TGL.L Regulatory News (TGL)

Touchstone Gold Limited (TSX:TCH; AIM:TGL)

 ("Touchstone Gold" or the "Company)

 Results for the three and nine months ended September 30, 2013 and 2012

Toronto, Ontario, November 14, 2013 ―Touchstone Gold reported its financial results for the three and nine months ended September 30, 2013 and 2012. The interim unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2013 and 2012 and notes thereto, as well as the Management's Discussion and Analysis are available at www.sedar.com and www.touchstonegold.com. Unless otherwise noted, all financial information is expressed in US dollars.

Highlights

§ For the three months ended September 30, 2013 the Company recorded a net loss of $499,350 or $nil per share compared with a loss of $2,333,138 or $0.02 per share for the three months ended September 30, 2012. For the nine months ended September 30, 2013 the Company recorded a net loss of $16,904,593 or $0.08 per share compared with a loss of $7,705,380 or $0.07 per share for the nine months ended September 30, 2012.

§ At September 30, 2013, the Company had cash and cash equivalents of $165,936 and $100,000 in deposits.

§ As previously announced during 2013, the Company commenced its Stage 4 drilling program as well as identified a new target zone (the "Bern" zone). The program was to focus on three zones; the 1141 Zone, Tagual Zone and the Bern zone, however, only the 1141 zone saw drilling. Additionally, the Company achieved positive results from metallurgical tests conducted on several samples, Pepas #1 and Pepas #2. Initial results indicated recoveries from 87.9% to 95% gold in floatation concentrate with Cyanide leaching providing recoveries ranging from 40.5% to 90.7%.

§ As previously announced, during 2013, the Company made a surface discovery of a new gold zone 350m west of the Pepas and Filodehombre trends.

§ As previously announced, during the three months ended September 30, 2013, in light of weak financing market conditions in the junior mining exploration sector, the Company implemented certain steps to preserve cash. The Company's has suspended its exploration program for the short-term and corporate overhead was reduced.

About Touchstone Gold Limited

Touchstone Gold Limited (TSX:TCH; AIM:TGL)is a gold exploration company with a highly-prospective gold project in the Segovia District of Colombia. The Company's Segovia Gold Project hosts a high-grade near-surface gold deposit, Rio Pescado Deposit, which spans along more than 15km of potential strike length. Only 5% of the Company's property has been drilled to date and several identified target zones, which host high-grade gold geochemical anomalies.

With a strategy of creating value through the systematic exploration and development of Touchstone's existing assets as well as the acquisition of suitable exploration and development mineral projects, Touchstone's long-term intention is to build a significant gold exploration and production company.

For additional technical information on the Rio Pescado Deposit, please refer to the Company's technical report (the "Technical Report") entitled "Technical Report on The Rio Pescado Gold Property, Republic of Colombia" dated June 30, 2012, prepared by Peter A. Christopher PhD., P.Eng. of PAC Geological Consulting available on SEDAR at www.sedar.com and on the Company website at www.touchstonegold.com.

For Further Information, please Contact

Brian Morales

Touchstone Gold Limited

647 925 2713

info@touchstonegold.com

www.touchstonegold.com

finnCap Ltd (Joint Corporate Broker and Nominated Advisor)

Matthew Robinson/Simon Hicks

Tel. +44 20 7220 0500

Cautionary Note Regarding Forward-Looking Information

Certain information set forth in this press release contains "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking information which includes the completion of the Acquisition, the drill program and management's assessment of Touchstone's future plans and operations and are based on Touchstone's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Some of the forward-looking information may be identified by words such as "expects" "anticipates", "believes", "projects", "plans", and similar expressions. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking information may necessarily involve known and unknown risks and uncertainties, which may cause Touchstone's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking information. These risks and uncertainties include, but are not limited to: liabilities inherent in mine development and production; geological, mining and processing technical problems; Touchstone's inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with mining and mineral processing operations; competition for, among other things, capital, acquisitions of resources and reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; currency and interest rate fluctuations; various events which could disrupt exploration and development, including labour stoppages and severe weather conditions; and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Touchstone undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking information.

