annual report 2011 - pembrook · pdf fileannual report 2011. cover photo: core from viento ......

Annual Report 2011

Cover photo: Core from Viento – VIE-03

Current page: Diamond drilling, Mexico

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Dear fellow shareholder,

Our Company has made considerable progress this past year on its key exploration projects and significantly increased its financial strength. Based on our robust diversified portfolio of high-quality projects, we completed a substantial equity financing led by Chinalco Resources, one of China’s largest mining companies. The Company is in a strong financial position to complete its ongoing exploration drill plans and will continue its focus on exploration in world-class mineral belts. This focus will maintain a pipeline of high-quality prospects that we believe have the best potential for discovery to significantly increase shareholder value. We continue to be one of the most active explorers in Peru and plan to aggressively drill our top five copper (gold) projects in 2012.

In Peru, the Company completed preliminary drill programs designed to identify those projects with the highest potential for hosting substantial mineral resources. Viento, Lidia and Huiniccasa have very encouraging results and have emerged as the projects that host a large and robust mineralizing system that could lead to the discovery of a world-class mineral deposit. In addition, two new high-grade copper projects, Sumaq and Mila, have advanced to the drilling stage and show excellent potential for hosting significant mineralization.

At Viento, the 2011 drill program tested the high-grade hydrothermal breccias zones returning several high-grade intersections up to 0.60% Cu, 0.25% Mo and 15 g/t Ag over 318 metres and 0.68% Cu, 0.13% Mo and 10.70 g/t Ag over 118 metres. Drill permitting delays due to the new government’s procedures has slowed our progress in Peru. Upon receipt of the new drill permit, planned drilling will focus on further testing and outlining of the high-grade hydrothermal breccias and the higher-grade porphyry target.

At Lidia, the 2011drill program considerably expanded the strike length of the Main Zone Cu-Au (iron oxide-copper-gold style mineralization) and our 2012 program will focus on the higher-grade areas along the structure, in order to vector to the higher-grade core of the system. Several new zones of high-grade copper mineralization identified in surface sampling programs will be evaluated in 2012 and prepared for initial drill testing.

The Huiniccasa Cu-Zn-Ag-Mo-Fe Skarn-Porphyry project drill permit is expected within the year and drilling will focus on testing the multiple porphyry targets south and east of the main skarn and the south skarn extension.

In Mexico, we have increased our activities substantially with the acquisition of a number of high-quality gold-silver prospects located in the Sonora District in the vicinity of Yamana’s Mercedes and Alamos’ Mulatos gold mines. Vale S.A. entered into an option Joint Venture agreement with Pembrook to advance our Rio Sonora porphyry project. Airborne and ground geophysics are complete and drilling is planned for the third quarter of 2012.

A substantial private placement was completed in 2011 for cash proceeds of $38.58 million at $2.50 per share. The principal investment was made by Chinalco Resources, one of China’s largest mining companies, resulting in their holding a 9.9% interest in the Company. At year-end, the Company held $41 million in the treasury, $18 million of which is budgeted to fund the planned drill programs on advanced copper projects in Peru and gold projects in Mexico.

The Company will continue its aggressive drill programs on key projects in Peru and Mexico. In 2012, we are confident that our portfolio of high-quality projects and strong technical team will position us to realize the Company’s full value for our shareholders.

Yours truly,

Brian R. BoothPresident and CEOVancouver, BC, Canada

May 22, 2012

President’s Letter

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Project ReviewPERUVientoLidiaSumaqMilaHuiniccasaTambo

MEXICOCuarentasRio SonoraDionicioLa Cruz

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VientoOwnership: Earning 100%Location: North-central PeruDeposit type: Cu-Mo-Ag Porphyry

The Viento project consists of 9,863 hectares and is located 120 kilometres north of Lima within a large metal district and lies along a northwest regional trend containing Chinalco’s Toromocho porphyry-copper deposit, Buenaventura’s Uchuchaqua silver deposit and Glencore’s Iscaycruz lead-zinc-silver deposit. Viento is a former producing mine with high-grade, intrusive-related molybdenum and copper within breccias, pipes, or large volume porphyry style copper and molybdenum mineralization.

Phase 1 drilling was completed in the fourth quarter of 2011 with a total of 21 holes and 10,168 metres drilled. 2011 exploration has identified a large mineralized system for testing in 2012 to locate a higher-grade phase of the porphyry. Results from the breccias have confirmed historical drill results and an inventory and geologic model will guide future plans for these zones. The breccias provide an excellent target for delineating a modest size but high-grade molybdenum-copper-silver deposit.

Peru

Lima

Cajamarca

Trujillo

Cusco

Pacific Ocean

Arequipa

Tacna

Viento

Lidia

LidiaOwnership: 100% and earning 100% on one claimLocation: Puno, southern PeruDeposit type: Cu-Au

The Lidia project is located in the altiplano of southern Peru, approximately 90 kilometres west of the city of Juliaca.

2011 drill results indicate the first discovery of an IOCG (iron oxide copper gold) occurrence in the altiplano and also within tertiary rocks. Though this is a poorly understood deposit type, many large deposits such as Candelaria and Manto Verde in Chile, and Marcona, Mina Justa and Pampa de Pongo in Peru are examples of this type of occurrence. Pembrook controls 33,500 hectares in this new district of which 29,300 hectares are titled and the remaining 4,200 hectares are subject to the new “previous consultation” law requiring community approval prior to granting of title.

2011 drilling was designed to test for extensions to mineralization at the Lidia Main Zone and to complete drilling on targets including Puru Puru, Tejene and Ichocollo, a total of 26 holes and 12,691 metres was drilled. A structural study is in progress and will enhance the understanding of this district and the controls to mineralization.

2012 drilling will focus on vectoring to higher-grade areas along the structure and new centres of mineralization elsewhere within the district. The drill program is designed to test for extensions, continuity and higher-grade mineralization within the mineralized Lidia Main Zone Corridor, a 150 to 250 metre wide zone which can be traced for at least two kilometres. This zone hosts all significant mineralization detected by drilling to date.

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SumaqOwnership: 100%Location: South-central PeruDeposit type: Cu-AuThe Sumaq prospect consists of 11,600 hectares located in the departments of Apurimac and Cusco within southeastern Peru and lies within the metal-rich Yauri-Andahuaylas Skarn-Porphyry Belt; host to several major deposits including Xstrata’s Las Bambas, Tintaya and Antapaccay, La Haquira, Las Chancas and the Constancia porphyry copper deposits. Sumaq is also well located with the Ferrobamba deposit, the largest deposit within the Las Bambas district, located just 8 kilometres to the northwest.

To date, multiple gold and copper-bearing skarns have been identified occurring at the contact of the Ferrobamba Limestone, the host to most skarn deposits within the region.

2011 exploration activities included geologic mapping, rock chip sampling, a ground magnetics survey and environmental studies. The magnetic survey outlined a strong magnetic feature measuring 700 by 1,200 metres, similar in size to the Ferrobamba and Chalcobamba deposits in the Las Bambas district.

MilaOwnership: 100% and earning 100% on 1 claimLocation: South-central PeruDeposit type: CuThe Mila prospect consists of 12,000 hectares located in south-central Peru, approximately 400 kilometres southeast of Lima. Previous “informal” mining from a small open pit located adjacent to the Company’s holdings extracted high-grade copper (+5% Cu) from a horizontal blanket measuring 2 to 5 metres thick. Pembrook sampling returned multiple channel samples containing 2.2% to 16.8% Cu through this secondary blanket characterized by chalcocite, malachite, chrysocolla and native copper.

The Company controls a large land position measuring 1,000 by 3,000 metres and is characterized by intense “acid” alteration including abundant breccia, granular silica, clay and native sulphur. This alteration is common in the highest, barren portions of a gold-rich, high-sulphidation system such as Yanacocha and Pierina or in the uppermost levels of a copper porphyry system. Thus, potential exists for a discovery of a high-grade, near-surface, secondary-enriched copper deposit and its deeper source, a copper porphyry or gold and copper epithermal deposit. The primary targets can quickly be advanced to drilling.

Mapping, sampling and geophysics continued through the first quarter of 2012 and it is anticipated that the environmental permit to allow drilling will be approved early in the second quarter of 2012 with a first-pass drill test comprised of 10-15 holes and 2,500 metres scheduled to begin in June 2012 pending approval of permits. Mila provides the Company with an excellent, high-grade, near-surface copper target along with potential for discovery of a copper porphyry or epithermal gold-copper mineralization at depth.

Pacific Ocean

Peru

Lima

Cajamarca

Trujillo

Cusco

Arequipa

Tacna

Sumaq

Mila

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System Type Porphyry

System Type Iron-oxide-copper-gold

Lidia

Viento

3,0000 6,000 9,000 12,000 15,000metres

Copper-Gold

Copper-Molybdenum-Silver 21 holes

26 holes

Drill Progress in 2011

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HuiniccasaOwnership: 100%Location: Ayacucho, central PeruDeposit type: Cu-Zn-Ag-Mo-FeThe Huiniccasa project consists of 5,100 hectares and is located in central Peru approximately 375 kilometres southeast of Lima. Huiniccasa is a recently discovered skarn system that includes numerous zones of copper, zinc, silver, molybdenum and iron mineralization.

A joint Pembrook and Peru Cultural Ministry archaeological study was completed at the end of 2011. This study is required prior to additional drilling and encompasses a 90 hectare area, mostly outside of, and above, the main skarn zone. Once approval is obtained from the Cultural Ministry, the Company can begin construction of drill access trails and platforms under the supervision of an archaeologist from the Cultural Ministry. This work will commence after the rainy season and should be complete within three months, with drilling ready to commence mid-2012. Work continues on the maintenance and modification of the 20 kilometre access road to lessen the impact of erosion within this steep, exposed terrain. Positive relations continue with the local communities as the Company completes its required obligations.

TamboOwnership: 100% Location: Moquegua, southern PeruDeposit type: AuThe Tambo project consists of 27,500 hectares and is located 75 kilometres east of the city of Arequipa. The large metal district measuring 8 by 12 kilometres lies at the structural intersection of the southern Peru Copper Porphyry Belt, which contains the Toquepala, Quellaveco, Cuajone and Tia Maria Cu porphyry deposits, with a northeast-trending structure projecting into the epithermal terrane in the altiplano that hosts such gold and silver deposits as Aruntani, Ares and Orcopampa.

Pacific Ocean

Huiniccasa

Peru

Lima

Cajamarca

Trujillo

Cusco

Arequipa

TacnaTambo

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Rio Sonora

Mexico City

Mexico

Pacific Ocean

Cuarentas

CuarentasOwnership: 100% Location: Sonora, northern MexicoDeposit type: Au-AgThe Cuarentas project consists of 27,000 hectares and was acquired by staking.

An intensive program of silt sampling and prospecting on the western half of the property was undertaken in 2011 to evaluate the potential for gold mineralization associated with a mineralized corridor extending northeast from Yamana Gold’s Mercedes gold-silver mine. The program identified several drainages with very strong gold responses, discovered several new mineralized structures with anomalous gold and silver and identified a zone of strong copper-silver skarn.

Title to the claims was formally granted in November 2011. Further surface exploration work is planned for the first half of 2012, followed by drilling in late 2012.

Rio SonoraOwnership: 100%, Vale earning 60%Location: Sonora, northern MexicoDeposit type: Cu

The Rio Sonora project consists of 42,179 hectares in two blocks located in between the world-class copper-molybdenum porphyry deposits at Cananea and Caridad. In October 2011, Pembrook and Vale entered into an option agreement whereby Vale can earn up to a 60% interest in the property. An airborne ZTEM was flown over the property and targets identified will be followed up with a ground Titan 24 IP system to define diamond drill targets in 2012.

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Hermosillo

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Mexico City

Mexico

Pacific Ocean

La CruzDionicio

DionicioOwnership: Earning 100% Location: Sonora, northern MexicoDeposit type: Au-Ag

The Dionicio property consists of 150 hectares and is located adjacent to and between the Mulatos Mine owned and operated by Alamos Gold and the La India project owned by Agnico-Eagle Mines. The property covers numerous epithermal veins with excellent high-level epithermal textures and lattice textured quartz. Initial drilling at Dionicio is planned for the second quarter of 2012.

La CruzOwnership: Earning 100% Location: Sonora, northern MexicoDeposit type: Cu-Mo

The La Cruz project consists of 480 hectares located 280 kilometres southwest of Hermosillo. The project was acquired through an auction of state owned properties in 2010 and the Company is earning 100% over 4 years. Mineralization within the project includes high-grade copper and molybdenum in small quartz bodies, low-grade copper mineralization and high-grade silver veins. The project is located in the core of a large mineralized district including La Verde, Cu-Mo (Virgin Metals) and Santana, Oxide Au (Corex Gold). Sampling and mapping have defined two drill targets. A historical silver mine in the western part of the claim block consists of three discrete veins that have yielded samples from 400 to 1,100 gpt Ag. The veins will be tested in two drill sections, an area of strong quartz tourmaline with some anomalous Mo in soils will also be tested for high grade Cu-Mo at depth below the tourmaline rich alteration. Drilling is planned for Q2 2012.

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Hermosillo

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Pembrook Mining Corp.’s community relations efforts are essential to planning its advanced exploration and drill programs.

With 57 projects, in 22 districts, affecting 40 communities and landowners, the Company dedicates teams focused on community consultation and creating initiatives that will benefit these communities by providing long-term benefits well into the future.

Programs such as medical and dental visits, constructing community centres and roads are examples of how Pembrook contributes much needed resources in the communities where it is active.

Health & Safety is a crucial ingredient in Pembrook’s exploration programs and the Company routinely trains its employees in standard operating procedures and first-aid in addition to providing specialized training such as safety for helicopter-assisted drill programs. A comprehensive safety manual in English and Spanish is provided to all employees.

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Corporate Social Responsibility

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Drill pad reforestation, Mexico

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Management Team Canada, Peru and Mexico

Brian BoothPresident & Chief Executive OfficerMr. Booth has over 30 years of experience in mineral exploration. Previously President and CEO of Lake Shore Gold Corp. and Manager of Exploration North America & Europe for Inco Limited.

Bruce HarveyExecutive Vice President & President, South America Mr. Harvey has over 27 years of experience in mineral exploration in North and South America. Previously he held the position of Director of South America Exploration for Newmont Mining Company, and Director of Geology, overseeing the Yanacocha Gold District.

April HashimotoChief Financial OfficerMs. Hashimoto is a Chartered Accountant and has over 25 years of experience in the accounting and mining industry, and has held various senior positions including CFO at Pacific Rim Mining Corp. and CFO, strategic development and project development for Placer Dome Inc.

Henry MarsdenVice President Exploration, MexicoMr. Marsden has 30 years experience as an exploration geologist and played a key role in the discovery and advancement of several deposits including Rio Blanco and Pico Machay in Peru, and the Timmins West gold deposit in Ontario.

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Angela DearieDirector of Corporate CommunicationsMs. Dearie has 28 years management experience in a broad range of industries, including junior and senior natural resource companies. Her expertise covers diamond branding and marketing, investor relations and corporate communications, and wealth and retail management.

Paul SimpsonCorporate Secretary & Legal CounselMr. Simpson has practised corporate securities law since 1985 and heads the corporate securities practice at Armstrong Simpson, specializing in publicly listed exploration and mining companies.

Buks LubbeChief Geophysicist, South AmericaMr. Lubbe is an exploration geophysicist with extensive experience in Africa, the Americas and the Caribbean, designing, processing and interpreting geophysical surveys. For more than two decades, he worked with Gold Fields of South Africa and Newmont Mining Corporation.

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Board of DirectorsAlan MoonIndependent Director, Chair of the BoardMr. Moon is an independent businessman, corporate director and consultant. He has held a number of executive positions with TransAlta Corporation and previously served as President and COO of TransAlta Energy Corporation. Mr. Moon sits on the boards of Lake Shore Gold Corp., TransAtlantic Petroleum Ltd., AvenEx Energy Corp. and Northern Superior Resources Inc.

Anthony MakuchIndependent Director, Chair of Compensation CommitteeMr. Makuch is President, CEO and Director of Lake Shore Gold Corp. He is a professional engineer (Ontario) with over 26 years of management, operations and technical experience in the mining industry, having managed numerous projects in Canada and the United States from advanced exploration through production.

Brian BoothDirector, President & Chief Executive OfficerMr. Booth is past President, CEO and Director of Lake Shore Gold Corp. Prior to Lake Shore, he held various management roles over the previous 23 years with Inco Limited. He has explored for nickel-copper, precious and base metal deposits throughout Canada, Europe, South America and southeast Asia for 30 years. Mr. Booth sits on the boards of Northern Superior Resources and Claude Resources and is an advisor to a number of public and private companies.

Daniel InnesDirector, Chair of Health, Safety, Environment and Community CommitteeDaniel Innes is past Chair, President and CEO of Lake Shore Gold Corp., and serves on the boards of La Salle Exploration Corp. and Radon Environmental Management Corp. He has over 36 years experience in the mining industry and has been involved in a number of successful junior mining companies. He has worked in a variety of metal environments in many parts of the world.

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Jorge BenavidesIndependent DirectorMr. Benavides is President and CEO of Zincore Metals Inc. and has 35 years experience in the mining industry. He was previously an independent consultant and Senior Advisor to the Chairman of Hochschild Mining plc. He was with Hochschild from 2001 through 2008 guiding the Company’s exploration programs and was actively involved in acquisition activities.

Kevin McArthurIndependent Director, Chair of Corporate Governance & Nominating CommitteeMr. McArthur is President and CEO of Tahoe Resources Inc., a public company engaged in the development of a silver mine in Guatemala. He is a mining engineer with over thirty years experience. He previously served as President and CEO of both Goldcorp Inc. and Glamis Gold Inc.

Richard PetersenDirectorMr. Petersen is a Geologist/Mining Engineer with over 50 years international experience. He has been involved in several significant ore deposit discoveries, is a consultant and part of the founding group of Pembrook Mining Corp. Mr. Petersen has held positions with Cerro de Pasco Corporation in Peru, Compañía Vale do Rio Doce, Occidental Minerals, Kennecott, Tenneco, Cyprus Minerals and Southwestern Resources Corp.

Wang DongboIndependent DirectorDr. Wang is Chief Geologist of Chinalco Group and Vice President and Chief Geologist of Chinalco Resources Corporation. He was Chair of the Beijing Institute of Geology for Mineral Resources (CNNC ) and the Institute of Geology (CAGS). He previously served as Vice President of the Mineral Deposit Commission, Geological Society of China. Dr. Wang has over 25 years experience in the mining industry and holds a doctorate from the China University of Geosciences.

Stephen KurtzIndependent Director, Chair of Audit CommitteeMr. Kurtz is Managing Member of Kurtz Financial, LLC, formed in 2008, a consulting firm specializing in restructuring, turnarounds and M&A advisory services. He is also a Co-Managing Member of Mankwitz Kurtz Investments, LLC, a Denver-based private equity firm, which he formed in 2001. Mr. Kurtz is currently the Chair of the Audit Committee and a member of the Compensation Committee of CIBER, Inc. and has held other public and private board positions.

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Javier Pretell, Community Relation Superintendent, with elementary schoolers from the Community of San Pedro de Navan following the “Moral Goods and Family Workshops” event, organized by Orion, Pembrook’s subsidiary in Peru.

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Financial Review 2011Management’s Discussion and Analysis 16

Auditor’s Report 34

Consolidated Financial Statements 35

Notes to Consolidated Financial Statements 39

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OverviewThe following Management’s Discussion and Analysis (“MD&A”) reviews Pembrook Mining Corp.’s (the “Company” or “Pembrook”) financial condition and results of operations for the year ended December 31, 2011. This discussion provides management’s analysis of the Company’s historical financial and operating results and provides estimates of the Company’s future financial and operating performance based on information that is currently available.

This MD&A contains forward-looking statements that involve certain risks and uncertainties. There can be no assurance that these statements will prove to be accurate and actual results and future events could differ materially. Please refer to the cautionary language regarding forward-looking statements at the end of this MD&A.

This MD&A is dated March 21, 2012 and should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2011, together with the notes thereto, prepared by management in accordance with International Financial Reporting Standards (“IFRS”) unless otherwise indicated.

All dollar figures are in Canadian dollars, unless otherwise noted.

Company BackgroundPembrook is a mineral exploration company engaged in the identification, acquisition, evaluation and advancement of mineral properties primarily in Peru and Mexico. The Company is exploring for copper (“Cu”), molybdenum (“Mo”), gold (“Au”), silver (“Ag”), nickel (“Ni”) and other metals including iron (“Fe”), platinum group elements (“PGE”), lead (“Pb”) and zinc (“Zn”). At present, none of the Company’s mineral properties are at a commercial development or production stage. The Company’s objective is to discover mineral deposits and either sell, option, joint venture or otherwise participate in their development.

The Company operates in Peru through its subsidiary, Compañia de Exploraciones Orion S.A.C. (“Orion”) and in Mexico through its subsidiary, Paget Southern Resources S. de R.L. de C.V.

HighlightsThe Company’s objectives for 2011 in Peru were to aggressively drill test the Lidia Cu-Au and Viento Cu-Mo-Ag porphyry prospects and initiate Phase 2 drilling at Viruna and Huiniccasa. In Mexico, 2011 objectives were to continue exploration on the gold-silver properties located in the Sonora district of Mexico that were acquired during 2010.

