News Column

ENERGIZER RESOURCES, INC. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

February 13, 2014

Included in this report are "forward-looking" statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA") as well as historical information. Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources and uses, and words including but not limited to "anticipates", "believes", "plans", "expects", "future" and similar statements or expressions, identify forward looking statements. Examples of forward-looking statements include, but are not limited to: (a) projections of our revenues, capital expenditures, growth, prospects, dividends, capital structure and other financial matters; (b) statements of our plans and objectives; (c) statements of our future economic performance; (d) statements of assumptions underlying other statements and statements about us and our business relating to the future; and (e) any statements using the words "believes," "budget," "target," "goal," "anticipate," "expect," "plan," "outlook," "objective," "may," "project," "intend," "estimate," or similar expressions. Any forward-looking statements herein are subject to certain risks and uncertainties in the business of Energizer Resources Inc. including but not limited to, planned capital expenditures, potential increases in prospective production costs, future cash flows and borrowings, pursuit of potential acquisition opportunities, the possibility that the industry may be subject to future regulatory or legislative actions (including additional taxes, changes in environmental regulation, changes in Madagascar French civil law and traditional Malagasy law, and disclosure requirements under the Dodd-Frank Wall Street Reform, Consumer Protection Act and the Jumpstart our Business Startups Act of 2012), our financial position, business strategy and other plans, objectives for future operations, difficulties of hiring or retaining key personnel and any changes in current accounting rules, all of which may be beyond the control of our Company. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth therein. We claim the protection afforded by the safe harbor for forward-looking statements provided by the PSLRA. Management's Discussion and Analysis of Results of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with our financial statements included herein. Further, this quarterly report on Form 10-Q should be read in conjunction with our Financial Statements and Notes to Financial Statements included in our fiscal 2013 Annual Report on Form 10-K for the year ended June 30, 2013, filed with the Securities and Exchange Commission on September 26, 2013. Our actual results could differ materially from those anticipated by the forward-looking statements due to important factors and risks including, but not limited to, those set forth under "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K. In addition, the foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements. Our financial statements have been prepared in accordance with United States generally accepted accounting principles. We urge you to read this report in conjunction with the risk factors described herein.



ITEM 1. DESCRIPTION OF BUSINESS

BACKGROUND - COMPANY OVERVIEW Energizer Resources Inc. (the "Company") was incorporated in the State of Nevada, United States of America on March 1, 2004 and reincorporated in the State of Minnesota on May 14, 2008. The Company's fiscal year end is June 30. The Company is an Exploration Stage Company, as defined by ASC Topic - 915, "Development Stage Entities". The Company's principal business is the acquisition and exploration of mineral resources. During fiscal 2008, the Company incorporated Energizer Resources (Mauritius) Ltd., a Mauritius subsidiary and Energizer Resources Madagascar Sarl, a Madagascar subsidiary. During fiscal 2009, the Company incorporated THB Venture Ltd., a Mauritius subsidiary to hold the interest in Energizer Resources Minerals Sarl, a Madagascar subsidiary, which holds the Green Giant Property in Madagascar. During fiscal 2012, the Company incorporated Madagascar-ERG Joint Venture (Mauritius) Ltd., a Mauritius subsidiary and ERG (Madagascar) Sarl, a Madagascar subsidiary. ERG (Madagascar) Sarl is 100% owned by Madagascar-ERG Joint Venture (Mauritius) Ltd., which is owned 75% by Energizer Resources (Mauritius) Ltd.ERG (Madagascar) Sarl holds the Malagasy Joint Venture Ground. During fiscal 2014, the Company incorporated 2391938 Ontario Inc., an Ontario, Canada subsidiary. 16

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We have not had any bankruptcy, receivership or similar proceeding since incorporation. Except as described below, there have been no material reclassifications, mergers, consolidations or purchases or sales of any significant amount of assets not in the ordinary course of business since the date of incorporation.

Summary of Our Business We are an exploration stage company engaged in the search for graphite, vanadium, gold, uranium and other minerals. We have an interest in properties located in the African country of Madagascar and Canada in the Province of QuÉbec. None of the properties in which we hold an interest have known mineral reserves of any kind at this time. As such, the work programs planned by us are exploratory in nature. Our executive offices are currently located at 520-141 Adelaide Street West, Toronto, Ontario, Canada M5H 3L5. Our telephone number is (416) 364-4911. We maintain a website at www.energizerresources.com (which website is expressly not incorporated by reference into this filing). These offices are leased on a month-to-month basis, and our monthly rental payments are currently CAD$10,000 per month. UNTIL WE CAN VALIDATE OTHERWISE, THE PROPERTIES OUTLINED BELOW HAVE NO KNOWN MINERAL RESERVES OF ANY KIND AND WE ARE PLANNING PROGRAMS THAT ARE EXPLORATORY IN NATURE. Further details regarding our properties, although not incorporated by reference, including the comprehensive geological report prepared in compliance with Canada's National Instrument 43-101 on our Green Giant Property (formerly the "Three Horses Property" in Madagascar) and our Sagar property in Northern Quebec can be found on our Company's website: www.energizerresources.com (which website is expressly not incorporated by reference into this filing) or in our Company's Canadian regulatory filings on www.sedar.com (which website and content is expressly not incorporated by reference into this filing). Cautionary Note Due to the nature of our business, we anticipate incurring operating losses for the foreseeable future. We base this expectation, in part, on the fact that very few mineral properties in the exploration stage ultimately develop into producing profitable mines. Our future financial results are also uncertain due to a number of factors, some of which are outside our control. These factors include, but are not limited to: our ability to raise additional capital as required;



the market price for graphite, vanadium, gold, uranium and for any other

minerals which we may find;

ongoing joint ventures;

the results of our proposed exploration programs on our mineral properties;

environmental regulations that may adversely impact cost and operations; and

our ability to find joint venture partners, as needed, for the development of

our property interests.

If we are successful in completing an equity financing, as necessary, existing shareholders will experience dilution of their interest in our company. In the event we are not successful in raising additional financing, we anticipate that we will not be able to proceed with our business plan. In such a case, we may decide to discontinue our current business plan and seek other business opportunities in the resource sector. During this period, should it ever arise, we will need to maintain our periodic filings with the appropriate regulatory authorities and, as such, will incur legal and accounting costs. In the event no other such opportunities are available and we cannot raise additional capital to sustain operations, we may be forced to discontinue our business altogether. We do not have any specific alternative business opportunities in mind and have not planned for any such contingency. Due to our lack of operating history and present inability to generate revenues, our auditors have stated their opinion that there currently exists doubt as to our ability to continue as a going concern. 17 --------------------------------------------------------------------------------