MANAGEMENT'S RESPONSIBILITY

FOR INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

All of the information in the accompanying unaudited interim condensed consolidated financial statements of Touchstone Gold Limited is the responsibility of management. The unaudited interim condensed consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards. Where necessary, management has made judgments and estimates in preparing the unaudited interim condensed consolidated financial statements, and such statements have been prepared within acceptable limits of materiality.

Management maintains appropriate systems of internal control given its size to give reasonable assurance that its assets are safeguarded, and the financial records are properly maintained.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control and exercises this responsibility principally through the Audit Committee. The Audit Committee meets with management to review the consolidated financial statements to satisfy itself that management is properly discharging its responsibilities to the Directors, who approve the consolidated financial statements.

(signed)"Fraser Buchan" (signed) "Brian Morales"

Fraser Buchan Brian Morales

Member of the Audit Committee Chief Financial Officer

Toronto, Canada

November 14, 2013

TOUCHSTONE GOLD LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Expressed in U.S. Dollars)

Signed on behalf of the Board of Directors:

Fraser Buchan (signed) , Director Paul Cowley (signed) , Director

TOUCHSTONE GOLD LIMITED

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in U.S. Dollars)

TOUCHSTONE GOLD LIMITED

 UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Expressed in U.S. Dollars)

TOUCHSTONE GOLD LIMITED

 UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Expressed in U.S. Dollars)

TOUCHSTONE GOLD LIMITED

 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

NOTE 1 - NATURE OF OPERATIONS

Touchstone Gold Limited ("Touchstone Gold") and its wholly-owned subsidiaries, which are noted below, (collectively "the Company") is an exploration stage company engaged in the exploration and development of gold properties in Colombia.

Touchstone Gold was incorporated under the laws of the British Virgin Islands on 29 June 2009 and existed under the provisions of British Virgin Islands Companies Act, 2004, as Company number 1536599. On September 7, 2012, after the approval of a resolution by the Company's shareholders, the Company was redomiciled via a continuance of the Company from the British Virgin Islands to the province of Ontario, Canada, where a majority of the Board of Directors and the Company's officers are located. The registered head office of the Company is #200-83 Yonge Street, Toronto, Ontario Canada.

The wholly-owned direct and indirect subsidiaries controlled by the Company are as follows:

These interim condensed consolidated financial statements have been prepared using International Financial Reporting Standards ("IFRS") applicable to a going concern, which assumes that assets will be realized and liabilities will be settled in the normal course of business as they become due. Additionally, the consolidated financial statements have been prepared using the historical cost basis except for certain financial instruments, which are measured in accordance with the policies described below. The financial year-end for Touchstone Gold is December 31.

Going concern: The Company has incurred a loss in the current period and prior periods. Given weakening in the financing market for junior resource companies and the material uncertainty of not having sufficient funds in place, to conduct operations there is significant doubt in the Company's ability to continue as a going concern and, accordingly, the ultimate use of accounting principles applicable to a going concern. The Company's ability to continue as a going concern is dependent upon its obtaining additional financing and eventually achieving profitable production in the future. The Company continually evaluates its various options in order to address its financing needs. It is management's intent to continue as a going concern, however, there can be no assurance that the Company's financing activities will continue to be successful or sufficient.

Statement of Compliance: These interim condensed consolidated financial statements are unaudited and have been prepared in accordance with IAS 34 "Interim Financial Reporting‟ ("IAS 34") using accounting policies consistent with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"). The unaudited interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements for the years ended December 31, 2012 and 2011.

The accounting policies applied in the preparation of these unaudited interim condensed consolidated financial statements are consistent with those applied and disclosed in the Company's consolidated financial statements for the year ended December 31, 2012, except as described in note 2.

The preparation of the unaudited interim condensed consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions about uncertain future events that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

The Company's interim results are not necessarily indicative of results for a full year.

The unaudited interim condensed consolidated financial statements of the Company for the three and nine months ended September 30, 2013 and 2012, have been prepared by management and approved and authorized for issue by the Board of Directors on November 14, 2013.