The following is a summary of key activities during 2011.

PeruViento (Cu-Mo-Ag)

• 21 diamond drill holes completed for a total of 10,168 metres.

• Identified new porphyry target in the PasTan-Paylacocha area.

• Completed the first phase drilling of six high-grade Cu-Mo-Ag breccia zones distributed over a 1,200 metre by 1,500 metre area.

• Discovery of a large low-grade copper porphyry system to the south of the high-grade breccia zones.

• Drill intersections in the fourth quarter of 2011 include 118 metres of 0.68% Cu, 0.13% Mo and 10.7 g/t Ag and 104 metres of 0.21% Cu, 0.03% Mo and 2.6 g/t Ag, 164 metres of 0.19% Cu, 0.18% Mo and 6.5 g/t Ag.

Lidia (Cu-Au)

• Detailed drilling continued and focused on the Lidia Main Zone Corridor with the objective of extending the known copper-gold mineralization and testing for higher grade mineralization within it and along strike.

• Drill intersections include 24 metres of 0.36% Cu and 0.42 g/t Au, 36 metres of 0.42% Cu and 0.18 g/t Au, 50 metres of 0.48% Cu and 0.3 g/t Au, 64 metres of 0.47% Cu and 0.06 g/t Au, 76 metres of 0.48% Cu and 0.19 g/t Au and 26 metres of 0.68% Cu and 0.11 g/t Au.

Sumaq (formerly Minascucho) (Cu-Au)

• The six high-grade copper-gold skarns identified on the property have been channel sampled.

• Geological mapping, rock chip sampling, a ground magnetic survey and environmental studies completed.

• Minasmoccha skarn channel samples range from 3.5-19.8% Cu, 0.4-5.6 g/t Au and 14.0-195.0 g/t Ag.

• A strong (700 metre by 1,200 metre) magnetic anomaly (porphyry target) occurs in a topographic low containing quartz stockwork porphyry and adjacent to three of the main skarn occurrences on the property.

Hurricane (Ni-Cu-PGE-Ag)

• Approximately 65% of the project area covered by airborne electromagnetic (“AEM”) and a magnetic survey completed.

• Ground follow-up of the Ocobamba stream geochemical anomaly located an ultramafic intrusion associated with numerous strong AEM conductors and coincident magnetic highs.

• Several other priority stream geochemical targets evaluated and are associated with ultramafic intrusions in proximity to strong AEM conductors.

Mila (Cu)

• Preliminary sampling on the Mila project returned very high grade copper assays that range from 2.2% to 16.8% Cu in channel samples along the eastern boundary of the property.

• The mineralization is dominantly chalcocite, a black copper sulphide along with lesser chrysocolla, malachite, cuprite, native copper and tenorite.

• A ground IP and magnetic survey initiated for drill targeting.

Santos (Au-Ag)

• Completed preliminary mapping and sampling over this large epithermal system (8 kilometres by 18 kilometres).

• This system contains 5 individual zones associated with high and low sulphidation targets.

• Two of the largest targets are the Apacheta zone (3,500 metres by 1,500 metres) and the Huamanripa zone (2,000 metres by 2,000 metres) that have returned gold assays up to 0.7 g/t along with associated strong trace elements of arsenic (“As”) and mercury (“Hg”).

New Projects

The Company has added the following new properties to its portfolio in Peru:

• Inchilihuay project with high-grade zinc-lead-silver mineralization

• 1.5 metres @ 18.9% combined Pb + Zn; 45.0 g/t Ag



Management Discussion and AnalysisFor the year ended December 31, 2011

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MD&A• Gema 4-6 & 9, Zoila 1 & 2 and Carancas 3-5 claims located contiguous to

the Sumaq project.

• Expansion of the land position at the Mila project by 500 hectares surrounding the open pit to the north, east and south.

Sale of Non-Core Assets

• On October 4, 2011, the Company sold its Cecilia Samana gold property in Peru for US$300,000. For additional information, please refer to the “Corporate Transactions” section below.

MexicoThe Company focused its work on the Batamote and Japonesas Norte optioned Au-Ag properties and acquired the Dionicio gold project.

Batamote and Japonesas Norte (Au-Ag)

• Ongoing program of mapping and rock and soil sampling and 4,102 metres of diamond drilling completed in twenty-four holes.

• Six main vein systems can be traced with strike lengths in excess of 500 metres.

• Drilling in the rhyolite at Batamote cut 0.5 g/t Au over 27 metres including 6.0 g/t Au over 1.5 metres.

• Drilling for structurally controlled mineralization at Batamote intersected 1.5 g/t Au and 200 g/t Ag over 1.5 metres and 3.2 g/t Au and 65 g/t Ag over 1.5 metres and 1.2 g/t Au over 31.5 metres.

• Hole CC-11 tested a newly discovered vein system in the Gloria area and cut a broad interval of gold mineralization of 27.5 metres with 0.3 g/t Au and 56 g/t Ag including 2.5 metres with 2.3 g/t Au and 364 g/t Ag. Lower in the same drill hole, altered rhyolite hosted 10 metres of 1.6 g/t Au including 4.7 metres of 3.0 g/t Au.

• Hole CC-21 tested the Japonesas Norte disseminated gold zone and returned 0.3 g/t Au over 143 metres.

Dionicio (Au)

• Acquired in November 2011 and is located next to and between the Mulatos Mine owned by Alamos Gold Inc. and the La India deposit owned by Agnico-Eagle Mines Limited.

• Covers a series of epithermal veins along a strike length of 600 metres that carry gold grades up to 12.0 g/t Au up to five metres.

Cuarentas (Au-Ag)

• Two areas along strike from the Mercedes Mine contain epithermal quartz veins (up to 1.4 g/t Au over 2 metres) and a wide series of stockwork veins.

Joint Venture of Assets

Rio Sonora (Cu)

• Option and Joint Venture agreement with Vale S.A. (“Vale”) on the Company’s 100%-owned Rio Sonora property. Under the terms of the agreement Vale can earn up to a 60% interest by incurring expenditures of US$7 million and making cash payments totaling US$400,000 over five years.

OutlookIn 2012, the Company plans to continue drilling its key projects in Peru and Mexico with drilling expected to commence by the end of the first quarter of 2012. If permits are received on schedule, initial diamond drill programs are planned for Sumaq, Mila and Tambo. Drilling is planned to resume at Lidia and Viento in the third quarter, once outstanding drilling permits are received as anticipated in the second quarter. Drilling at Japonesas Norte and Batamote is scheduled to resume in the first quarter of 2012 to follow

up on Phase 1 drill results. The Company will also continue to maintain a pipeline of high quality new projects in Peru and Mexico.

In 2012, the Company plans to complete the following:

PeruViento (Cu-Mo-Ag)

• Resume drilling at this breccia/porphyry project in the second quarter, focus on assessing the potential for the high grade breccias and continuing to explore for a higher grade phase of the porphyry system in the PasTan-Paylacocha area.

Lidia (Cu-Au)

• Continue drilling in the third quarter at the Main Zone to locate the high-grade areas within the mineralized structure.

• Additional sampling and geological mapping will be completed on new copper occurrences on the north and south sections of the property to develop additional drill targets.


• The emphasis will be on the diamond drilling of the known high-grade copper-gold skarns and the porphyry target identified from the magnetic survey which is planned for the end of the first quarter.

• Geological mapping and sampling will continue on the newly acquired ground contiguous and to the south of the property.

Mila (Cu)

• Ground IP and magnetics are being completed in the first quarter.

• A Phase 1 drill program is planned to evaluate the size potential of the newly discovered high-grade copper mineralization and to locate the source porphyry. Drilling is planned to commence at the end of the first quarter.

Hurricane (Ni-Cu-PGE-Ag)

• In the second quarter, ground follow-up of AEM conductors at Ocobamba, Coquimbo and Jantunpuma to identify the nature of the conductivity and to develop drill targets.

Huiniccasa (Cu-Zn-Ag-Mo-Fe)

• Drilling will resume once the drilling permit has been received (anticipated in the second half of 2012).

• The drilling will focus on testing the three geophysical targets interpreted to be potentially reflecting a porphyry.

• The strike extension to the south skarn will also be evaluated.

Tambo (Au)

• Substantial gold breccia zone of quartz-specularite, tourmaline chalcopyrite and pyrite that returned channel sample assays up to 1.0 g/t Au over 20.0 metres and multiple individual channels with 5.0 g/t to 30.3 g/t Au is planned for drill testing.

• Two high-level epithermal gold targets have been identified at the top of the system and are planned for drilling in 2012.

Santos (Au-Ag)

• The Company plans to complete additional geological mapping and sampling and if results warrant, drilling could begin in the third quarter.

MexicoBatamote and Japonesas Norte (Au-Ag)

• Drilling will continue on the gold-bearing vein structures in the first and

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second quarters to further drill test the Batamote, Japonesas and Rincon targets.

Cuarentas (Au-Ag)

• Geological mapping and sampling along the strike extension of the Mercedes Mine structure will continue in the first half of 2012.

• Based on the results, a drill program could be initiated in the fourth quarter.

Dionicio (Au-Ag)

• Geological mapping and sampling are planned for the first quarter of 2012 to develop drill targets along the epithermal vein system. Based on the results, a drilling program could be initiated in the second quarter of 2012.

Rio Sonora (Cu)

• A Titan 24 IP geophysical survey is planned by Vale for the second quarter of 2012 which will further define Z Axis Tipper Electomagnetic System (“ZTEM”) airborne anomalies for diamond drill testing in the third quarter of 2012.

Project Details: PeruDrilling of the Peru portfolio for 2011 was initiated in May and is detailed below.

Project System Type Metal Target Holes Drilled (2011)

Metres Drilled (2011)

Viento Porphyry Copper- Molybdenum- Silver

21 10,168

Lidia Iron-oxide-copper-gold

Copper-Gold26 12,691

Viruna Porphyry Gold-Copper 5 2,272Total 52 25,131

Viento (Cu-Mo-Ag)

The Phase 1 drilling was completed at the Viento project located 120 kilometres north of Lima, in the fourth quarter of 2011, with a total of 21 holes and 10,168 metres drilled. Viento is within a large metal district and lies along a northwest regional trend which contains Chinalco’s Toromocho porphyry-copper deposit, Buenaventura’s Uchuchaqua silver deposit and Glencore’s Iscaycruz lead-zinc-silver deposit. The Viento district covers a 15 kilometre by 20 kilometre area, within which the Company has a land position of 9,863 hectares.

The Viento district is characterized by silver-lead-zinc vein systems on the outer margins with a central area of high-grade breccia and multiple porphyries. The district is developed within intermediate volcanic and volcaniclastic rocks which are underlain, and/or cut, by both older batholithic granodiorite and younger dacitic to tonalitic porphyry bodies. Previous exploration by Minera Carolina (Gubbins Group) in the mid-1990s resulted in the discovery of multiple high-grade copper-molybdenum-silver breccia pipes. Rock chip sampling and 2011 drilling by the Company has verified these results with Pembrook’s initial drilling returning the following results (as previously reported):

VIE-1 La Trinchera Breccia 318 metres @ 0.60% Cu; 0.25% Mo; 15.1 g/t Ag

VIE-3 La Mina Breccia 89 metres @ 0.39% Cu; 0.62% Mo; 7.1 g/t Ag

VIE-4 Parag Oeste Breccia 96 metres @ 1.00% Cu; 0.19% Mo; 10.3 g/t Ag

VIE-18 Parag Oeste Breccia 70 metres @ 0.26% Cu; 0.36% Mo; 7.8 g/t Ag

VIE-20 La Trichera Breccia 118 metres @ 0.68% Cu; 0.13% Mo; 10.7 g/t Ag

Six distinct breccia bodies are found within an east-west trending zone measuring 1,200 metres by 1,500 metres. The breccias have surface expressions up to 120 metres by 150 metres across (Paylacocha I breccia) and appear to form vertical pipe-like bodies. The breccias are polymictic, hydrothermal breccias with a matrix of pyrite, chalcopyrite, molybdenite and locally with variable calcite, quartz, magnetite, sphalerite and galena. Within the breccias, grades can reach up to 8.17% Mo, 6.9% Cu and 191.0 g/t Ag. The breccias provide an excellent target for delineation of modest size but high-grade molybdenum-copper-silver deposit.

In addition to the known breccia bodies, exploration by the Company in 2011 has outlined other targets. Immediately east of the La Trinchera breccia, mapping and sampling identified the Viento Porphyry which is characterized by a dacitic porphyry with sericitic alteration at the surface. This porphyry is cut by quartz and pyrite veinlets and is found over an area of at least one kilometre by one kilometre. Within the area, channel rock chip samples taken from road cuts which crisscross this zone have returned 1,000 metres of 0.10% copper attesting to the large copper anomaly associated with this part of the porphyry system.

In addition to the mineralization within the breccias, previously reported results from 2011 drill tests at the Viento porphyry returned the following exceptionally large (+1 billion tonnes) low-grade copper intervals:

Hole VIE-5 254 metres @ 0.09% Cu





Logging of core through the porphyry indicates extensive sodic-calcic alteration indicative of deeper and lower levels of a porphyry system. Exploration is now focussed on vectoring toward higher level porphyry bodies at higher elevations or in faulted blocks toward the PasTan-Paylacocha area.

All results from 2011 drilling have been returned and complete new results are presented as follows:

Hole From (metres)

To (metres)

Length (metres)

Cu %

Mo %

Ag g/t

VIE-01 0.0 317.8 317.8 0.60 0.25 15.00VIE-02 0.0 166.0 166.0 0.16 - 1.67VIE-03 0.7 96.0 89.0 0.39 0.62 7.05VIE-04 0.0 96.0 96.0 1.00 0.19 10.29VIE-05 72.0 194.0 122.0 0.10 - 1.25VIE-05 232.0 392.0 160.0 0.11 - 1.10VIE-05 430.0 450.0 20.0 0.14 - 1.20VIE-06 22.0 290.0 268.0 0.09 - 1.73VIE-07 0.0 516.0 516.0 0.11 - 1.30including 233.0 413.0 180.0 0.16 - 1.30VIE-08 2.0 382.0 380.0 0.11 - 1.10including 200.0 224.0 24.0 0.20 - 2.10VIE-09 3.0 63.0 60.0 0.27 0.09 3.81VIE-09 175.0 201.0 26.0 - 0.07 -VIE-10 6.0 150.0 146.0 0.21 - 2.00VIE-10 182.0 238.0 56.0 0.15 0.02 2.10VIE-10 276.0 432.0 156.0 0.23 0.04 2.30including 328.0 382.0 54.0 0.38 0.06 3.40VIE-11 11.0 398.0 387.0 0.12 - 2.60including 346.0 398.0 42.0 0.15 - 9.90VIE-12 63.0 325.0 262.0 0.13 - 1.16VIE-13 32.0 62.0 30.0 0.13 - 3.47

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Hole From (metres)

To (metres)

Length (metres)

Cu %

Mo %

Ag g/t

VIE-13 218.0 222.0 4.0 - 0.08 -VIE-13 284.0 290.0 6.0 0.21 - 1.50VIE-13 340.0 370.0 30.0 0.12 - 1.30VIE-14 0.0 34.0 34.0 0.19 0.02 1.82VIE-14 48.0 86.0 38.0 0.12 - 1.18VIE-14 170.0 256.0 86.0 - 0.08 -including 210.0 256.0 46.0 - 0.10 -VIE-14 300.0 304.0 4.0 - 0.11 -VIE-15 480.0 484.0 4.0 0.14 - 1.20VIE-16 60.0 66.0 6.0 0.10 - 12.90VIE-17 173.0 185.0 12.0 0.14 - 1.40VIE-17 201.0 257.0 56.0 0.17 0.05 4.10VIE-17 283.0 299.0 16.0 0.89 0.08 13.50VIE-17 351.0 455.0 104.0 0.21 0.03 2.60VIE-18 0.0 164.0 164.0 0.19 0.18 6.50including 0.0 70.0 70.0 0.26 0.36 7.80including 0.0 14.0 14.0 0.37 0.69 12.10including 134.0 144.0 10.0 0.13 0.07 2.30VIE-18 194.0 232.0 38.0 0.12 0.06 1.10VIE-19 101.0 103.0 2.0 0.05 - 46.30VIE-20 23.0 57.0 34.0 0.11 0.01 1.10VIE-20 115.0 233.0 118.0 0.68 0.13 10.70including 121.0 175.0 54.0 1.04 0.23 15.00including 137.0 175.0 38.0 1.33 0.28 19.80VIE-21 25.0 48.0 23.0 0.48 0.07 4.50including 21.0 43.0 12.0 0.63 0.09 6.10VIE-21 48.0 76.0 28.0 0.04 - 1.90VIE-21 201.0 240.0 136.0 0.20 0.03 4.40including 112.0 128.0 16.0 0.48 0.04 11.20VIE-21 282.0 324.0 42.0 0.10 0.01 1.40

These results (VIE-13 through VIE-21) are from holes designed to test for extensions of the known breccia bodies. High-grade copper and molybdenum mineralization was intersected as noted at Parag Oeste (VIE-17 reporting 16 metres at 0.89% Cu and 0.08% Mo; VIE-18 reporting 24 metres at 0.21% Cu and 0.59% Mo) and La Trichera where VIE-20 intersected 118 metres at 0.68% Cu and 0.13% Mo. These results suggest the breccias are metal-rich and occur as both narrow, near-vertical bodies with long vertical extent (La Trichera) and as bodies which flare near the surface and have less vertical range (La Bola). A model to provide an initial estimate of the size of the breccia pipes is in progress.

Exploration at Viento in 2011 has identified a large mineralized system for testing in 2012 to locate a higher grade phase of the porphyry. Results from the breccias have confirmed historical drill results and an inventory and geologic model, which is in progress, will guide future plans for these zones. The drill permit for +100 holes has been submitted and approval is anticipated in mid-2012.

Lidia (Cu-Au)

At Lidia, two drills completed 26 holes, for a total of 12,691 metres drilled in 2011. The drilling was designed to test for extensions to mineralization at the Lidia Main Zone and to complete Phase 1 drilling on targets including Puru Puru, Tejene and Ichocollo. In addition, a structural study is being completed to enhance the understanding of the district and the controls to mineralization.

In May 2011, the Company acquired a 100% interest in additional claims along strike of the Lagunillas fault, thereby expanding the Lidia project by 1,500 hectares.

The Company continues to advance this new copper and gold discovery with two drills currently operating. Significant mineralization has been discovered by the Company in previous drilling and results include

such drill intercepts as:

LID-1 32 metres @ 0.90 g/t Au

LID-1 185 metres @ 0.45% Cu

LID-4 135 metres @ 0.52% Cu

LID-10 100 metres @ 0.37% Cu and 0.51 g/t Au



These results indicate the first discovery of an IOCG (iron oxide copper gold) occurrence in the altiplano of Peru and also within tertiary rocks in Peru. Though this is a poorly understood deposit type, many large deposits such as Candelaria and Manto Verde in Chile, and Marcona, Mina Justa and Pampa de Pongo in Peru are examples of this type of occurrence. The Company has built a large land position in this new district and now controls 33,500 hectares of which 29,300 hectares are titled and the remaining 4,200 hectares are subject to the new “previous consultation” law which requires community approval prior to granting of title. The current drill program is designed to test for extensions, continuity and higher-grade mineralization within the mineralized Lidia Main Zone Corridor and to test for new centres of mineralization elsewhere within the district. During the fourth quarter of 2011, the Company drilled fifteen holes for 6,759 metres.

