CONSOLIDATED INTERIM FINANCIAL STATEMENTS

CONSOLIDATED INTERIM FINANCIAL STATEMENTS For the three months ended July 31, 2011 (Unaudited)

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION (Unaudited) Canadian dollars July 31, 2011 April 30, 2011 May 1, 2010 ASSETS Current Cash $ 7,096,291 $ 7,167,471 $ 437,900 Receivables 70,401 48,452 10,137 Prepaid expenses 53,816 5,826 5,350 Total current assets 7,220,508 7,221,749 453,387 Equipment (Note 6) 167,018 153,178 30,833 Exploration Advances (Note 5) 97,820 97,820 - Mineral properties (Note 5) 5,033,355 2,680,640 951,444 TOTAL ASSETS $ 12,518,701 $ 10,153,387 $ 1,435,664 LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities $ 146,028 $ 145,911 $ 60,069 Future income tax liability 62,000 62,000-208,028 207,911 60,069 Shareholders' equity Share capital (Note 7) 16,260,289 14,120,827 5,116,055 Contributed surplus (Note 7) 2,267,034 2,266,988 1,211,943 Accumulated other comprehensive income (189,345) (204,013) (34,330) Deficit (6,027,305) (6,238,326) (4,918,073) Total shareholders equity 12,310,673 9,945,476 1,375,595 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $ 12,518,701 $ 10,153,387 $ 1,435,664 Corporate information and liquidity risk (Note 1) On behalf of the Board: Kim Evans Director Bryce Porter Director The accompanying notes are an integral part of these financial statements.

CONSOLIDATED INTERIM STATEMENTS OF LOSS (Unaudited) Canadian dollars For the three months ended July 31 2011 2010 EXPENSES Amortization 9,656 3,083 Management fees 25,500 19,500 Office and miscellaneous 44,880 17,614 Foreign exchange (gain)/loss (370,538) 35 Professional fees 17,055 8,467 Regulatory fees and listing fees 2,564 10,826 Share-based compensation (Note 7) 19,593 - Travel and promotion 23,339 8,854 Wages and benefit fees 36,202 20,449 191,749 (88,828) OTHER INCOME (EXPENSE) Interest income 19,272 170 19,272 170 (Loss) income for the period $ 211,021 $ (88,658) Net loss per common share Basic $ 0.00 $ 0.00 Diluted $ 0.00 $ 0.00 Weighted average number of common shares outstanding 56,310,976 33,641,174 The accompanying notes are an integral part of these financial statements.

CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE LOSS (Unaudited) Canadian dollars For the three months ended July 31 2011 2010 (Loss) income for the period $ 211,021 $ (88,658) Other comprehensive loss Cumulative translation adjustment (189,345) 21,263 Other comprehensive (loss) income for the period (189,345) 21,263 Comprehensive (loss) income for the period $ 21,676 $ (67,395) The accompanying notes are an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) Canadian dollars Share capital Contributed surplus Accumulated other comprehensive income Deficit Total Equity Balance May 1, 2011 $ 14,120,827 $ 2,266,988 $ (204,013) $ (6,238,326) $ 9,945,476 Net loss for the period - - - 211,021 211,021 Other comprehensive loss - - 14,668-14,668 Comprehensive loss for the period - - (189,345) (6,027,305) 10,171,165 Shares issued on exercise of warrants 1,281,165 - - - 1,281,165 Shares issued for mineral property 810,000 - - - 810,000 Employee share options: Value of options - 15,100 - - 15,100 Changes in vesting rules - 4,493 - - 4,493 Shares issued on exercise of options 48,297 (19,547) - - 28,750 Balance July 31, 2011 $ 16,260,289 $ 2,267,034 $ (189,345) $ (6,027,305) $ 12,310,673 Balance May 1, 2010 5,116,055 1,211,943 (34,330) (4,918,073) 1,375,595 Net income for the period - - - (88,658) (88,658) Other comprehensive income - - 55,593-55,593 Comprehensive loss for the period - - 21,263 (5,006,731) 1,342,530 Private placement 892,712 8,750 - - 901,462 Share issue costs (32,553) - - - (32,553) Shares issued for mineral property 150,000 - - - 150,000 Balance July 31, 2010 $ 6,126,214 $ 1,220,693 $ 21,263 $ (5,006,731) $ 2,361,439 The accompanying notes are an integral part of these financial statements.

CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (Unaudited) Canadian dollars For the three months ended July 31 2011 2010 OPERATING ACTIVITIES (Loss) income for the period $ 211,021 $ (88,658) Add items not affecting cash: Amortization 9,656 3,083 Share-based compensation 19,593-240,270 (85,575) Changes in non-cash working capital items Receivables (21,949) (1,348) Prepaid expenses (47,990) (12,842) Accounts payable and accrued liabilities 117 7,662 Cash used in operating activities 170,448 (92,103) INVESTING ACTIVITIES Acquisition of equipment (30,637) (29,913) Expenditures on mineral properties (1,520,906) (242,076) Cash used in investing activities (1,551,543) (271,989) FINANCING ACTIVITIES Proceeds from issuance of shares 1,309,915 892,712 Share issue costs - (23,803) Cash generated by financing activities 1,309,915 868,909 Net (decrease) increase in cash (71,180) 504,817 Cash, beginning of period 7,167,471 437,900 Cash, end of period $ 7,096,291 $ 942,717 Supplemental cash flow information Note 10 The accompanying notes are an integral part of these financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 1 Corporate information and liquidity risk Golden Reign Resources Ltd. (the Company ) was incorporated on April 1, 2004 under the laws of the Yukon Territory and continued into British Columbia under the British Columbia Corporations Act. Its principal business activity is the acquisition and exploration of mineral properties. The Company s primary mineral property is the San Albino-Murra Mining Concession, located in Nicaragua, which is in the exploration stage. Recovery of the carrying value of the investment in mineral properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete exploration and development and the attainment of future profitable production or the disposition of these assets for proceeds in excess of their carrying values. At July 31, 2011, the Company has no source of operating cash flows, has not yet achieved profitable operations, has accumulated losses since its inception, expects to incur further losses in the development of its business and has no assurance that sufficient funding will be available to conduct further exploration of its mineral properties. Management estimates it will have sufficient working capital to conduct its planned operations for fiscal 2012. In future, the Company may raise additional financing through the issuance of share capital, however, there can be no assurance that it will be successful in its efforts to do so and that the terms will be favourable to the Company. These financial statements do not reflect the adjustments to the carrying values of assets and liabilities, or the impact on the statement of operations and balance sheet classifications that would be necessary were the going concern assumption not appropriate. 2 Basis of presentation The interim consolidated financial statements of the Company have been prepared in accordance with Canadian generally accepted accounting principles as set out in the Handbook of the Canadian Institute of Chartered Accountants ( CICA Handbook ). In 2010, the CICA Handbook was revised to incorporate International Financial Reporting Standards ( IFRS ), and required publicly accountable enterprise to apply such standards effective for years beginning on or after January 1, 2011. Accordingly, the Company has commenced reporting on this basis in these condensed consolidated interim financial statements. In these financial statements, the term Canadian GAAP refers to Canadian GAAP before the adoption of IFRS. These interim consolidated financial statements have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, including IAS 34 and IFRS 1. Subject to certain elections disclosed in Note 4, the Company has consistently applied the same accounting policies in its opening IFRS statement of financial position at May 1, 2010 ( the transition date ) and throughout all periods presented, as if these policies had always been in effect. Note 4 discloses the impact of the transition to IFRS on the Company s reported financial results, including the nature and effect of significant changes in accounting policies from those used in the Company s consolidated financial statements for the year ended April 30, 2011. The policies applied in these interim consolidated statements are based on IFRS issued and outstanding as at the date the Board of Directors approved these financial statements. Any subsequent changes to IFRS, that are given effect in the Company s annual consolidated financial statements for the year ended April 30, 2012 could result in restatement of these interim consolidated financial statements, including the transitional adjustments recognized on change-over to IFRS. The interim consolidated financial statements should be read in conjunction with the Company s Canadian GAAP annual financial statements for the year ended April 30, 2011.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 3 Summary of significant accounting policies These consolidated financial statements have been prepared on the historic cost convention. 3.1 Consolidation The consolidated financial statements at July 31, 2011 include the accounts of the Company and its subsidiary Gold Belt, S.A., incorporated in Nicaragua from the date of formation. All intercompany accounts, transactions and balances have been eliminated on consolidation. 3.2 Foreign currency translation The financial statements for the Company and its subsidiary are prepared using their functional currencies. Functional currency is the currency of the primary economic environment in which an entity operates. The functional currency of the parent company, Golden Reign Resources Ltd., is the Canadian dollar; and the functional currency of the Company s subsidiaries is the US dollar. The presentation currency of the Company is the Canadian dollar. The financial statements of entities that have a functional currency different from that of the Company ( foreign operations ) are translated into Canadian dollars as follows: assets and liabilities at the closing rate at the date of the statement of financial position, and income and expenses at the average rate of the period (as this is considered a reasonable approximation to actual rates). All resulting changes are recognized in other comprehensive income as cumulative translation adjustments. When an entity disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in profit or loss. If an entity disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive income related to the subsidiary is reallocated between controlling and non-controlling interests. 