Management s Discussion and Analysis of Financial Results Three and Nine Months ended December 31, Overview and Strategic Activities

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1 Management s Discussion and Analysis of Financial Results Three and Nine Months ended December 31, 2010 This discussion and analysis of the financial condition and results of the operations of Auriga Gold Corp. ( Auriga Gold or the Company ) constitutes management s review of the factors that affected the Company s financial and operating performance for the three and nine months ended December 31, This discussion dated February 28, 2011 should be read in conjunction with the unaudited interim financial statements of the Company for the three and nine months ended December 31, 2010, together with the notes thereto, and with the audited financial statements for the years ended March 31, 2010 and 2009, together with the notes thereto. The financial statements were prepared in accordance with Canadian generally accepted accounting principles ( GAAP ) with the Canadian dollar as the reporting currency. These documents along with others published by the Company are available on SEDAR at or from the office of the Company. Overview and Strategic Activities Auriga Gold is a public company focused on gold resource expansion, near term gold production at its major property, and project development and acquisition in Central Canada. Auriga Gold was incorporated July 19, 1994 pursuant to the laws of the Companies Act of Barbados. The Company formerly traded on the Toronto Stock Exchange. Pursuant to a transfer agreement, dated August 16, 2000, all of the assets of Auriga Gold were transferred to a wholly owned subsidiary, URSA Major Minerals Incorporated, which was subsequently listed for trading. Subsequent to the transfer of assets, Auriga Gold was delisted from the Toronto Stock Exchange in Formerly the Company was incorporated under the Companies Act (Barbados) ("Barbados Act"). Since the Company's management and the principal office of the Company are located in Toronto, Ontario, a continuance (the "Continuance") of the Company from the laws of Barbados to the laws of the Province of Ontario was filed. As a result the corporate legislation that governs the Company ceased to be the Barbados Act, and the Company is now governed by the Business Corporations Act (Ontario). On April 26, 2010, articles of amendment were filed to change the name of the Company from Ursa Major International Inc. to Auriga Gold Corp. Concurrent with the name change, the articles of incorporation were amended to consolidate each of the issued and outstanding common shares by converting four (4) common shares of the Company into one (1) new common share of the Company (4:1). The unaudited interim financial statements of the Company for the three and nine months ended December 31, 2010 and this Management s Discussion and Analysis reflects the name change and the share consolidation. During October 2010, Auriga Gold completed a $5,350,762 financing (see Financings below) and on November 4, 2010 Auriga Gold commenced trading on the TSX Venture Exchange as a Tier 2 mining issuer under the trading symbol AIA. 1

2 Mineral Properties Auriga Gold s exploration activities are at an early stage, and it has not yet been determined whether its properties contain an economic mineral reserve. Any activities of Auriga Gold will constitute exploratory searches for minerals. See Risks and Uncertainties below. Puffy Lake Properties On October 8, 2010, Auriga Gold completed the acquisition in acquiring the past-producing Puffy Lake Gold Mine and adjacent properties from Pioneer Metals ULC ( Pioneer ). The properties are located 50 km northeast of the town of Flin Flon, Manitoba. Pioneer is a wholly owned subsidiary of Barrick Gold Corporation. The Puffy Lake Gold Mine features a 1,000 tonne-per-day mill and concentrator in excellent condition, a deposit developed by a ramp to a depth of 130 meters, and infrastructure related to the past-producing mine. In 1993, Kilborn Engineering Pacific Ltd. estimated that the property contained probable resources of 1,346,200 tonnes of mineralization at a grade of 8.57 g/t gold and possible resources of 883,700 tonnes at a grade of 7.15 g/t gold. The resource was estimated as part of a 1993 feasibility study prepared for Pioneer and uses a cut-off grade of 3.5 g/t gold and minimum width of 1.2 meters. The resource is a historical resource that predates NI , is not compliant with current definitions, has not been verified by the Company, and consequently should not be relied on by investors. The Puffy Lake Mine produced over 28,000 ounces of gold in 1988 and Auriga Gold s agreement was to acquire 100% of Pioneer s interest in the Puffy Lake Gold Mine subject to a 3% Net Smelter Royalty that reduces to 2.5% and 2% if gold is below US$1,000/oz and US$750/oz, respectively. The agreement also provided for the acquisition of Pioneer s 54% interest in the adjacent Nokomis property, subject to a right of first refusal held by a 3rd party. In consideration of the acquisitions, Auriga Gold: made total payments of $2.5 million; and issued stock to Pioneer valued at $1.0 million. On August 12, 2010 the Company filed a NI compliant technical report on the Puffy Lake property that qualified a further exploration program on the property. Exploration Expenditures Nine Months Ended December 31, 2010 $ Beginning balance Nil Acquisition cost 3,592,924 Claim renewal costs 1,640 Diamond drilling 96,012 Geology 24,325 2