Key intersections from 2011 drilling results received are:

Hole From (metres)

To (metres)

Length (metres)

Cu %

Ag g/t

Au g/t

LID-21 298.0 308.0 10.0 0.14 - -LID-23 0.0 294.0 294.0 0.16 - -including 162.0 270.0 98.0 0.32 - -LID-23 138.0 294.0 156.0 0.23 - -LID-23 408.0 444.0 36.0 0.26 1.41 -LID-24 18.0 24.0 6.0 0.12 0.33 0.35LID-24 254.0 268.0 14.0 0.33 3.10 -LID-24 436.0 486.0 50.0 - 37.8 -LID-25 74.0 118.0 44.0 0.07 0.28 0.22LID-25 360.0 370.0 10.0 0.15 0.44 0.42LID-25 408.0 412.0 4.0 0.22 0.90 0.28LID-26 48.0 68.0 20.0 0.09 34.8 -LID-26 346.0 360.0 14.0 - 14.60 -LID-26 384.0 398.0 16.0 0.12 15.30 -LID-27 150.0 162.0 12.0 0.12 0.90 0.15LID-27 326.0 330.0 4.0 - - 0.20LID-28 8.0 12.0 4.0 0.07 1.00 0.41LID-28 68.0 72.0 4.0 0.02 1.00 0.78LID-28 258.0 260.0 2.0 0.02 35.30 -LID-30 274.0 278.0 4.0 0.39 4.70 0.09LID-33 248.0 354.0 106.0 0.23 0.70 0.04LID-33 506.0 528.0 22.0 0.33 1.90 0.04LID-34 4.0 86.0 82.0 0.19 1.20 0.05LID-34 124.0 382.0 258.0 0.25 0.40 0.07including 128.0 160.0 32.0 0.36 1.40 0.42including 232.0 256.0 24.0 0.43 0.20 0.04including 268.0 314.0 46.0 0.39 - -LID-35 2.0 20.0 18.0 0.14 0.20 0.01LID-35 52.0 58.0 6.0 0.12 0.90 -LID-35 74.0 82.0 8.0 0.36 3.90 0.01LID-35 102.0 136.0 34.0 0.24 0.20 0.14LID-35 162.0 178.0 16.0 0.20 0.30 0.02LID-35 204.0 242.0 38.0 0.18 0.70 0.03LID-35 302.0 338.0 36.0 0.25 3.00 0.05LID-35 358.0 368.0 10.0 0.38 4.80 0.07

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Hole From (metres)

To (metres)

Length (metres)

Cu %

Ag g/t

Au g/t

LID-35 396.0 426.0 30.0 0.15 0.30 0.04LID-36 0.0 28.0 28.0 0.16 0.60 0.01LID-36 56.0 66.0 10.0 0.11 0.20 0.01LID-36 88.0 348.0 260.0 0.20 0.40 0.06including 150.0 196.0 46.0 0.28 0.40 0.17including 280.0 348.0 16.0 0.25 0.80 0.02LID-37 0.0 106.0 106.0 0.25 1.40 0.11including 46.0 78.0 32.0 0.37 0.50 0.27LID-37 114.0 126.0 12.0 0.11 0.70 0.01LID-37 256.0 268.0 12.0 0.19 0.60 0.03LID-37 298.0 312.0 14.0 0.28 5.50 0.04LID-37 380.0 414.0 34.0 0.17 5.90 0.08LID-37 426.0 436.0 10.0 0.16 0.20 0.03LID-37 456.0 462.0 6.0 3.59 6.30 0.51LID-38 24.0 34.0 10.0 0.15 0.80 0.01LID-38 54.0 182.0 128.0 0.21 2.00 0.09including 154.0 166.0 12.0 0.42 5.60 0.30LID-39 26.0 46.0 20.0 0.27 0.40 0.01including 60.0 96.0 36.0 0.42 0.40 0.18LID-39 104.0 112.0 8.0 1.19 0.50 0.11LID-39 190.0 196.0 6.0 0.11 0.90 0.01LID-40 218.0 220.0 2.0 0.12 4.00 0.06LID-41 0.0 90.0 90.0 0.32 0.80 0.15Including 48.0 88.0 50.0 0.48 0.90 0.30LID-41 104.0 128.0 24.0 0.35 2.50 0.01LID-41 172.0 180.0 8.0 0.21 2.20 0.10LID-42 90.0 94.0 4.0 0.38 2.40 0.22LID-42 272.0 282.0 10.0 0.35 1.20 0.27LID-42 308.0 312.0 4.0 0.17 1.20 0.03LID-43 324.0 546.0 220.0 0.25 1.70 0.05including 324.0 388.0 64.0 0.47 0.80 0.06including 520.0 546.0 26.0 0.23 8.70 0.05LID-45 134.0 142.0 8.0 0.80 8.20 1.33LID-45 152.0 174.0 12.0 0.19 1.80 0.09LID-45 188.0 198.0 10.0 0.15 3.30 0.01LID-45 214.0 460.0 246.0 0.28 1.30 0.09including 214.0 354.0 140.0 0.39 1.60 0.13including 216.0 292.0 76.0 0.48 1.70 0.19including 216.0 234.0 18.0 0.61 4.20 0.32including 266.0 292.0 26.0 0.68 1.40 0.11LID-46 4.0 12.0 8.0 0.51 1.90 0.61LID-46 306.0 310.0 4.0 0.13 1.6 0.01

* Drill holes LID-22, LID-29, LID-31, LID-32 and LID-44 did not intersect any significant mineralization.

The 2011 drill program was designed to test for extensions both along strike and at depth of the Lidia Main mineralized zone and to test several of the new district prospects. Results from the district exploration targets returned narrow, anomalous to low-grade copper-gold mineralization at Tejene and Puru Puru. These holes were targeted to test strong, surface copper and gold geochemical anomalies coincident with strong chargeability signatures. Evaluation of these results and the core will continue to determine how to use this information as a guide to future exploration. Hole LID-33 cuts strongly altered favourable andesite and through the entire hole contained anomalous copper (0.23% Cu over 106 metres). Drilling in the fourth quarter of 2011 focused along the Lidia Corridor with two drills. The Lidia Corridor is a N70E trending, 150 metre to 250 metre wide zone which can be traced for at least two kilometres. The zone is bound by the Mantilla fault to the north and the Lidia fault to the south and is the host for all significant mineralization detected by drilling to date. The presence of interesting drill intercepts over this large

area suggests potential for the discovery of a significant copper and gold deposit within this corridor. Within the Lidia Corridor, mineralization has a strong lithologic control and is preferentially developed within the “middle andesite,” a coarsely porphyritic, massive andesite. This horizon can be up to 230 metres thick and the entire stratigraphic sequence has been rotated to a steep dip complicating geologic correlations. The mineralized andesite has strong iron alteration as specularite and hematite (locally with iron concentrations to +30% Fe) along with variable proportions of sericite and feldspar, and with dolomite as fine stringers. Mineralization occurs as chalcopyrite as disseminations replacing mafic phenocrysts, as microfracture fillings and as massive veinlets. In addition, secondary copper minerals are present within near-surface oxidized zones. Gold is found with chalcopyrite and also as free gold within fine specularite veinlets.

Drilling was designed at 100 metre spacing to establish continuity and controls of the Cu-Au mineralization and to search for high-grade portions along the structure. LID-33 is the first hole drilled in this effort and though long runs of anomalous to low-grade mineralization were encountered within the favourable andesite, higher-grade mineralization was not intersected. LID-34, 35 and 36 also penetrated the favourable andesite, and locally chalcopyrite was noted. Drilling in 2012 will be focused on vectoring to higher-grade areas along the structure.


The Sumaq prospect is located in the departments of Apurimac and Cusco within southeastern Peru. The prospect lies within the metal-rich Yauri-Andahuaylas Skarn-Porphyry Belt, which hosts several major deposits including Xstrata’s Las Bambas, Tintaya and Antapaccay, La Haquira, Las Chancas and the Constancia porphyry copper deposits. The Sumaq property is well located with the Ferrobamba deposit, the largest deposit within the Las Bambas district, located just 8 kilometres to the northwest. The Sumaq property consists of 11,600 hectares, of which 7,700 hectares is comprised of the Gema 4-6 & 9, Zoila 1 & 2, and Carancas 3-5 claims acquired from Minera del Suroeste S.A.C. in October 2011. For additional information on the acquisition of these claims, please refer to the “Corporate Transactions” section below.

To date the Company has identified multiple gold-bearing and copper-bearing skarns. These bodies occur at the contact of the Ferrobamba Limestone, which is the host for nearly all skarn deposits within the region, and granodioritic to monzonitic intrusive bodies. High-grade copper mineralization with several samples containing up to 19.8% Cu and high-grade gold and silver up to 30.1 g/t Au and 195 g/t Ag is found within highly-oxidized, magnetite and garnet-bearing skarns. Six distinct skarns have been identified on the project and measure up to 300 metres by 50 metres.

Exploration activities including geologic mapping, rock chip sampling, a ground magnetics survey and environmental studies were carried out and are in progress. The magnetic survey has outlined a strong magnetic feature that measures 700 metres by 1,200 metres (which is similar in size to the Ferrobamba and Chalcobamba deposits in the Las Bambas district). This anomaly is centred in a topographic low adjacent to the three of the main copper-gold skarn occurrences. The magnetic signature is indicative of an extensive magnetite skarn, or the magnetic central portion (potassic zone) of a porphyry system.

Mila (Cu)

Mila is located in south-central Peru approximately 400 kilometres southeast of Lima. Previous “informal” mining from a small (60 metres by 120 metres), open pit located immediately adjacent to the Company’s holdings, extracted high-grade copper (+5% Cu) from a horizontal blanket measuring 2 metres to 5 metres thick. Sampling by Pembrook returned multiple channel samples containing 2.2% to 16.8% Cu through this secondary blanket characterized by chalcocite, malachite, chrysocolla and


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native copper. Immediately west of this pit, the Company controls a large land position measuring 1,000 metres by 3,000 metres and characterized by intense “acid” alteration including abundant breccia, granular silica, clay and native sulphur. This alteration is common in the highest, barren portions of a gold-rich, high-sulphidation system such as Yanacocha and Pierina or in the uppermost levels of a copper porphyry system. Thus, potential exists for a discovery of a high-grade, near-surface, secondary-enriched copper deposit and its deeper source, a copper porphyry or gold and copper epithermal deposit.

During the fourth quarter of 2011, the Company expanded its land position through the acquisition of a key 500 hectares block surrounding the open pit to the north, east and south. The Company will acquire a 100% interest in this property through a series of phased cash payments at project milestones including completion of a community agreement and approval of the environmental permit for drilling. For more details, please see the “Corporate Transactions” section below. The Company now controls 12,000 hectares at the Mila prospect including 1,000 hectares in which the Company has title with the remaining 11,000 hectares subject to the new “previous consultation” law and thus subject to community approval prior to granting of title. The primary targets lie within the titled ground and can quickly be advanced to drilling.

The Company was able to initiate exploration activities including rock chip and drainage sampling, geophysics (magnetics and IP/resistivity) and geologic mapping. In addition to the zone immediately west of the small open pit which is characterized by strong silica and clay alteration and abundant breccia, the Company has now identified several targets in the area east of the open pit and on the property. Three, distinct, opaline and chalcedonic silica, breccia bodies with variable amounts of iron oxide and pyrite are present in this zone and suggest the Mila system is highly dynamic (explosive) and covers a larger area than previously noted. The breccia bodies are found within a sequence of layered volcanic rocks and the presence of chalcedonic and opaline silica within these multi-phase bodies suggests potential exists for the discovery of gold mineralization within permeable, favourable horizons at depth. These “eastern breccias” are found over an area of 300 metres by 300 metres and provide additional drill targets within the project.

Geophysical surveys are in progress with a magnetic survey completed (70 line kilometres) and an IP/resistivity survey ongoing (44 of 72 line kilometres completed). Though data collection and processing is not complete, initial data suggests the presence of a strong, east-west trending resistor terminating in the open pit and extending west across Pembrook ground for a distance of one kilometre. This body is mostly flat-lying, has a thickness of 30 to 80 metres and a width up to 100 metres, and the high resistivity likely represents strong silicification within a volcanic tuff. This body is underlain by an extremely conductive manto which could be the extension of the supergene copper blanket. In addition to this strong geophysical anomaly, other resistivity and chargeability features are present and may provide drill targets.

Mapping, sampling and geophysics will continue through the first quarter of 2012 and it is anticipated that the environmental permit to allow drilling will be approved early in the second quarter of 2012 with a first-pass drill test comprised of 10-15 holes and 2,500 metres scheduled to begin in April 2012 pending approval of permits. In summary, Mila provides the Company with an excellent, high-grade, near-surface copper target along with potential for discovery of a copper porphyry or epithermal gold-copper mineralization at depth.

Hurricane Magmatic (Ni-Cu-PGE-Ag)

At the Hurricane project in southeastern Peru, work during the third quarter of 2011 consisted of two main activities: a helicopter-supported reconnaissance of anomalies generated by the integration of results from the 2010 airborne geophysical survey (electromagnetics and magnetics)

with the regional geochemical data base, and the restart of the airborne geophysical survey to complete the remainder of the originally planned survey cut short by bad weather in 2010.

Within the project area the Company controls 96,845 hectares with 61,945 hectares titled, and the remaining 34,900 hectares subject to the “previous consultation” process managed by the government and requiring approval by the local communities prior to granting of title. In 2010 the Company initiated an airborne geophysical survey of the Hurricane region to enhance the potential for discovery. A total of 3,290 line kilometres of a planned 6,640 line kilometres were flown in 2010 with an additional 706 line kilometres flown in 2011. The 2010 survey identified twelve distinct EM anomaly clusters of which the Ocobamba AEM-magnetic anomalies coincided with a strong stream geochemical anomaly with elevated nickel-copper-cobalt-silver and platinum values. A total of four of the anomaly clusters were followed up with helicopter-supported reconnaissance. At Ocobamba, a small ultramafic stock measuring at least 300 metres by 400 metres across was identified in close proximity to the AEM conductor and remains a priority target for drilling. Results of the follow-up work at the other anomalies were similar with discovery of ultramafic rock in highly-vegetated terrain also in proximity to AEM conductors.

The Phase 2 electromagnetics-magnetics survey began in mid-August 2011. Twenty-one percent of the planned 2011 survey (706 of 3,320 line kilometres) was completed by year-end. The area still to be flown will not be completed in 2012. Work in 2012 will focus on ground follow-up including trenching and sampling over high-priority AEM conductors.

Huiniccasa (Cu-Zn-Ag-Mo-Fe)

At Huiniccasa, located in central Peru, non-geologic work has continued through the fourth quarter of 2011, with the primary activity the advance of the detailed archaeological study required prior to additional drilling. The study is a joint Pembrook and Peru Cultural Ministry effort and encompasses a 90 hectare area, nearly all of which is outside of, and above, the main skarn zone. The study was completed at the end of the fourth quarter and once approval is obtained from the Cultural Ministry the Company can begin construction of drill access trails and platforms under the supervision of an archaeologist from the Cultural Ministry. It is anticipated this work will begin following cessation of the rainy season in April and require three months for completion, with drilling ready to commence mid-2012. In addition to the archaeological study, the Company has continued work with the local communities in order to maintain positive relations and complete required obligations. The focus of this work has been maintenance and modification of the over 20 kilometre access road to lessen the impact of erosion within this steep, exposed terrain.

Tambo (Au)

Tambo is a large metal district measuring 8 kilometres by 12 kilometres consisting of 27,500 hectares for which the Company has title. The district lies at the structural intersection of the Southern Peru Copper Porphyry Belt, which contains the Toquepala, Quellaveco, Cuajone and Tia Maria Cu porphyry deposits, with a northeast-trending structure that projects into the epithermal terrane in the altiplano hosting such gold and silver deposits as Aruntani, Ares and Orcopampa. Within the Tambo project there are three distinct target types within the system. At the highest levels, large silica caps (siliceous sinters) covering up to 1 kilometre by 3 kilometres are present. These bodies contain strong trace element geochemistry with highly-enriched antimony (including stibnite), arsenic and mercury. A large number of silica boulders are found in the drainages of this target and multiple values up to +1.0 g/t Au are reported. It is likely that these gold-bearing blocks were derived from the silica caps.

In the lowest levels of the system, gold (and copper) is associated with breccia and fracture fillings containing quartz + specularite + tourmaline + chalcopyrite + pyrite. Channel samples through these zones have returned

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intervals including 18 metres @ 0.73 g/t Au and 20 metres @ 0.99 g/t Au, with multiple high-grade gold samples (up to 30.3 g/t Au) within separate structures. Breccias are found within a topographic low area measuring at least 200 metres by 200 metres and potential exists for better continuity and more voluminous gold-bearing breccias at depth. In addition, this zone lies within a large circular feature with many similarities to a covered porphyry system. Thus potential exists for the discovery of a porphyry beneath the breccia zone.

Santos (Au-Ag)

Preliminary geological mapping and sampling has been initiated at the Santos prospect located in southwestern Peru, 65 kilometres east of Nazca. Santos is a large, epithermal system covering an 8 kilometre by 18 kilometre area containing at least five altered and mineralized zones including both high-sulphidation (disseminated sulphide related) and low-sulphidation (vein) targets. The property comprises 3,300 hectares within the district which includes two of the largest high-sulphidation systems in the area. The Apacheta zone (southern target) measures 3.5 kilometres by 1.5 kilometres and the Huamanripa target (northern target) covering 2 kilometres by 2 kilometres. Reconnaissance sampling indicated numerous anomalous gold with one sample from a “vuggy” silica zone returning 0.7 g/t Au. In addition, trace element geochemistry including arsenic and mercury are locally anomalous within the zones. Both systems appear to contain clay-dominant alteration with multiple silica ribs and small, silica breccia bodies scattered through the altered andesitic rocks. During 2011, the Company signed an agreement with Teck Mining Company (“Teck”) to gain access to their technical data from the project area. In return Teck retains the right to have the claims transferred to them should Pembrook decide to abandon the property in the future. This right does not apply should Pembrook transfer, or sell the claims, but only in the event Pembrook abandons the claims.

Inchilihuay (Pb- Zn-Ag)

The Inchilihuay prospect is located in central Peru just east the Central Peru Mineral Belt and 40 kilometres from the Cerro de Pasco Mine. Reconnaissance exploration identified discovered high-grade lead-zinc-silver mineralization within limestone surrounded by granodiorite. Initial sampling returned multiple +5% combined lead and zinc, and some channel samples with very high grade assays from the South Inchilihuay area including:

1.5 metres @ 18.9% combined Pb + Zn; 45.0g/t Ag

1.0 metre @ 23.2% combined Pb + Zn; 95.1g/t Ag

1.5 metres @ 29.8% combined Pb + Zn; 62.6g/t Ag

The Company also finalized an agreement with Hochschild Mining Company (“Hochschild”) in which the Company acquired a 100% interest in Hochschild’s Lorena claims (2,400 hectares – titled) contiguous to the Inchilihuay concessions. The Company now holds 7,700 hectares within the Inchilihuay prospect. Geological mapping and sampling has now focused on the north end of the Inchilihuay Corridor, a north-south trending, 150 metre by 800 metre wide zone which hosts the high-grade lead-zinc-silver mineralization. Within this zone, limestone and sandstone are found as pendants or fault wedges within a large granodiorite. The limestone has been marbleized and recrystallized and locally skarn is present. Mineralization is found within the skarn zones as massive and disseminated sphalerite and galena. Sampling at the north end indicates system zoning as this portion contains only zinc with values from 1%-10% zinc from the altered limestone. Mineralization at the north end of the corridor is confined to a 40 metre by 50 metre zone. To the south, mineralization includes lead-zinc-silver as mineralized blocks measuring tens of metres across.

Viruna (Au-Cu)

At the Viruna project, drilling was carried out in the second quarter consisting of five holes for a total of 2,272 metres. This program focussed on testing extensions of the first hole drilled at Viruna in 2010 that returned 0.47 g/t gold over 240 metres.

The intersections from 2011 drilling results are:

Hole From (metres)

To (metres)

Length (metres)

Au g/t

Cu %

VIR-08 0.00 208.4 208.4 0.37 -VIR-09 139.4 147.0 7.6 0.40 -VIR-09 305.15 332.9 27.75 0.49 0.26VIR-10 0.0 21.0 21.0 0.44 -VIR-11 282 292 10.0 0.44 -VIR-11 325 335 10.0 0.28 -VIR-11 487 493 6.0 0.25 -VIR-12 21.0 28.0 7.0 1.22 -VIR-12 62.0 78.0 16.0 0.32 -

These assay results, combined with evaluation of core, indicate the presence of a large porphyry system with low-grade to anomalous gold mineralization. Mineralization in VIR-8 is an offset to VIR-1 and examination of core suggest mineralization in these two holes is related to a structural zone cut by a high density of pyrite stringers and quartz-sulphide breccias. Potential exists to expand this zone but it appears mineralization will be low-grade. Results from the 2011 drill program indicate the central zone of this porphyry system has been tested and additional review will be conducted to determine if targets along the margin of the system are associated with “vein-type” high-grade gold and copper mineralization.

Project Details: MexicoActivities during 2011 include the acquisition of three new projects in the Sonora district (Japonesas Norte, Batamote and Dionicio) and mapping and sampling at the Guadalcazar and La Cruz projects in order to plan drill programs at both properties. Titles for the Ramard, Cuarentas, Buenavista del Cubo, Guadalcazar and La Cruz properties were all granted in late 2011. Exploration activity will focus on gold and copper exploration, largely in Sonora.

Japonesas Norte and Batamote ( Au-Ag)

These two adjoining claim groups were optioned in May 2011 and April 2011 respectively. The 3,200 hectare project covers numerous gold showings in rhyolite and sedimentary rocks. Extensive mapping, rock and soil sampling have defined a broad area with northwest-trending structural zones containing anomalous to high-grade gold. Gold occurs in three settings, as high-grade polymetallic epithermal veins, disseminated and fracture controlled oxide mineralization in rhyolite and as silicification with quartz stockwork. A preliminary exploration program consisting of 4,102 metres in 24 holes of drilling on seven different targets areas was initiated in October 2011 and completed by the end of the quarter. Results of this drill program are shown in the following table.

