60,000.

NOTE 9 – RELATED PARTY TRANSACTIONS

In addition to those transactions disclosed elsewhere in these financial statements, the Company had the following transactions with related parties:

a)	During the period ended August 31, 2008, the Company paid management fees of $63,000 (2007 – $63,000) to a company controlled by the President of the Company for management and consulting services.
b)	During the period ended August 31, 2008, the Company charged a fee of $90,000 (2007 – $Nil) to a related company with a common director, for administrative and office support.
c)	As at August 31, 2008, there was a short term loan of $261,842 (November 30, 2007 - $Nil), included in the amounts due from related parties for advances to a company with a director in common.

The balances due from related parties are unsecured, bear no interest and have no specified terms for repayment. All related party transactions were measured at the exchange value, which represented the amount of consideration established and agreed to by the related parties.

18

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 10 – SHARE CAPITAL

a)	Issued and Outstanding Common Shares and Contributed Surplus
	Unlimited number of common shares without par value.

	Number of	Amount		Contributed
	Common Shares			Surplus
		$		$
Balance, November 30, 2006	24,701,130	6,626,840		924,607
Issued During the Year
For Cash
Private Placements (ii)	8,458,430	2,394,750		-
Exercise of Warrants (i)	643,000	244,340		-
Exercise of Options	166,627	58,320		-
For Mineral Properties
Musgrove Property (Note 7a)	75,000	27,000		-
Vianey Property (Note 7c)	500,000	185,000		-
Silver Mountain Property (Note 7d)	2,700,000	675,000		-
Finder’s Fees and Share Issue Costs (ii)	-	(238,925	)	49,597
Fair Value of Options Exercised	-	57,266		(57,266	)
Stock-Based Compensation on Options (Note 10d)	-	-		305,468
Balance, November 30, 2007	37,244,187	10,029,591		1,222,406
Issued During the Period
For Cash
Private Placement (vi)	2,024,500	346,692		58,208
Exercise of Options (iv)	750,000	232,500		-
Bonus Shares (iii)	100,000	31,000		-
For Mineral Properties
Silveria Property (v)	1,400,000	248,000		-
Finder’s Fees and Share Issue Costs (vi)	-	(34,414	)	3,715
Fair Value of Options Exercised (iv)	-	250,721		(250,721	)
Stock-Based Compensation on Options (Note 10d)	-	-		499,111
Balance, August 31, 2008	41,518,687	11,094,090		1,532,719

a) Issued and Outstanding Common Shares and Contributed Surplus (Continued)

(i)

During the year ended November 30, 2007, 643,000 warrants priced at $$0.38 were exercised for total proceeds of $244,340.

(ii)

On April 24, 2007, the Company completed a private placement for 2,801,430 units at a price of $0.35 per unit for total proceeds of $980,500. Each unit consists of one common share and one share purchase warrant exercisable to purchase one additional common share at a price of $0.55 for a period of two years. The Company paid finder’s and legal fees totalling $68,404 in connection with this private placement and issued 172,114 broker warrants with a fair value of $21,327. Each broker warrant is exercisable into one common share at a price of $0.55 for a period of two years.

19

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 10 – SHARE CAPITAL (Continued)