3 Travel 29,932 Office and supplies 17,231 Mining asset retirement 1,585,490 Exploration expenditures 5,347,554 Total 5,347,554 The Company has provided a letter of credit in the amount of $75,000 to the Government of Manitoba c/o Manitoba Innovation, Energy and Mines under the terms of the Closure Plan on the Puffy Lake property. The Company further provided all assets, goods and personal property involved in the operation of the Puffy Lake property, as a security of up to $5,000,000 for the performance of the Closure Plan and the rehabilitation program. As at December 31, 2010, the net present value of the estimated asset retirement obligation related to the Puffy Lake Closure Plan is estimated to be $1,585,490, based on an estimated future liability of $3,073,160 and an estimated credit adjusted risk-free rate of 7%. The following is an analysis of the asset retirement obligation: Balance, March 31, 2010 $ - Additions 1,558,221 Accretion incurred during period 27,269 Balance, December 31, 2010 $ 1,585,490 Fox Properties On October 20, 2010, the Company completed the acquisition of the Fox Properties. The Company acquired a 75% interest in the Dunlop property and a 100% interest in the Fox River property on execution of a formal definitive purchase agreement. The terms of this purchase include: a cash payment of $50,000; the issuance of 1,262,500 common shares; staking mineral claims over all of the former Dunlop property; and a minimum $250,000 exploration program by April 15, If a bankable feasibility defines a deposit containing inferred, measured and indicated Mineral Resources, inclusive of Mineral Resources modified to produce proven and probable Mineral Reserves, in accordance with NI , totaling at least the equivalent value of a 20 million tonne deposit at 1% nickel equivalent, the Vendor may give notice within 90 days of receiving such study to form a 50 / 50 Joint Venture by funding the implementation costs of the study until such time as such costs equal 150% of Auriga s total expenditures at the time of delivery of such notice, and by arranging project financing costs. The Vendor may elect to become operator. Thereafter, the parties shall incur the balance of the expenditures pro-rata to their interests. 3

4 The Fox River property is subject to Net Smelter Returns Royalties ( NSR ) according to the following schedule: 2% NSR when the LME spot price for Ni $12.00 / lb. for the applicable period; 1.5% NSR when Ni < $12.00 / lb. and $6.00 / lb.; and 1% NSR when Ni < $6.00 / lb. The Vendor retains a first right and option to purchase all or any portion of concentrates or mineral products produced from the Fox River properties applicable to each 12 month period of commercial operation, to be set forth in a separate off-take agreement. On the Dunlop property, a former property owner holds the remaining 25% JV interest as well as a 1.5% NSR, of which 0.5% can be purchased for $500,000. The Fox properties are located east of Gillam, in northern Manitoba. The properties comprise staked claims and mineral exploration licenses with an area of 58,000 ha covering the Fox River belt which is considered to be an extension of the Thompson nickel belt. The properties were acquired with a substantial geological and geophysical exploration database and contain a number of drill targets associated with platinum group metal and base metal showings. During the nine months ended December 31, 2010, the Company completed a preliminary diamond drill program on the Fox properties and has identified further platinum group metal and base metal drill targets. On July 13, 2010, the Company filed a NI compliant technical report on the Fox properties that qualified a further exploration program on the property. Exploration Expenditures Nine Months Ended December 31, 2010 $ Year Ended March 31, 2010 $ Beginning balance 464, ,898 Acquisition cost 355,625 Nil Claim renewal costs 23, Assays 13,090 2,640 Diamond drilling 96, ,131 Geology 15,111 35,312 Travel 9,707 23,565 Office 816 1,925 Grants received (65,313) Nil Exploration expenditures 449, ,656 Total 913, ,554 4