Intersections from the 2011 drilling program include:

Hole From To Length (metres)

Au g/t

Ag g/t

CC-001 27.0 31.5 4.5 0.7 89.7CC-002 105.0 111.4 6.3 0.2 6.2CC-002 136.5 141.2 7.5 0.8 5.5including 138.9 141.2 2.3 2.6 11.2CC-003 58.2 68.3 10.2 0.5 20.6CC-005 5.5 32.5 27.0 0.5 1.6including 22.0 23.5 1.5 6.5 4.3CC-006 48.0 52.5 4.5 0.7 0.8CC-006 126.0 148.5 22.5 0.2 0.1including 139.5 145.5 6.0 0.4 37.3


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Hole From To Length (metres)

Au g/t

Ag g/t

CC-008 85.5 87.0 1.5 0.4 0.5including 96.0 97.5 1.5 0.3 0.5CC-009 117.6 144.0 26.4 0.2 10.0CC-010 28.5 35.3 6.8 0.4 2.9CC-011 23.5 51.0 27.5 0.3 55.8including 28.5 46.5 18.0 0.5 58.9including 30.2 32.7 2.5 2.3 364.0CC-011 122.1 132.0 9.9 1.6 1.4including 124.4 129.0 4.6 3.0 1.9CC-012 46.1 49.5 3.4 1.3 14.5including 48.0 49.5 1.5 2.5 15.5CC-012 106.3 127.0 20.7 0.3 5.6including 108.6 110.7 2.1 1.3 35.4CC-013 47.7 84.5 36.9 0.2 3.0CC-014 0.0 31.5 31.5 1.2 2.1including 13.5 16.5 3.0 6.1 7.1CC-015 0.0 37.5 37.5 0.4 2.5including 3.0 12.0 9.0 0.9 0.3CC-016 4.1 64.6 60.5 0.2 1.1CC-018 25.5 33.0 7.5 0.3 6.9CC-019 99.8 136.0 36.2 0.2 5.3CC-020 0.0 30.0 30.0 0.3 4.9including 22.5 30.0 7.5 0.7 17.4CC-021 0.0 146.0 146.0 0.3 0.8including 0.0 34.5 34.5 0.6 2.8CC-021 113.0 131.0 18.0 0.8 0.3CC-022 98.0 154.0 56.0 0.2 0.3including 127.0 130.0 3.0 0.8 0.3including 133.0 136.0 3.0 0.6 0.3including 139.0 142.0 3.0 0.7 0.3CC-023 30.0 43.2 13.2 0.3 3.2including 70.0 82.5 12.5 0.4 0.3CC-024 0.0 3.0 3.0 1.3 0.3CC-024 30.0 43.2 13.2 0.3 3.2CC-024 54.7 66.0 11.3 0.5 2.2

* Drill holes CC-004, CC-007 and CC-017 did not intersect any significant mineralization.

Phase 2 drilling in the first quarter of 2012 will follow up favourable intersections from the 2011 drilling in the Batamote, Japonesas and Rincon areas of the properties.

Cuarentas (Au-Ag)

An intensive program of silt sampling and prospecting on the western half of this claim was undertaken to evaluate the potential for gold mineralization associated with a mineralized corridor extending northeast from Mercedes Mine owned by Yamana Gold Inc. This program has identified several drainages with very strong gold responses, discovered several new mineralized structures with anomalous gold and silver and identified a zone of strong copper-silver skarn. Title to the claims was formally granted in November 2011. Further surface exploration work is planned for the first half of 2012, followed by drilling in late 2012.

Dionicio (Au)

The Dionicio 150 hectare property is located adjacent to and between the Mulatos Mine owned and operated by Alamos Gold Inc. and the La India project owned by Agnico-Eagle Mines Limited. The property covers numerous epithermal veins with excellent high-level epithermal textures and lattice textured quartz. The veins locally reach widths greater than 5 metres and average 1 metre to 2.5 metres. All veins carry anomalous gold and one vein consistently ranges from 5.0 g/t Au to 12.0 g/t Au over 1.0-4.3 metres along a 300 metre strike length of the vein. The same vein also

extends for a further 600 metres with similar widths and textures. Initial drilling is planned for the second quarter of 2012.

Rio Sonora (Cu)

This project consists of 42,179 hectares in two blocks located in between the world class copper-molybdenum porphyry deposits at Cananea and Caridad. In October 2011, Pembrook entered into an option agreement with Vale whereby Vale can earn up to a 60% interest in the property. For additional information on the option agreement, please see the “Corporate Transactions” section below. An airborne ZTEM was flown over the property. Targets identified by the survey will be followed up with a ground Titan 24 IP system to identify diamond drill targets.

Guadalcazar (Au-Ag)

Mapping, rock and soil sampling on this project defined a skarn zone of silver-gold mineralization with good silver results (average of 69 rock chip samples was 0.34 g/t Au and 183 g/t Ag in a zone 150 metres wide). The Company is endeavouring to obtain local community approval to begin drilling in 2012.

Ramard (Au-Ag)

This 4,624 hectare property is located in Sonora roughly 80 kilometres north of Hermosillo. The claims cover a gold and polymetallic stream sediment anomaly as well as a known epithermal stockwork vein showing. Reconnaissance mapping and sampling on this concession in late November 2011 successfully delineated an area of gold mineralization. Two silt samples assayed 0.15 g/t and 0.35 g/t Au while rocks assayed up to 2.2 g/t Au from veinlets and up to 0.4 g/t Au from silicification and breccia. The best results are from near the north boundary of the claim and the holdings will be expanded a further 2,000 metres to the north. Follow-up work will be completed in the second quarter of 2012.

Buenavista del Cubo (Ag-Au)

This project comprises 1,187 hectares covering a number of poorly-exposed epithermal veins located in Guanajuato. Work planned to be performed on this project in 2011 was deferred due to higher exploration priorities in Mexico.

La Cruz (Cu-Mo)

This 480 hectare project was acquired from the Servicio Geologico Mexicano in 2010 and is located in Sonora, 280 kilometres southwest of Hermosillo. Preliminary results from sampling work in 2011 returned significant soil anomalies in copper and some areas with strong silver assays from veins in both rocks and soils.

Corporate TransactionsOn March 24, 2011, the Company sold its Schaft Creek North property to Copper Fox Metals Ltd. (“Copper Fox”) for $350,000, realizing a gain of $209,133, and retaining a 2% NSR of which half may be purchased by Copper Fox at any time for $1,500,000.

On April 12, 2011, the Company signed an Option Agreement (the “Option Agreement”) with Paget Minerals Corp. (“Paget”) to sell a 100% interest in its Ball Creek copper-gold-molybdenum-silver property in northwestern British Columbia. The Option Agreement requires that Paget issue 5,000,000 shares to Pembrook and make a minimum $3,000,000 spending commitment over a maximum period of 48 months. After the exercise of the option, Paget will be obligated to make a payment of $2,000,000 to Pembrook upon completion of a positive feasibility study. Pembrook will retain a 2% NSR, half of which may be purchased by Paget at any time for $1,000,000. Upon approval of the Option Agreement by the TSX-Venture Exchange (“TSX-V”) on September 1, 2011, Paget issued the 5,000,000 shares to Pembrook.

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On June 15, 2011, the Company closed a private placement of 15,210,000 shares at $2.50 per share, which included participation by Chinalco Resources Corp. (“Chinalco”) whereby Chinalco purchased 13,000,000 common shares of the Company, comprising 9.75% of the outstanding common shares of Pembrook. Acting on their right to maintain a 9.9% interest in the Company, Chinalco purchased an additional 220,000 shares at $2.50 per share in August 2011 to bring their total shareholding to 9.9% of the Company’s outstanding common shares. Under the terms of the subscription agreement with Chinalco, they are entitled to one seat on the Company’s Board of Directors, a pre-emptive right to maintain a 9.9% shareholding in the Company and a right of first offer on certain of the Company’s projects, subject to certain conditions. The Company paid a finder’s fee of 350,000 shares valued at $2.50 per share, relating to the successful closing of the transaction with Chinalco. No finder’s fees were paid on the balance of the private placement. As a result of this private placement, the Company has 133,562,889 common shares outstanding at the date of this MD&A.

On July 14, 2011, the Company entered into an option agreement with Minera del Norte S.A. to sell 100% of the Cecilia Samana project in Peru for US$300,000 following a 90 day due diligence period. On October 4, 2011, Minera del Norte S.A. exercised their option to acquire Cecilia Samana and paid US$300,000 on October 10, 2011.

On October 3, 2011, Pembrook signed an agreement to purchase 100% interests in the Gema 4-6 & 9, Zoila 1 & 2, and Carancas 3-5 claims from Minera del Suroeste S.A.C. Under the terms of the agreement, Pembrook paid US$25,000 upon signing of the agreement and Minera del Suroeste S.A.C. retains a 2% NSR. Pembrook will pay advance royalties totalling US$575,000 payable US$25,000 in the first year and US$50,000 per year for the following eleven years. The advance royalty payments terminate at the commencement of commercial production or Pembrook’s abandonment of the claims.

On October 11, 2011, the Company advised Minsur S.A. (“Minsur”) that after meeting its spending and drilling obligations of the first year of the option agreement for the San Cipriano property signed on October 13, 2009, it was terminating the option agreement prior to the second anniversary of the option agreement due to negative exploration results.

On October 31, 2011, Pembrook signed an option agreement with a Vale whereby Vale has the option acquire an interest in the Company’s 100%-owned Rio Sonora project. Under the terms of the agreement, Vale can earn up to a 51% interest (the “First Option”) in Rio Sonora by spending US$4 million on exploration over three years and making US$400,000 in cash payments to the Company. Upon earning the First Option, Vale can earn an additional 9% interest in Rio Sonora, bringing its interest to 60%, by spending additional US$3 million in the following two year period.

On November 16, 2011, Pembrook signed an option agreement for the Dionicio property located in Sonora, Mexico. Under the terms of the agreement, the Company will make payments totalling US$545,000 over three years to earn a 100% interest, subject to a 3.25% NSR of which 2.5% may be purchased by Pembrook for US$3 million. For additional information on the Dionicio project, please refer to note 5 of the September 30, 2011 condensed consolidated financial statements.

On November 22, 2011, the Company signed an agreement to acquire a 100% interest in certain mineral claims surrounding and contiguous to its Mila property. Under the terms of the agreement, Pembrook will make payments totalling US$300,000. Pembrook paid US$60,000 upon execution of the agreement and will pay US$90,000 and US$150,000 upon receipt of community approvals and receipt of a drill permit, respectively.

Additional Property Disclosure

The capitalized exploration expenditures of the Company by mineral property are provided in Pembrook’s consolidated financial statements for the year ended December 31, 2011.

Information Concerning Financial PerformanceThe Company is an exploration stage company and engages principally in the acquisition, exploration and advancement of mineral properties. The Company’s current properties are in the early stages of exploration, and none of the Company’s properties are in production. Mineral exploration expenditures are capitalized and financial losses are incurred as a result of general exploration and administrative expenses relating to the operation of the Company’s business. Consequently, the Company’s net income is not a meaningful measure of its performance or potential.

The Company capitalizes all acquisition and exploration costs until the property to which those costs are related is placed into production, sold, abandoned or determined by management to be impaired. The decision to abandon a property is largely determined based on exploration results, the Company’s view of future prospects, and whether the property may be of interest to other exploration or mining companies.

The key performance drivers for the Company include securing the best geological expertise it can, and acquiring and successfully exploring high potential mineral properties. By hiring highly qualified staff and acquiring and exploring projects of superior technical merit, the Company increases its chances of finding and advancing an economic deposit.

Selected Financial Information

Selected quarterly financial information for operations of the Company for the last eight quarters ending December 31, 2011 is presented below. Changes in income or expense items from period to period are not necessarily representative of trends or potential future changes.

Unaudited Quarterly Selected Financial Information (figures are in thousands of Canadian dollars, except per share information):

Quarter ended Revenues

Loss before Other Items

Net Loss

Basic and Diluted

Loss per Share

Total Assets

Total Non-Current

Liabilities4th Quarter ended Dec 31, 2011 (a) Nil $3,567 $4,094 $0.03 $75,478 $8353rd Quarter ended Sept 30, 2011 (a) Nil $1,402 $1,431 $0.01 $79,503 $8082nd Quarter ended June 30, 2011 (a) Nil $2,494 $2,521 $0.02 $79,566 $1,4131st Quarter ended Mar 31, 2011 (a) Nil $1,213 $1,178 $0.01 $42,641 $4054th Quarter ended Dec 31, 2010 (a) Nil $2,671 $2,822 $0.03 $44,740 $9323rd Quarter ended Sept 30, 2010 (a) Nil $2,733 $2,905 $0.02 $46,943 $4152nd Quarter ended June 30, 2010 (a) Nil $1,537 $1,451 $0.01 $50,212 $1,1901st Quarter ended Mar 31, 2010 (a) Nil $2,160 $2,148 $0.02 $35,655 $5324th Quarter ended Dec 31, 2009 (b) Nil $1,986 $1,757 $0.02 $36,107 $4053rd Quarter ended Sept 30, 2009 (b) Nil $1,195 $1,311 $0.01 $36,926 $2872nd Quarter ended June 30, 2009 (b) (c) Nil $1,901 $1,685 $0.02 $26,088 $2511st Quarter ended Feb 29, 2009 (b) Nil $1,389 $1,312 $0.01 $27,418 $262

(a) Based on accounting information prepared in accordance with IFRS.(b) Based on accounting information prepared in accordance with Canadian GAAP.(c) The quarter ended June 30, 2009 consists of four months due to change in year-end.


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Results of OperationsFor the year ended December 31, 2011 compared with the year ended December 31, 2010

The Company’s net loss for the year ended December 31, 2011 (the “current year”) was $9,224,113 or $0.07 per share compared with a loss of $9,325,886 or $0.08 per share for the year ended December 31, 2010 (the “comparable year”). The main reasons for the decrease in the net loss were lower write-offs of mineral properties, lower general exploration expense and foreign exchange gains, partially offset by lower gain on dilution of associate and the unrealized loss on the change in accounting for the investment in Paget in the year ended December 31, 2011 compared with the comparable year.

Significant operating income and expenditures were as follows:

• Write-off of mineral property costs for the year ended December 31, 2011 of $1,323,058 was for the Pinalito property in Mexico ($13,291), the Cariboo property in B.C., Canada ($43,263) and the Santa Helena ($771,033) and San Cipriano ($495,471) properties in Peru. The Company pursued partners for the Pinalito property until the first quarter of 2011 when activities on higher priority assets in Mexico precluded the investment of any further time and resources in Pinalito. The Company is considering its options for the Cariboo project, including possibly pursuing compensation from the B.C. government. The B.C. government imposed a Wildlife Habitat designation over the area in which the project is located, with the result that a previously approved drill program was so reduced by the B.C. government that the Company’s partner on the project declared force majeure and ultimately terminated their option. The Company is of the view that with the restrictive view taken by the B.C. government, it is unlikely that the Company will be able to find a partner to advance the project. As a result and despite the exploration potential of the project, the Company wrote off its $43,263 investment in Cariboo during the third quarter of 2011. In October 2011, the Company terminated its option agreement on the San Cipriano property due to negative exploration results and wrote off the amount capitalized of $495,471. Upon reviewing the options available for the advancement of the Santa Helena property in December 2011, management determined that the total amount capitalized of $771,033 should be written off. In the year ended December 31, 2010, the Company wrote off 19 mineral properties totalling $1,965,002 including La Golda ($737,595), Unigransa ($99,790) and Safsi ($88,349) in Peru, Jacala ($607,508) in Mexico, and Dragon ($198,118), Icy Lake ($64,189) and Dorado ($55,444) in Canada.

• General exploration expense was $1,684,298 in the year ended December 31, 2011 compared with $2,085,768 in the comparable period due to lower levels of generative exploration expenditures in Peru. General exploration expense represents costs incurred to identify properties for exploration and reconnaissance work on properties to which the Company has not obtained title.

• Foreign exchange gains were $27,088 for the current year compared with foreign exchange losses of $416,394 in the comparable year. In the current year, the Canadian dollar weakened relative to the US dollar. In periods where the Canadian dollar is weakening relative to the US dollar, foreign exchange gains are generated on the Company’s US dollar denominated bank accounts and investments. In the year ended December 31, 2010, the Canadian dollar strengthened relative to the US dollar.

• Gain on dilution of associate decreased from $579,286 in the comparable year to $242,860 in the current year reflecting higher levels of financings through private placements at Paget in the comparable year. During the year, Pembrook did not participate in any of these Paget financings, all of which were done at a higher price per share than Pembrook’s cost per share.

• Unrealized loss on investment in associate recorded at fair value represents the adjustment resulting from the change in accounting for the Company’s investment in Paget due to the cessation of significant influence over Paget by the Company effective November 30, 2011. Pembrook was accounting for its investment in Paget as an investment in an associate until November 30, 2011 due to two common officers, one common director and a shared services agreement. Effective November 30, 2011, the common officers and director resigned from Paget and services provided under the shared services agreement were terminated. Effective December 1, 2011, the Company commenced accounting for its investment in Paget as an available-for-sale financial asset, resulting in an unrealized loss of $497,891.

For the three months ended December 31, 2011 compared with the three months ended December 31, 2010

The Company’s loss for the three month period ended December 31, 2011 (the “current quarter”) was $4,094,253 or $0.03 per share compared with a loss of $2,822,485 or $0.02 per share for the three month period ended December 31, 2010 (the “comparable quarter”). The main reasons for the increase in the net loss were higher write-off of mineral properties, loss on sale of mineral properties and the unrealized loss on the change in accounting for the investment in Paget, partially offset by lower general exploration expenses and higher finance income in the current quarter compared with the comparable quarter.

Significant operating income and expenditures were as follows:

• Write-offs of mineral property costs increased from $99,970 in the comparable quarter to $1,266,504 in the current quarter. In the three month period ended December 31, 2011, the Company wrote off the San Cipriano project and Santa Helena project in Peru. The Company terminated its option agreement with Minsur on the San Cipriano project due to negative exploration results and wrote off the total amount capitalized of $495,471. Management concluded that due to negative exploration results, no further work would be done on the Santa Helena project and the total amount capitalized of $771,033 was written off. In the comparable quarter, the Unigransa project in Peru was written off by $99,790.

• Loss on sale of mineral properties was $326,149 for the year ended December 31, 2011 and $nil for the year ended December 31, 2010. In the current quarter, the total amount of the loss is related to the sale of the Cecilia Samana project in Peru to Minera del Norte S.A. for US$350,000 in October 2011. No projects were sold in the comparable quarter.

• Unrealized loss on investment in associate recorded at fair value represents the adjustment resulting from the change in accounting for the Company’s investment in Paget due to the cessation of significant influence over Paget by the Company effective November 30, 2011. Pembrook was accounting for its investment in Paget as an investment in an associate until November 30, 2011 due to two common officers, one common director and a shared services agreement. Effective November 30, 2011, the common officers and director resigned from Paget and services provided under the shared services agreement were terminated. Effective December 1, 2011, the Company commenced accounting for its investment in Paget as an available-for-sale financial asset, resulting in an unrealized loss of $497,891.

• General exploration expenses declined by 63% from $807,063 for the three month period ended December 31, 2010 to $299,131 in the current quarter. The decline primarily reflects lower generative activity in the current quarter as exploration focussed on drilling two of the existing projects, Japonesas Norte and Batamote. General exploration expense represents costs incurred to identify properties for exploration and reconnaissance work on properties to which the Company has not obtained title.

MD&A

26

• Finance income increased by $110,391 in the current quarter from $45,535 in the comparable quarter due to higher levels of cash and cash equiva-lents generating interest income in the current quarter. The higher levels of cash and cash equivalents reflect the proceeds of $38,575,000 from the private placement in June 2011.

Liquidity and Capital ResourcesSelected financial information pertaining to liquidity and capital resources during the year ended December 31, 2011 and the year ended December 31, 2010 is presented below:

On December 31, 2011, the Company had cash and cash equivalents of $40,979,707 and working capital of $40,903,396 compared with $20,196,991 and $20,123,506 respectively as at December 31, 2010.

Cash utilized in operating activities during the year ended December 31, 2011 was $5,836,088 compared with $6,214,521 in the year ended December 31, 2010. The decrease of $378,433 is primarily due to movements in working capital reflecting the impact on cash of a decrease in deposits partially offset by a decrease in accounts payable in the current year. In the current year, the Company received cash from reclamation and exploration bonds that were set up in the comparable period. This was partially offset by the use of cash in the current year to settle large accounts payable for drilling in Peru at December 31, 2010.

Cash utilized in investing activities during the current year was $11,703,281 compared with $10,855,698 in the comparable year. The increase of $847,583 was primarily attributable to higher spending capitalized on exploration projects partially offset by proceeds received on the sale of the mineral properties and higher interest income in the current year. The higher level of capitalized exploration expenditure in the current year reflects a higher level of activity at priority projects in Peru and at the two new projects in Mexico – Japonesas Norte and Batamote. In the current year, the Company received proceeds of $350,000 upon the sale of the Schaft Creek North property in March 2011 and proceeds of US$300,000 upon the sale of the Cecilia Samana project in October 2011. In the comparable year, no mineral properties were sold. In the year ended December 31, 2011, interest income was higher than in the comparable year reflecting the higher cash balances in 2011 due to the private placement that closed in May 2011.

Cash provided by financing activities was $38,498,981 for the year ended December 31, 2011 compared with $16,245,685 for the year ended December 31, 2010. The increase of $22,253,296 reflects the private placement of 15,430,000 shares at $2.50 per share for total gross proceeds of $38,575,000 compared with a private placement for 8,054,800 shares at $2.00 per share for gross proceeds of $16,109,600 in the year-earlier period.