	On October 15, 2007, the Company completed a private placement of 2,287,000 units at a price of $0.25 per unit for total proceeds of $571,750. Each unit consists of one common share and one-half of a share purchase warrant. Each whole warrant is exercisable into one common share at a price of $0.35 for a period of two years. The Company paid finder’s and legal fees totalling $50,964 in connection with this private placement and issued 128,560 broker warrants with a fair value of $8,798. Each broker warrant is exercisable into one common share at a price of $0.35 for a period of two years.
	On November 24, 2007, the Company completed a private placement of 3,370,000 units at a price of $0.25 per unit for total proceeds of $842,500. Each unit consist of one common share and one-half of a share purchase warrant. Each whole warrant is exercisable into one common share at a price of $0.35 for a period of two years. The Company paid finder’s and legal fees totalling $69,960 in connection with this private placement and issued 154,600 broker warrants with a fair value of $19,472. Each broker warrant is exercisable into one common share at a price of $0.35 for a period of two years.
(iii)	On January 25, 2008, the Company issued a total of 100,000 common shares pursuant to the Loan Agreement (Note 8a).
(iv)	During the period ended August 31, 2008, 750,000 of the stock options were exercised for gross proceeds of $232,500. A faire value of $250,721 was transferred from contributed surplus on the exercise of these options.
(v)	During the period ended August 31, 2008, 1,000,000 shares valued at $0.17 per share were issued on acquisition of Silveria property and 400,000 shares valued at $0.17 per share were issued as finder’s fees on this acquisition (Note 7e). The shares were valued based on the market value of the Company’s shares on the date of issuance.
(vi)	On August 5, 2008, the Company completed a private placement of 2,024,500 units at a price of $0.20 per unit for proceeds of $404,900. Each unit consists of one common share and one share purchase warrant exercisable into one common share at a price of $0.35 until August 5, 2010. A fair value of $58,208 was assigned to the warrants.
	The Company paid finder's fees of $11,152 in cash and issued 69,700 Agents’ units exercisable at a price of $0.20 into one share and one share purchase warrant with the same terms as private placement warrants. The faire value of Agents’ units of $3,715 using Black-Scholes model was recognised.
	Shares issued pursuant to this private placement are subject to a four-month hold period until December 5, 2008.

d)

Stock Options

The Company has established a stock option plan which provides for the granting of incentive stock options up to a maximum of 10% of the Company’s issued and outstanding common shares. The Company has issued options to directors, officers, employees and consultants. Terms of the options granted are subject to determination and approval by the Board of Directors. All options granted are subject to a four-month hold period from the date of grant as imposed by the TSX Venture Exchange.

20

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 10 – SHARE CAPITAL (Continued)

	Number		Weighted Average
	of Options		Exercise Price
			$
Balance, November 30, 2006	2,100,000		0.32
Granted	1,200,000		0.34
Cancelled	(550,000	)	0.35
Exercised	(166,627	)	0.35
Balance, November 30, 2007	2,583,373		0.32
Granted	1,550,000		0.32
Exercised	(750,000	)	0.31
Expires	(400,000	)	0.31
Balance, August 31, 2008	2,983,373		0.33

As at August 31, 2008, the Company has the following options outstanding:

	Options Granted and Outstanding			Options Vested and Exercisable
		Weighted	Weighted		Weighted
		Average	Average	Number of	Average
Range of	Number	Remaining	Exercise	Shares	Exercise
Exercise Prices	of Shares	Contractual life	Price	Exercisable	Price
$0.30 to $0.40	2,983,373	3.53 year	$0.33	2,983,373	$0.33

	The options expire between April 26, 2010 and February 7, 2013
e)	Share Purchase Warrants

	Number of		Weighted Average
	Warrants		Exercise Price
			$
Balance, November 30, 2006	3,765,232		0.38
Issued	6,085,204		0.45
Exercised	(643,000	)	0.38
Balance, November 30, 2007	9,207,436		0.42
Issued	2,024,500		0.35
Expired	(3,122,232	)	0.38
Balance, August 31, 2008	8,109,704		0.42

As at August 31, 2008, the Company has the following warrants outstanding:

Expiry Date
April 24, 2009	2,973,544	0.55
October 15, 2009	1,272,060	0.35
November 24, 2009	1,839,600	0.35
August 5, 2010	2,024,500	0.35
	8,109,704	0.42

21

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 10 – SHARE CAPITAL (Continued)

d) Agents’ Units

	Number of	Weighted Average
	Agents’ Units	Exercise Price
		$
Balance, November 30, 2006 and 2007	-	-
Granted (Note 7vi)	69,700	0.20
Balance, August 31, 2008	69,700	0.20

e)	Stock Based Compensation
	The fair value of stock options and brokers warrants granted is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used for the grants made during the fiscal 2008 and 2007:

	2008	2007
Risk-Free Annual Interest Rate	3.4-0.98%	4.0 – 4.5%
Expected Annual Dividend Yield	0%	0%
Expected Stock Price Volatility	142-147%	69 - 192%
Expected Life of Option	5 years	2 to 5 years

The weighted average fair value per share of stock options granted during the period ended August 31, 2008 was $0.00 per share. During the periods ended August 31 2008 and 2007, the Company respectively recognized $499,111 and $57,108 of stock based compensation expense for options granted to directors, officers, and consultants.