Properties

Madagascar PropertiesMolo Graphite Project, Southern Madagascar, Africa On December 14, 2011, we entered into a Definitive Joint Venture Agreement ("JVA") with Malagasy Minerals Limited ("Malagasy"), a public company on the Australian Stock Exchange, to acquire a 75% interest to explore and develop a group of industrial minerals (including graphite, vanadium and approximately 25 other minerals). Malagasy retains a 25% interest. The land position covers 2,119 permits and 827.7 square kilometres and is mostly adjacent to the south and east of the Company's 100% owned Green Giant Property. The Company paid $2,261,690 and issued 7,500,000 common shares valued at $1,350,000. Malagasy has a carried interest until the Company delivers a Bankable Feasibility Study ("BFS"). Upon the delivery of a BFS, Malagasy is required to contribute its 25% interest in the development and mining operations. Should either party's interest fall below 10%, through not contributing their portion of costs post-BFS, their position will be diluted to a 2% Net Smelter Return ("NSR"). As it has not yet determined whether the property has probable or proven reserves, the Company recognized an impairment loss during fiscal 2012 totaling $3,770,129. This amount represents the cash paid, the value of common shares issued, and legal and other professional fees paid relating to the properties acquisition. Further, on October 24, 2013, we signed a Memorandum of Understanding ("MOU") with Malagasy to acquire the remaining 25% interest in the Molo Graphite Project. A share purchase agreement and joint venture agreement will be completed between the parties. As of the date herein, no purchase agreement has been signed. It is anticipated, but not guaranteed, that definitive agreement will be executed in the third fiscal quarter As part of the prospective transaction, the Company agreed to make the following payments to Malagasy within 5 business days of TSX approval: Cash payment of CAD$400,000;



Issuance of 2,500,000 Energizer common shares which are subject to a 12 month

voluntary vesting period;

Issuance of 3,500,000 Common Share purchase warrants having an expiration

date of five years from the signing date of the Agreement at a price to be

determined by taking the volume weighted average closing price of Energizer's

common shares during the five days immediately preceding execution of the

Agreement;

Cash payment of CAD$700,000 and issuance of 1,000,000 Energizer common shares

which are subject to a 12 month voluntary vesting period within 5 business

days of Energizer receiving a final completed Bankable Feasibility Study

("BFS") for the Molo Graphite Project or the formal announcement of a decision to mine;



Cash payment of CAD$1,000,000 within 5 business days of the commencement of

Molo mine commercial production;

Malagasy retains a 1.5% Net Smelter Return Royalty on all industrial minerals

produced from the property; and

Energizer acquires a 100% interest in and to the industrial mineral rights on

about 1-1/2 additional claim blocks comprising 10,811 hectares immediately to

the east and adjoining the Molo Graphite Deposit claim blocks.

In a parallel but separate transaction, Malagasy acquires a 75% interest through a Joint Venture Agreement to be drafted for non-industrial minerals on Energizer's 100% owned Green Giant Property in Madagascar. Energizer will own the remaining 25% and have a free carried interest through to the BFS stage. Green Giant Property, Southern Madagascar, Africa During 2007, we paid $765,000, issued 2,500,0000 common shares and 1,000,000 now expired common share purchase warrants to enter into a joint venture agreement for the Green Giant Property with Madagascar Minerals and Resources Sarl ("MMR"). We owned a 75% interest and MMR owned a 25% interest.



On July 9, 2009, we acquired the remaining 25% interest for $100,000 and terminated the joint venture. MMR retains a 2% NSR. The NSR can be purchased, at our option, for $500,000 in cash or common shares for the first 1% and at a price of $1,000,000 in cash or common shares for the second 1%.

Canadian Properties Sagar Property - Romanet Horst, Labrador Trough, QuÉbec, Canada On May 2, 2006, we signed a letter of intent for an option to acquire a 75% interest in 377 claims located in northern Quebec, Canada. The vendor had the right and option to sell the remaining 25% interest in the property and exercised that right on February 28, 2007. Therefore we now own a 100% interest in this property, subject to a 2% NSR. As there has been a change in government in the province of Quebec, in particular a political party that advocates separation of Canada and Quebec, we are uncertain if any legislation will be introduced that will impact our business plan for this property. 18 --------------------------------------------------------------------------------



Further details on exploration programs carried out on all our company's properties can be found below.

Competitive Conditions in our Industry The mineral exploration and mining industry is competitive in all phases of exploration, development and production. We compete with a number of other entities and individuals in the search for, and acquisition of, attractive mineral properties. As a result of this competition, the majority of which is with companies with greater financial resources than us, we may not in the future be able to acquire attractive properties on terms our management considers acceptable. Furthermore, we compete with other resource companies, many of whom have greater financial resources and/or more advanced properties that are better able to attract equity investments and other capital. Factors beyond our control may affect the marketability of minerals mined or discovered by us.



Employees

As of February 10, 2014, we had 8 total employees, 6 full-time and 2 part-time employees. In addition to our full time employees, we engage consultants to serve several important managerial and non-managerial functions for us including serving as officers and to performing professional, geological and administrative functions. MADAGASCAR PROPERTIES [[Image Removed]] Green Giant Property Description and Location The Green Giant Property is comprised of 6 mineral permits. The properties are located in the District of Toliara and are referenced as TN 12,306,P(R); TN 12,814, P(R); TN 12,887 P(R); TN 12,888 P(R); TN 13,020 P(R); TN 13,021 P(R) as issued by the Bureau de Cadastre Minier de Madagascar ("BCMM") pursuant to the Mining Code 1999 (as amended) and its implementing decrees. The total land position is 225 sq. kilometres. This property can be accessed by both air and road. 19

-------------------------------------------------------------------------------- [[Image Removed]] Joint Venture Property Description and Location The "Joint Venture Property" is comprised of a portion of or all of 39 mineral permits. The properties are located in the District of Toliara and are referenced as TN 3,432,P(R); TN 5,394, P(R); TN 13,064 P(R); TN 13,811 P(R); TN 14,619 P(R); TN 14,620 P(R); TN 14,622 P(R); TN 14,623 P(R); TN 16,747 P(R); TN 16,753 P(R); TN 19,003 P(R); TN 19,851 P(R); TN 19,932 P(R); TN 19,934 P(R); TN 19,935 P(R); TN 21,059 P(R); TN 21,060 P(R); TN 21,061 P(R); TN 21,062 P(R); TN 21,063 P(R); TN 21,064 P(R); TN 24,864 P(R); TN 25,605 P(R); TN 25,606 P(R); TN 28,340 P(R); TN 28,346 P(R); TN 28,347 P(R); TN 28,348 P(R); TN 28,349 P(R); TN 28,352 P(R); TN 28,353 P(R); TN 29,020 P(R); TN 31,734 P(R); TN 31,735 P(R); TN 38,323 P(R); TN 38,324 P(R); TN 38,325 P(R); TN 38,392 P(R); and TN 38,469 P(R) as issued by the Bureau de Cadastre Minier de Madagascar ("BCMM") pursuant to the Mining Code 1999 (as amended) and its implementing decrees. The total land position is 827.7 sq. kilometres. This property can be accessed by both air and road. 20