3.3 Financial instruments The Company initially measures financial instruments at estimated fair value. The Company s loans and receivables are comprised of cash, trade receivables and are included in current assets due to their short-term nature. Financial liabilities are categorized as other financial liabilities consisting of accounts payable and accrued liabilities. 3.3.1 Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and with no intention of trading. They are included in current assets, except for maturities greater than 12 months after the statement of financial position date, which are classified as non-current assets. Loans and receivables are recognized at the amount expected to be received less, any discount or rebate to reduce the loan and receivables to estimated fair value. Loans and receivables are subsequently measured at amortized cost using the effective interest method. Loans and receivables are included in accounts receivable and other current assets on the statement of financial position.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 3.3.2 Other financial liabilities Other financial liabilities are financial liabilities that are not quoted on an active market and with no intention of being traded. They are included in current liabilities. Financial liabilities include accounts payable and accrued liabilities and future income tax liabilities. Accounts payable are initially recognized at the amount required to be paid less any discount or rebates to reduce the payables to estimated fair value. Accounts payable are subsequently measured at amortized cost using the effective interest method. 3.4 Equipment Equipment is recorded at cost less related accumulated depreciation. Cost is determined as the expenditure directly attributable to the asset at acquisition, only when it is probable that future economic benefits will flow to the Company and the cost can be reliably measured. When an asset is disposed of, its carrying cost is derecognized. All repairs and maintenance costs are charged to the earnings statement during the financial period in which they are incurred. The Company provides for depreciation of equipment on a declining balance basis using the following rates: Computer equipment 30% Equipment and furniture 20% Vehicles 30% The Company allocates the amount initially recognized in respect of an item of equipment to its significant components and depreciates separately each such component, where applicable. The estimated residual value and useful life of equipment is reviewed at the end of each reporting period and adjusted if required. Gains and losses on disposals of equipment are determined by comparing the proceeds with the carrying amount of the asset and are included as part of other gains and losses in the consolidated statement of earnings (losses) and comprehensive income (losses). 3.5 Mineral property costs The Company records its interests in mineral properties and areas of geological interest at cost less option payments received and other recoveries. All direct and indirect costs relating to the acquisition and exploration of these interests are capitalized on the basis of specific claim blocks or areas of geological interest until the properties to which they relate are placed into production, sold, abandoned or management has determined there to be an impairment. These costs will be amortized over the proven reserves available on the related property following commencement of production. The amounts shown for mineral properties represent costs incurred to date and are not intended to reflect present or future values. Mineral properties which are sold before that property reaches the production stage will have all revenues from the sale of the property credited against the cost of the property. Properties which have reached the production stage will have a gain or loss calculated based on the portion of that property sold. Management s estimates of recoverability of the Company s investment in various projects have been based on current conditions. However, it is reasonably possible that changes could occur in the near term which could adversely affect management s estimates and may result in material future write-downs of capitalized property carrying values.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 3.6 Impairment of assets 3.6.1 Financial assets Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized. 3.6.2 Non-financial and intangible assets The carrying amounts of the Company s equipment and intangible assets having a finite useful life are assessed for impairment indicators on at least an annual basis to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. An impairment loss is recognized for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s or group of assets estimated fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable independent cash inflows (a cash generating unit ( CGU )). Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but limited to the carrying that would have been determined had no impairment loss been recognized for the asset (or CGU) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. Assets that have an indefinite useful life and goodwill are not subject to depreciation and are tested for impairment on an annual basis and when there is an indication of potential impairment. 3.7 Asset retirement obligations An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the exploration or development of a mineral property interest. The Company recognizes the fair value of a liability for an asset retirement obligation in the year in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased by the same amount as the liability. The Company does not currently have any asset retirement obligations. Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation. The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease to the carrying amount of the liability and the related long-lived asset. The operations of the Company may in the future be affected from time to time in varying degree by changes in environmental regulations, including those for site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company are not predictable.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 3.8 Share capital The Company has one class of shares, common shares, which are classified as equity. These are recorded at the proceeds received less any direct issue costs and related taxes. Where the Company purchases any of the Company s equity share capital, the consideration paid is deducted from equity attributable to the Company s equity holders until shares are cancelled, reissued or disposed of. 3.9 Stock options The Company grants stock options to certain employees, directors, officers and consultants. Stock options vest over various periods and expire after five years. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. The fair value of each tranche is measured at the date of grant using the Black-Scholes option pricing model. Compensation expense is recognized over the tranche s vesting period by increasing contributed surplus based on the number of awards expected to vest. The number of awards expected to vest is reviewed at least annually, with any impact being recognized immediately. 3.10 Income taxes Current income tax represents the expected income tax payable (or recoverable) on taxable income for the period using income tax rates enacted or substantially enacted at the end of the reporting period and taking into account any adjustments arising from prior years. The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized when there are differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using substantively enacted or enacted tax rates in effect in the period in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as part of the provision for income taxes in the period that includes the enactment date. Deferred tax assets are recognized to the extent that it is probable that the assets can be recovered. Tax on income in interim periods is accrued using the tax rate that would be applicable to expected total annual earnings. All items recognized directly in shareholders equity are recognized net of tax. 3.11 Loss per share Loss per share is computed based on the weighted average basic number of shares outstanding for the period. Diluted loss per share is calculated by adjusting the weighted average number of common shares outstanding for dilutive instruments. The number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method. The Company s potentially dilutive common shares comprise stock options granted to employees, directors, officers and consultants, and warrants.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 3.12 Significant accounting judgments and estimation uncertainties The preparation of the interim consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual area of estimates includes mineral property impairment assessment, assumptions used in the accounting for stock based compensation, valuation of future income tax benefits and contingent liabilities. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the interim consolidated financial statements is included in the notes to the financial statements where applicable. 3.13 Adoption of new and revised standards and interpretation The following new standards and amendments to standards are mandatory for the first time for the financial year beginning May 1, 2011: 3.13.1 Amendments to IFRS 7 Financial Instruments: Disclosures This amendment increases the disclosure required regarding the transfer of financial assets, especially if there is a disproportionate amount of transfer transactions that take place around the end of a reporting period. This amendment is effective for annual periods beginning on or after July 1, 2011. 3.13.2 New standard IFRS 9 Financial Instruments IFRS 9 as issued reflects the first phase of the IASB s work on the replacement of IAS 39, Financial Instruments: Recognition and Measurement, and applies to the classification and measurement of financial assets as defined in IAS 39. The standard is effective for annual periods beginning on or after January 1, 2013. In subsequent phases, the IASB will address classification and measurement of financial liabilities, hedge accounting and derecognition. The completion of the project is expected in 2011. 3.13.3 New standard IFRS 10 Consolidated Financial Statements IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements. The standard provides additional guidance to assist in determining control where this is difficult to assess. This new standard might impact the entities that a group consolidates in its subsidiaries. The standard is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 3.13.4 New standard IFRS 11 Joint Arrangements IFRS 11 requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity method of accounting whereas for a joint operation the venturer will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account for interests in joint ventures. IFRS 11 supersedes IAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled Entities Non-monetary Contributions by Venturers. The standard is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. 3.13.5 New standard IFRS 12 Disclosure of Interests in Other Entities IFRS 12 is a new standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off-balance sheet vehicles. This standard is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. The Company has not yet assessed the impact of these standards or determined whether it will adopt the standards early. 