NOTE 2 -ACCOUNTING CHANGES AND RECENT ACCOUNTING PRONOUNCEMENTS

ACCOUNTING CHANGES

On January 1, 2013, the Company adopted the following standards and amended standards

•IFRS 10 Consolidated Financial Statements,

•IFRS 11 Joint Arrangements,

•IFRS 12 Disclosure of Interests in Other Entities,

••IAS 27 Separate Financial Statements, and

•IAS 28 Investments in Associates and Joint Ventures

The adoption of these standards did not have an impact on the Company's statement of financial position, statement of operations and statement of cash flows.

On January 1, 2013, the Company adopted IFRS 13 Fair Value Measurement, which provides guidance on how fair value should be applied where its use is already required or permitted by other IFRS standards, and includes a definition of fair value and is a single source of guidance on fair value measurement and disclosure requirements or use with all IFRS standards. This standard also requires additional disclosure about fair value measurement. As a result of adopting IFRS 13, the Company has provided the additional disclosures in these unaudited interim condensed consolidated financial statements. There were no other impacts on the interim financial statements on adoption of this standard.

NOTE 3 -ACQUISITIONS

Atlantis

On 10 September 2012, the Company completed the acquisition of all of the issued and outstanding common shares of Atlantis Gold Mines Corp. ("Atlantis"). Atlantis was the owner of certain gold exploration projects, located in Colombia.

The acquisition was completed pursuant to a three-cornered amalgamation, whereby a wholly-owned subsidiary of the Company amalgamated with Atlantis to form Touchstone Atlantis Mining Inc. All of the holders of Atlantis Shares received one common share of the Company for each Atlantis Share held. The Company issued a total of 59,108,300 shares in respect of the acquisition. Additionally, the Company assumed 6,975,000 Atlantis warrants outstanding. The warrants are exercisable for one common share of the Company at an exercise price of C$0.60 and expire on 15 November 2013.

The Atlantis portfolio encompasses a similar geological setting to the Company's Rio Pescado project. Previous exploration has identified several prospective targets for gold mineralization.

The cost of the acquisition is noted in the table below.

Bolivar

On March 5, 2012, the Company entered into an option agreement with a private company to acquire a 90% interest in four mining concessions, over a total area of 57 square kilometres that together comprise the important Santa Rosa Project located in the well-known gold mining district in the south of the Bolivar Department, Colombia.

The material terms of the Agreement are summarised below:

• Initial payment of US$59,000 to the current concession holders, a non-related private company, upon signing the option agreement;

• An additional payment of US$50,000 upon the mining concessions being registered to Touchstone Colombia on the National Mining Registry of Colombia;

• Four annual payments of US$327,750 that will commence one year after the mining concessions have been registered;

• US$1,000,000 in exploration expenditures on the property before earning the 90% interest;

• The Company has secured a right of first refusal to acquire the remaining 10% of the Santa Rosa Project.

The Company has decided not to make the additional option payments required and as a result the option agreement has expired.

NOTE 4 -PROPERTY, PLANT AND EQUIPMENT, NET AND MINERAL INTERESTS

Property, plant and equipment, net

Mineral interests

During the nine months ended September 30, 2013, the Company identified the recent and continued decline in metal prices as well as the tightening of financing conditions for exploration stage companies as indicators of impairment. As a result of the identification of these indicators, the Company assessed the carrying amount of mineral interests in the statement of financial position. Based on the Company's existing cash and the cash required to undertake an exploration program the Company has recorded an impairment of $13,632,773. The mineral interest was initially acquired as a result of the acquisition of Atlantis Gold Mines Corp.

NOTE 5 - RELATED PARTY TRANSACTIONS

Compensation of Directors and management

For the three months ended September 30, 2013 and 2012, the Company paid $106,343 and $63,366, respectively, in salaries and consulting costs to the Chief Executive Officer and Chief Financial Officer of the Company. Included in the amount for September 30, 2013 is an amount related to severance for the Chief Executive Officer.

For the nine months ended September 30, 2013 and 2012, the Company paid $239,272 and $191,221, respectively, in salaries and consulting costs to the Chief Executive Officer and Chief Financial Officer of the Company. Included in the amount for September 30, 2013 is an amount related to severance for the Chief Executive Officer.