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Agreements

Molo Graphite Project, Southern Madagascar, Africa On December 14, 2011, we entered into a Definitive Joint Venture Agreement ("JVA") with Malagasy to acquire a 75% interest to explore and develop a defined group of industrial minerals (as noted below). Malagasy retains a 25% interest in the exploration and development of the define group of industrial minerals. The new land position covers an area totalling 2,119 research permits and 827.7 square kilometres. This land portfolio is mainly adjacent to the south and east of the Company's Green Giant Property. Under the terms of the JVA, we paid Malagasy $2,261,690 and issued 7,500,000 of our common shares. Malagasy has a free carried interest until we deliver a Bankable Feasibility Study ("BFS"). Upon the delivery of a BFS, Malagasy will be required to contribute its 25% interest in the development and mining operations. Should either party's interest subsequently fall below a 10% interest, their position will be diluted to a 2% NSR. The industrial minerals within the agreements are as follows: Vanadium, Lithium, Aggregates, Alunite, Barite, Bentonite, Vermiculite, Carbonatites, Corundum, Dimensional stone (excluding labradorite), Feldspar (excluding labradorite), Fluorspar, Granite, Graphite, Gypsum, Kaolin, Kyanite, Limestone/Dolomite, Marble, Mica, Olivine, Perlite, Phosphate, Potash -Potassium minerals, Pumice Quartz, Staurolite, Zeolites. Further, on October 24, 2013, we signed a Memorandum of Understanding ("MOU") with Malagasy to acquire the remaining 25% interest in the Molo Graphite Project. A share purchase agreement and joint venture agreement will be completed between the parties. As of the date herein, no purchase agreement has been signed. As part of the prospective transaction, the Company agreed to make the following payments to Malagasy within 5 business days of TSX approval: Cash payment of CAD$400,000;



Issuance of 2,500,000 of our common shares which are subject to a 12 month

voluntary vesting period;

Issuance of 3,500,000 Common Share purchase warrants having an expiration

date of five years from the signing date of the Agreement at a price to be

determined by taking the volume weighted average closing price of our common

shares during the five days immediately preceding execution of the Agreement;

Cash payment of CAD$700,000 and issuance of 1,000,000 of our common shares

which are subject to a 12 month voluntary vesting period within 5 business

days of our receiving a final completed Bankable Feasibility Study ("BFS")

for the Molo Graphite Project or the formal announcement of a decision to mine; 21

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Cash payment of CAD$1,000,000 within 5 business days of the commencement of

Molo mine commercial production;

Malagasy retains a 1.5% Net Smelter Return Royalty on all industrial minerals

produced from the property; and

We acquire a 100% interest in and to the industrial mineral rights on about

1-1/2 additional claim blocks comprising 10,811 hectares immediately to the

east and adjoining the Molo Graphite Deposit claim blocks.

In a parallel but separate transaction, Malagasy acquires a 75% interest through a Joint Venture Agreement to be drafted for non-industrial minerals on our 100% owned Green Giant Property in Madagascar. We will own the remaining 25% and have a free carried interest through to the BFS stage. Green Giant Property On August 22, 2007, we entered into a joint venture agreement with MMR, a company incorporated under the laws of Madagascar. The joint venture was operated through a Madagascar limited liability company in which our company held 75% undivided interest and MMR held the remaining 25% undivided interest.



The consideration paid to MMR to acquire the 75% stake in the joint venture consisted of cash consideration totaling $765,000 and 1,250,000 of our common shares and 500,000 now expired common share purchase warrants.

On July 9, 2009, we entered into an agreement to acquire the remaining 25% interest of the Green Giant Property for $100,000. Upon our acquisition of the remaining 25%, the joint venture was terminated. MMR retains a 2% NSR. We can acquire the NSR on this 25% interest portion at a price of $500,000 in cash or common shares for the first 1% and at a price of $1,000,000 in cash or common shares for the second 1% at our option. DRA Agreement Signed for Ability to Develop and Build Mine During January 2012, we signed a formal agreement with South Africa's DRA Mineral Projects ("DRA"), a world-leading process engineering and mining project development management firm, for the development of our projects in Madagascar. Specific focus will be on the development of vanadium and graphite minerals. This partnership provides us with the ability to both build and manage a mining operation. It also provides DRA the option to purchase up to 5% of our company through private placement at current market conditions. Madagascar Historical Exploration Programs The Green Giant Property displays extensive gossans outcroppings at surface. An examination of part of this property revealed several large areas covered with gossanous boulders, which are believed to overlie massive sulphide mineralization. Phases of the exploration projects were managed by our company's President and COO, Craig Scherba, P. Geol., who at the time was one of our outside consultant geologists. We conducted a first phase of exploration from September to November 2007 that included the following activities: Stream Sediment sampling of all stream on the property area



Detailed Geological mapping over selected startigraphic horizons

Reconnaissance geological mapping over the entire property

Soil sampling over selected target areas and prospecting over selected target

areas

Limited trenching over selected targets

Construction of a cinder block base camp

Construction of a one kilometre long surfaced airstrip

Repair and surfacing of the access road from base camp to the airstrip

Airborne geophysical surveying

During March 2008-June 2008, a full field exploration program following up on the airborne geophysical survey and results of the 2007 exploration program was implemented. This exploration consisted of the following: Infill stream sediment sampling



Detailed Geological mapping over selected stratigraphic horizons

Prospecting over selected target areas

Grid emplacement over selected target areas

Ground-based magnetometer and frequency domain EM surveys

Soil sampling over selected target areas

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After reviewing the analytical data from the March 2008- June 2008 program, additional exploration was conducted from July 2008 to September 2008 to prepare for a drill program. This exploration consisted of the following: Infill stream sediment sampling

Detailed geological mapping over selected stratigraphic horizons

Prospecting over selected target areas with the aid of a mobile XRF analyzer

Based on compiled analytical results obtained from the various exploration programs, a drill program was initiated on the property from September 2008-November 2008. This exploration program consisted of the following: Prospecting over selected target areas with the aid of a mobile XRF analyzer

Ground-based scintillometer surveying over selected target areas

Diamond drilling of 31 holes over 4,073 metres

Based on early indications for vanadium on the property, another exploration program was initiated on the Green Giant Property during the spring of 2009. The program (completed between April 2009-July 2009) consisted of an extensive X-Ray Fluorescence analysis (XRF) soil sampling program coupled with mechanical trenching and scintillometer surveys over possible areas of vanadium enrichment and new areas, defined by the soil XRF survey.



We initiated a vanadium drill program during September 2009-December 2009 consisting of the following: XRF soil sample analyses (8,490 samples) on lines 200 metres apart covering

18 kilometre strike length

Scintillometer surveying (112 line kilometres) on lines 200 metres apart over

an 18 kilometre strike length

Trenching (140 trenches for 17,105 metres)

Diamond drilling of 54 diamond drill holes over 8,931 metres

The exploration programs to date resulted in the delineation of two vanadium pentoxide (V2O5) deposits (named the Jaky and Manga), characterized by two separate categories: oxide and primary. Based on the results of the September 2009-December 2009 program, we conducted an additional exploration program on the property from April 2010-July 2010. This program consisted of the following activities: Diamond drilling of 46 diamond drill holes over 8,952 metres



Prospecting over selected target areas with the aid of a mobile XRF analyzer

(20 grab samples)

Geologic mapping over the Manga and Mainty deposits at 1:5000 scale

ERT ground geophysical survey (5.64 km)

MAG ground geophysical survey (169.53 km)

Gradient Array EM ground geophysical survey (128.82 km)

In 2011, the identification of graphite in the Manga, Jaky and Mainty zones led our geologists to conduct a reconnaissance exploration program (Phase I program) on the properties in September, 2011. The goal of this exploration program was to delineate new graphitic trends, and compare them to those associated with vanadium mineralization. This program consisted of the following activities: Diamond drilling of 10 holes over 1,157.5 metres