4 First time adoption of IFRS The accounting policies set out in Note 3 have been applied in preparing the financial statements for the period ended July 31, 2011, the comparative information presented in these financial statements for the year ended April 30, 2011 and in the preparation of an opening IFRS balance sheet at May 1, 2010 (the Company s date of transition). 4.1 Transition elections IFRS 1 allows first time adopters to IFRS to take advantage of a number of voluntary exemptions from the general principal of retrospective restatement. The Company has taken the following exemptions: 4.1.1 IFRS 2 Share based payments The Company has elected not to apply IFRS 2 to share based payments granted and fully vested before the Company s date of transition to IFRS. 4.1.2 IFRS 3 Business combinations This standard has not been applied to acquisitions of subsidiaries that occurred before May 1, 2010, the Company s transition date to IFRS. As such, there is no retrospective change in accounting for business combinations. 4.1.3 Currency translation differences The Company has elected to reset the cumulative translation adjustment account, which includes gains and losses arising from the translation of foreign operations, to zero at the transition date to IFRS.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 4.2 Reconciliation of equity as previously reported under Canadian GAAP to IFRS April 30, 2011 July 31, 2010 May 1, 2010 Note Cdn GAAP Adj IFRS Cdn GAAP Adj IFRS Cdn GAAP Adj IFRS ASSETS Current Cash 7,167,471-7,167,471 942,717-942,717 437,900-437,900 Receivables 48,452-48,452 11,485-11,485 10,137-10,137 Prepaid expenses 5,826-5,826 18,193-18,193 5,350-5,350 Total current assets 7,221,749-7,221,749 972,395-972,395 453,387-453,387 Equipment 153,178-153,178 57,663-57,663 30,833-30,833 Exploration advances 97,820-97,820 - - - - - - Mineral properties 4.3.2 2,884,653 (204,013) 2,680,640 1,376,463 21,263 1,397,726 985,774 (34,330) 951,444 TOTAL ASSETS 10,357,400 (204,013) 10,153,387 2,406,521 21,263 2,427,784 1,469,994 (34,330) 1,435,664 LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities 145,911-145,911 66,345-66,345 60,069-60,069 Future income tax liability 62,000-62,000 - - - - - - 207,911-207,911 66,345-66,345 60,069-60,069 Shareholders' equity Share capital 14,120,827-14,120,827 6,126,214-6,126,214 5,116,055-5,116,055 Contributed surplus 4.3.1 2,250,851 16,137 2,266,988 1,220,693-1,220,693 1,211,943-1,211,943 Other comprehensive income 4.3.2 - (204,013) (204,013) - 21,263 21,263 - (34,330) (34,330) Accumulated deficit (6,222,189) (16,137) (6,238,326) (5,006,731) - (5,006,731) (4,918,073) - (4,918,073) Total shareholders equity 10,149,489 (204,013) 9,945,476 2,340,176 21,263 2,361,439 1,409,925 (34,330) 1,375,595 TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 10,357,400 (204,013) 10,153,387 2,406,521 21,263 2,427,784 1,469,994 (34,330) 1,435,664

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 4.3 Reconciliation of comprehensive income as previously reported under Canadian GAAP to IFRS Year ended April 30, 2011 Three months ended July 31, 2010 Note Cdn GAAP Adj IFRS Cdn GAAP Adj IFRS EXPENSES Amortization 14,700-14,700 3,083-3,083 Management fees 86,000-86,000 19,500-19,500 Office and miscellaneous 61,830-61,830 17,649-17,649 Professional fees 55,408-55,408 8,467-8,467 Regulatory and listing fees 29,210-29,210 10,826-10,826 Share-based compensation (Note 8) 4.3.1 840,033 16,137 856,170 - - - Travel and promotion 64,458-64,458 8,854-8,854 Wages and benefits 100,608-100,608 20,449-20,449 (1,252,247) (16,137) (1,268,384) (88,828) - (88,828) OTHER ITEMS Interest income 10,131-10,131 170-170 (Loss) gain before income tax (1,242,116) (16,137) (1,258,253) (88,658) - (88,658) Future income tax expense 62,000-62,000 - - - (Loss) gain for the period (1,304,116) (16,137) (1,320,253) (88,658) - (88,658) Other comprehensive (loss) income Cumulative translation adjustment - (204,013) (204,013) - 21,263 21,263 Comprehensive (loss) income for the period $ (1,304,116) $ (220,150) $ (1,524,266) $ (88,658) $ 21,263 $ (67,395) 4.3.1 Share-based payments Under IFRS, the Company accrues the cost of stock options over the vesting period using the graded method of amortization rather than the straight-line method, which was the Company s policy under Canadian GAAP. This increased contributed surplus and deficit at the date of transition and increased share-based compensation expenses by $Nil and $16,137 for the three months ended July 31, 2010 and year ended April, 2011, respectively. 4.3.2 Currency translation reserve In accordance with IFRS transitional provisions, the Company has elected to reset the cumulative translation adjustment account, which includes gains and losses arising from the translation of foreign operations, to zero at the date of transition to IFRS. Along with the change in the way the Company translates the results of its foreign operations, the adjustment to deficit and contributed surplus was zero.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 The following is a summary of transition adjustments to the Company s retained earnings from Canadian GAAP to IFRS: Apr 30, 2011 July 31, 2010 May 1, 2010 Deficit as reported under Canadian GAAP (6,222,189) (5,006,731) (4,918,073) IFRS adjustments increase (decrease): Amortization of stock options (16,137) - - Retained earnings as reported under IFRS $ (6,238,326) $ (5,006,731) $ (4,918,073) 5 Mineral properties San Albino-Murra Property, Nicaragua On June 29, 2009, the Company entered into an option agreement (the Agreement ), to acquire an 80% interest in the San Albino-Murra Mining Concession (the Property ) located in Nicaragua by: a) making cash payments to the optionor as follows: (i) (ii) US$30,000 (paid) on signing of the Agreement; US$100,000 (paid), of which US$50,000 was paid upon delivery of an acceptable legal title opinion to the Property and receipt by the Company of conditional acceptance of the Agreement by the TSX-V (received) and the remaining US$50,000 was paid upon receipt by the Company of final acceptance of the Agreement by the TSX-V (the Approval Date ), which was received on September 30, 2009; (iii) US$40,000 on each six month anniversary of the signing of the