5 Knife Lake Property On July 31, 2010, the Company had entered into two agreements to acquire a 100% interest subject to royalty considerations in the Knife Lake (Mokoman) Copper Gold property in Saskatchewan. The Knife Lake property consists of staked claims covering an area of 1,500 ha and is located approximately 75 km northwest of Flin Flon, Manitoba. The claims are subject to a 2% NSR to a former property owner. Consideration for the property is a follows: $35,625 cash payment on signing $35,625 cash payment on July 31, 2010 $35,625 cash payment on July 31, ,000 common shares on signing 125,000 common shares on July 31, ,000 common shares on July 31, 2011 During the period, the Company accelerated the acquisition of the Knife Lake property. On November 24, 2010, the Company completed the acquisition with the final payment of and the issuance of 125,000 common shares, which was due on July 31, The property contains a pre NI resource of 6.0 million tonnes grading 0.90% copper and 0.18 g/t gold and is located in an extension of the Flin Flon greenstone belt. This resource was estimated by Micon International Ltd. in 1997 and is considered to be suitable for open pit mining. (This resource is non NI compliant, has not been verified by management and should not be relied on by investors). The property was obtained with a significant geological and geophysical database and has a number of potential drill targets. Exploration Expenditures Nine Months Ended December 31, 2010 $ Year Ended March 31, 2010 $ Beginning balance 45,625 1,000 Acquisition cost 135,180 44,625 Exploration expenditures 135,180 44,625 Total 180,805 45,625 Other The Company intends to acquire further advanced projects in central Canada. To assist with this objective the Company had entered into a two year advisory services agreement in July 2009 to further 5

6 provide the Company with leads, information, screening and introductions with respect to prospective projects in central Canada. Selected Quarterly Information A summary of selected information for each of the eight most recent quarters is as follows: Net (Loss) Income Per Share Three Months Ended Net Revenues ($) Total ($) (Basic and Diluted) ($) Total Assets ($) 2010-December 31 - (597,461) (0.02) 8,051, September 30 - (88,160) (0.01) 692, June 30 - (127,562) (0.02) 752, March 31 - (107,007) (0.03) 582, December 31 - (26,367) (0.00) 390, September 30 - (40,211) (0.02) 341, June 30 - (3,477) (0.00) 260, March 31 - (4,601) (0.00) 234,105 Results of Operations Three months ended December 31, 2010, compared with three months ended December 31, 2009 Auriga Gold s net loss totalled $597,461 for the three months ended December 31, 2010, with basic and diluted loss per share of $0.02. This compares with a net loss of $26,367 with basic and diluted loss per share of $0.00 for the three months ended December 31, The increase of $571,094 in net loss was principally due to: The Company incurred an increase in stock-based compensation of $187,375 for the three months ended December 31, 2010, compared to the three months ended December 31, The increase can be attributed to the grant of 1,070,000 stock options, compared to nil stock options issued for the three months ended December 31, The options issued vest in accordance with the stock option plan. Following are details of the stock options issued during the three months ended December 31, 2010: Number of Stock Options Issued Exercise Price ($) Expiry date 1,070, December 2, ,070,000 6