For the three months ended September 30, 2013 and 2012, the Company incurred $nil and $226,633, respectively in geologic consulting costs and supply reimbursements to a Company owned and controlled by John Nicholson, an officer of the Company. For the nine months ended September 30, 2013 and 2012 the Company incurred $352,267 and $1,092,277, respectively. These transactions were in the normal course of operations and all transactions are measured at the exchange amount, which is the amount agreed to by the related parties and is recorded in professional and consulting fees. During the time Mr. Nicholson served as an officer of the company he received no direct salary or compensation. A total of $326,246 was owing at September 30, 2013 (December 31, 2012 - $55,723).

For the three months ended September 30, 2013 and 2012, the Company paid $nil and $34,688, respectively in fees to a Director of the Company. For the nine months ended September 30, 2013 and 2012 the Company paid $46,025 and $82,728, respectively.

A total of $59,506 and $542,776 in share-based payment expense was recognized in respect of options granted to Officers and Directors of the Company for the three months ended September 30, 2013 and 2012. For the nine months ended September 30, 2013 and 2012 a total of $265,027 and $1,027,097 in share-based payments expense to Officers and Directors was incurred.

Commitments

In 2009, the Company entered into a contract with an employee of the Company for the purchase of a mining interest payable over a five year period as of the date of the registration of the mining interest on behalf of the Company. The total payable under the contract is $587,500. Approximately $50,000 has been paid under this contract.

Under the contract, the Company reserves the right to continue the agreement based on the results obtained from exploration, economical assessment and construction. At any time while the contract is in force the agreement may be terminated by the Company with no further payments required.

NOTE 6 - SHARE CAPITAL AND CAPITAL MANAGEMENT, STOCK OPTIONS AND SHARE-BASED PAYMENTS

Share capital

The Company is authorized to issue an unlimited number of shares with no par value.

The following tables denote the movement in share capital and warrants to September 30, 2013.

Stock options

No stock options were granted during the three and nine months ended September 30, 2013 and 2012.

As at September 30, 2013, the following options were outstanding.

A total of 8,033,420 options were exercisable at September 30, 2013.

The Company has recorded a warrant reserve on the statement of financial position, which represents the allocated fair value of the stock options, which are determined to be equity instruments.

Capital management

The Company includes equity, comprised of issued Ordinary Shares, options and warrants and deficit, in the definition of capital. The Company's primary objectives when managing capital are to safeguard the Company's ability to fund the exploration and development of its gold properties in Colombia.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size and stage of the Company is reasonable. The Company is not subject to other externally imposed capital requirements.

NOTE 7 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK FACTORS

The Company has exposure to liquidity risk and foreign currency risk. The Company's risk management objective is to protect cash flow and, ultimately, shareholder value. Risk management strategies, as discussed below, are designed and implemented to ensure the Company's risks and the related exposure are consistent with the business objectives and risk tolerance.

Liquidity Risk: Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity by ensuring that there is sufficient capital to meet short and long-term business requirements, after taking into account cash flows from operations and the Company's holdings of cash, cash equivalents, and short-term investments. The Company also strives to maintain sufficient financial liquidity at all times in order to participate in investment opportunities as they arise, as well as to withstand sudden adverse changes in economic circumstances.

The Company's primary source of additional liquidity is financing transactions. The Company's primary use of cash to September 30, 2013 was exploration and evaluation expenses at the Rio Pescado project as well as general and administrative expenses.

Management forecasts cash flows for its current and subsequent fiscal years to predict future financing requirements. Future requirements may be met through a combination of credit and access to capital markets. The Company's cash requirements are dependent on the level of operating activity, a large portion of which is discretionary. Should management decide to increase its operating activity more funds, then what is currently in place would be required. It is not possible to predict whether financing efforts will be successful or sufficient in the future. At September 30, 2013 the Company had $165,936 (December 31, 2012 - $4,087,940) in cash and cash equivalents. Additionally, the Company had $100,000 in deposits.

Currency risk: The Company's expenditures are incurred in Colombian peso, British pounds, U.S. dollars and Canadian dollars. The results of the Company's operations are subject to currency transaction risk. The Company mitigates foreign exchange risk through forecasting its foreign currency denominated expenditures and maintaining an appropriate balance of cash in each currency to meet the expenditures. As the Company's reporting currency is the U.S. dollar, fluctuations in the Colombian peso, British pound and Canadian dollar relative to the U.S. dollar will affect the results of the Company.