Agreement, for the duration of the option earn-in period (paid US$240,000)(Note 12(b)). b) incurring aggregate exploration expenditures of US$5,000,000 on the Property, as follows: (i) US$200,000 (incurred) on or before the first anniversary of September 30, 2010; (ii) US$1,000,000 (incurred) on or before the second anniversary of September 30, 2011; (iii) US$1,800,000 on or before the third anniversary of September 30, 2012; and (iv) US$2,000,000 on or before the fourth anniversary of September 30, 2013. c) issuing a total of 4,000,000 common shares of the Company, as follows: (i) 1,000,000 common shares (issued at a value of $140,000) within five business days of the Approval Date; and (ii) 1,000,000 common shares to be issued on each of the first (issued at a value of $150,000), second (Note 12(b)) and third anniversary dates of the Agreement. Upon the Company earning its 80% interest, a participating joint-venture agreement will be entered into, unless the optionor elects to convert its 20% working interest to a 3% Net Smelter Royalty ( NSR ) and cause the transfer of its working interest to the Company. In which case, the Company has the right to purchase 50% of the NSR, or 1.5%, for an amount of US$1,850,000, and, further, will have the right of first refusal to purchase the remaining 1.5% NSR should it be offered for sale at any time. Should a commercial production decision be reached, the Company, at its election, will issue to the optionor additional shares in its capital or cash or a combination thereof, the value of which is to be equivalent to US$3,500,000. At July 31, 2011 and April 30, 2011, the Company had paid $97,820 in exploration advances related to the San Albino-Murra Concession.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 Detailed costs to date: San Albino-Murra Property, Nicaragua July 31, 2011 April 30, 2011 Acquisition costs Balance, beginning of year $ 561,572 $ 324,871 Option payments 739,514 233,644 1,301,086 558,515 Deferred exploration costs Balance, beginning of year 2,133,736 591,185 Assaying 219,533 164,946 Drilling 572,389 155,926 Field Office - 27,282 Geological consulting 738,697 312,860 Professional fees 13,465 103,454 Project expenses 15,955 446,290 Reports - 9,336 Surface fees 29,795 65,729 Share-based compensation - 211,782 Translation - 1,106 Travel 8,699 32,229 3,732,269 2,122,125 San Albino-Murra Property, Nicaragua Balance, end of period $ 5,033,355 $ 2,680,640 6 Equipment July 31, 2011 Cost Accumulated Amortization Net Book Value Computer equipment $ 16,629 $ 13,589 $ 3,040 Equipment & Furniture 127,770 17,664 110,106 Vehicles 69,473 15,601 53,872 $ 213,872 $ 46,854 $ 167,018 April 30, 2011 Cost Accumulated Amortization Net Book Value Computer equipment $ 16,629 $ 13,342 $ 3,287 Equipment & Furniture 111,135 12,330 98,805 Vehicles 63,311 12,225 51,086 $ 191,075 $ 37,897 $ 153,178

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 May 1, 2010 Cost Accumulated Amortization Net Book Value Computer equipment $ 16,629 $ 11,934 $ 4,695 Equipment & Furniture 16,521 8,131 8,390 Vehicles 20,880 3,132 17,748 $ 54,030 $ 23,197 $ 30,833 7 Share capital Authorized: Unlimited number of common shares, without par value The following is a description of the issued share capital: Number of shares Amount Issued: Balance at May 1, 2010 28,814,716 $ 5,116,055 Private placement 23,314,757 8,975,751 Option exercises 535,000 276,585 Warrant exercises 183,075 50,769 Mineral Property 1,000,000 150,000 Share issue costs - (448,333) Balance at April 30, 2011 53,847,548 $ 14,120,827 Option exercises 140,000 48,297 Warrant exercises 1,733,220 1,281,165 Mineral Property 1,000,000 810,000 Balance at July 31, 2011 56,720,768 $ 16,260,289 7.1 Private placements 7.1.1 2010/2011 In April 2010, the Company completed the first tranche of a non-brokered private placement issuing 1,875,000 units at a price of $0.20 per unit for gross proceeds of $375,000. Each unit was comprised of one common share and one-half of one share purchase warrant, each full warrant entitling the holder thereof to purchase one additional common share at a price of $0.25 for a period of two years. Finder fees of $23,000 were paid in cash. In June 2010, the Company completed the second and final tranche of a non-brokered private placement, issuing 4,463,560 units at a price of $0.20 per unit for gross proceeds of $892,712. Each unit was comprised of one common share and one-half of one share purchase warrant, each full warrant entitling the holder thereof to purchase one additional common share at a price of $0.25 for a period of two years. Finders fees of $23,000 cash and 125,000 warrants exercisable into 125,000 common shares at a price of $0.25 per share for a period of two years were paid in connection with this tranche of

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 the private placement. The share purchase warrants were valued at $11,119 and credited to contributed surplus. Fair value was determined using the Black-Scholes valuation model, based on a risk free interest rate of 1.82%, an expected life of two years, an expected volatility of 117.90% and a dividend yield rate of nil. Including the first tranche that closed on April 1, 2010, the Company raised gross proceeds of $1,267,712. In October 2010, the Company completed a non-brokered private placement issuing 2,000,000 units at a price of $0.25 per unit for gross proceeds of $500,000. Each unit was comprised of one common share and one share purchase warrant, each warrant entitling the holder thereof to purchase one additional common share at a price of $0.35 for a period of two years, subject to an acceleration clause should the trading price of the Company s shares for 20 consecutive trading days exceed $0.70 per share during the exercise period, then the expiry time of the warrants shall be 30 calendar days from the date that written notice is provided by the Company to the warrant holders. In January 2011, the Company completed a non-brokered private placement issuing 16,851,197 units at a price of $0.45 per unit for gross proceeds of $7,583,039. Each unit was comprised