Trenching (16 trenches for 1,912 metres)

Prospecting over selected target areas

An additional reconnaissance exploration program was conducted from November 2011-December, 2011 (Phase II program). The purpose of this program was to ascertain the industrial mineral potential on the Joint Venture Ground, and further drill testing of graphitic trends on the Green Giant Property. This program consisted of the following: Diamond drilling of 20 holes over 2,842 metres



Prospecting over selected target areas

EM31 ground geophysical survey over selected target areas (160.5 km)

The discovery of graphite mineralization from the 2011 exploration programs resulted in the initiation of a resource delineation drill program from May 2012-August 2012. This program consisted of the following: Trenching (18 trenches for 2,100 metres)

Diamond drilling of 41 diamond drill holes over 8,459 metres

23 -------------------------------------------------------------------------------- The resource delineation drill program identified that graphite mineralization could be divided into a high grade zone (6 to 10% carbon) that produces small to large graphite flakes, and a low grade zone (4 to 6% carbon) that produces large to jumbo graphite flakes. A bulk sampling program was undertaken in May 2013 with the purpose of collecting two separate samples, in order to test the nature of the low-grade and high-grade deposits to see if they have different requirements. The two bulk samples were submitted for metallurgical test work, which is deemed to be representative of the future plant feed, and hence could be used for a Bankable Feasibility Study going forward. In order to be representative, an external geological consultant determined a sample size of 100 tonnes each (low grade and high grade) was deemed sufficient. SGS Canada Inc. of Lakefield, Ontario, Canada ("SGS") conducted metallurgical test work on bench-scale samples obtained from 200 tonnes of sample material collected at the Molo Graphite deposit . SGS determined that the optimum flake size recovery, purity and distribution was achieved when blending the low and high grade sample material at a ratio of 50:50. Based on this analysis, SGS constructed a pilot plant to: 1) confirm the robustness of the proposed metallurgical flow-sheet developed on a laboratory scale under continuous pilot scale conditions, 2) develop process design criteria for the ongoing Molo Full Feasibility Study, and 3) generate large samples of concentrate for evaluation by potential offtake partners. The average head grade of the bulk sample was 7.98% C(t) based on the mass balances of twelve circuit surveys. The pilot plant was operated targeting a concentrate grade of greater than 95% C(t) in the size fractions greater than 200 mesh, while minimizing flake degradation. The concentrate grades of the coarse flakes were consistently 95% C(t) or higher, while the mass recovery into the large flake (+80 mesh) concentrates varied between 27.9% and 52.6% The pilot plant was operated under a host of different conditions ranging from 90.8% C(t) concentrate grade at 94.3% recovery to 97.5% C(t) concentrate grade at 87.1% recovery for the twelve surveys at which the circuit was deemed stable. This operating strategy was employed to determine the impact of altering process variables on key metallurgical performance indicators such as concentrate grade, flake size distribution, and carbon recovery. The following results were obtained from the pilot plant, which confirm the robustness of the proposed flow sheet and also confirm that the graphite flakes from the Molo deposit can be upgraded to high-grade graphite concentrate by means of simple flotation. The average mass recovery into the large and extra-large flake category (greater than +80 mesh) was 43.5% based on the results of fifteen size fraction analyses of the combined concentrate;



The average grade of the extra-large flake (greater than +48 mesh) was 97.7% Ct;

The average grade of the large flake (greater than +80 mesh) was 97.4% Ct;

The average grade of the medium flake (greater than +200 mesh) was 96.7% Ct;

The majority of the impurities reported to the small flake size fractions

(-400 mesh)

The average total carbon content of twelve pilot plant surveys was 93.7%

Ct at an average carbon recovery of 90.3%.

The average composition of the combined concentrate of fifteen size fraction analyses is shown in the following table.

Size Mass as Percentage of Total Grade mesh Concentrate Mass in % % C(t) 48 15.7 97.7 65 17.6 97.4 80 10.2 96.7 100 9.7 96.4 150 15.0 96.1 200 10.1 95.2 -200 21.6 88.2 24

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Madagascar Infrastructure Road Access Access to the Company's Molo Graphite Deposit from Toliara, starts with a 70 km paved road to the village of Andranovory. From Andranovory, secondary all-season roads continue to Betioky, a distance of 93 km. From Betioky, the Molo Graphite Deposit can be reached from Ambatry to Fotadrevo, a distance of 105 km, for an overall total of 268 km, or from Betioky to Ejeda then onwards to Fotadrevo, a distance of 161 km, for an overall total of 324 km. The second route from Ejeda to Fotadrevo is used by heavy transport trucks and by all vehicles during portions of the rainy season, as the other route can become impassable. At the height of the rainy season, both routes to Fotadrevo may become impassable. From Fotadrevo, the Molo Graphite Deposit may be reached by a fairly well maintained dirt track. The map below shows the road access to the Molo Graphite Deposit from the town of Toliara. [[Image Removed]] Map of Road Structure from Toliara to Fotadrevo Air Access With the upgrading of an existing airstrip at Fotadrevo to an all-weather airstrip during the 2008 exploration program, our Madagascar properties are accessible year-round by private aircraft out of Antananarivo, except under special circumstance caused by continuous or multiple days of heavy rain. Flying times to Fotadrevo are approximately 2.5 hours from Antananarivo and 45 minutes from Toliara. 25

-------------------------------------------------------------------------------- [[Image Removed]] Photo of the Landing Strip at Fotadrevo Antananarivo is currently serviced by Air France (Paris), South African Airways (Johannesburg), and Air Mauritius (Mauritius). Air Madagascar also provides service to Paris, Johannesburg, Mauritius, Nairobi, and RÉunion Island. Domestically, Air Madagascar has regularly scheduled jet and propjet flights throughout the country, including daily flights between Antananarivo and Toliara. The village of Fotadrevo, where our Company has its base camp, is located to the west of the Molo Graphite Deposit. The village has been a labour source during our Company's exploration programs, and will likely provide a portion of the workforce during future exploration and development. A few basic goods are commercially available in the village, however, the main centre for support of exploration and development are the cities of Toliara and Antananarivo. Two 40 kVA diesel-powered generators provide power to the camp facility. A cellular telephone tower is located in Fotadrevo, which provides phone and internet coverage. No potable water is currently available within the project area. A well 123 millimetre in diameter has been drilled to a depth of 42 metres within the camp compound, which provides non-potable water for the camp. Graphite Market and Pricing Market Overview According to Industrial Minerals magazine, the natural graphite market is 1,015,100 tonnes of which roughly 55% is flake and 45% is low grade amorphous (or 582,800 flake, 428,300 amorphous, 4,000 vein). Graphite is produced globally, however China currently accounts for most of the graphite production with a market share of 77%. Two tables listing the current major production countries of flake and amorphous graphite are below (Source: Natural Graphite Report 2012, Industrial Minerals, www.indmin.com): Country Flake output China 380,000 Brazil 96,000 India 35,000 North Korea 30,000 Canada 21,000 Norway 8,000 Zimbabwe 5,000 Madagascar 4,000 Russia 2,000 Ukraine 1,500 Germany 300 Total 582,800 26