7 Consulting fees for the three months ended December 31, 2010 were $103,973, compared to $13,150 for the three months ended December 31, The Company entered into an executive advisory service agreement for services for the three months of $72,500 (three months ended December 31, $nil). In 2009, the Company entered into an advisory services agreement for a total contract price of $105,200 over a two year period and $13,150 was expensed during the three months ended December 31, 2010 (three months ended December 31, $13,150). Furthermore, a comparative increase in fees for project evaluation of $15,000 has also contributed to the increase. Professional fees increased by $97,681 for the three months ended December 31, 2010, compared to the three months ended December 31, 2009, attributed to increased corporate activity requiring assistance from legal counsel. Furthermore, a comparative increase in the accrual of audit fees of $2,500 has also contributed to the increase. The Company incurred an increase in management compensation of $92,542 for the three months ended December 31, 2010, compared to the three months ended December 31, 2009 as a new management agreement and listing bonus have been approved by the Compensation committee. Furthermore, a comparative increase in fees for services of an officer has also contributed to the increase. Auriga Gold incurred stock exchange and transfer agent fees of $58,835 for the three months ended December 31, 2010, compared to $1,519 for the three months ended December 31, 2009, mainly related to the listing on the TSX Venture Exchange. The Company incurred business development expenses of $22,423 for the three months ended December 31, 2010, compared to $nil for the three months ended December 31, 2009, mainly related to the increase activity in the Company s advertising expenditure. Office and general, rent, travel bank charges and interest, salaries and benefits, and shareholder information increase by $22,934 for the three months ended December 31, 2010, compared to the three months ended December 31, 2009, mainly related to reactivating the Company. Nine months ended December 31, 2010, compared with nine months ended December 31, 2009 Auriga Gold s net loss totalled $813,183 for the nine months ended December 31, 2010, with basic and diluted loss per share of $0.06. This compares with a net loss of $70,055 with basic and diluted loss per share of $0.02 for the nine months ended December 31, The increase of $743,128 in net loss was principally due to: The Company incurred an increase in stock-based compensation of $258,625 for the nine months ended December 31, 2010, compared to the nine months ended December 31, The increase can be attributed to the grant of 1,545,000 stock options, compared to nil stock options issued in The options issued vest in accordance with the stock option plan. Following are details of the stock options issued during the nine months ended December 31, 2010: 7

8 Number of Stock Options Issued Exercise Price ($) Expiry date 475, April 23, ,070, December 2, ,545,000 Consulting fees for the nine months ended December 31, 2010 were $144,173, compared to $39,450 for the nine months ended December 31, 2009, which is attributed the Company entering into an executive advisory service agreement for services of $72,500 (nine months ended December 31, $nil). In 2009, the Company entered into an advisory services agreement for a total contract price of $105,200 over a two year period and $39,450 was expensed during the nine months ended December 31, 2010 (nine months ended December 31, $39,450). Furthermore, a comparative increase in fees for project evaluation of $25,930 has also contributed to the increase. Professional fees increased by $121,911 for the nine months ended December 31, 2010, compared to the nine months ended December 31, 2009, attributed to increased corporate activity requiring assistance from legal counsel. Furthermore, a comparative increase in the accrual of audit fees of $5,400 has also contributed to the increase. The Company incurred an increase in management compensation of $122,542 for the nine months ended December 31, 2010, compared to the nine months ended December 31, 2009 as a management agreement and bonus has been approved by the Compensation committee. Furthermore, a comparative increase in fees for services of an officer has also contributed to the increase. Auriga Gold incurred stock exchange and transfer agent fees of $80,999 for the nine months ended December 31, 2010, compared to $4,405 for the nine months ended December 31, 2009, mainly related to reactivating of the Company and the listing on the TSX Venture Exchange. The Company incurred an increase in business development, office and general expenses, rent, travel, bank charges and interest, salaries and benefits and shareholder information of $58,173 for the nine months ended December 31, 2010, compared to the nine months ended December 31, 2009, which is attributed to the increase in corporate activity. Liquidity and Capital Resources The activities of Auriga Gold is principally the acquisition and exploration of properties that have the potential to contain precious and base metals, are financed through equity offerings and the exercise of stock options. During the nine months ended December, 2010, the Company issued 21,053,347 common shares for a total proceeds of $5,730,780. As of December 31, 2010 the Company had cash in the amount of $1,400,459. This compares to $9,794 in cash as at March 31,