Credit risk: Credit risk is the risk of loss associated with a counterparty's inability to fulfill its payment obligations. As at September 30, 2013, the Company's credit risk is primarily attributable to cash. At September 30, 2013, the majority of the Company's cash was held with a reputable bank with a Standard and Poor's investment rating of AA-.

Interest rate risk: Interest rate risk is the risk borne by an interest-bearing asset or liability as a result of fluctuations in interest rates. Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate risk. The Company's most significant interest rate risk arises from its investments in cash equivalents. However, the maturity on these investments is less than ninety days, thereby mitigating the exposure to the impact of changing interest rates.

Fair Values: The Company's cash and cash equivalents, receivables and accounts payables and accrued liabilities all had fair values which approximate their carrying values, are expected to be realized within the next financial year and are considered Level 2 in the fair value hierarchy. The fair value of the warrant liability is based on quoted market prices for comparable contracts and represents the amount the Company would have received from, or paid to, a counterparty for an equivalent contract. The warrant liability is considered Level 2 in the fair value hierarchy.

The following financial instruments which are re-measured to fair value at September 30, 2013 are determined based on the observable market prices for foreign exchange rates.

· Cash and cash equivalents; and

· Trade accounts payable

The fair value of the warrant liability is re-measured to fair value at September 30, 2013 based on the market prices for the Company's share price, interest rates and foreign exchange rates.

NOTE 8 -LOSS PER SHARE

The following table details the weighted average number of outstanding common shares for the purposes of computing basic and diluted loss per common share for the three and nine months ended September 30, 2013 and 2012.

As a result of the losses for incurred, there is no dilutive effect of options and warrants.

NOTE 9 - SEGMENT INFORMATION

The Company operates in one reportable operating segment, being the development of mineral properties in Colombia. The Company also has an administrative office in Toronto, Canada. In order to determine reportable operating segments, the chief operating decision maker reviews various factors including geographical location, quantitative thresholds and managerial structure. Currently the Company's reportable segment is geographic. Segmented information is as follows:

As at September 30, 2013, the total corporate liabilities amounted to $413,094 (December 31, 2012 - $1,363,473).

The amounts reported above are allocated based on the location where the amounts are incurred.

NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES

In 2009, the Company entered into a contract with an employee of the Company for the purchase of a mining interest payable over a five year period as of the date of the registration of the mining interest on behalf of the Company. The total payable under the contract is $587,500 of which approximately $50,000 has been paid by December 31, 2012.

In 2009, the Company entered into a contract for the purchase of a mining interest payable over a five year period as of the date of the registration of the mining interest on behalf of the Company. The total payable under the contract is $2,000,000 of which approximately $250,000 has been paid by December 31, 2012.

Under the contract, the Company reserves the right to continue the agreement based on the results obtained from exploration, economical assessment and construction. At any time while the contract is in force the agreement may be terminated by the Company with no further payments required.

FORWARD-LOOKING STATEMENT

The following discussion of the results of operations, financial condition and cash flows of Touchstone Gold Limited and its wholly-owned subsidiaries (collectively the "Company") was prepared as at November 14, 2013 and should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2013 and 2012 and the consolidated financial statements and the management's discussion and analysis for the years ended December 31, 2012 and 2011 prepared in accordance with International Financial Reporting Standards ("IFRS") as well as the annual information form. All amounts disclosed are in United States dollars unless otherwise stated.

This Management's Discussion and Analysis contains "forward‑looking statements" which may include, but are not limited to, statements with respect to the future financial or operating performance of the Company and its projects, the estimation of mineral resources, capital, operating and exploration expenditures, costs and timing of the development of new acquisitions, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of regulatory matters. Often, but not always, forward‑looking statements can be identified by the use of words such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. Forward-looking statements are based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable at the date that such statements are made. Forward‑looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward‑looking statements. Such factors include, but are not limited to, the factors discussed in the section entitled "Business environment and Risks". Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward‑looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward‑looking statements contained herein are made as at the date of this management discussion and analysis. There can be no assurance that forward‑looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward‑looking statements. The Company does not undertake to update any forward-looking statements except as required by applicable securities laws.