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Country Amorphous output China 400,000 Austria 16,000 Mexico 12,000 Turkey 300 Total 428,300 China produces 77% of the world's graphite, however over half of its production is low grade amorphous. The graphite industry in China is undergoing fundamental reforms. China is protecting its domestic supply and has imposed a combined 37% export duty and value added tax. Furthermore, China is consolidating and closing a large number of mines, between 180-200, to preserve graphite resources and address environmental concerns. Current Demand Graphite has many wide-ranging uses from refractories to anodes in batteries (Source: Natural Graphite Report 2012, Industrial Minerals, www.indmin.com) Refractories, foundry and crucibles 39% Metallurgy 28% Parts and components 10% Batteries 9% Lubricants 9% Other 5% Future Demand Batteries alone is the fastest growing market for graphite with growth between 15-25% a year (Source: Industrial Minerals, 2012) and future demand for graphite is expected through the uptake of lithium-ion batteries (Li-ion). There is 11 times more graphite in a Li-ion battery than there is lithium and demand for graphite in Li-ion batteries, specifically from the growth of the electric vehicle market, is expected to be significant. Other future demand drivers include pebble bed nuclear reactors, fuel cells, large-scale energy storage and graphene. Graphite Pricing Graphite pricing is a function of flake size and purity where larger flake and higher purity command premium pricing in the market. The three major categories for flake graphite are large, medium, and small (amorphous). Graphite is not freely traded on an open market. This means determining its price is somewhat of an opaque market as prices are determined through contracts between buyers and sellers. Nevertheless, Industrial Minerals performs regular customer surveys tracking pricing trends and, from their analysis, overall graphite prices have substantially increased since 2007 due to increased demand and constrained supply. Recently however, graphite prices have decreased from their peak due to the slowdown in the global economy particularly in Europe and Asia. Despite this recent decline, future prices are predicted to remain strong as can be outlined in the graph below: 27 --------------------------------------------------------------------------------



[[Image Removed]]

Source: Natural Graphite Report 2012, Industrial Minerals, www.indmin.com

Vanadium Market and Pricing Source of this entire section: United States Geological Survey. Data in metric tons of vanadium content unless otherwise noted. Domestic Production and Use Seven U.S. firms comprise most of the domestic vanadium industry produced ferrovanadium, vanadium pentoxide, vanadium metal and vanadium-bearing chemicals or specialty alloys by processing materials such as petroleum residues, spent catalysts, utility ash and vanadium-bearing pig iron slag. Metallurgical use, primarily as an alloying agent for iron and steel, accounted for about 93% of the U.S. vanadium consumption in 2011. Of the other uses for vanadium, the major non-metallurgical use was in catalysts for the production of maleic anhydride and sulfuric acid. 28

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Salient Statistics-United States 2008 2009 2010 2011 2012est Production, mine, mill 520 230 1,060 590 270 Imports for consumption: Ferrovanadium 2,800 353 1,340 2,220 3,400 Vanadium pentoxide, anhydride 3,700 1,120 4,000 2,810 1,570 Oxides and hydroxides, other 144 25 167 886 1,210 Aluminum-vanadium master alloys (gross weight) 618 282 951 278 180 Ash and residues 1,040 791 521 1,420 1,500 Sulfates 2 16 48 42 40 Vanadates 187 214 158 303 320 Vanadium metal, including waste and scrap 5 22 10 44 110 Exports: Ferrovanadium 452 672 611 314 530 Vanadium pentoxide, anhydride 249 401 140 89 40 Oxides and hydroxides, other 1,040 506 1,100 254 190 Aluminum-vanadium master alloys (gross weight) 1,390 447 1,190 920



1,400

Vanadium metal, including waste and scrap 57 23 21 102 10 Consumption: Apparent 5,820 1,040 5,190 6,963 6,400 Reported 5,170 4,690 5,030 5,120 5,200 Stocks, consumer, yearend 335 295 248 2185 2220 * Price, average, dollars per pound V2O5 $ 12.92$ 5.43$ 6.46$ 6.76$ 6.52 Imports + exports + adjustments for government and industry stock changes as a percentage of apparent consumption 91 % 78 % 81 % 92 % 96 % * Vanadium is not freely traded on an open market. This means determining prices for vanadium is somewhat of an opaque market as prices are determined through contracts between buyers and sellers. Events, Trends, and Issues U.S. apparent consumption of vanadium in 2012 decreased by 9% from its 2011 level; however, it was still almost six times higher than its level in 2009. Apparent consumption of vanadium declined dramatically in 2009 from that of 2008 owing to the global economic recession in 2009. Among the major uses for vanadium, production of carbon, full-alloy, and high-strength low-alloy steels accounted for 16%, 45%, and 33% of domestic consumption, respectively. U.S. imports for consumption of vanadium in 2012 increased 4% from those of the previous year. U.S. exports increased 29% from those of the previous year. In the fourth quarter of 2011, vanadium pentoxide (V2O5) prices continued to decrease to a year-to-date low of $6.22 per pound of V2O5 in December 2011. In January 2012, prices continued to decrease to a year-to-date low of $5.83 per pound of V2O5 until February when prices began to slowly increase again. In August 2012, V2O5 prices averaged $6.60 per pound of V2O5, slightly more than average V2O5 prices in August 2011. In the fourth quarter of 2011, U.S. ferrovanadium (FeV) prices continued to slowly decrease to a year-to-date low of $13.19 per pound FeV (contained vanadium) in December 2011. In January 2012, prices continued to decrease until February 2012 when prices began to slowly increase. In August 2012, FeV prices averaged $15.60 per pound of FeV. World Mine Production and Reserves Production data for the United States were revised based on new company information. Mine production Reserves (thousand 2011 2012est metric tons) China 23,000 23,000 5,100 South Africa 22,000 22,000 3,500 Russia 15,200 16,000 5,000 United States 1,590 1,270 45 Other countries 1,600 1,600 not applicable World total (approximate) 63,390 63,870 14,000 29