9 The Company has current liabilities of $275,271 as at December 31, This compares with $497,260 as at March 31, As of December 31, 2010, the Company had a working capital of $1,250,035 (March 31, 2010 a deficit of $424,553). The working capital has increased as a result of the net proceeds of $5,280,508 from the April and July 2010 private placement and the October 2010 financing. This was offset by incurring exploration expenditures of $3,018,575 on the Company s exploration properties, the repayment of $213,758 due to a related company and by incurring cash general and administrative expenses. Shares Issued and Outstanding As of February 28, 2011, the issued and outstanding common shares of the Company totalled 32,153,448 and an aggregate of 17,521,621 warrants outstanding, each entitling the holder to acquire one common share of the Auriga Gold. In addition, a total of 1,707,500 stock options have been granted to purchase 1,707,500 common shares of the Company. Financings In April 2010, the Company issued 1,825,000 common shares at $0.20 per common share for total proceeds of $365,000 pursuant to a private placement financing. In July 2010, the Company issued 75,000 common shares at $0.20 per common share for total proceeds of $15,000 pursuant to a private placement financing. On October 6, 7, 8 and 12 the Company completed a private placement and had issued 14,869,747 units (the "Units") at a price of $0.30 per Unit. Each Unit consists of one common share and one share purchase warrant. Each whole warrant entitles the holder to purchase one additional common share at a purchase price of $0.40 for a period of 24 months. In addition, the Company has issued 2,542,393 flowthrough units (the "F/T Units") at a price of $0.35 per F/T Unit. Each F/T Unit consists of one flow through share and one-half share purchase warrant. Each whole warrant entitles the holder to purchase one additional common share at a purchase price of $0.45 for a period of 24 months. The financings raised total gross proceeds of $5,350,762. The Company did not qualify the distribution of the Units in Canada by a short form prospectus on or before the date that is 30 days from the closing, therefore, each Unit now comprises of 1.10 common shares and one (1) warrant, in lieu of one (1) common share and one (1) warrant, and each FT Unit now entitles the holder to receive (without any additional consideration) 1.10 flow-through shares and onehalf (1/2) of one warrant, in lieu of one (1) flow-through share and one-half (1/2) of one warrant. All of the securities issued pursuant to this private placement are subject to a hold period of 4 months. In connection with the closing of the financing, the Company paid a cash commission of $424,105 and issued 1,380,678 financing fee warrants to certain arms-length parties. Each financing fee warrant entitles the holder thereof the acquire one common share at a price of $0.30 per Common Share for a period of twenty-four (24) months from the date of issuance of the financing fee warrant. Related Party Transactions For the three and nine months ended December 31, 2010, a law firm controlled by a director of the Company was paid professional fees of $64,602 and $80,639, respectively (three and nine months ended 9

10 December 31, $nil and $925, respectively). As at December 31, 2010, the firm was owed $68,126 (March 31, $5,171) and is included in accounts payable and accrued liabilities. During the three and nine months ended December 31, 2010 the Company recorded management compensation of $70,000 and 100,000, respectively (three and nine months ended December 31, $nil) to a company controlled by a director of the Company The related party transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties. Proposed Transaction Subsequent to the period end the Company continues to seek and evaluate various business opportunities, there are no transactions currently pending. Critical Accounting Estimates In preparing financial statements, management has to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. The most significant accounting estimates are the policy of capitalizing exploration costs on its mineral properties and the valuation of such properties. The Company reviews its portfolio of mineral properties on a periodic basis to determine whether a writedown of the capitalized cost of any property is required. The recoverability of the amounts shown for mineral properties and deferred exploration costs is dependent on the existence of economically recoverable reserves, the ability to obtain financing to complete the development of such reserves and meet its obligations under various agreements. The Company uses a Black-Scholes option-pricing model to determine the fair value of options. The main factor affecting the estimates of stock-based compensation is the stock price volatility used. The Company uses historical price data and comparables in the estimate of future volatilities. Future Accounting Changes Business Combinations, Consolidated Financial Statements and Non-Controlling Interests The CICA issued three new accounting standards in January 2009: Section 1582, Business Combinations, Section 1601, Consolidated Financial Statements and Section 1602, Non-Controlling interests. These new standards will be effective for fiscal years beginning on or after January 1, The Company is in the process of evaluating the requirements of these new standards. Section 1582 replaces Section 1581 and establishes standards for the accounting for a business combination. It provides the Canadian equivalent to International Financial Reporting Standards IFRS 3 - Business Combinations. The section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, Sections 1601 and 1602 together replace Section 1600, Consolidated Financial Statements. Section 1601 establishes standards for the preparation of consolidated financial statements. Section 1601 applies to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, Section 1602 establishes standards for accounting for a non- 10