Option pricing models require the input of highly subjective assumptions. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore the existing models may not necessarily provide a single reliable measure of the fair value of the Company’s stock options.

NOTE 11 – COMMITMENT

On April 01, 2006, the Company entered into a lease agreement for office premises commencing April 01, 2006 and renewed on April 1, 2008 for a term of five years. The Company is committed to pay monthly basic rent of $4,200 plus monthly operating costs and taxes estimated at $4,633 for an estimated annual total of $106,000.

On April 1, 2008 the Company entered into an Access and Benefits Agreement (‘the Parac Agreement’) with the Community of Parac, Peru, with respect to the exploration and development of the Silveria Property. Pursuant to the Parac Agreement, the Company will pay the Community an annual fee which will allow Grenville and the Company unrestricted access to conduct exploration activities on land owned by the Community within the Silveria region for a ten year period. The Company also agreed to assist with the renovation and expansion of the community hall, the upgrade of the Community’s primary school through the provision of teaching materials, stationary and equipment, and to assist with outstanding legal fees owed by the Community.

22

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

Change in Non-Cash Working Capital Accounts

	For the three months ended			For the nine months ended
			August 31			August 31
	2008		2007	2008		2007
	$		$	$		$
Accounts Receivable	-		42,000	-
GST Recoverable	(614	)	5,467	7,149		10,004
Prepaid Expenses	9,132		36,369	48,078		20,379
Accounts Payable and Accrued Liabilities	240,459		29,958	289,744		(435,290	)
Advances from (to) Related Parties	-		-	-		8,203
Due from Joint Venture Partner	(2,075	)	-	(72,180	)	-
	246,902		113,794	272,791		(396,704	)

NOTE 13 - FINANCIAL INSTRUMENTS

The Company designated its cash and cash equivalents as held-for-trading, which are measured at fair value. Accounts receivable and amounts due from related parties and joint venture partner are classified as loans and receivables, which are measured at amortized cost. Accounts payable and accrued liabilities and short terms loans are classified as other financial liabilities. Marketable securities are classified as available-for-sale which are measured at fair value with changes in fair value recorded in other comprehensive income until the investment is derecognized or impaired at which time the amounts would be recorded in net income.

The Company recognized "other comprehensive loss" transactions during the period ended August 31, 2008 of $95,891.

The Company’s financial instruments are exposed to certain financial risks:

Fair values

The carrying values of cash, amounts receivable and accounts payable and accrued liabilities approximate their fair value based on their short term nature.

The carrying value of the long term debt approximates its fair value as it has been discounted at an interest rate approximating current market rates.

Foreign exchange risk

The Company is exposed to foreign exchange risk to the extent it incurs costs in foreign currencies including the Mexican Peso, Peruvian New Sols, and the US Dollar. The Company does not use derivatives to manage its exposure to foreign exchange risk.

Other risks

Due to the nature of the Company’s operations management considers that risks related to credit, interest and liquidity are not significant to the Company at this time.

23

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 13 - FINANCIAL INSTRUMENTS (Continued)

Commodity price risk

The ability of the Company to develop its mineral properties and the future profitability of the Company are directly related to the market price of gold. The Company has not hedged any of its future gold sales. The Company’s input costs are also affected by the price of fuel. The Company closely monitors gold and fuel prices to determine the appropriate course of action to be taken by the Company.

NOTE 14 - MANAGEMENT OF CAPITAL RISK

The Company manages its cash, common shares, stock options and warrants as capital (see Note 10). The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the development of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.