At December 31, 2011, share capital was $102,005,127 comprising 133,562,889 shares compared with $63,499,946 comprising 117,782,889 shares at December 31, 2010. The increase in share capital is due to the private placement that closed on June 15, 2011 for 15,210,000 shares at $2.50 per share, the related issue of 350,000 shares as a finder’s fee and the subsequent issue of 220,000 shares to Chinalco as described in the “Corporate Transactions” section above. Share-based payment reserve, which arises from the recognition of the estimated fair value of stock options vesting during the period, was $7,643,168 at December 31, 2011 (December 31, 2010 – $6,386,588). The increase in the share-based payment reserve in the second quarter of 2011 includes a one-time charge to share-based payment reserve of $500,544 for the extension of the lives of certain stock options from five years to seven years as approved by the Board of Directors and shareholders. Cumulative translation reserve, which arises from the translation of subsidiaries from local currency to functional currency, was $301,253 at December 31, 2011 (December 31,

2010 – $(145,232)). Available-for-sale reserve, which arises from re-stating financial assets classified as available-for-sale to fair value at each period-end date, was $49,750 at December 31, 2011 (December 31, 2010 – $190,000). The available-for-sale reserve relates to the Company’s investment in Zincore Metals Inc. (“Zincore”) at December 31, 2010 and to the Company’s investment in Zincore and Paget at December 31, 2011.

As a result of the net loss of $9,224,113 for the year ended December 31, 2011 (December 31, 2010 – $9,325,886), the deficit increased to $35,444,360 at December 31, 2011 (December 31, 2010 – $26,220,247).

At present, the Company’s operations do not generate cash inflows and its financial success is dependent on the Company’s ability to raise financing, discover economically recoverable mineral deposits and sell, joint venture or otherwise participate in the development of those projects. The Company currently has sufficient capital resources to meet its planned exploration expenditures, administrative overhead expenses and other costs for at least the next year.

Transactions with Related PartiesStatement of Financial Position

The following amounts were due to/from companies that have directors or management in common with the Company or have a partner who is a director of the Company:

December 31, 2011 $

December 31, 2010 $

Included in trade and other receivables 11,674 82,011Included in trade and other payables 140,201 15,120

Zincore Metals Inc. has two directors in common with the Company and is considered a related party. The Company has an investment of 1,000,000 common shares of Zincore.

Paget had a director and two officers in common with the Company at December 31, 2010 and was considered a related party. On November 30, 2011, the common director and officers resigned from Paget and Paget ceased to be a related party.

Statements of Loss and Comprehensive Loss

Transactions with related parties in the normal course of operations have been measured at the exchange amount, which is the consideration agreed to by the parties.

Year ended December 31Transaction Nature of Relationship 2011 2010

$ $Expenses included in general and administration on the Statements of Loss and Comprehensive LossLegal fees Partner is an officer 61,998 85,168Management/consulting

Director and management in common 988,899 495,828

Share issuance costs Partner is an officer 43,869 -Recoveries included in general and administration in the Statements of Loss and Comprehensive LossRecovery of common costs, administrative expense and salaries Paget Minerals Corp. 409,308 508,795

Up to November 30, 2011, the Company recovered rent and related costs for shared office space with Paget and provided administrative and geological services to Paget under an intercompany common services and cost allocation agreement.


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Proposed TransactionsThere are no proposed transactions.

Change in Accounting Policies including Initial Adoption and Recent PronouncementsThe Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective. The Company has not early adopted any of these standards and is currently evaluating the impact, if any, that these standards might have on its consolidated financial statements.

Accounting standards issued and effective January 1, 2012

Financial instruments disclosure

In October 2010, the International Accounting Standards Board (“IASB”) issued amendments to IFRS 7 – Financial Instruments: Disclosures that enhance the disclosure requirements in relation to transferred financial assets. The amendments are effective for annual periods beginning on or after July 1, 2011, with earlier application permitted. The Company does not anticipate this amendment to have a significant impact on its financial statements.

Income taxes

In December 2010, the IASB issued an amendment to IAS 12 – Income Taxes that provides a practical solution to determining the recovery of investment properties as it relates to the accounting for deferred income taxes. This amendment is effective for annual periods beginning on or after January 1, 2012, with earlier application permitted. The Company does not anticipate this amendment to have a significant impact on its financial statements.


Consolidation

In May 2011, the IASB issued IFRS 10 – Consolidated Financial Statements (“IFRS 10”), which supersedes SIC 12 and the requirements relating to consolidated financial statements in IAS 27 – Consolidated and Separate Financial Statements (“IAS 27”). IFRS 10 is effective for annual periods beginning on or after January 1, 2013, with earlier application permitted under certain circumstances. IFRS 10 establishes control as the basis for an investor to consolidate its investees; and defines control as an investor’s power over an investee with exposure, or rights, to variable returns from the investee and the ability to affect the investor’s returns through its power over the investee.

In addition, the IASB issued IFRS 12 – Disclosure of Interests in Other Entities (“IFRS 12”) which combines and enhances the disclosure requirements for the Company’s subsidiaries, joint arrangements, associates and unconsolidated structured entities. The requirements of IFRS 12 include reporting of the nature of risks associated with the Company’s interests in other entities, and the effects of those interests on the Company’s consolidated financial statements.

Concurrently with the issuance of IFRS 10, IAS 27 and IAS 28 – Investments in Associates (“IAS 28”) were revised and reissued as IAS 27 – Separate Financial Statements and IAS 28 – Investments in Associates and Joint Ventures to align with the new consolidation guidance.

The Company is currently evaluating the impact that the above standards are expected to have on its consolidated financial statements.

Joint arrangements

In May 2011, the IASB issued IFRS 11 – Joint Arrangements (“IFRS 11”), which supersedes IAS 31 – Interests in Joint Ventures and SIC-13 – Jointly Controlled Entities – Non-Monetary Contributions by Venturers. IFRS 11 is effective for annual periods beginning on or after January 1, 2013, with

earlier application permitted under certain circumstances. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures based on the rights and obligations of the parties to the joint arrangements. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (“joint operators”) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (“joint venturers”) have rights to the net assets of the arrangement. IFRS 11 requires that a joint operator recognize its portion of assets, liabilities, revenues and expenses of a joint arrangement, while a joint venturer recognizes its investment in a joint arrangement using the equity method.

The Company is currently evaluating the impact that IFRS 11 is expected to have on its consolidated financial statements.

Fair value measurement

In May 2011, as a result of the convergence project undertaken by the IASB and the US Financial Accounting Standards Board, to develop common requirements for measuring fair value and for disclosing information about fair value measurements, the IASB issued IFRS 13 – Fair Value Measurement (“IFRS 13”). IFRS 13 is effective for annual periods beginning on or after January 1, 2013, with earlier application permitted. IFRS 13 defines fair value and sets out a single framework for measuring fair value which is applicable to all IFRSs that require or permit fair value measurements or disclosures about fair value measurements. IFRS 13 requires that when using a valuation technique to measure fair value, the use of relevant observable inputs should be maximized while unobservable inputs should be minimized. The Company does not anticipate the application of IFRS 13 to have a material impact on its consolidated financial statements.

Financial statement presentation

In June 2011, the IASB issued amendments to IAS 1 – Presentation of Financial Statements (“IAS 1”) that require an entity to group items presented in the Statement of Comprehensive Income on the basis of whether they may be reclassified to earnings subsequent to initial recognition. For those items presented before taxes, the amendments to IAS 1 also require that the taxes related to the two separate groups be presented separately. The amendments are effective for annual periods beginning on or after July 1, 2012, with earlier adoption permitted. The Company does not anticipate the application of the amendments to IAS 1 to have a material impact on its consolidated financial statements.

Accounting Standards anticipated to be effective January 1, 2015

Financial instruments

The IASB intends to replace IAS 39 – Financial Instruments: Recognition and Measurement (“IAS 39”) in its entirety with IFRS 9 – Financial Instruments (“IFRS 9”) in three main phases. IFRS 9 will be the new standard for the financial reporting of financial instruments that is principles-based and less complex than IAS 39. In November 2009 and October 2010, phase 1 of IFRS 9 was issued and amended, respectively, which addressed the classification and measurement of financial assets and financial liabilities. IFRS 9 requires that all financial assets be classified as subsequently measured at amortized cost or at fair value based on the Company’s business model for managing financial assets and the contractual cash flow characteristics of the financial assets. Financial liabilities are classified as subsequently measured at amortized cost except for financial liabilities classified as at FVTPL, financial guarantees and certain other exceptions. The complete IFRS 9 is anticipated to be issued during the second half of 2011. On July 22, 2011, the IASB tentatively agreed to defer the mandatory effective date of IFRS 9 from annual periods beginning on or after January 1, 2013 (with earlier application permitted) to annual periods beginning on or after January 1, 2015 (with earlier

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application still permitted). The IASB has proposed the deferral of IFRS 9 in an exposure draft with a 60 day comment period ended on October 21, 2011. The Company is currently evaluating the impact the final standard is expected to have on its consolidated financial statements.

Transition to International Financial Reporting Standards (“IFRS”)IFRS employs a conceptual framework that is similar to Canadian Generally Accepted Accounting Principles (“GAAP”). However, there are some differences in certain matters of recognition, measurement and disclosure that impact the Company’s financial statements. While the adoption of IFRS has not changed the Company’s actual cash flows, it has resulted in changes to the Company’s reported financial position and results of operations. In order to allow the users of the financial statements to better understand those changes, the Company’s Canadian GAAP statement of loss and comprehensive loss for the year ended December 31, 2010, and statements of financial position as at January 1, 20101 and December 31, 2010 have been reconciled to IFRS in Note 17 of the December 31, 2011 consolidated financial statements. The reconciliation differences are explained as follows.

(a) Share-based payments

Under Canadian GAAP, the fair value of share-based payments is calculated as one grant and the resulting fair value is recognized on a straight-line basis over the vesting period and forfeitures are recognized as they occur.

Under IFRS, each tranche of an award with different vesting dates is considered a separate grant for the purposes of calculating fair value and the fair values are amortized over the vesting period for the respective tranches. Forfeitures are estimated and recognized in the period they are estimated to occur and are revised to reflect actual forfeitures in subsequent periods.

(b) Deferred income tax on flow-through shares

Upon the renouncement of exploration expenditures, a deferred tax liability is established. Under Canadian GAAP, the corresponding entry is booked to share capital whereas under IFRS, the corresponding entry is booked to the statement of loss.

(c) Elimination of intercompany gains

Under Canadian GAAP, the Company eliminated all profit pertaining to the sale of five mineral properties in 2010 to its equity-accounted for associate, Paget. Under IFRS, downstream transactions with an equity-accounted associate require the elimination of profit only to the extent that the Company holds an interest in the equity-accounted associate.

(d) Consolidation of foreign subsidiaries denominated in foreign currencies

Under Canadian GAAP, the concept of a group functional currency is applied. Under IFRS, each subsidiary is evaluated to establish its functional currency on an entity by entity basis. The Company has determined that as at the January 1, 2010 transition date, the US dollar was the functional currency of Paget Southern Resources S. de R.L. de C.V., Pembrook Offshore Corp., Pembrook Peru Corp. and Compañia de Exploraciones Orion S.A.C. whereas the Canadian dollar is the functional currency of the legal entity Pembrook Mining Corp. The revision of the functional currency of these entities impacts the consolidation of the Company into its presentation currency, the Canadian dollar.

The impact of these differences on the December 31, 2011 financial statements is described in Note 17 to the December 31, 2011 consolidated financial statements.

Off-Balance Sheet ArrangementsThe Company is not party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the Company’s financial position, revenues, expenses, results of operations, liquidity, capital expenditures or future cash flows.

Financial InstrumentsThe Company’s financial instruments are exposed to certain financial risks, the elements of which are discussed more fully in Note 13 to the Company’s December 31, 2011 consolidated financial statements. The fair values of the Company’s trade and other receivables, deposits and trade and other payables approximate their carrying values due to their short-term nature. The Company’s investments in Zincore and Paget are carried at fair value using a level 1 fair value measurement. Obligations under capital lease are carried at amortized cost.

Critical Accounting EstimatesThe December 31, 2011 consolidated financial statements have been prepared on a going concern basis which assumes Pembrook will continue to operate for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. The Company’s ability to continue to operate for the foreseeable future is conditional upon its ability to secure additional financing, divest assets or generate cash flow from operations in the future, none of which is assured. The Company has incurred operating losses since inception and has no source of operating cash flow. Due to market fluctuations and the inherent risks in the exploration industry as well as uncertainty surrounding the political environment in Peru, there can be no assurance that management will be able to continue to successfully raise financing in the future.

An inability to raise financing may impact the future assessment of Pembrook as a going concern. If the going concern assumption becomes inappropriate for these financial statements, then adjustments would be necessary in the carrying values of assets, liabilities and expenses and the balance sheet classifications used. Such adjustments could be material.

The December 31, 2011 consolidated financial statements have been prepared on a historical cost basis except for financial instruments classified as available-for-sale, which have been measured at fair value. In addition, these consolidated financial statements have been prepared on an accrual basis of accounting, except for cash flow information.

The preparation of the December 31, 2011 consolidated financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. These consolidated financial statements are prepared in accordance with IFRS. An explanation of how the transition to IFRS with a transition date of January 1, 2010 has affected the reported financial position and financial performance of the Company is provided in Note 17 to the December 31, 2011 consolidated financial statements. These notes include reconciliations of the Company’s consolidated statements of financial position and statements of loss and comprehensive loss and cash flows for the comparative periods prepared in accordance with Canadian GAAP and as previously reported to those prepared and reported in these consolidated financial statements in accordance with IFRS.

The policies applied in these consolidated financial statements are based on IFRS issued and outstanding at March 21, 2012, the date the Board of Directors approved these consolidated financial statements for issue.

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual


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outcomes could differ from these estimates. The consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive through the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the statement of financial position date, that could result in material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

• the inputs used in calculating the provisions for environmental rehabilitation that are included in the consolidated statements of financial position;

• the provision for income taxes which is included in the consolidated statements of loss and comprehensive loss and composition of deferred income tax assets and liabilities included in the condensed consolidated interim statements of financial position;

• the inputs used in accounting for share-based payment expense in the consolidated statements of loss and comprehensive loss.

The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies, apart from those involving estimations noted above, that have the most significant effect on the amounts recognized in the Company’s consolidated financial state-ments are related to the economic recoverability of the mineral properties, functional currency determination for the Company and its subsidiaries and assumption of going concern.

The Company is in the exploration stage with respect to its investment in mineral properties and follows the practice of capitalizing all costs relating to the acquisition of, exploration for and development of mineral claims and crediting all revenues received against the cost of the related claims. Such costs include, but are not limited to, staking and claims management, options payments, geological, geophysical studies, sampling and drilling. At such time that commercial production commences, these costs will be charged to operations on a unit-of-production method based on proven and probable reserves. The aggregate costs related to abandoned mineral claims are charged to operations at the time of any abandonment or when it has been determined that there is evidence of a permanent impairment.

• Exploration and evaluation (“E&E”) assets are assessed for impairment when the facts and circumstances suggest that the carrying amount of an E&E asset may exceed its recoverable amount and when the Company has sufficient information to reach a conclusion about technical feasibility and commercial viability.

Industry specific indicators of the existence of a potential impairment typically include the absence of plans to incur substantive expenditure on further exploration over a reasonable time horizon, conditions where title is compromised, adverse changes in the taxation, regulatory or political environment and adverse changes in currencies, commodity prices and markets.

Once technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, E&E assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets within property, plant and equipment.

Recoverability of the carrying amount of any E&E asset is dependent on successful development and commercial exploration, or alternatively, sale of the respective areas of interest.

• Income taxes are recognized in the statement of loss, except where they relate to items recognized in other comprehensive income or directly in equity, in which case the related income taxes are recognized in other comprehensive income or equity. Current taxes receivable or payable are estimated on taxable income for the current year at the statutory tax rates enacted or substantively enacted.

Deferred income tax assets and liabilities are recognized based on the difference between the tax and accounting values of assets and liabilities and are calculated using substantively enacted tax rates for the periods in which the differences are expected to reverse. The effect of tax rate changes is recognized in earnings or equity, as the case may be, in the period of substantive enactment.

Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the assets can be utilized. Deferred tax liabilities are recognized for taxable temporary differences arising on investments in joint ventures and associates. However, such deferred tax liabilities are not recognized where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. As an exception, deferred tax assets and liabilities are not recognized if the temporary differences arise from the initial recognition of goodwill or an asset or liability in a transaction (other than in a business combination) that affects neither accounting profit nor taxable profit.

• The share option plan allows the Company’s employees and consultants to acquire shares of the Company. The fair value of the options granted is recognized as a share-based payment expense with a corresponding increase in equity. The fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over a period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted.

• The presentation currency of the Company and each of its subsidiaries is the Canadian dollar. The functional currency of Pembrook Mining Corp. is the Canadian dollar. The functional currency of its wholly-owned subsidiaries Compañia de Exploraciones Orion S.A.C. (Peru), Paget Mexico Holding Corp. and Paget Southern Resources S. de R.L. de C.V. (Mexico) is the United States dollar. The functional currency determinations were conducted through an analysis of the consideration factors identified in IAS 21 – The Effects of Changes in Foreign Currency Rates (“IAS 21”).

These consolidated financial statements have been translated to the Canadian dollar in accordance with IAS 21. This standard requires that the assets and liabilities of entities with a functional currency other than Canadian dollars are converted from functional currency to presentation currency at the exchange rate in effect at the balance sheet date and revenue and expense items are translated at the average exchange rate for the period and exchange differences arising are recognized directly in equity.

Transactions in currencies other than the functional currency are recorded at the exchange rates prevailing on the dates of the transactions. At each financial position reporting date, the monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at the date of the statement of financial position. Non-monetary assets and liabilities are translated at historical exchange rates, unless such items are carried at market, in which case they are translated at the exchange rate in effect at the balance sheet date. Revenue and expense items are translated at the average exchange rate in effect in the period in which they occur.

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Other MD&A RequirementsAdditional information relating to the Company may be found in the Company’s consolidated financial statements and related notes for the year ended December 31, 2011.

CommitmentsThe following table is a summary of the commitments of the Company as at each of the following dates:

(in thousands of Canadian dollars)

Office and Warehouse

Management Services

Geological Services

Drilling, Helicopter and

Geophysical Total$ $ $ $ $

Within one year 233 234 157 173 797One to two years - 184 - - 184Two to three years - 183 - - 183

233 601 157 173 1,164

The table does not include cash payments or exploration expenditures required to maintain property option agreements in good standing with vendors, as those payments and expenditures are conditional on the Company electing to continue with the individual option agreements. If the Company chooses to terminate an option agreement, no further payments or exploration expenditures are required and the related capitalized costs will be written off.

Other Subsequent EventsThere have not been any material events subsequent to December 31, 2011 that are not disclosed elsewhere in this MD&A.

Disclosure of Outstanding Share DataThe table below provides information concerning the designation and number of each class of equity securities for which there are securities outstanding as of the dates noted below:

Type of Security

March 21, 2012

Dec 31, 2011

Sept 30, 2011

June 30, 2011

March 31, 2011

Dec 31, 2010

Common shares 133,562,889 133,562,889 133,562,889 133,342,889 117,782,889 117,782,889Options 9,479,250 9,013,414 9,013,414 9,053,000 10,341,743 10,523,414Total 143,042,139 142,576,303 142,576,303 142,395,889 128,124,632 128,306,303

Risk FactorsExploration Stage Company

Pembrook is engaged in the business of acquiring and developing mineral properties to locate economic deposits of minerals. All of its properties are in the early stages of exploration and are without defined mineral bodies. Advancement of Pembrook’s properties will only occur after obtaining satisfactory exploration results. There can be no assurance that Pembrook’s existing or future exploration programs will result in the discovery of economically recoverable mineral deposits. Further, there can be no assurance that even if an economic deposit of minerals is identified, it can be commercially mined.

No Source of Operating Revenue

At present, the Company’s operations do not generate cash inflows and the Company’s continued existence depends on management’s ability to raise additional equity financing, discover recoverable mineral deposits and sell or otherwise participate in the development of those projects. Many

factors influence the Company’s ability to raise funds, including the health of the commodity resource market, the climate for mineral exploration investment, the Company’s track record, and the experience and calibre of its management. Actual funding requirements may vary from those planned due to a number of factors, including the progress of exploration activities. Management believes it will be able to raise equity capital as required over time, but recognizes there are risks involved that may be beyond its control. If those risks fully materialize, the Company may not be able to raise adequate funds to continue its operations.

Minerals Exploration and Advancement

The exploration and development of minerals is highly speculative in nature and involves a high degree of financial and other risks over a significant period of time which even a combination of careful evaluation, experience and knowledge may not eliminate. While discovery of a mineral deposit or ore body may result in significant rewards, few properties which are explored are ultimately advanced into producing mines. Substantial expenses are required to establish ore reserves by drilling, sampling and other techniques and to design and construct mining and processing facilities. Whether a mineral deposit will be commercially viable depends on a number of factors, including the particular attributes of the deposit (e.g. size, grade, access and proximity to infrastructure), financing costs, the cyclical nature of commodity prices and government regulations (including those relating to prices, taxes, currency controls, royalties, land tenure, land use, importing and exporting of minerals and environmental protection). The effect of these factors, or a combination thereof, cannot be accurately predicted but could have a significant adverse impact on the Company.