of one common share and one share purchase warrant, each warrant entitling the holder thereof to purchase one additional common share at a price of $0.75 for a period of two years. Finders fees of $250,893 cash and 494,020 warrants exercisable into 494,020 common shares at a price of $0.75 per share for a period of two years were paid in connection with the private placement. The share purchase warrants were valued at $127,691 and credited to contributed surplus. Fair value was determined using the Black-Scholes valuation model, based on a risk free interest rate of 1.76%, an expected life of two years, an expected volatility of 90.92% and a dividend yield rate of nil. 7.2 Warrants At July 31, 2011 and April 30, 2011 the following share purchase warrants were outstanding: Expiry Date Exercise Price July 31, 2011 April 30, 2011 May 1, 2010 April 8, 2012 $0.25 875,000 912,500 937,500 June 9, 2012 $0.25 2,248,705 2,248,705 - September 29, 2012 $0.35 1,950,000 1,950,000 - January 18, 2013 $0.75 15,649,497 17,345,217-20,723,202 22,456,422 937,500 7.3 Stock options The Company has a stock option plan, under which the Board of Directors is authorized to grant options to employees, directors, officers and consultants, enabling them to acquire up to 10% of the issued and outstanding share capital of the Company. The exercise price of each option is based on the market price of the Company s stock as calculated on the date of grant. The options can be granted for a maximum term of five years. Options granted to investor relations consultants are subject to vesting provisions, as established by regulatory authorities, over a twelve month period, with no more than ¼ vesting during any three month period. Vesting provisions for other options are determined by the Company s Board of Directors.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 The following options were outstanding and exercisable as at July 31, 2011 and April 30, 2011: July 31, 2011 April 30, 2011 Number of Shares Weighted Average Exercise Price Number of Shares Weighted Average Exercise Price Opening balance 4,830,000 $ 0.37 2,250,000 $ 0.20 Granted - - 3,215,000 0.46 Exercised (140,000) (0.21) (535,000) (0.20) Expired - - (100,000) (0.20) Ending balance 4,690,000 $ 0.38 4,830,000 $ 0.37 Options exercisable 4,580,000 $ 0.36 4,678,750 $ 0.36 All stock options have exercise prices that are higher or equal to market prices at the date of grant. Weighted Average Exercise Price Expiry Date Number Outstanding Number Exercisable Weighted Average Remaining Contractual Life $ 0.20 November 27, 2011 1,100,000 1,100,000 0.33 years 0.20 January 11, 2012 50,000 50,000 0.45 years 0.85 March 28, 2012 165,000 55,000 0.66 years 0.20 November 9, 2014 375,000 375,000 3.28 years 0.25 September 20, 2015 950,000 950,000 4.14 years 0.41 October 15, 2015 400,000 400,000 4.21 years 0.50 October 15, 2015 150,000 150,000 4.21 years 0.56 February 7, 2016 1,500,000 1,500,000 4.53 years $ 0.38 4,690,000 4,580,000 3.14 years 7.4 Share-based compensation During the first quarter of fiscal 2012, the Company recognized share-based compensation totaling $19,593, which was expensed as stock-based compensation in operations, with a corresponding increase in contributed surplus. During fiscal 2011, the Company recorded stock-based compensation totaling $1,067,933 of which $227,900 was capitalized as mineral property expenditures and $840,033 was expensed as stock-based compensation in operations, with a corresponding increase in contributed surplus. The fair value of stock options was estimated on the measurement date using the Black-Scholes option-pricing model and is amortized over the vesting period of the underlying options. The assumptions used to calculate the fair value were as follows:

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 The fair values of the options granted were estimated using the Black-Scholes option pricing model with the following assumptions: 2011 2010 Risk-free interest rate 2.36% 1.59% Expected life of options 5 years 3 years Expected volatility 114.87% 133.06% Weighted average fair value per option $ 0.35 $ 0.12 Dividend yield Nil Nil 8 Related party transactions During the period ended July 31, 2011, the Company paid or accrued: a) management fees of $25,500 (2010 - $19,500) to a director and officer of the Company; and b) consulting fees of $19,500 (2010 - $13,500) to an officer of the Company for the provision of geological consulting services, which was capitalized to mineral properties. Included in accounts payable and accrued liabilities is a total of $11,967 due to related parties for expenses. The amounts due to related parties are unsecured, non-interest bearing and have no specific terms of repayment. These 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. 9 Financial risk factors The Company s financial instruments are exposed to certain financial risks. The Company s risk exposures and the impact on the Company s financial instruments are summarized below. 9.1 Credit and Interest rate risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company has significant cash balances but no interest-bearing debt. The Company s maximum exposure to credit risk at the reporting date is the carrying value of cash and other receivables. The Company s current policy is to invest excess cash in variable interest investment-grade demand deposit certificates issued by reputable financial institutions with which it keeps its bank accounts and management believes the risk to be remote. Receivables are due from a government agency. 9.2 Liquidity risk Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. The Company manages liquidity risk by ensuring that it has sufficient cash and other financial resources available to meet its short term obligations. The Company forecasts cash flows for a period of twelve months to identify financial requirements. These requirements are met through a combination of cash flows from operations, dispositions of assets and accessing financing through private placements. The exposure of the Company to liquidity risk is considered to be minimal.