11 controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. It is equivalent to the corresponding provisions of International Financial Reporting Standard las 27 - Consolidated and Separate Financial Statements and applies to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, International Financial Reporting Standards ("IFRS") In January 2006, the CICA's Accounting Standards Board ("AcSB") formally adopted the strategy of replacing Canadian GAAP with IFRS for Canadian enterprises with public accountability. On February 13, 2008, the AcSB confirmed that the use of IFRS will be required in 2011 for publicly accountable profit oriented enterprises. For these entities, IFRS will be required for interim and annual financial statements relating to fiscal years beginning on or after January 1, The Company will be required to have prepared, in time for the filing of its unaudited financial statements for the three months ended June 30, 2011, comparative financial statements in accordance with IFRS for the three months ended June 30, The Company is currently in the process of evaluating the potential impact of IFRS on its financial statements. This will be an ongoing process as the International Accounting Standards Board and the AcSB issue new standards and recommendations. It is anticipated that the Company's financial results and financial position as disclosed in the Company's current Canadian GAAP financial statements will not be significantly different when presented in accordance with IFRS. Financial Instruments There have been no changes to the risk objectives, policies and procedures from the previous period. The Company's risk exposures and the impact on the Company's financial instruments are summarized below: Credit Risk Credit risk is the risk of loss associated with a counterparty's inability to fulfills its payment obligations. The Company's credit risk is primarily attributable to cash and amounts receivable. Cash consists of cash on hand with a reputable financial institution. The Company does not hold any non-bank asset backed commercial paper. Management believes the risk of loss is remote. Financial instruments included in amounts receivable consist of goods and services tax due from the Federal Government of Canada. Management believes that the credit risk concentration with respect to these financial instruments is remote. Liquidity Risk The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at December 31, 2010, the Company had sufficient cash and cash equivalents to settle current liabilities of $275,271. Most of the Company s financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms. Market Risk Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity prices. 11

12 Interest rate risk The Company has cash balances subject to fluctuations in the prime rate. The Company's current policy is to invest excess cash in investment-grade short-term deposit certificates issued by its banking institutions. The Company periodically monitors the investments it makes and is satisfied with the credit ratings of its banks. Currently, the Company does not hedge against interest rate risk. Foreign currency risk The Company's functional currency is the Canadian dollar and major purchases are transacted in Canadian dollars. Management believes the foreign exchange risk derived from currency conversions at this time are small and therefore, does not hedge its foreign exchange risk. Commodity price risk The Company is exposed to price risk with respect to commodity prices. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices as it relates to precious and base metals to determine the appropriate course of action to be taken by the Company. Sensitivity Analysis The Company has, for accounting purposes, designated its cash as held-for-trading, which is measured at fair value. Amounts receivable are classified for accounting purposes as loans and receivables, which are measured at amortized cost which approximates the fair market value. Accounts payable and accrued liabilities are classified for accounting purposes as other financial liabilities, which are measured at amortized cost which approximates fair market value. As of December 31, 2010, both the carrying and fair value amounts of the Company's financial instruments are approximately equivalent because of the limited term of these instruments. Based on management's knowledge and experience of the financial markets, the Company believes the following movements are "reasonably possible" over a six month period: Interest rate risk is remote since cash is not subject to interest rate fluctuations; The Company does not hold balances in foreign currencies to give rise to exposure to foreign exchange risk; and Commodity price risk could adversely affect the Company. In particular, the Company's future profitability and viability from mineral exploration depends upon the world market prices of precious and base metals. Commodity prices have fluctuated significantly in recent years. There is no assurance that, even if commercial quantities of metals are produced in the future, a profitable market will exist for them. As of December 31, 2010, the Company was not a producer of metals. As a result, commodity price risk may affect the completion of future equity transactions such as equity offerings and the exercise of stock options and warrants. This may also affect the Company's liquidity and its ability to meet its ongoing obligations. Fair Value Hierarchy Cash is classified as Level 1 within the fair value hierarchy under Section 3862 of the CICA Handbook. 12