OVERVIEW

The Company was incorporated under the laws of the British Virgin Islands on June 29, 2009 and existed under the provisions of British Virgin Islands Companies Act, 2004, as Company number 1536599. The Company's registered office is Akara Building, 24 De Castro Street, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands.

On September 7, 2012, after the approval of a resolution by the Company's shareholders, the Company was redomiciled via a continuance of the Company from the British Virgin Islands to the province of Ontario, Canada, where a majority of the Board of Directors and the Company's officers are located.

The Company is listed on the AIM under the ticker TGL and on the Toronto Stock Exchange under the ticker TCH.

SUMMARY

§ For the three months ended September 30, 2013 the Company recorded a net loss of $499,350 or $nil per share compared with a loss of $2,333,138 or $0.02 per share for the three months ended September 30, 2012. For the nine months ended September 30, 2013 the Company recorded a net loss of $16,904,593 or $0.08 per share compared with a loss of $7,705,380 or $0.07 per share for the nine months ended September 30, 2012.

§ At September 30, 2013, the Company had cash and cash equivalents of $165,936 and $100,000 in deposits.

§ During 2013, the Company commenced its Stage 4 drilling program as well as identified a new target zone (the "Bern" zone). The program was to focus on three zones; the 1141 Zone, Tagual Zone and the Bern zone, however, only the 1141 zone saw drilling. Additionally, the Company achieved positive results from metallurgical tests conducted on several samples, Pepas #1 and Pepas #2. Initial results indicated recoveries from 87.9% to 95% gold in floatation concentrate with Cyanide leaching providing recoveries ranging from 40.5% to 90.7%.

§ During 2013, the Company made a surface discovery of a new gold zone 350m west of the Pepas and Filodehombre trends.

§ During the three months ended September 30, 2013, the Company's President and Chief Executive Officer, David Wiley resigned. In addition, Lord Clanwilliam Patrick James Gillford also resigned from the Company's Board of Directors.

GOING CONCERN AND OUTLOOK

The Company has incurred a loss in the current period and prior periods. Given weakening in the financing market for junior resource companies and the material uncertainty of not having sufficient funds in place, to conduct operations there is significant doubt in the Company's ability to continue as a going concern and, accordingly, the ultimate use of accounting principles applicable to a going concern. The Company's ability to continue as a going concern is dependent upon its obtaining additional financing and eventually achieving profitable production in the future. The Company continually evaluates its various options in order to address its financing needs and is currently examining its strategic and financing options. It is management's intent to continue as a going concern, however, there can be no assurance that the Company's financing activities will continue to be successful or sufficient.

RESULTS OF OPERATIONS

During the three months ended September 30, 2013, in light of weak financing market conditions in the junior mining exploration sector, the Company implemented certain steps to preserve cash. The Company's exploration program was suspended for the short-term and corporate overhead was reduced.

Operating Activity

For the three and nine months ended September 30, 2013, the Company incurred exploration expenditures of $122,002 and $1,672,246, respectively not including geologist consulting costs and supply reimbursements. This compares with $808,586 and $3,778,532, respectively, for the three and nine months ended September 30, 2012. During 2013, the Company commenced its Stage 4 drilling program as well as identified a new target zone (the "Bern" zone). The program focused on the 1141 Zone.

In addition to the exploration expenditures noted above, for the three months ended September 30, 2013 and 2012, the Company incurred $nil and $226,633, respectively in geologic consulting costs and supply reimbursements. For the nine months ended September 30, 2013 and 2012 the Company incurred $352,267 and $1,092,277, respectively. These amounts are recorded in professional and consulting costs in the statement of operations.

The decrease for the three and nine months ended September 30, 2013 compared with the September 30, 2012, was primarily due to the fact that during 2012, the Company was utilising three drills during its drill program. The use of fewer drills resulted in lower exploration expenditures. Additionally, as noted above, the Company ceased its exploration program during the third quarter of 2013.

A breakdown of exploration expenditures for the three and nine months ended September 30, 2013 and 2012 is noted in the table below.