Minerals Exploration Activities

Mineral exploration activities generally involve a high degree of risk. Pembrook’s operations are subject to all of the hazards and risks normally encountered in mineral exploration and advancement. Such risks include unusual and unexpected geological formations, seismic activity, rock bursts, flowing and other conditions involved in the drilling and removal of material, drilling or transportation accidents, environmental issues including chemical spills or environmental degradation, industrial accidents, periodic interruptions due to adverse weather conditions, labour disputes, community relationship issues and political, community or interest group unrest. The occurrence of any of the foregoing could result in damage to, or destruction of, mineral properties or interests, personal injury, damage to life or property, environmental damage, delays or interruption of operations, increases in costs, monetary losses, legal liability, adverse government action, and a loss in the value of Pembrook’s properties. Pembrook does not currently carry insurance against all these risks and there is no assurance that such insurance will be available in the future, or if available, at economically feasible premiums or acceptable terms. The potential costs associated with liabilities not covered by insurance or excess insurance coverage may cause substantial delays and require significant capital outlays. Such damages, if uninsured, could under certain circumstances, be greater than the financial capacity of the Company to pay for them.

No Operating History and Financial Resources

Pembrook has a short operating history and no operating revenue, and is unlikely to generate revenues from operating activities sufficient to fund operations in the near future. If the Company’s exploration program is successful, additional funds will be required for further exploration to prove economic deposits and to bring such deposits to production. Additional funds may also be required for Pembrook to acquire and explore other mineral interests. Pembrook has limited financial resources and there is no assurance that sufficient additional funding will be available to fulfill its obligations or to further explore and advance its properties on acceptable terms or on any terms at all. Failure to obtain additional funding on a timely


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basis could result in delay or indefinite postponement of further exploration and property advancement activities and could cause Pembrook to forfeit its interests in some or all of its properties, or to reduce or terminate its operations.

Political or Economic Instability in Countries where Pembrook Operates

Certain of our properties are located in countries, provinces and states which may be subject to political and economic instability, or unexpected legislative change which may delay or prevent exploration of our properties. Exploration of our properties could be adversely affected by:

• political instability and violence;

• war and civil disturbance;

• labour unrest or community relation issues;

• permitting issues

• expropriation or nationalization;

• changing fiscal regimes and uncertain regulatory environments;

• changes to royalty and tax regimes;

• underdeveloped industrial and economic infrastructure; and

• the unenforceability of contractual rights and judgments.

Competition

The mineral exploration and mining business is competitive in all of its phases. Pembrook competes with numerous other companies in the search for and the acquisition of attractive mineral properties and individuals, including competitors with greater financial, technical and other resources. Pembrook’s ability to acquire properties in the future will depend not only on its ability to advance is present properties, but also on its ability to select and acquire suitable prospects for mineral exploration or advancement. There is no assurance that Pembrook will be able to compete successfully with others in acquiring such prospects. In addition, there is a limited supply of good geological talent and drilling crews and equipment. There is no assurance that Pembrook will be able to acquire the supply of geological talent or drillers, executives or other employees or contractors that are required to complete our exploration work in planned time frames.

Title to Property

Pembrook has taken precautions to ensure that legal titles to its property interests are properly recorded. There can be no assurance that Pembrook will be able to secure the grant or the renewal of exploration permits or other tenures on terms satisfactory to it, or that governments in the jurisdictions in which the properties are situated will not revoke or significantly alter such permits or other tenures or that such permits and tenures will not be challenged or impugned. In addition, some of Pembrook’s properties are held in the names of others. Third parties may have valid claims underlying portions of Pembrook’s interests and the permits or tenures may be subject to prior unregistered agreements or transfers or native land claims and title may be affected by undetected defects. If a title defect exists, it is possible that Pembrook may lose all or part of its interest in the properties to which such defects relate. In addition, Pembrook may fail, due to error, omission, or technological issues, to renew its claims in a timely manner, potentially resulting in the loss of valuable claims to property.

Reliance on Third Parties for Critical Services

Pembrook contracts certain activities critical to its operations to third parties. These include drilling owners/operators, expediters, helicopter and other transport providers, surveyors, experts for 43-101 reports and assay providers. Any failure to secure such contractors, or errors on their part, could result in significant disruption to Pembrook’s operations, or

in accidents which could cause safety issues, environmental damage or liabilities to them and to Pembrook. Pembrook cannot currently insure against all these risks.

Environmental Risks and Hazards

All phases of Pembrook’s operations are subject to environmental regulation in the jurisdictions in which the property is located. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation, provide for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain exploration activities and operations. They also set forth limitations on the generation, transportation, storage and disposal of hazardous waste. A breach of such regulation may result in the imposition of fines and penalties. In addition, certain types of mining operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the viability or profitability of operations. Environmental hazards may exist on the properties in which Pembrook holds interests or on properties that will be acquired which are unknown to Pembrook at present and which have been caused by previous or existing owners or operators of the properties.

Commodity Prices

The price of Pembrook’s securities, its financial results, and exploration, advancement and mining activities may in the future be significantly adversely affected by declines in the price of precious or base minerals. Precious or base minerals prices fluctuate widely and are affected by numerous factors beyond Pembrook’s control such as the sale or purchase of precious or base metal by various dealers, central banks and financial institutions, interest rates, exchange rates, inflation or deflation, currency exchange fluctuation, global and regional supply and demand; production and consumption patterns, speculative activities, increased production due to improved mining and production methods, government regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals, environmental protection and international political and economic trends, conditions and events and specific demand from emerging countries. The price of precious or base metals has fluctuated widely in recent years, and price declines could cause continued advancement of Pembrook’s properties to be impracticable.

In addition to adversely affecting reserve estimates and its financial condition, declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if the project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed.

Price Volatility and Lack of Active Market

Since 2008, the securities markets in Canada and elsewhere have experienced a high level of price and volume volatility, and the market price of securities of many public companies have experienced significant fluctuations. Some of these fluctuations may not necessarily have been related to the operating performance, underlying asset values or prospects of such companies. Any future market for Pembrook’s securities may be subject to such market trends, and the value of such securities may be affected accordingly. There is currently no market through which the securities of Pembrook can be sold and there can be no assurance that

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one will develop or be sustained. If an active market does not develop, the liquidity of the investment may be limited and the market price of such securities may decline below the subscription price.

Risk Associated with Joint Venture Agreements

Pembrook may, in the future, enter into joint venture arrangements whereby it agrees to co-develop a property with another mining or mineral exploration company. Such agreements may require significant up-front payments or investments over time by Pembrook. These agreements may also be difficult to enforce, could result in significant differences of interpretation with the joint venture partner or could result in the joint venture partner failing to carry out its responsibilities under the contract. This could cause delays, significant diversion of management time and attention, excess costs, litigation, and the eventual dissolution of the joint venture with unsatisfactory results. All of these could delay or hinder ongoing Pembrook projects, or could result in significant financial damage to Pembrook and its shareholders.

Key Executives

Pembrook is and will be dependent on the services of key executives and a small number of highly skilled and experienced geologists, consultants and personnel, whose contributions to the immediate future operations of Pembrook are likely to be of great importance. Locating mineral deposits depends on a number of factors, not the least of which is the technical skill of the exploration personnel involved. Advancing those projects via joint exploration agreement and operating an organization of increasing scale also require certain specialized skills which are in high demand and difficult to acquire. Due to the relatively small size of Pembrook’s staff, the loss of key personnel or Pembrook’s inability to attract and retain additional highly skilled employees and consultants may adversely affect its business and future operations. In addition, some officers of Pembrook may be hired on a part-time or consultant basis and may therefore not devote all their time solely to Pembrook’s affairs. This could slow or hinder our corporate development.

Potential Conflicts of Interest

Certain directors and officers of the Company are and may continue to be involved in the mining and minerals exploration industry through their direct and indirect participation in corporations, partnerships or joint ventures which are or could become potential competitors of the Company. Situations may arise in connection with potential acquisitions or investments where the other interests of these directors and officers may conflict with the interests of the Company. Directors and officers of the Company with conflicts of interest are subject to the procedures set out in applicable corporate and securities legislation, regulation, rules, policies and Pembrook’s Code of Ethics.

Litigation

Pembrook does not currently have any claims against it, nor does it have any outstanding claims against others. However, in its normal course of business or due to issues which may arise, Pembrook could face legal action in the future. Such actions could result in significant costs of defense, absorption of management time and focus away from the main activities of the business, and potentially significant settlements or payments by the company. Such settlements or payments may, under certain circumstances, result in losses greater than the Company’s ability to pay.

Objectives May Not Be Fulfilled

As a result of the foregoing factors, as well as other factors, Pembrook’s objective of discovering mineral deposits and economic ore-grade mineral bodies may never be realized. If this occurs, the value of Pembrook’s shares may fall.

Dilution

As the Company does not generate operating cash flow and has no current plans to do so, it will need to raise additional funds over a period of time to continue its operations. As a result, shareholders may incur dilution of their percentage holding in the Company.

Nature of the Securities

The purchase of the Company’s securities involves a high degree of risk and should be undertaken only by investors whose financial resources are sufficient to enable them to assume such risks. The Company’s securities should not be purchased by persons who cannot afford the possible loss of their entire investment.

Investment Risk

The Company currently holds its cash and investments with major Canadian banks and financial institutions. Canadian banks have recently been ranked among the safest in the world by the World Economic Forum. Due to volatility in credit markets and to several international bank failures, the possibility of bank failures in Canada cannot be entirely ruled out. If a bank with which the Company holds deposits or investments fails, and if the Canadian government does not step in to protect the bank, its depositors or creditors, the Company could lose that portion of its cash and investments. Due to the nature of interest-bearing investments, changes in interest rates can significantly affect the return on the investment, if the investment is redeemed before maturity.

Forward-Looking StatementsSome of the statements in this MD&A constitute “forward-looking statements” within the meaning of Canadian securities legislation. These forward-looking statements are made as of the date of this MD&A, or in the case of documents incorporated by reference herein, as of the date of such documents and the Company does not intend and does not assume any obligation to update these forward-looking statements. These forward-looking statements represent management’s best judgment based on facts and assumptions that management considers reasonable, including that exploration plans could be disrupted by issues such as weather, community relations issues, disruptions in access to exploration properties, labour disturbances, delayed or refused permits, environmental issues, political issues, mechanical failures of equipment and availability of financing when needed. Management currently is not aware of any material events that may disrupt exploration plans or budgets. The Company makes no representation that reasonable business people in possession of the same information would reach the same conclusions.

Forward-looking statements include, but are not limited to, statements with respect to the future price of minerals, the timing of exploration plans, timing of drill results, success of exploration activities, permitting time lines, currency fluctuations, government regulation of exploration operations, environmental risks, unanticipated reclamation expenses, prospects for equity financing activities, title or claims disputes and completion of acquisitions and their potential impact on the Company.

In certain cases, forward-looking statements can be identified by the use of words such as “plans,” “expects” or “does not expect,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates” or “does not anticipate,” or “believes,” or 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 involve known and unknown risks, uncertainties and other factors which 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, among others,


33

risks related to: the inherent uncertainties in minerals exploration and development activities; fluctuations in the price of minerals or in currency markets; the uncertainty of mineral resource and reserve estimates; the uncertainty of financing being available when needed; the uncertainty of mining licences or governmental approvals being granted in a timely manner; changes in regulatory requirements; hiring and retaining personnel with the necessary expertise; the failure of equipment or processes to operate as anticipated; material unanticipated variations in budgeted costs; contractors not completing projects according to schedule; accidents, labour disputes and other risks of the mineral exploration industry; as well as other factors discussed in the section entitled “Risk Factors” in this MD&A. 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 not to be as anticipated, estimated or intended. 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.

Additional InformationAdditional information relating to Pembrook is available by contacting:

Pembrook Mining Corp.Suite 1160, 1040 West Georgia StreetVancouver, BC, CanadaV6E 4H1Office (778) 327 6540Fax (778) 327 6546General Inquiries: [email protected]: www.pembrookmining.com

Brian BoothChief Executive Officer

April HashimotoChief Financial Officer

MD&A

34

To the Shareholders of Pembrook Mining Corp.We have audited the accompanying consolidated financial statements of Pembrook Mining Corp., which comprise the consolidated statements of financial position as at December 31, 2011, December 31, 2010 and January 1, 2010, and the consolidated statements of loss and comprehensive loss, consolidated statements of changes in equity and consolidated statements of cash flows for the years ended December 31, 2011 and December 31, 2010, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Pembrook Mining Corp. as at December 31, 2011, December 31, 2010 and January 1, 2010, and its financial performance and its cash flows for the years ended December 31, 2011 and December 31, 2010 in accordance with International Financial Reporting Standards.

Chartered Accountants

March 21, 2012

Vancouver, British Columbia

Independent Auditor’s Report

35

Consolidated Statements of Financial PositionAll amounts in Canadian dollars

December 31, 2011 December 31, 2010 (Note 16)

January 1, 2010 (Note 16)

$ $ $

AssetsCurrent Assets

Cash and cash equivalents 40,979,707 20,196,991 21,153,760

Trade and other receivables 389,135 283,587 136,475

Mineral Exploration Tax Credit receivable (Note 5) - - 19,507

Deposits 75,000 125,000 125,000

Prepaid expenses 202,674 449,721 96,314

41,646,516 21,055,299 21,531,056

Reclamation Deposits 58,750 58,750 53,750

Investments (Notes 3 & 8) 1,717,750 500,000 -

Property and Equipment (Note 4) 319,053 421,589 342,928

Investment in Associate (Note 8) - 1,428,674 876,872

Mineral Properties (Notes 5 & 17) 31,735,739 21,275,926 13,140,224

Total Assets 75,477,808 44,740,238 35,944,830

LiabilitiesCurrent Liabilities

Trade and other payables 820,048 914,136 380,809

Finance lease obligation – current portion 5,458 5,141 11,630

Lease inducement – current portion 9,387 12,516 12,516

834,893 931,793 404,955

Finance Lease Obligation 11,768 18,285 24,424

Lease Inducement - 9,387 21,903

Provision for Environmental Rehabilitation (Note 6) 76,209 69,718 63,227

922,870 1,029,183 514,509

EquityShare Capital (Note 7) 102,005,127 63,499,946 47,154,150

Reserves 7,994,171 6,431,356 5,170,532

Deficit (35,444,360) (26,220,247) (16,894,361)

74,554,938 43,711,055 35,430,321

Total Liabilities and Equity 75,477,808 44,740,238 35,944,830

Commitments (Note 11)

Approved by the Board of Directors on March 21, 2012

Steve Kurtz

Director

Brian Booth

Director

The accompanying notes are an integral part of these consolidated financial statements

36

Consolidated Statements of Loss and Comprehensive LossAll amounts in Canadian dollars

Year ended December 31

2011 2010 (Note 16)

$ $

Operating and Administrative Expenses

General exploration 1,684,298 2,085,768

Write-off of mineral properties (Notes 5 & 17) 1,323,058 1,965,002

Loss on sale of mineral properties (Note 5) 117,016 -

Recovery of mineral property costs - (204,567)

General and administration 5,551,293 5,254,988

Loss before other items (8,675,665) (9,101,191)

Other Items

Share of loss of associate (Note 8) (515,643) (366,820)

Gain on dilution of associate (Note 8) 242,860 579,286

Unrealized loss on investment in associate recorded at fair value (Note 8) (497,891) -

Loss on disposal of property and equipment (10,989) (8,763)

Foreign exchange gain/(loss) 27,088 (416,394)

Finance income 355,527 155,020

Finance expense (149,400) (167,024)

Net Loss (9,224,113) (9,325,886)

Other Comprehensive Loss

Unrealized gain/(loss) on available-for-sale investments (140,250) 190,000

Foreign currency translation differences 446,485 (145,232)

Total Comprehensive Loss (8,917,878) (9,281,118)

Basic and Diluted Loss Per Share (Note 7(e)) (0.07) (0.08)

Weighted Average Shares Outstanding During the Year – Basic and Diluted 126,352,834 115,047,581


37

Consolidated Statements of Changes in EquityAll amounts in Canadian dollars


Reserves

Share Capital Common Shares

Share-Based Payment Reserve

Available- For-Sale Reserve

Foreign Currency

Translation Reserve

Total Reserves Deficit Total

Number $ $ $ $ $ $ $

Balance – January 1, 2010 109,411,423 47,154,150 5,170,532 - - 5,170,532 (16,894,361) 35,430,321

Exercise of stock options 316,666 245,816 (87,483) - - (87,483) - 158,333

Private placement for cash 8,054,800 16,109,600 - - - - - 16,109,600

Share issuance costs - (9,620) - - - - - (9,620)

Share-based payments - - 1,303,539 - - 1,303,539 - 1,303,539

Net loss and total comprehensive loss - - - 190,000 (145,232) 44,768 (9,325,886) (9,281,118)

Balance – December 31, 2010 117,782,889 63,499,946 6,386,588 190,000 (145,232) 6,431,356 (26,220,247) 43,711,055

Private placement for cash 15,430,000 38,575,000 - - - - - 38,575,000

Shares issued for finder’s fee 350,000 875,000 - - - - - 875,000

Share issuance costs - (944,819) - - - - - (944,819)

Share-based payments - - 1,256,580 - - 1,256,580 - 1,256,580

Net loss and total comprehensive loss - - - (140,250) 446,485 306,235 (9,224,113) (8,917,878)

Balance – December 31, 2011 133,562,889 102,005,127 7,643,168 49,750 301,253 7,994,171 (35,444,360) 74,554,938

38

Consolidated Statements of Cash FlowsAll amounts in Canadian dollars

Year ended December 31

2011 2010

$ $

Operating Activities (9,224,113) (9,325,886)

Net Loss

Items not affecting cash:

Write-off of mineral properties 1,323,058 1,965,002

Recovery of mineral properties - (204,567)

Share of loss of associate 515,643 366,820

Gain on dilution of associate (242,860) (579,286)

Unrealized loss on investment in associate recorded at fair value 497,891 -

Loss on sale of mineral properties 117,016 -

Finance income (355,527) (155,020)

Loss on disposal of property and equipment 10,989 8,763

Finance expense 149,400 167,024

Share-based payments 1,256,580 1,303,539

Unrealized foreign exchange loss (27,088) 416,394

Lease inducement (12,516) (12,516)

(5,991,527) (6,049,733)

Changes in non-cash working capital:

Trade and other receivables (105,548) (146,862)

Mineral Exploration Tax Credit receivable - 19,507

Prepaid expenses and deposits 247,047 (353,407)

Trade and other payables 13,940 315,974

(5,836,088) (6,214,521)

Investing Activities

Additions to mineral properties (12,714,404) (10,762,618)

Proceeds on sale of mineral property 661,760 -

Purchase of property and equipment (99,740) (248,206)

Proceeds on sale of property and equipment 43,576 5,106

Finance income 355,527 155,020

Deposits 50,000 (5,000)

(11,703,281) (10,855,698)

Financing Activities

Net proceeds on share issuances 38,505,181 16,258,313

Payment on finance lease obligation (6,200) (12,628)

38,498,981 16,245,685

Effect of exchange rate on cash and cash equivalents (176,896) (132,235)

Change in cash and cash equivalents 20,782,716 (956,769)

Cash and cash equivalents – beginning of year 20,196,991 21,153,760

Cash and Cash Equivalents – end of year 40,979,707 20,196,991

Supplemental cash flow information (Note 12)


39

Notes to the Consolidated Financial StatementsAll amounts in Canadian dollars except where otherwise indicated

1. Nature of Operations and Going ConcernPembrook Mining Corp. (the “Company” or “Pembrook”) is incorporated under the laws of British Columbia. The Company’s head office, principal address and records office are located at 1040 West Georgia Street, Suite 1160, Vancouver, British Columbia, Canada V6E 4H1.

Pembrook is a minerals exploration company engaged in the identification, acquisition, evaluation and advancement of mineral properties primarily in Peru and Mexico. The Company is exploring for copper, gold, silver, nickel and other metals. At present, none of the Company’s mineral properties are at a commercial development or production stage. The Company’s objective is to discover mineral deposits and either sell, option, joint venture, or otherwise participate in their development.

The recoverability of the amounts shown for mineral properties is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to advance the properties, and attaining future profitable production from the properties or proceeds from disposition.

The Company’s continuing operations are dependent upon its ability to secure additional equity capital, divest assets or generate cash flow from operations in the future, none of which are assured. The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments relating to the recoverability and classification of recorded assets and liabilities that may be necessary should the Company be unable to secure additional equity capital or generate sufficient cash to continue operations in the future.

2. Significant Accounting Policies(a) Statement of compliance

These consolidated financial statements represent the first annual financial statements of the Company prepared in accordance with International Financial Reporting Standards (“IFRS”). The Company adopted IFRS in accordance with IFRS 1 “First Time Adoption of International Financial Reporting Standards” (“IFRS 1”) as discussed in Note 16. The policies below were consistently applied to all periods presented.

(b) Basis of preparation and presentation and statement of compliance

These consolidated financial statements have been prepared on the historical cost basis except for available-for-sale financial assets which are measured at fair value. The consolidated financial statements are presented in Canadian dollars, which is the Company’s presentation currency.

(c) Principles of consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries Pembrook Offshore Inc. (BVI), Pembrook Peru Inc. (BVI), Compania de Exploracionces Orion S.A.C. (Peru), Pembrook Mexico Holding Corp., Paget Southern Resources S. de R.L. de C.V. (Mexico) and Pembrook Property Holdings Corp. (BVI). Intercompany balances, transactions, revenues and expenses have been eliminated.