-------------------------------------------------------------------------------- World Resources the Substitutes World resources of vanadium exceed 63 million tons. Vanadium occurs in deposits of phosphate rock, titaniferous magnetite, and uraniferous sandstone and siltstone, in which it constitutes less than 2% of the host rock. Significant amounts are also present in bauxite and carboniferous materials, such as coal, crude oil, oil shale, and tar sands. Because vanadium is usually recovered as a byproduct or co-product, demonstrated world resources of the element are not fully indicative of available supplies. While domestic resources and secondary recovery are adequate to supply a large portion of domestic needs, a substantial part of U.S. demand is currently met by foreign material. Steels containing various combinations of other alloying elements can be substituted for steels containing vanadium. Certain metals, such as manganese, molybdenum, niobium (columbium), titanium, and tungsten, are to some degree interchangeable with vanadium as alloying elements in steel. Platinum and nickel can replace vanadium compounds as catalysts in some chemical processes. There is currently no acceptable substitute for vanadium in aerospace titanium alloys. Permitting in Madagascar Companies in Madagascar first apply for an exploration mining permit with the Bureau de Cadastre Minier de Madagascar ("BCMM"), a government agency falling under the authority of the Minister of Mines. Permits are granted under usual circumstances are generally issued within a month. The 2013 fees per square within a mining permit range from 89,800 Ariary to 359,000 Ariary (between $42 and $165 using a current exchange rate of 2,175 Madagascar Ariary = $1 USD). The number of squares varies widely by claim number. For the 2013 year, the Company paid approximately $350,000 to the BCMM to renew all of its claims in Madagascar. This fee covered both the 100% owned Green Giant Property (6 claims) and the 75% owned Joint Venture Property (39 claims). Each year we are required to pay a similar amount in order to maintain the claims in good standing. The next step in the permitting process, which our company has initiated, is to apply for an exploitation permit. Our Company has engaged a third party environmental study company in Madagascar to assist us with this process. In order to get an exploitation permit, an investment plan, exploitation work plan budget and specific ground mapping is submitted to the BCMM. This step is completed in conjunction with a submission of an environmental impact study for the BCMM. This environmental impact study includes, among other things, completion of a water study and a social impact study. QA/QC Protocols At all times during sample collection, storage, and shipment to the laboratory facility, the samples are in the control of our Company or parties that we have contracted to act as our agents. When sufficient sample material (grab, trench or core) has been collected, the samples are flown or sent by truck to our storage location in Antananarivo, Madagascar. At all times samples are accompanied by an employee, consultant or agent of our Company. From there, samples are shipped to labs either in South Africa or Canada for ICP-MS analysis. All analytical results are e-mailed directly by the lab to our project manager on site in Madagascar and to our geological and executive staff. Results are also posted on a secure website and downloaded by our personnel using a secure username and password. All of the labs that carried out the sampling and analytical work are independent of our company.



In order to carry out QA/QC protocols on the assays, blanks, standards and duplicates were inserted into the sample streams. This was done once in every 30 samples, representing an insertion rate of 3.33% of the total.

Since the 2009 Madagascar drill program, our company has rigorously implemented a blank protocol. For the Molo Graphite Deposit a fine-grained quartz sand sourced from a hardware store in Antananarivo was used as the blank material for the sampling campaign. A total of 208 blank samples were used in this program. A detection limit of 0.05% Carbon was used for the purpose of this exercise. To verify the reliability of the blank samples, the detection limit and the blank + 2, and 3 times the detection limit were plotted against the date. The plot shows that there are a lot of blank samples that have concentrations that exceed the blank + 3 times detection limit threshold. This, coupled with the large spread of data points, would lead to the assumption that samples may have been contaminated during their preparation for analysis. 30 -------------------------------------------------------------------------------- [[Image Removed]] Blanks plot - Log %C versus the date of the analysis. Since certified reference materials ("CRMs") are essentially non-existent for graphite, our Company commissioned a third party lab in Canada to create a CRM from the remaining Molo Graphite Deposit drill core pulps from the 2011 program. As certified the third party lab standard (STD 1 C) a recommended value of 9.11 % Carbon. To check the reliability of the standard, a plot of the recommended CRM value versus date was created. The upper and lower limits of one, two and three times the standard deviations of the recommended value are also included in the plot. All the results except for two fall within the acceptable limit of two times the standard deviation. It is however worth noting that there seems to be a negative bias towards lower concentrations in the first batch of samples that were submitted. As the campaign progressed the bias leant towards the positive side. This issue appears to have been sorted out towards the latter parts of the campaign as the data becomes less spread, and is closer to the recommended value. [[Image Removed]] Graph showing carbon concentration as analyzed in STD 1C. For the Molo Graphite Deposit, 205 field duplicates were prepared. To check how close these were to the original samples, a plot of the original samples with a zero, five, and ten per cent difference of the original samples was created. The majority of the samples were within the 10% difference limit. The plot also shows a good correlation between the original value and the duplicate, as is evident from the regression line with an R2 value of 0.96. 31 --------------------------------------------------------------------------------

[[Image Removed]] Original ("Orig") versus Duplicate ("Dupe") plots. Next Steps Energizer is currently shipping graphite concentrate generated from its Pilot Plant metallurgical testwork out to prospective offtake partners. Additionally, the Company will conduct an infill drill program on its Molo deposit to bring a portion of its National Instrument (NI) 43-101 compliant Indicated Resource up to Measured Resource in order to meet banking requirements for an anticipated mine financing. This data will be integrated into a Full Feasibility Study scheduled for completion in the last quarter of calendar year 2014. Future Programs The economic potential of the property rests upon the ability to extract graphite and/or vanadium using reasonable, potentially economic parameters. Metallurgical results indicate that an economic processing method is available to extract graphite. This will be determined within a Full Feasibility Study, anticipated for release in Q4 of the calendar year 2014. The results of this study will dictate how management proceeds with project development. 32 --------------------------------------------------------------------------------

SAGAR PROPERTY [[Image Removed]] Property Description and Location The Sagar Property comprises 361 blocks of claims in the Province of QuÉbec, Canada. The approximate centre of exploration activity is circa 5622' N latitude and circa 68 00' W longitude. Details on the individual claims are available on-line at the Government of QuÉbec's MinistÈre des Resources Naturelles et de la Faune GESTIM website at https://gestim.mines.gouv.qc.ca. This property can be accessed by air. These claims comprise approximately 6,580 hectares. In this region of the Province of QuÉbec, "map staking" predetermines claim outlines. This can be done via a claim staking system with the MinistÈre des Ressources Naturelles ("MNRF"). Previously, the map-staking grid, producing some of the small parcels, superimposes upon staked claims. There are no carried environmental liabilities on the property. Each claim costs CAD $112 and is active for a one year period. Each following year our company is required to spend a certain dollar amount to keep the claim in good standing or pay CAD $112 per annum in lieu of performing any work. All surface work requires provincial government permits, including camp construction permits. Our company is current with these permits. To be able to conduct an exploration project, our company needs to obtain permits pertaining to water, forest management and waste disposal for any camp location set-up. These permits are obtained from various Quebec government ministries. This entire process takes approximately than one month to complete. With obtaining the required permits our company is required to pay approximately CAD $200 per claim per annum. When our company is exploring, our power comes from a generator. Management currently believes that water is ample as the property has a lake and several streams. There are no bonding requirements relating to permits issued out of Quebec at the exploration stage.



Agreement

On May 2, 2006, we signed a letter of intent with Virginia Mines Inc. ("Virginia") for an option to acquire a 75% interest in 200 claims located in northern QuÉbec, Canada. Virginia had the right and option to sell the remaining 25% interest in the property. This agreement was subject to a 2% NSR. Virginia had previously acquired a 100% interest in the property, subject to a 1% NSR on certain claims, and a 0.5% NSR on other claims. Virginia has the right to buy back half of the 1% NSR for $200,000 and half of the 0.5% NSR for $100,000. In order to exercise its option, we issued Virginia 2,000,000 of our common shares, 2,000,000 now expired common share purchase warrants and incurred exploration expenditures greater than $2,000,000 on the property before September 1, 2008. Further, on February 28, 2007, Virginia exercised its option to sell its remaining 25% interest on the property to us for 1,000,000 common shares valued at $1,219,000 and 1,000,000 now expired common share purchase warrants. As a result of these agreements, we now own a 100% interest in this property, subject to the noted NSR's. We are currently up to date with all obligations required to maintain the property in good standing. 33 --------------------------------------------------------------------------------