In addition to the exploration expenditures noted above, for the three months ended September 30, 2013 and 2012, the Company incurred $nil and $226,633, respectively in geologic consulting costs and supply reimbursements. For the nine months ended September 30, 2013 and 2012 the Company incurred $352,267 and $1,092,277, respectively. These amounts are recorded in professional and consulting costs in the statement of operations.

Impairment of mineral interests

During 2013, the Company identified the recent and continued decline in metal prices as well as the tightening of financing conditions for exploration stage companies as indicators of impairment. As a result of the identification of these indicators, the Company assessed the carrying amount of mineral interests in the statement of financial position. Based on the Company's existing cash and the cash required to undertake an exploration program the Company has recorded an impairment of $13,632,773 during the nine months ended September 30, 2013. The mineral interest was initially acquired as a result of the acquisition of Atlantis Gold Mines Corp.

Share-based payment expense

During the three months ended September 30, 2013, the Company incurred share-based payment expense of $110,225, compared with $923,443 for the three months ended September 30, 2012. For the nine months ended September 30, 2013, the Company incurred $441,711 compared with $1,558,633 for the nine months ended September 30, 2012. The decrease was due to the majority of the share-based payment expense for the options outstanding had been previously recognized.

Professional and consulting fees

Professional and consulting fees were $19,386 and $352,106, respectively for the three months ended September 30, 2013 and 2012. For the nine months ended September 30, professional fees were $779,454 in 2013 and $1,715,326 in 2012. Professional and consulting fees were lower in the current year periods as a result of a lower level of operating and corporate activity.

Travel

Travel for the three months ended September 30, 2013 was $nil compared with $25,322 for the three months ended September 30, 2012. Travel expenses were reduced as a result of the suspension of the Company's exploration activities and a reduction in corporate activity. The Company incurred travel costs of $149,280 for the nine months ended September 30, 2013 compared with $119,148 for the nine months ended September 30, 2012. Travel expenses were higher due to costs incurred with respect to marketing.

Salaries

During the three months ended September 30, 2013, the Company suspended salaries in an effort to reduce costs. For the three months ended September 30, 2013 salaries expense was $169,160 compared with $82,955 for the three months ended September 30, 2012. Salaries were $384,007 for the nine months ended September 30, 2013 compared with $234,150 for the nine months ended September 30, 2012. Salaries expense was higher in the current quarter compared with the same period in the prior year due to two more employees in the current year periods. Additionally, the Company incurred severance expense as a result of a reduction in headcount.

Other operating costs

Other operating costs include non-refundable value added taxes paid during the period. Other operating costs were $7,922 and $74,254 for the three months ended September 30, 2013 and 2012, respectively. Other operating costs were $124,977 and $189,224 for the nine months ended September 30, 2013 and 2012, respectively. Other operating costs for the three and nine month periods in ended September 30, 2013 were lower than the same periods in the prior year as a result of a decrease in corporate activity.

Foreign exchange and Financial and other income

During the three and nine months ended September 30, 2013, the Company recognized a foreign exchange loss of $34,339 and $149,568 respectively, primarily on the revaluation of cash as the US dollar strengthened relative to the Canadian dollar and British pound. The Company incurred a foreign exchange gain of $47,306 for the three months ended September 30, 2012, and $52,944 for the nine months ended September 30, 2012 as a result of the weakening of the US dollar compared with the Canadian dollar and British pound.

Financial income was lower for the three and nine months ended September 30, 2013 compared with the same periods ended September 30, 2012 primarily due to lower interest income received as cash balances were lower during the current quarter compared with the prior year quarter.

During the nine months ended September 30, 2013 the Company recognized a gain on the change in the fair value of the derivative liability as the derivative liability decreased during the quarter. No amount was recognized during the three and nine months ended September 30, 2012, as the common share purchase warrants considered a derivative liability were not issued until later in 2012.

Net loss

For the three months ended September 30, 2013 the Company recorded a net loss of $499,350 or $nil per share compared with a loss of $2,333,138 or $0.02 per share for the three months ended September 30, 2012. For the nine months ended September 30, 2013 the Company recorded a net loss of $16,904,593 or $0.08 per share compared with a loss of $7,705,380 or $0.07 per share for the nine months ended September 30, 2012.

Quarterly review