13 Managing Capital The Company manages its capital with the following objectives: to ensure sufficient flexibility to achieve the ongoing business objectives including funding of future resource based exploration and investment initiatives; and to maximize shareholder return through enhancing the share value. The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its objectives given the current outlook of the business and the industry in general. The Company may manage its capital structure by issuing new shares, repurchasing outstanding shares, adjusting capital spending, or disposing of assets. Management adjusts the capital structure as necessary in order to support the acquisition, exploration and development of its mineral properties for the mining of nickel, copper and gold. The capital structure is reviewed by management and the Board of Directors on an ongoing basis. The Company considers its capital to be total shareholders' equity (managed capital) which at December 31, 2010 totaled $6,190,951 (March 31, $85,626). The Company manages capital through its financial and operational forecasting processes. The Company reviews its working capital and forecasts its future cash flows based on operating expenditures, as well as other investing and financing activities. The forecast is regularly updated based on activities related to the acquisition, exploration and development of its mineral properties. The Board of Directors regularly reviews the Company's capital management approach. The Company's capital management objectives, policies and processes have remained unchanged during the three and nine months ended December 31, The Company is not subject to any capital requirements imposed by a lending institution. Risks and Uncertainties Mining Industry The exploration for, development and mining of mineral deposits involves significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be required to establish ore reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the current exploration programs planned by the Company will result in a profitable commercial mining operation. Whether a mineral deposit will be commercially viable depends on a number of factors, including the particular attributes of the deposit, such as size, grade and proximity to infrastructure, as well as metal prices which are highly cyclical and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital. 13

14 Government Regulation The exploration and development activities of the Company are subject to various federal, provincial and local laws governing prospecting, development, production, taxes, labour standards and occupational health, mine safety, toxic substance and other matters. Exploration and development activities are also subject to various federal, provincial and local laws and regulations relating to the protection of the environment. These laws mandate, among other things, the maintenance of air and water quality standards, and land reclamation. These laws also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Although the Company s exploration and development activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development. Amendments to current laws and regulations governing operations and activities of exploration and development, mining and milling or more stringent implementation thereof could have a substantial adverse impact on the Company. Government approvals and permits are currently, and may in the future be, required in connection with the Company s operations. To the extent such approvals are required and not obtained; the Company may be curtailed or prohibited from proceeding with planned exploration or development of mineral properties. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions there under, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in exploration expenses, capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties. Permits and Licenses Mineral exploration and mining activities may only be conducted by entities that have obtained or renewed exploration or mining permits and licenses in accordance with the relevant mining laws and regulations. No guarantee can be given that the necessary exploration and mining permits and licenses will be issued to the Company or, if they are issued, that they will be renewed, or that the Company will be in a position to comply with all conditions that are imposed. Nearly all mining projects require government approval. There can be no certainty that these approvals will be granted to the Company in a timely manner, or at all. Environmental Risks and Hazards All phases of the Company s operations are subject to environmental regulation in the various jurisdictions in which it operates. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company s operations. Environmental hazards may exist 14