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 9.3 Commodity price risk The Company s ability to raise capital to fund exploration or development activities is subject to risks associated with fluctuations in the market price of commodities for which it is exploring. The Company closely monitors commodity prices to determine the appropriate course of action to be taken. 9.4 Foreign currency risk The Company s functional currency is Canadian dollars. The Company is exposed to the currency risk related to the fluctuation of foreign exchange rates. A reduction in the value of the US Dollar relative to the Canadian dollar would have a favourable impact on funding required for exploration, subject to any resulting inflationary impacts; while an increase in that value would have an unfavourable impact. The Company has not hedged its exposure to currency fluctuations. 9.5 Fair value The Company s financial assets and liabilities consist of cash, receivables and accounts payable and accrued liabilities. The estimated fair values of receivables and accounts payable and accrued liabilities approximate their respective carrying values due to the short period to maturity. Cash is valued using Level 1 inputs. 10 Supplemental cash flow information 2011 2010 Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - Non-cash financing and investing activities: Issuance of 1,000,000 common share for mineral properties (Note 5) $ 810,000 $ 150,000 Deferred exploration costs included in accounts payable 38,772 22,883 11 Segmented information The Company operates in the single business segment of mine exploration and development. The Company s identifiable capital assets are located primarily in Nicaragua. Geographic information is as follows: July 31, 2011 April 30, 2011 May 1, 2010 Capital assets Nicaragua $ 5,194,687 $ 2,827,746 $ 974,101 Canada 5,686 6,072 8,176 $ 5,200,373 $ 2,833,818 $ 982,277

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the three months ended July 31, 2011 and 2010 12 Subsequent events Subsequent to July 31, 2011, the Company: a) issued 449,280 common shares for gross proceeds of $132,320 upon the exercise of 214,000 stock options and 235,280 share purchase warrants; and b) paid cash of $40,956 (US$40,000) pursuant to the San Albino-Murra Property agreement (Note 5).

MANAGEMENT DISCUSSION AND ANALYSIS For the Three Months Ended July 31, 2011 This Management Discussion and Analysis ( MD&A ) of Golden Reign Resources Ltd. (the Company or Golden Reign ) provides analysis of the Company s financial results for the three months (Q1 2012 )ended July 31, 2011. The following information should be read in conjunction with the accompanying unaudited consolidated financial statements and the notes thereto for the period ended July 31, 2011 and the audited consolidated financial statements and notes thereto for the year ended April 30, 2011, which are available on SEDAR at www.sedar.com. This MD&A is current as at October28, 2011. The July 31, 2011 financial statements have been prepared in accordance with International Financial Reporting Standards ( IFRS ) applicable to the preparation of interim financial statements, including IAS 34 Interim Financial Reporting and IFRS 1 First-Time Adoption of IFRS. For comparative purposes, all financial statement amounts related to the quarter ended July 31, 2010 and year ended April 30, 2010 have been restated in accordance with IFRS. All other periods remain unchanged from the numbers originally reported under Canadian generally accepted accounting principles ( Canadian GAAP ). Refer to Note 3 of the unaudited interim financial statements for disclosure of the Company s significant accounting policies. All amounts are expressed in Canadian dollars, unless otherwise stated. Forward-Looking Statements Certain statements made may constitute forward-looking statements. Such statements involve a number of known and unknown risks, uncertainties and other factors. Actual results, performance and achievements may be materially different from those expressed or implied by these forward-looking statements. BUSINESS OVERVIEW Highlights Golden Reign was incorporated on April 1, 2004 under the laws of the Yukon Territory and continued into British Columbia under the British Columbia Corporations Act. Common shares of the Company are listed for trading on the TSX Venture Exchange ( TSX-V ) under the symbol GRR. On June 29, 2009, the Company announced the signing of an option agreement to acquire an 80% interest in the San Albino-Murra Mining Concession (the Property ) located in Nicaragua. The San Albino Mine area, comprising the San Albino, Arras and San Lorenzo mines, occurs within a structural corridor approximately 3 kilometres wide by 15 kilometres long, stretching from the southern to the north-eastern boundaries of the Property Drill programs at the San Albino Mine area commenced in the fall of 2009 and have established a series of at least 4 parallel, mineralized veins comprising the Arras/San Lorenzo vein, San Albino vein and two intermediate veins. The Arras/San Lorenzo vein has been traced along a strike length of 900 metres, while work to establish a 600 metre strike length at the San Albino vein is in process. The mineralized zones remain open along strike in both directions and at depth. The 2011 diamond drilling program of approximately 10,000 metres of definition drilling is currently underway, with the objective of obtaining sufficient data to calculate a NI 43-101 compliant mineral resource at the San Albino Mine area A major trenching program to the south of San Albino/Arras has led to new discoveries including highly mineralized zones bearing quartz veins ranging from 1 to 8 metres in true thickness, and has outlined excellent targets for drill testing High-grade early exploration samples have been returned at other Southern District prospects and at Mina Estrella in the Northern (Murra) District The Company is well funded, with approximately $5M in cash. To date in fiscal 2012, proceeds of $1,442,235 have been received from the exercise of 354,000 stock options and 1,968,500 warrant shares.