(d) Accounting for subsidiaries

A subsidiary is an entity controlled by the Company. Control is achieved where the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

(e) Exploration and evaluation

The Company is in the exploration stage with respect to its investment in mineral properties and follows the practice of capitalizing all costs relating to the acquisition of, exploration for and development of mineral claims and crediting all revenues received against the cost of the related claims. Such costs include, but are not limited to, staking and claims management, options payments, geological, geophysical studies, sampling and drilling.

At such time that commercial production commences, these costs will be charged to operations on a unit-of-production method based on proven and probable reserves. The aggregate costs related to abandoned mineral claims are charged to operations at the time of any abandonment or when it has been determined that there is evidence of a permanent impairment.

Exploration and evaluation (“E&E”) assets are assessed for impairment when the facts and circumstances suggest that the carrying amount of an E&E asset may exceed its recoverable amount and when the Company has sufficient information to reach a conclusion about technical feasibility and commercial viability. Industry specific indicators of the existence of a potential impairment typically include the absence of plans to incur substantive expenditure on further exploration over a reasonable time horizon, conditions where title is compromised, adverse changes in the taxation, regulatory or political environment and adverse changes in currencies, commodity prices and markets.

Once technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, E&E assets attributable to that area of interest are first tested for impairment and then reclassified to mining property and development assets within property, plant and equipment.

Recoverability of the carrying amount of any E&E asset is dependent on successful development and commercial exploration, or alternatively, sale of the respective areas of interest.

(f) Property and equipment

Property and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an item consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use. The Company conducts an annual assessment of the residual balances, useful lives and depreciation methods and any changes arising from the assessment are applied by the Company prospectively.

Depreciation is provided at rates calculated to write off the cost of the asset, less the estimated residual value, using the declining balance method applied using the following rates:

• Leasehold improvements 10%

• Field and computer equipment 25%

• Furniture and fixtures 10%

• Software 20%

• Vehicles 20%

Equipment under finance lease is depreciated over the shorter of term of the lease or useful life of the equipment.

(g) Impairment of non-financial assets under IAS 36

Non-financial assets are reviewed for impairment if there is any indication that the carrying amount may not be recoverable. If any such indication is present, the recoverable amount of the asset is estimated in order to determine whether impairment exists. Where the asset does not generate cash inflows that are independent from other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Any intangible asset with an indefinite life is tested for impairment annually and whenever there is an indication that the asset may be impaired.

An asset’s recoverable amount is the higher of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been adjusted.

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If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount is reduced to the recoverable amount. Impairment is recognized immediately as additional depreciation. Where an impairment subsequently reverses, the carrying amount is increased to the revised estimate of recoverable amount but only to the extent that this does not exceed the carrying value that would have been determined if no impairment had previously been recognized. A reversal is recognized as a reduction in the depreciation charge for the period.

(h) Investment in associate

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in the consolidated financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Company’s share of the profit or loss of the associate, less any impairment in the value of the investment or dilution of the shareholding in the investment.

(i) Restoration, rehabilitation and environmental obligations

An obligation to incur restoration, rehabilitation and environmental costs arises when an environmental disturbance is caused by exploration or development of a mineral property interest. Such costs arising from the decommissioning of exploration camps and sites, discounted to their net present value, are provided for and capitalized at the start of each project to the carrying amount of the asset along with a corresponding liability as soon as the obligation to incur such costs arises. The timing of the actual rehabilitation expenditure is dependent on a number of factors such as the life and nature of the asset, the operating license conditions and when applicable, the environment in which the exploration activity takes place.

Discount rates using pre-tax rates that reflect the time value of money are used to calculate the net present value. These costs are charged against profit or loss over the economic life of the related asset, through amortization using either the unit-of-production method or the straight line method. The corresponding liability is progressively increased as the effect of discounting unwinds, creating an expense recognized in profit or loss.

The operations of the Company have been, and 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.

(j) Loss per share

Loss per share is calculated based on the weighted average number of shares outstanding during the period. For fully diluted loss per share, dilution is calculated based on the net number of common shares issued should “in the money” options and warrants be exercised and the proceeds used to repurchase common shares at the average market price in the period. Dilution from convertible securities is calculated based on the number of shares to be issued after taking into account the reduction of the related after-tax interest expense.

Shares held in escrow, other than where their release is subject to the passage of time, are not included in the calculation of the weighted average number of shares outstanding. For all periods presented, diluted loss per share is not presented as the effect of outstanding options is anti-dilutive.

(k) Significant accounting judgments

The critical judgments that the Company’s management has made in the process of applying the Company’s accounting policies, apart from those involving estimations (note 2 (l)) , that have the most significant effect on the amounts recognized in the Company’s financial statements are related to

the economic recoverability of the mineral properties, assumption of going concern, classification of financial instruments, determination of functional currency and determination of development costs eligible for capitalization.

(l) Measurement uncertainties and estimates

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period.

Actual results could differ from those estimates and would impact future results of operations and cash flows. The significant accounts that require estimates as a basis for determining the stated amounts consist of share-based compensation, accretion of restoration, rehabilitation and environmental obligations, valuation of capitalized property costs and deferred tax liabilities and provisions.

(m) Income taxes

Income taxes are recognized in the statement of loss, except where they relate to items recognized in other comprehensive income or directly in equity, in which case the related income taxes are recognized in other comprehensive income or equity. Current taxes receivable or payable are estimated on taxable income for the current year at the statutory tax rates enacted or substantively enacted.

Deferred income tax assets and liabilities are recognized based on the difference between the tax and accounting values of assets and liabilities and are calculated using substantively enacted tax rates for the periods in which the differences are expected to reverse. The effect of tax rate changes is recognized in earnings or equity, as the case may be, in the period of substantive enactment.

Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the assets can be utilized. Deferred tax liabilities are recognized for taxable temporary differences arising on investments in joint ventures and associates. However, such deferred tax liabilities are not recognized where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. As an exception, deferred tax assets and liabilities are not recognized if the temporary differences arise from the initial recognition of goodwill or an asset or liability in a transaction (other than in a business combination) that affects neither accounting profit nor taxable profit.

(n) Share-based payments

The Company’s share option plan allows employees and consultants to acquire shares of the Company. The fair value of the options granted is recognized as a share-based payment expense with a corresponding increase in equity. The fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over a period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted and an estimated forfeiture rate.

(o) Deferred lease inducement

The Company received lease inducements for office space which are being amortized on a straight-line basis over the term of the lease. The lease inducements are recorded as a reduction of rent expense and will be fully amortized in 2012.

(p) Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards of ownership of the asset to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognized as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments as determined at the inception of the


41

lease. The corresponding liability to the lessor is shown on the statement of financial position separated into current and non-current components. Lease payments are apportioned between finance expense and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.

(q) Foreign currency translation and transactions

The functional currency is the currency of the primary economic environment in which the Company and each of its subsidiaries operates. The functional currency of each subsidiary has been determined through an analysis of the consideration factors specified in IAS 21 The Effects of Changes in Foreign Exchange Rates. The Company operates in Peru and Mexico where its functional currency is the US dollar. The functional currency of the corporate headquarters is the Canadian dollar.

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing on the dates of transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in local currencies are translated to the functional currency at the exchange rate in effect at the reporting date. Non-monetary assets and liabilities are translated at historical exchange rates, unless such items are measured at fair value, in which case they are translated at the exchange rate in effect at the date when the fair value was determined.

For the purpose of presenting consolidated financial statements, the assets and liabilities of entities with a functional currency other than Canadian dollars are converted from functional currency to presentation currency at the exchange rate in effect at the reporting date and revenue and expense items are translated at the average exchange rate for the period and exchange differences arising are recognized directly in equity.

(r) Financial assets

The Company classifies its financial assets into one of the following categories: fair value through profit or loss (“FVTPL”), held to maturity (“HTM”), available for sale (“AFS”), and loans and receivables.

Financial assets classified as FVTPL are measured at fair value with unrealized gains and losses recognized through net income.

Financial assets classified as HTM and as loans and receivables are measured at amortized cost using the effective interest rate method.

Financial assets classified as AFS are measured at fair value with changes in fair value recognized in other comprehensive income, net of tax. Investments in equity instruments that do not have an active quoted market price are measured at cost.

Transaction costs that are directly attributable to the acquisition or issue of financial assets or liabilities (other than those designated as FVTPL, which are expensed) are included in the initial carrying value.

(s) Financial liabilities

All financial liabilities are initially recorded at fair value and designated upon inception as FVTPL or other financial liabilities. Financial liabilities classified as other financial liabilities are measured at amortized cost using the effective interest rate method.

(t) Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, deposits in banks and highly liquid investments with an original maturity date of three months or less.

(u) Recent accounting pronouncements

The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective. The Company has not early adopted any of these standards and is currently evaluating the impact, if any, that these standards might have on its consolidated financial statements.


IAS 12 – Income Taxes (Amended) (“IAS 12”) introduces an exception to

the general measurement requirements of IAS 12 in respect of investment properties measured at fair value.

IFRS 7 – Financial instruments: Disclosures (Amended) require additional disclosures on transferred financial assets.


IFRS 10 Consolidated Financial Statements establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. This standard (i) requires a parent entity (an entity that controls one or more other entities) to present consolidated financial statements; (ii) defines the principle of control, and establishes control as the basis for consolidation; (iii) sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee; and (iv) sets out the accounting requirements for the preparation of consolidated financial statements. IFRS 10 supersedes IAS 27 Consolidated and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities.

IFRS 11 Joint Arrangements establishes the core principle that a party to a joint arrangement determines the type of joint arrangement in which it is involved by assessing its rights and obligations and accounts for those rights and obligations in accordance with that type of joint arrangement.

IFRS 12 Disclosure of Involvement with Other Entities requires the disclosure of information that enables users of financial statements to evaluate the nature of, and risks associated with, its interests in other entities and the effects of those interests on its financial position, financial performance and cash flows.

IFRS 13 Fair Value Measurement defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. IFRS 13 applies when another IFRS requires or permits fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements), except for: share-based payment transactions within the scope of Share-based Payment; leasing transactions within the scope of IAS 17 Leases; measurements that have some similarities to fair value but that are not fair value, such as net realisable value in IAS 2 Inventories or value in use in IAS 36 Impairment of Assets.

In June 2011, the IASB issued amendments to IAS 1 – Presentation of Financial Statements (“IAS 1”) that require an entity to group items presented in the statement of other comprehensive income on the basis of whether they may be reclassified to profit or loss subsequent to initial recognition. For those items presented before tax, the amendments to IAS 1 also require that the tax related to the two separate groups be presented separately. The amendments to IAS 1 are effective for annual periods beginning on or after July 1, 2012, with earlier application permitted. The Company does not anticipate this amendment to have a significant impact on its consolidated financial statements.

IAS 27 Separate Financial Statements has the objective of setting standards to be applied in accounting for investments in subsidiaries, joint ventures, and associates when an entity elects, or is required by local regulations, to present separate (non-consolidated) financial statements.

IAS 28 Investments in Associates and Joint Ventures prescribes the accounting for investments in associates and sets out the requirements for the application of the equity method when accounting for investments in associates and joint ventures. IAS 28 applies to all entities that are investors with joint control of, or significant influence over, an investee (associate or joint venture).


IFRS 9 Financial Instruments replaces the current standard, IAS 39 Financial Instruments: Recognition and Measurement, replacing the current classification and measurement criteria for financial assets and liabilities with only two classification categories: amortized cost and fair value.

Notes

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3. Investments

December 31,2011 2010

$ $

Marketable securities:

Common shares in Zincore Metals Inc. 190,000 500,000

Common shares in Paget Minerals Corp. 1,527,750 -

1,717,750 500,000

In March 2010, the Company received 1,000,000 common shares of Zincore Metals Inc. (“Zincore”), a Canadian company listed on the TSX, valued at $310,000, in connection with an option agreement whereby Zincore could acquire a 100% interest in the Company’s Sajapampa property in Peru and the Cariboo property in British Columbia, Canada. In March 2011, the option agreement was terminated.

The Company commenced accounting for its investment in Paget Minerals Corp. (“Paget”) as an AFS financial asset effective December 1, 2011. For additional information on Pembrook’s investment in Paget, please refer to Note 8.

As these investments are classified as AFS financial assets, fair value gains and losses are recognized in available-for-sale reserve. If there is a significant or prolonged decline in fair value, an impairment is recognized through the statement of loss and comprehensive loss in the period. As at December 31, 2011, the investments had a fair market value of $1,717,750, resulting in an unrealized loss of $140,250 recognized in other comprehensive loss during the year ended December 31, 2011 (December 31, 2010 – ($190,000)).

4. Property and Equipment

Leasehold Improvement

Field & Computer Equipment

Furniture & Fixtures Software Vehicles

Equipment Under Finance Lease Total

CostAs at January 1, 2010 87,185 231,428 39,626 36,178 152,800 32,057 579,274Additions 59,326 73,138 19,367 7,486 88,889 - 248,206Disposals - (12,826) - - (16,216) - (29,042)Foreign exchange movement (582) (1,118) (420) (377) (705) - (3,202)As at December 31, 2010 145,929 290,622 58,573 43,287 224,768 32,057 795,236

Accumulated depreciationAs at January 1, 2010 (35,876) (97,898) (16,706) (22,192) (60,468) (3,206) (236,346)Charges for the year (31,589) (64,248) (5,800) (14,713) (35,528) (8,655) (160,533)Eliminated on disposition - 9,422 - - 5,751 - 15,173Foreign exchange movement 35 14,634 54 (5,350) (1,314) - 8,059As at December 31, 2010 (67,430) (138,090) (22,452) (42,255) (91,559) (11,861) (373,647)

Carrying amount as at December 31, 2010 78,499 152,532 36,121 1,032 133,209 20,196 421,589

Leasehold Improvement

Field & Computer Equipment

Furniture & Fixtures Software Vehicles

Equipment Under Finance Lease Total

CostAs at December 31, 2010 145,929 290,622 58,573 43,287 224,768 32,057 795,236Additions 17,814 43,247 5,556 33,123 - - 99,740Disposals - (86,383) (7,949) - (29,496) - (123,828)Foreign exchange movement 673 2,658 514 867 3,743 - 8,455As at December 31, 2011 164,416 250,144 56,694 77,277 199,015 32,057 779,603

Accumulated depreciationAs at December 31, 2010 (67,430) (138,090) (22,452) (42,255) (91,559) (11,861) (373,647)Charges for the year (40,190) (95,627) (19,824) (5,279) 23,060 (5,049) (142,909)Eliminated on disposition - 51,934 3,791 - 13,898 - 69,623Foreign exchange movement 19 (9,527) (46) (626) (3,437) - (13,617)As at December 31, 2011 (107,601) (191,310) (38,531) (48,160) (58,038) (16,910) (460,550)

Carrying amount as at December 31, 2011 56,815 58,834 18,163 29,117 140,977 15,147 319,053

Year ended December 31,2011 2010

$ $Depreciation expense included finance expense in the Statement of Loss 142,909 160,533


43

5. Mineral propertiesAs of December 31, 2011, the Company held a portfolio of properties primarily in Peru and Mexico.

Note 17 of these consolidated financial statements summarizes the amounts capitalized to the Company’s mineral properties.

During the year period ended December 31, 2011, the Company wrote off a total of $1,323,058 for the Cariboo project located in British Columbia, Canada, the Pinalito project located in Mexico and the San Cipriano and Santa Helena projects located in Peru. In the year ended December 31, 2010, the Company determined that further exploration work on 19 properties was not warranted and recorded write-offs totalling $1,965,002.

During the year ended December 31, 2011, the Company did not carry out any exploration work in British Columbia and therefore did not file any Mineral Exploration Tax Credit (“METC”). The $41,152 claim filed for the December 31, 2009 taxation year was received in 2010. The METC is credited to the capitalized mineral property costs for the applicable property. For properties which had been written off prior to receiving the METC refund, the corresponding credit is to recovery of mineral property costs in the statement of loss.

Existing Property Option Agreements

The Company has previously entered into various acquisition agreements for properties which have optional cash payments and exploration commitments required by specific dates, as follows:

On June 24, 2008, Pembrook signed an option agreement for the Lidia property in Peru, with Andes Mineros S.A. Under the terms of the agreement, Pembrook has the option to acquire a 100% interest in the property, subject to a 2% NSR by paying US$550,000 as follows:

• Completing a payment of US$60,000 (paid) on execution of the agreement;

• Completing a payment of US$20,000 (paid) on the three month anniversary;

• Completing a payment of US$20,000 (paid) on the six month anniversary;

• Completing a payment of US$20,000 (paid) on the one year anniversary;

• Completing a payment of US$80,000 (paid) on the two year anniversary;

• Completing a payment of US$100,000 (paid) on the third year anniversary; and

• Completing a payment of US$250,000 on the fourth year anniversary.

The 2% NSR can be reduced to 1% if the Company makes a US$1,000,000 payment to Andes Mineros. In addition, advance royalty payments of US$35,000 must be made annually commencing on June 24, 2013 until the earlier of the passage of ten years or commencement of production.

Viruna

On May 2, 2008, Pembrook signed an option agreement for the Viruna property in Peru. Under the terms of the agreement, Pembrook has an option to acquire a 100% interest by making payments totalling US$300,000 as follows:

• Completing payments of US$15,000 (paid) upon execution of the agreement;

• Completing payments of US$96,000 ($2,000 per month for 48 months from June 2008 to May 2012) ($86,000 paid to December 31, 2011);

• Completing payments of US$189,000 on the five year anniversary.

Tambo

On June 12, 2009, the Company granted an option to Minera Oro Vega S.A.C. (“Oro Vega”), a subsidiary of International Minerals Corporation (“IMC”), regarding the Company’s Tambo property in southern Peru. Under terms of the agreement, Oro Vega could earn a 50% interest in the property, by completing 10,500 metres of diamond drilling over 40 months. Oro Vega could acquire a further 10% interest in the property by completing a pre-feasibility study within a further three years. If Oro Vega did not elect to

earn the additional interest, Pembrook would have the right to acquire an additional 10% interest on the same terms. On January 31, 2011, Oro Vega terminated the option agreement and returned the Tambo property to the Company.

Viento

On January 11, 2010, the Company signed an option agreement with Geoandina Minerals S.A.C. (“Geoandina”), a private Peruvian company, for the Viento property in Peru. The Company has an option to acquire a 100% interest, subject to a 1% Net Smelter Royalty (“NSR”), in the project by completing payments of:

• US$50,000 (paid) on signing;

• US$150,000 (paid on December 7, 2010) at the time the community agreement is finalized (which established the anniversary date for future requirements);

• US$300,000 (paid) on the first anniversary;

• US$500,000 on the second anniversary;

• US$1,000,000 on the third anniversary; and

• US$3,000,000 on the fourth anniversary.

In addition, in order to exercise the option, the Company is required to produce a pre-feasibility study by the end of the seventh anniversary. Geoandina may receive a bonus payment by the end of the seventh anniversary based on the resource estimate from a pre-feasibility study. The Company will be required to pay:

• US$5,000,000 if the resource identified is between 200,000 and 500,000 metric tonnes with a minimum copper equivalent grade of 0.5% copper; or

• US$10,000,000 for a resource over 500,000 metric tonnes with a minimum copper equivalent grade of 0.5% copper; or

• If the Company has not completed a pre-feasibility study by the end of the seventh anniversary, a bonus payment of US$10,000,000 to Geoandina will be required or the option expires.

On October 4, 2010 (the “agreement day”), the Company signed an option agreement with Adelina Cordova Gaona (“Adelina”), a private Peruvian company, for the additional claims at the Viento property in Peru. The Company has an option to acquire a 100% interest in the project by completing payments of:

• US$24,000 (paid) on signing;

• US$25,000 (paid) six months after the agreement day;

• US$25,000 (paid) on the first anniversary;

• US$30,000 eighteen months after the agreement day;

• US$30,000 on the second anniversary;

• US$75,000 on the third anniversary; and

• US$290,000 on the fourth anniversary.

Additional Lidia Claims

On April 29, 2010, the Company signed an option agreement for certain claim blocks in Peru which are adjacent to the Lidia property. The Company will acquire a 100% interest in the property by completing a payment of US$50,000 (paid) on signing of the agreement and US$50,000 (paid) on registration of the agreement with the Peruvian authorities

On July 12, 2010, the Company signed an option agreement for additional Lidia claims in Peru with Compania Minera Ares S.A.C. The Company has an option to purchase a 100% interest in the property by:

• Completing payments of US$23,105 on execution of the agreement (paid);and

The property is subject to an escalating NSR as follows:

• 1 % NSR if less than 100,000 ounces proven resources of gold;

• 2% NSR if between 100,000 and 249,999 ounces proven reserves of gold;

Notes

44

• 3% NSR if between 250,000 and 749,999 ounces proven reserves of gold;

• 3.5% NSR if more than 750,000 ounces proven reserves of gold;

• 1.5% NSR on copper extractions;

• Advance NSR payments of US$26,895 on the first anniversary of the signing of the agreement and US$50,000 per year for ten years commencing on the second anniversary, all to be credited against the actual NSR payments, if any are incurred.