FERDERBER

Property Description and Location We acquired a 100% undivided right, title and interest in and to 19 mining claims (0036315, 0036316, 0036317, 0036318, 0036319, 0036320, 0036321, 0036322, 0036323, 0036324, 0036325, 0036326, 0036327, 0030649, 0030650, 0030640, 0030638, 0030612, 0030613) held by Peter Ferderber, covering an area of approximately 64 hectares located in the Central Labrador Trough Region of QuÉbec, 13 of which are contiguous to our Sagar Property. This property can be accessed by air. In consideration of our receiving a 100% interest in these claims, subject to any NSR royalties, we paid Mr. Ferderber CAD$6,000, and issued 150,000 of our common shares and 75,000 now expired common share purchase warrants. Mr. Ferderber retained a 1% NSR on this property and agreed that we shall have a first right of refusal to purchase the 1% NSR should Mr. Ferderber elect to sell the royalty. We are currently up to date with all obligations required to maintain the property in good standing. Sagar and Ferderber Property Geological Highlights The geological setting of the property is the northwest trending Romanet Horst within the Labrador Trough. The significant mineral potential of this geological setting is well demonstrated, we believe, by the abundance and diversity of uranium-gold showings, which range from veins to breccia's to shear zones. There is also locally significant sedimentary-hosted copper mineralization. Our management contends that the most significant mineralization found to date is the 500 x 200 metre Mistamisk boulder field which contains 150 boulders that range up to 640 g/t gold and 4.11% uranium, with 70 tested boulders averaging 64.9g/t gold and 1.3% uranium. The boulders discovered within the Mistamisk boulder field range in length from 0.30 to 2.0 metres. Previous work has not determined the bedrock source of this boulder field. Copper mineralization has been defined in several spots, the most significant being the Dehli-Pacific showing, which has reported 4.2% copper over 7.6 metres within a drill hole that intersected a shear zone along a sediment-gabbro contact. Potential Future Programs In light of empirical observations collected during the course of 2007 exploration activities, other targets have been identified which could prove to be volumetrically more significant than the source of the Mistamisk Boulder Field. In order of priority, management believes future exploration on the Sagar Property should focus on the discovery of: Gold and uranium mineralization at redox boundaries along major faults. This



work should focus on the intersection between the Romanet fault and the

reducing lithologies of the Dunphy and Lace Lake formations.

Unconformity associated polymetallic uranium-style mineralization at the

Archean basement contact. The 'Kilo' soil anomaly should be targeted for this

exploration due to the anomalous soil, RC, and DDH geochemistry, as well as

the numerous coincident geophysical anomalies.

Iron-Oxide Copper Gold (IOCG) mineralization. This work should focus on the

east-west structure bisecting the Romanet Horst. In particular, the area to

the southwest of the Lac Plisse showing should be drill tested as it has

coincident gravity and magnetic highs, and has an anomalous IOCG-related

geochemical signature for RC, soil, and water geochemical data. Additionally,

the DDH geochemistry and alteration mineralogy observed from holes in the

'Alpha' soil target area should be re-examined in the context of IOCG

mineralization.

Source mineralization for the Mistamisk Boulder Field. The anomalous Alpha,

Delta, and Kilo soil targets, as well as A, B, and E RC targets identified

during the course of the 2007 exploration program should be examined to ascertain the source mineralization for the Mistamisk Boulder Field. Other Expenses Management anticipates spending approximately $350,000 - $450,000 in ongoing general office and administration expenses and professional fees per quarter for the next twelve months. Expenses will vary in direct proportion with the level of activity relating to future acquisitions and exploration programs. 34 -------------------------------------------------------------------------------- RESULTS OF OPERATIONS We have had no operating revenues from inception on March 1, 2004 through to the quarter ended December 31, 2013. Our activities have been financed from the proceeds of securities subscriptions. From inception, on March 1, 2004, to December 31, 2013, we raised total net proceeds of $45,489,995 from private offerings of our securities and $1,075,500 through the exercise of common share purchase warrants and stock options. For the six month period ending December 31, 2013, $3,314,757 (December 31, 2012: $1,809,549) and $Nil (December 31, 2012: $Nil) was raised through private placements and the exercise of stock options, respectively. For the period from March 1, 2004 to December 31, 2013, we incurred losses before income taxes of $78,095,881. Expenses included $39,871,363 in mineral property and exploration costs and impairment losses on mineral properties. These costs include acquisition costs relating to the Madagascar properties, the Sagar properties in Quebec and other abandoned properties. We have also incurred $7,788,369 in professional fees since inception; general and administrative expenses of $8,468,829; stock based compensation valued at $24,417,363 using the Black-Scholes pricing model; net foreign exchange translation gains totaling $1,091,460, donated services and expenses of $18,750, and total net other income (including interest) of $1,475,949. The following are explanations for the fluctuations during the six month period ended December 31, 2013: Following our accounting policies of expensing acquisition costs and



exploration expenses on mineral properties as incurred, this amounts

increased the net loss for each period. For the six months ended December 31,

2013, we spent $1,584,290 (December 31, 2012: $2,288,357) on our mineral

properties. In the prior year, we completed a drill program on our Molo

ground as part of work required to complete our National Instrument 43-101

report (which was subsequently filed during the second quarter of fiscal

2013). During the six months ended December 31, 2013, we worked on both our

Madagascar pilot plant through SGS in Lakefield, Canada and to a lesser

degree commenced work on our Sagar property with the ultimate aim, with no

assurances, of finding a seller for the Sagar property.

Professional fees totalled $624,550 for the period ended December 31, 2013,

down $451,277 from the December 31, 2012's total of $1,075,827. General and

administration totalled $593,735 for the period ended December 31, 2013, up

$68,003 from the December 31, 2012's total of $525,732. General and

administration are costs associated with running the Toronto and Madagascar

offices. Investor relations expenses, including the use of third parties to

assist in getting our company's story out to retail investors, institutional

investors and potential off-take parties plus the cost of travel are the

primary reasons for the increase in general and administration expenses.

Trips included visits to Europe, Asia and Africa to update existing investors

and potential off-take partners, trips to California for investor presentations and trips to New York City and surrounding area for both investors, conferences and potential off-take partners. With regards to professional fees, compensation to existing employees was approximately $200,000 lower during the current period.



Stock-based compensation decreased by $169,219 from $411,038 for the six

month period ended December 31, 2012 to $241,819 for the six month period

ended December 31, 2013. A total of 2,255,000 stock options were issued at

exercise prices between $0.11 and $0.15 during the six months ended December

31, 2013 while 1,695,000 stock options were issued at an exercise price of

$0.29 during the six months ended December 31, 2012. The value noted within

the statement of operations is the theoretical Black-Scholes calculated value

of the stock options, based on subjective factors including volatility, risk-free interest rate, dividend yield and expected life.



Net investment income totalled $7,400 for the six month period ended December

31, 2013 and $295,562 during the six month period ended for December 31,

2012. During 2012, our cash balance was higher allowing us to make greater

returns. More significantly, during 2012, due to the rise in the value of

low-risk bond funds, we were able to capitalize by investing its net excess

cash and yielding a significant return.

During the six months ended December 31, 2013, $63,849 (December 31, 2012:

$Nil) was written off as a result of other than a temporary decline in market

value of various investments held during the life of our company.