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

In order to facilitate the management of its capital requirements, the Company prepares expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions.

In order to maximize ongoing development efforts, the Company does not pay out dividends. The Company’s investment policy is to invest its short-term excess cash in highly liquid short-term interest-bearing investments with maturities 90 days or less from the original date of acquisition, selected with regards to the expected timing of expenditures from continuing operations.

The Company is currently assessing financing alternatives for its exploration plans and operations through its current operating period.

NOTE 15 – SUBSEQUENT EVENTS

a)	On October 15, 2008, the Company entered into a mineral claim option agreement (the "Option Agreement") with Tektite Financial Inc. and Minera Bacoachi, S.A de C.V., to acquire, through its wholly Mexican subsidiary, a 100% interest in and to certain mining claims comprising the Charay Gold Property, located in Sinaloa, Mexico.
	The terms of the agreement require the Company to pay a total of US$2,725,000, plus the required value –added tax in the amount of 15% ( “IVA”) during four years as follows:

initial payments consisting of $30,000 upon execution of the Option Agreement;
$25,000 on or before December 1, 2008;
$50,000 on or before April 1, 2009;
$50,000 on or before August 1, 2009;
$120,000 on or before January 1, 2009;
$150,000 on or before June1, 2010;
$200,000 on or before October 10, 2010;
$500,000 on or before April 1, 2011;
$600,000 on or before October 1, 2011;
$1,000,000 on or before April 1, 1212.

24

JOURNEY RESOURCES CORP.

Notes to the Consolidated Financial Statements

August 31, 2008

(Expressed in Canadian Dollars)

(Unaudited)

NOTE 15 – SUBSEQUENT EVENTS (Continued)

	In addition, the Company will issue 1,000,000 common shares and incur $75,000 in work expenditures on the Property on or before April 15, 2009.
	The option will retain a 2% net smelter royalty in the event of commercial production of the Property.
	Subject to regulatory approval, finders' fees may also be payable in connection with this transaction.
b)	On September 26, 2008, the Company and Grenville Gold Corporation entered into a second amendment to the joint venture agreement to acquire up to a 75% interest in and to certain mining claims comprising the Silveria property. Pursuant to the second amendment to the joint venture agreement (the "Amendment Agreement"), the Company must fund an amount of CDN$750,000 toward expenditures on the Property and issue 500,000 shares of its common stock to Grenville on or before October 31, 2008. On or before December 15, 2008, Journey shall fund a further amount of CDN$750,000 toward Expenditures on the Property, upon completion of which, Journey will have earned a 25% interest in and to the Property. In addition, the Company must fund a further CDN$3,000,000 in Expenditures on the Property on or before eight months following the date of approval of the TSX Venture Exchange, upon completion of which, the Company will have earned a 50% interest in and to the Property.
	The Company will maintain an option to earn an additional 25% interest in and to the Property by funding a further CDN$6,000,000 in Expenditures on the Property and making payment to Grenville in the amount of CDN$1,000,000 on or before January 31, 2011. In the event that Journey completes such further Expenditures, the Company will have earned a 75% interest in and to the Property, unless Grenville elects to contribute an equal amount of Expenditures under the joint venture in order to maintain its interest of 50% and have the joint venture continue to run on a 50/50% basis. All funds are to be deposited into a joint venture account within the required time limits for the purpose of funding work on the Property under the joint venture.
c)	In October 2008, the Company announced that a non-brokered private placement of up to 12,500,000 units at a price of $0.08 per unit for proceeds of up to $1,000,000. Each unit will consist of one common share and one half of a share purchase warrant, each full warrant exercisable to purchase one additional share at $0.15 per share for a period of two years from the date of issue.
	Shares issued pursuant to this non-brokered private placement, as well as any shares issued pursuant to the exercise of the warrants, will be subject to a four-month hold period from the date of closing. Finder's fees may be payable in connection with this proposed financing.
d)	Subsequently, the Company paid off $100,000 of its short-term loan (Note 8a).

25