15 on the properties on which the Company holds interests which are unknown to the Company at present which have been caused by previous or existing owners or operators of the properties. The Company may become liable for such environmental hazards caused by previous owners and operators of the properties even where it has attempted to contractually limit its liability. Production at mineral properties may involve the use of dangerous and hazardous substances. While all steps will be taken to prevent discharges of pollutants into the ground water and the environment, the Company may become subject to liability for hazards that cannot be insured against. Commodity Prices The future profitability of the Company will be directly related to the market price of metals. Metal prices fluctuate considerably and are affected by numerous factors beyond the Company s control, such as industrial demand, inflation and expectations with respect to the rate of inflation, the strength of the U.S. dollar and of other currencies, interest rates, forward sales by producers, production and cost levels and changes in investment trends. If these prices were to decline significantly or for an extended period of time, the Company might be unable to continue its operations, develop its properties or fulfill its obligations under its agreements with its partners or under its permits and licenses. As a result, the Company might lose its interest in, or be forced to sell, some of its properties. Conflicts of Interest Certain of the directors of the Company also serve as directors and/or significant shareholders of other companies involved in natural resource exploration and development and consequently there exists the possibility for such directors to be in a position of conflict. In the event that a director or executive officer has a material interest in any transaction being considered by the Company, the Company will require a director or officer of a corporation experiencing such a conflict to disclose his interest and refrain from voting on any such matter. Land Title Although title to the Company s mineral properties has been reviewed by or on behalf of the Company and title opinions were delivered to the Company, no assurances can be given that there are no title defects affecting the properties. Title insurance generally is not available for mining claims in Canada, and the Company s ability to ensure that it has obtained secure claim to individual mineral properties or mining concessions may be severely constrained. The Company has not conducted surveys of all the claims in which it holds direct or indirect interests; therefore, the precise area and location of such claims may be in doubt. Accordingly, the properties may be subject to prior unregistered liens, agreements, transfers or claims, including native land claims, and title may be affected by, among other things, undetected defects. In addition, the Company may be unable to operate the properties as permitted or to enforce its rights with respect to its properties. Requirement of Additional Financing The continuing development of the Company s properties will depend upon the Company s ability to obtain financing through debt financing, equity financing or the joint venturing of projects or other means. No assurance can be given that the Company will be successful in obtaining the required financing on acceptable terms, if at all. 15

16 Off Balance Sheet Items There are no off balance sheet items. Outlook This acquisition of the Puffy Lake property positions Auriga Gold as a new Canadian company focused on gold resource expansion, near-term production, and project acquisition in the Flin Flon greenstone belt and adjacent areas of central Canada. The Company has been acquiring assets in Manitoba and Saskatchewan over the past year. Management considers that these provinces currently offer a particularly favourable environment for mineral exploration and development. The Company intends to acquire quality advanced projects with defined resources in central Canada. The Company s management has a proven record of discovery, resource expansion permitting and developing projects through to production. Auriga Gold will combine its exploration and development activity of both the Puffy Lake property and Nokomis property as the Maverick Gold project. The Company has commenced the first phase drilling program at the Maverick Gold Project. Auriga Gold will conduct a 2,500 metre phase I drill program to confirm the historical (pre-ni ) gold resources at the Maverick Gold project thus forming the basis for a preliminary economic assessment. The initial confirmation drilling program will consist of approximately 15 holes on three sections totaling 2,500 metres. Initial assay results are anticipated in early in 2011 and the phase I program will be completed in March A follow-up phase II program of up to 2,500 metres of shallow drilling is currently planned to follow up on the confirmation drilling. Bruce Mackie, P.Geo, is the qualified person for the program. P & E Mining Consultants Ltd. have been engaged to complete a NI resource estimate.the Puffy Lake property contains an historical gold resource, 1,000 tonne per day flotation concentrator for processing gold ores, a ramp developed to 130 meters depth and related mining infrastructure. These assets will potentially enable the Company to rapidly advance the project to production. Special Note Regarding Forward-Looking Statements This Report contains forward-looking statements that are based on beliefs of its management as well as assumptions made by and information currently available to management of the Company. When used in this Report, the words estimate, believe, anticipate, intend, expect, plan, may, should, will, and the negative thereof or other variations thereon or comparable terminology are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events based on currently available information and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in those statements. Such risk factors include those set forth under Risks and Uncertainties above. The statements contained in this Report speak only as of the date hereof. The Company does not undertake any obligation to release publicly any revisions to these statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Signed Richard H. Sutcliffe Richard H. Sutcliffe, Ph.D., P.Geo President and Chief Executive Officer February 28, Signed Victor Hugo Victor Hugo, CMA Chief Financial Officer