Liquidity, Capital Resources and Foreign Currencies As at December 31, 2013, we had cash on hand of $1,294,151. Our working capital was $887,624.

We hold a significant portion of cash reserves in Canadian dollars. Due to foreign exchange rate fluctuations, the value of these Canadian dollar reserves can result in translation gains or losses in US dollar terms. If there was to be a significant decline in the Canadian dollar against the US dollar, the US dollar value of that Canadian dollar cash position presented on our balance sheet would significantly decline. Recently, the Canadian dollar has declined to near the 90 cent mark relative to the US dollar. There is no certainty as to whether the value of the Canadian dollar will rise or continue to fall to lower levels. If the US dollar significantly declines relative to the Canadian dollar, our quoted Canadian dollar position would increase however US dollar cash position would significantly decline. Such foreign exchange declines could cause us to experience losses that will be recorded on our income statement. 35 -------------------------------------------------------------------------------- In addition to paying certain expenses in Canadian dollars, we are required, from time to time, to pay expenses in South African Rand, Australian Dollars, Great British Pounds and Madagascar Ariary, and possibly other currencies. Therefore, we are subject to risks relating to movements in those currencies. There are no assurances that we will be able to achieve further sales of common shares or any other form of additional financing. If we are unable to achieve the financing necessary to continue the plan of operations, then we will not be able to continue our exploration and our venture will fail.



Capital Financing From inception to June 30, 2004, we raised $59,750 through the issuance of

9,585,000 common shares.

For the year ended June 30, 2005, we did not raise any capital from new

financings.

For the year ended June 30, 2006, we raised $795,250 through the issuance of

2,750,000 common shares and 2,265,000 common share purchase warrants.

For the year ended June 30, 2007, we raised $17,300,000 through the issuance

of 34,600,000 common shares and 29,000,250 common share purchase warrants.

For the year ended June 30, 2008, we did not raise any capital from new

financings.

For the year ended June 30, 2009, we raised $680,000 through the issuance of

6,800,000 common shares and 3,400,000 common share purchase warrants.

For the year ended June 30, 2010, we raised $6,500,000 through the issuance

of 21,666,667 common shares and 21,666,667 common share purchase warrants.

For the year ended June 30, 2011, we raised net proceeds of $13,178,708

through the issuance of 30,936,654 common shares and 15,468,328 common share

purchase warrants and $886,501 (by issuing 4,549,500 common shares) through

the exercise of common share purchase warrants.

For the year ended June 30, 2012, we raised net proceeds of $635,000 (by

issuing 2,540,000 common shares) through the issuance of common shares and

$84,000 (by issuing 510,000 common shares) through the exercise of common

stock purchase options. For the year ended June 30, 2013, we raised net proceeds of $4,076,113



through the issuance of 18,157,142 common shares and 3,513,599 common share

purchase warrants and $105,000 by issuing 700,000 common shares through the

exercise of common stock purchase options.

For the six month period ended December 31, 2013, we raised net proceeds of

$3,314,757 through the issuance of 28,139,216 common shares and 1,223,353

common share purchase warrants.

We will likely continue to require additional funding during 2014. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of common shares for additional phases of exploration. Our management will continue to attempt to secure additional financing through both the public and private market sectors to meet our continuing commitments of capital expenditures. No assurance can be given that we will be able to obtain additional financing or that we will be able to obtain additional financing on terms that are favorable to us. If we are successful in completing additional financing in the form of an equity financing or securities convertible into equity, as necessary, existing shareholders will experience dilution of their interest in our company (see "Cautionary Note" above) Issuances of Securities We have funded our business to date from sales of our securities. During the period ended December 31, 2013, and since July 1, 2012, we issued the following unregistered securities: During July 2012, $105,000 was raised through the exercise of 700,000 stock



options at $0.15.

On July 13, 2012, we issued 1,695,000 stock options to directors, officers

and consultants of our company.

During November 2012, we closed a brokered and non-brokered private placement

raising a total of $2,032,500. We issued 5,807,142 common stock at $0.35 per

share and 2,903,571 common share purchase warrants at an exercise price of

$0.50, expiring 24 months from the date of issue. We paid fees of $119,010

and issued 340,028 compensation common share purchase warrants. Each

compensation common share purchase warrant entitles the holder to purchase

one common share at $0.35 and one half of one common share purchase warrant

at an exercise price of $0.50.

On February 27 2012, we issued 5,900,000 stock options to directors, officers

and consultants of our company. During March 2013, we closed a private placement raising CAD$2,358,000



(USD$2,307,035). We issued 12,350,000 common stock at prices between CAD$0.18

and CAD$0.20 per share. We paid a fee of CAD$86,000 (USD$84,176) and issued

270,000 compensation warrants. Each compensation warrant entitles the holder

to purchase one common share at CAD$0.20. 36

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During July/August 2013, we closed a private placement raising $2,043,452

through the issuance of 16,950,001 common shares and 552,000 common share

purchase warrants. We paid a fee of CAD$57,750 (USD$56,075) and $18,000 and

issued 552,000 compensation warrants. Each compensation warrant entitles the

holder to purchase one common share at CAD$0.125. On December 18, 2013, we closed a private placement raising a total of



CAD$1,566,490 (USD$1,478,923). We issued 11,189,215 common shares at a price

of CAD$0.14. We paid fees of CAD$103,989 (USD$98,176) and issued 671,353

compensation warrants at an exercise price of CAD$0.14. Each compensation

warrant expires eighteen months from the date of issue.

The offer and sale of all shares of our common shares and warrants listed above were affected in reliance on the exemptions for sales of securities not involving a public offering, as set forth in Regulation S promulgated under the Securities Act. The Investor acknowledged the following: Subscriber is not a United States Person, nor is the Subscriber acquiring the shares of our common stock and warrants directly or indirectly for the account or benefit of a United States Person. None of the funds used by the Subscriber to purchase the shares of our common stock and warrants have been obtained from United States Persons. For purposes of this Agreement, "United States Person" within the meaning of U.S. tax laws, means a citizen or resident of the United States, any former U.S. citizen subject to Section 877 of the Internal Revenue Code, any corporation, or partnership organized or existing under the laws of the United States of America or any state, jurisdiction, territory or possession thereof and any estate or trust the income of which is subject to U.S. federal income tax irrespective of its source, and within the meaning of U.S. securities laws, as defined in Rule 902(o) of Regulation S, means: (i) any natural person resident in the United States; (ii) any partnership or corporation organized or incorporated under the laws of the United States; (iii) any estate of which any executor or administrator is a U.S. person; (iv) any trust of which any trustee is a U.S. person; (v) any agency or branch of a foreign entity located in the United States; (vi) any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person; (vii) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and (viii) any partnership or corporation if organized under the laws of any foreign jurisdiction, and formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a)) who are not natural persons, estates or trusts. Further, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding for additional phases of exploration. We currently believe that debt financing will not be an alternative for funding additional phases of exploration. We do not have any arrangements in place for any future equity financing. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing necessary to continue our plan of operations, then we will not be able to continue our exploration and our venture will fail. Off-balance sheet arrangements We have no off-balance sheet arrangements including arrangements that would affect the liquidity, capital resources, market risk support and credit risk support or other benefits.


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Source: Edgar Glimpses


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