New Property Option Agreements during 2011

Japonesas Norte

In April 2011, the Company signed an option agreement for the Japonesas Norte project located in the Cerro Caliche area of Cucurpe, Sonora in Mexico. Under the terms of the agreement, Pembrook has the option to acquire a 100% interest in the properties, subject to a 2% NSR by paying US$3,000,000 as follows:

• Completing a payment of US$70,000 (paid) upon execution of the agreement;

• Completing a payment of US$10,000 (paid) upon receipt of certain documentation;


• Completing a payment of US$125,000 on the twelve month anniversary;

• Completing a payment of US$150,000 on the eighteen month anniversary;

• Completing a payment of US$250,000 on the twenty-four month anniversary;

• Completing a payment of US$500,000 on the thirty month anniversary;

• Completing a payment of US$815,000 on the thirty-six month anniversary; and

• Completing a payment of US$1,000,000 on the forty-two month anniversary.

The 2% NSR can be reduced to 1% if the Company makes a US$1,000,000 payment.

Batamote

In May 2011, the Company signed an option agreement for the Batamote project located in the Cerro Caliche area of Cucurpe, Sonora in Mexico. Under the terms of the agreement, Pembrook has the option to acquire a 100% interest in the properties, subject to a 2% NSR by paying US$2,500,000 as follows:



• Competing a payment of US$150,000 on the twelve month anniversary;

• Completing a payment of US$175,000 on the eighteen month anniversary;


• Completing a payment of US$420,000 on the thirty month anniversary; and

• Completing a payment of US$1,325,000 on the thirty-six month anniversary.

The 2% NSR which can be purchased by the Company for US$1,500,000.

Additional Sumaq Claims

On October 3, 2011, Pembrook signed an agreement to purchase 100% interest in the Gema 4-6 & 9, Zoila 1 & 2, and Carancas 3-5 claims located adjacent to the Sumaq (formerly Minascucho) project, from Minera del Suroeste S.A.C. Under the terms of the agreement, Pembrook paid US$25,000 upon signing of the agreement and Minera del Suroeste S.A.C. retains a 2% NSR. Pembrook will pay advance royalties totalling

US$575,000 payable US$25,000 in the first year and US$50,000 per year for the following eleven years. The advance royalty payments terminate at the commencement of commercial production or Pembrook’s abandonment of the claims.

Ball Creek

In April 2011, the Company signed an Option Agreement with Paget to sell a 100% interest in its Ball Creek copper-gold-molybdenum-silver property in northwestern British Columbia. The Option Agreement requires that Paget issue 5,000,000 shares to Pembrook and make a minimum $3,000,000 spending commitment over a maximum period of 48 months. After the exercise of the option, Paget will be obligated to make a payment of $2,000,000 to Pembrook upon completion of a positive feasibility study. Pembrook will retain a 2% NSR, half of which may be purchased by Paget at any time for $1,000,000. Upon receipt of TSX approval of the Option Agreement on September 1, 2011, Paget issued the 5,000,000 shares to Pembrook.

Rio Sonora

On October 31, 2011, Pembrook signed an option agreement with Vale S.A. (“Vale”) whereby Vale has an option to acquire an interest in the Company’s 100%-owned Rio Sonora project in Mexico. Under the terms of the agreement, Vale can earn up to a 51% interest (the “First Option”) in Rio Sonora by spending US$4 million on exploration over three years and making US$400,000 in cash payments to the Company. Upon earning the First Option, Vale can earn an additional 9% interest in Rio Sonora, bringing its interest to 60%, by spending additional US$3 million in the following two years.

Dionicio

On November 16, 2011, Pembrook signed an option agreement for the Dionicio property located in Sonora, Mexico. Under the terms of the agreement, the Company has the option to acquire a 100% interest in the Dionicio property, subject to a 3.25% NSR by making payments totalling US$545,000 as follows:


• Completing a payment of US$45,000 on the six month anniversary;

• Competing a payment of US$130,000 on the twelve month anniversary;


• Completing a payment of US$195,000 on the thirty-six month anniversary.

In addition, the Company must make annual payments of US$10,000 for land access. The Company may purchase 2.5% of the 3.25% NSR for US$3,000,000.

Additional Mila Claims

On November 22, 2011, the Company signed an agreement to acquire a 100% interest in certain mineral claims surrounding and contiguous to its Mila property. Under the terms of the agreement, Pembrook will make payments totalling US$300,000 as follows:


• Completing a payment of US$90,000 (paid) upon receipt of community approvals; and

• Completing a payment of US$150,000 upon receipt of a drill permit.

Property Sold during 2011

On March 24, 2011, the Company realized a gain of $209,133 on the sale of its Schaft Creek North property to Copper Fox Metals Inc. (“Copper Fox”) for $350,000 and retained a 2% NSR, half of which can be purchased by Copper Fox for $1,500,000.

On July 14, 2011, the Company entered into an option agreement with


45

Minera del Norte S.A. to sell 100% of its Cecilia Samana project in Peru for US$300,000 following a 90 day due diligence period. On October 4, 2011, Minera del Norte S.A. exercised their option to acquire Cecilia Semana and paid US$300,000 on October 10, 2011.

6. Provision for Environmental RehabilitationThe Company’s provision for environmental rehabilitation for exploration projects is as follows:

December 31, 2011

December 31, 2010

January 1, 2010

$ $ $Obligations, beginning of year 69,718 63,227 16,672Accretion 6,491 6,491 4,312Additions and revisions in estimates - - 42,243Obligations, end of year 76,209 69,718 63,227

The total undiscounted amount of estimated future cash flows required to settle environmental liabilities at the Ball Creek property is $87,028 at December 31, 2011 (December 31, 2010 – $87,028), which has been inflated at an annual rate of 2.0% and has been discounted using an estimated liability specific risk-free rate of 10%. All restoration, rehabilitation and environmental obligations are expected to be paid several years in the future and are intended to be funded from cash balances at the time. The amounts and timing of actual payments will depend on several factors including exploration success and alternative exploration plans.

7. Share Capital(a) Authorized and Issued

Unlimited number of common shares without par value authorized.

On June 15, 2011, the Company closed a private placement of 15,210,000 shares at $2.50 per share, which included participation by Chinalco Resources Corp. (“Chinalco”) whereby Chinalco purchased 13,000,000 common shares of the Company. Under the terms of the subscription agreement with Chinalco, they are entitled to one seat on the Company’s Board of Directors, a pre-emptive right to maintain a 9.9% shareholding in the Company and a right of first offer on certain of the Company’s projects, subject to certain conditions. The Company paid a finder’s fee of 350,000 shares valued at $2.50 per share, relating to the successful closing of the transaction with Chinalco. No finder’s fees were paid on the balance of the private placement. On August 11, 2011, acting on their right to maintain a 9.9% interest in the Company, Chinalco purchased an additional 220,000 shares at $2.50 per share to bring their total shareholding to 9.9% of the Company’s outstanding common shares.

During the year ended December 31, 2011, no stock options were exercised. During the year ended December 31, 2010, the Company issued 316,666 common shares on the exercise of stock options at $0.50 per share for cash proceeds of $158,333, with $87,483 of share option reserve transferred to common shares.

(b) Stock option plan

Under the Company’s Stock Option Plan (the “Plan”), a maximum of 10% of the Company’s issued and outstanding common shares (or 13,356,289 shares as at December 31, 2011) can be issued. A total of 9,656,750 options to purchase common shares have been granted and are currently outstanding under the Plan.

In addition, the number of shares which may be reserved for issuance to any one individual may not exceed 10% of the issued shares on a yearly basis or 2% if the optionee is engaged in investor relations activities or is a consultant.

A summary of the Company’s outstanding stock options is as follows:

Number of Options

Weighted Average

Exercise Price$

Balance, January 1, 2010 10,239,416 0.97Granted 790,000 1.96Exercised (316,666) 0.50Forfeitures (189,336) 1.37Balance, December 31, 2010 10,523,414 1.05Granted 2,510,000 2.50Expired (100,000) 0.50Forfeitures (3,276,664) 0.90Balance, December 31, 2011 9,656,750 1.48

Number of options currently exercisable 6,441,742 1.04

(c) Stock options

As at December 31, 2011, the Company had stock options outstanding at the following exercise prices:

Exercise Price

Number of Options

Outstanding

Weighted Average Remaining Life of Outstanding

Options

Number of Options

Exercisable

Weighted Average

Remaining Life of Exercisable

Options$ (years) (years)

0.50 3,050,000 2.7 3,050,000 2.20.75 314,250 3.4 314,250 1.41.00 310,000 3.0 310,000 1.41.25 640,000 4.2 640,000 3.81.75 1,358,500 4.0 1,345,998 3.41.80 949,000 2.9 606,494 2.92.00 525,000 3.7 175,000 3.72.50 2,510,000 4.9 - 4.9

9,656,750 3.7 6,441,742 3.2

The stock options were granted with five year lives. In May 2011, the Board of Directors approved the extension of the lives of 5,747,750 granted stock options expiring on or before December 31, 2013 from five years to eight years, resulting in a one-time charge of $500,544 to share-based payment expense. The fair value of the extension of the stock option lives was calculated as the difference between the fair value of the stock options before and after the extension, using the following assumptions under the Black-Scholes option pricing model:

Before Extension of Stock Options

After Extension of Stock Options

Expected dividend yield - -Expected stock price volatility 69%-78% 66%-76%Risk-free rate 1.7%-2.3% 1.7%-3.0%Expected option life (years) 3.3 years 3.3 years

During the year ended December 31, 2011, 2,510,000 stock options were granted with an exercise price of $2.50. During the year ended December 31, 2010, 790,000 stock options were granted with a weighted exercise price of $1.96. The stock options were granted with 5 year lives, vesting one-third annually over 3 years.

(d) Share-based payments

The fair value of each option grant during the period was estimated on the date of grant using the Black-Scholes option pricing model, with the

Notes

46

following weighted average assumptions:


Risk-free interest rate 1.3% 2.1%Expected dividend yield - -Expected stock price volatility 74% 71%Expected forfeiture rate 4.4% 3.7%Expected option life (years) 3.5 years 3.5 years

Changes in the input assumptions used in the Black-Scholes option pricing model can materially affect the fair value estimate.

Option pricing models require the input of highly subjective assumptions, including expected price volatility. As Pembrook is a privately-owned company, no observable market exists for its shares or options, and management estimates the price volatility of Pembrook options using the average volatility of five exploration and mining company stocks listed on the TSX and the TSX Venture Exchange. The risk-free interest rate assumption is based on yield curves on Canadian government zero-coupon bonds with a remaining term equal to the stock options’ life. The weighted average grant date fair value of options granted during the year ended December 31, 2011 was $1.30 (December 31, 2010 – $0.99).

Total share-based payments have been included in the Statement of Loss as follows:


$ $General and administrative 1,256,580 1,303,539

(e) Loss per share

In periods where the Company has incurred a loss, exercise or contingent issue of securities has not been included in the calculation of diluted loss per share as increasing the number of shares outstanding would be anti-dilutive.

8. Investment in AssociateAs at December 31, 2011, the Company’s ownership of 16,975,000 common shares of Paget represented 20.54% (December 31, 2010 – 19.8%) of the common shares of Paget. Pembrook is the largest shareholder of Paget.

Since June 1, 2008, the Company has accounted for its investment in Paget using the equity method of accounting, reflecting the significant influence of Pembrook over Paget due to having one director in common, two officers in common and the provision of all administration and geological services. On November 30, 2011, the common directors and officers resigned from Paget and Pembrook ceased providing administration and geological services to Paget. As Pembrook no longer had significant influence over Paget, the Company ceased to account for its investment in Paget as an investment in an associate effective November 30, 2011. The investment in Paget was re-measured at the fair value of $1,358,000 (based on Paget’s closing market price as at November 30, 2011 as quoted on the TSX-V) resulting in an unrealized loss on investment in Paget of $497,891 being recognised in the Statement of Loss as an unrealized loss on investment in associate recorded at fair value. Effective December 1, 2011, Pembrook commenced accounting for its investment in Paget as an available-for-sale financial asset.

In April 2011, the Company signed an option agreement to sell its 100% interest in its Ball Creek property to Paget. Upon receipt of regulatory approval of the agreement, Paget issued 5,000,000 shares to Pembrook. For additional details on this transaction, please see Note 5.

The Company recognized a loss on investment of associate in Paget of $515,643 and a gain on dilution of $242,860 for the 11 month period ended November 30, 2011, the date on which the Company ceased to have significant influence over Paget. For the year ended December 31, 2010, the Company recognized a loss on investment of associate of $366,820 and gain on dilution of $579,286.

The Company’s investment in Paget was as follows:

$Balance, January 1, 2010 876,872Equity loss (366,820)Gain on dilution 579,286Transfer of five mineral properties 339,336Balance, December 31, 2010 1,428,674

Equity loss (515,643)Gain on dilution 242,860Share received pursuant to Ball Creek option agreement 700,000Balance, November 30, 2011 1,855,891

Reclassification of investment (1,855,891)Balance, December 31, 2011 -

9. Income TaxesAs at December 31, 2011, no deferred tax assets are recognized on the following temporary differences as it is not probable that sufficient future taxable profit will be available to realize such assets:

December 31, 2011

December 31, 2010

$ $Tax loss carryforwards 5,466,862 3,951,181Other 498,628 214,549Unrecognized deferred tax assets 5,965,490 4,165,729

The Company has non-capital losses of approximately $10.5 million (2010 – $8.3 million), $8.5 million (2010 – $6.7 million) and $2.7 million (2010 – $2.5 million) to reduce future income tax in Canada, Peru and Mexico respectively.

The losses in Canada expire between 2014-2031, in Peru the losses are available indefinitely and in Mexico between 2017-2021.

The provision for income taxes differs from the amount calculated using the Canadian federal and provincial statutory income tax rates of 26.5% (2010 – 28.5%) as follows:


$ $Expected tax expense (recovery) (2,444,391) (2,657,878)Non-deductible items 759,493 1,114,465Other (114,862) 35,736Deferred income tax assets not recognized 1,799,760 1,507,677

- -

10. Related Party Transactions Statement of Financial Position

The following amounts were due to/from companies that have directors in common with the Company or have a partner who is a director of the Company:

December 31, 2011

December 31, 2010

January 1, 2010

$ $ $Included in trade and other receivables 11,674 82,011 39,518Included in trade and other payables 140,201 15,120 -

Zincore has two directors in common with the Company and is considered a related party. The Company has an investment of 1,000,000 common shares of Zincore.


47

NotesPaget had a director and two officers in common with the Company at December 31, 2010 and was considered a related party. On November 30, 2011, the common director and officers resigned from Paget and Paget ceased to be considered a related party.

Statement of Loss and Comprehensive Loss

Transactions with related parties in the normal course of operations have been measured at the fair value, which is the consideration agreed to by the parties.

Year ended December 31,

Transaction Nature of Relationship 2011 2010$ $

Expenses included in general and administration on the Statement of LossLegal fees Partner is an officer 61,998 85,168Management/consulting Director and management

in common 988,899 495,828Share issuance cost Partner is an officer 43,869 1,819Recoveries included in general and administration on the Statement of LossRecovery of administrative expenses Paget Minerals Corp. 409,308 508,795

Up to November 30, 2011, the Company recovered rent and related costs for shared office space with Paget, and provided administrative and geological services to Paget under an intercompany common services and cost allocation agreement.

Compensation of Key Management Personnel


$ $Short-term employee benefits 1,675,431 1,759,826Share-based payments 947,869 733,908

Employee benefit expenses included in the Statement of Loss


$ $Employee benefit expenses included in the Statement of Loss 2,909,797 2,454,265

11. CommitmentsThe following table is a summary of the commitments of the Company at December 31, 2011:

Office and Warehouse

Management Services

Geological Services

Drilling, Helicopter

and Geophysical Total

$ $ $ $ $Within one year 232,616 233,546 157,034 172,894 796,090One to two years - 183,546 - - 183,546Two to three years - 183,546 - - 183,546

232,616 600,638 157,034 172,894 1,163,182

The table does not include cash payments or exploration expenditures required to maintain property option agreements in good standing with vendors, as those payments and expenditures are conditional on the Company electing to continue with the individual option agreements. If the Company chooses to terminate an option agreement, no further payments or exploration expenditures are required and related capitalized costs will be written off.

12. Supplemental Cash Flow Information


$ $

Non-cash investing and financing activities:Shares received for mineral properties 700,000 485,221

Composition of cash and cash equivalents:Cash 5,298,618 13,529,991Guaranteed investment certificates 35,681,089 6,667,000

40,979,707 20,196,991

13. Financial Instruments

The following table summarizes the Company’s financial instruments:

December 31, 2011 December 31, 2010 January 1, 2010

ClassificationsCarrying amount

Fair value

Carrying amount

Fair value

Carrying amount

Fair value

$ $ $ $ $ $Financial AssetsLoans and Receivables Cash and cash equivalents 40,979,707 40,979,707 20,196,991 20,196,991 21,153,760 21,153,760 n/a Deposits and reclamation deposits 133,750 133,750 183,750 183,750 178,750 178,750 n/a Trade and other receivables and Mineral Exploration Tax Credits receivable 389,135 389,135 283,587 283,587 155,982 155,982 n/aAvailable-for-Sale Investments 1,717,750 1,717,750 500,000 500,000 - - Level 1

43,220,342 43,220,342 21,164,328 21,164,328 21,468,982 21,468,982Financial LiabilitiesOther Financial Liabilities Trade and other payables 820,048 820,048 914,136 914,136 380,809 380,809 n/a

820,048 820,048 914,136 914,136 380,809 380,809

Fair values are determined directly by reference to published price quotation in an active market, when available. Investments in equity instruments that do not have an active quoted market price are measured at cost.

48

The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value as described as follows:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for the assets or liability either directly or indirectly; and

Level 3 – Inputs that are not based on observable market data.

The fair values of the Company’s cash and cash equivalents, deposits and reclamation deposits, trade and other receivables, Mineral Exploration Tax Credits receivable and trade and other payables approximate their carrying values due to their short-term nature. The Company’s financial instruments are exposed to certain financial risks, including credit risk, liquidity risk and market risk with respect to currency risk and interest risk.

a) Currency risk

The Company is exposed to financial risk related to the fluctuation of foreign exchange rates. The Company operates in Peru and Mexico where its functional currency is the US dollar. The functional currency of the corporate headquarters is the Canadian dollar.

As many expenses in Peru and Mexico are incurred in US dollars, significant change in the currency exchange rates between the Canadian dollar and the US dollar could have a material effect on the Company’s financial performance, financial position or cash flows. The Company has not hedged its exposure to currency fluctuations. The Company does, from time to time, convert Canadian dollars to US dollars in anticipation of upcoming cash needs in Peru and Mexico.

As of December 31, 2011, the Company is exposed to currency risk through the following assets and liabilities denominated in US dollars:

Amounts in Canadian dollar equivalents

$

Cash and cash equivalents 5,220,365Trade and other receivables 214,619Trade and other payables (583,078)

Assuming that all other variables remain constant, a 1% depreciation or appreciation of the Canadian dollar against the US dollar would result in an increase/decrease in the total value of the financial instruments of approximately of $48,519.

b) Credit risk

Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company’s maximum exposure to credit risk, defined as the sum of its cash and cash equivalents, trade and other receivables, METC receivable, deposits, reclamation deposits and investments, is $43,220,342. As of December 31, 2011, the Company had $40,979,707 in cash, deposits of $75,000 and reclamation deposits of $58,750. The Company’s cash, deposits and reclamation deposits are invested in highly liquid short-term interest-bearing investments and in savings accounts with major Canadian financial institutions, which are rated among the strongest financial institutions in the world.

c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages its liquidity risk through a planning, budgeting and cash forecasting process through which future cash needs are planned and anticipated. The Company’s goal is to ensure that cash balances are sufficient to cover in excess of one year of expenditures. The Company has funded all of its activities through private placements, including $16 million raised in 2010 and $38 million raised in 2011.

Cash and cash equivalents and working capital total $41.0 million and $40.9 million respectively at December 31, 2011 (December 31, 2010 – $20.2 million and $20.1 million).

In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments. The following table summarizes the Company’s significant liabilities and corresponding maturities.

At December 31, 2011Total < 1 year 1-3 years

$ $ $Trade and other payables 820,048 820,048 -Finance lease obligations 17,226 5,458 11,768Commitments 1,163,182 796,090 367,092

At December 31, 2010Total < 1 year 1-3 years

Trade and other payables 914,136 914,136 -Finance lease obligations 23,426 5,141 18,285Commitments 875,776 756,053 119,723

At January 1, 2010Total < 1 year 1-3 years

Trade and other payables 380,809 380,809 -Finance lease obligations 36,054 11,630 24,424Commitments 1,026,204 593,254 432,950

d) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The risk that the Company will realize a loss due to fluctuations in interest rates is mitigated due to surplus funds being held as cash or short-term interest-bearing deposits. Assuming that all other variables remain constant, a 1% increase or decrease in interest rates would result in an increase/decrease in the annual interest income of the Company of approximately of $395,749.

14. Management of CapitalThe Company’s only source of capital to date has been the issuance of common shares. The Company’s objectives are to pursue the advancement of its mineral properties. In order to do so, it endeavours to safeguard its ability to continue as a going concern, while maintaining a flexible capital structure. As the Company has no cash inflow from operations, the Company may attempt to issue new shares, pursue option agreements and/or joint ventures on properties, or sell assets in order to raise funds in the future. In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including capital deployment, results from the exploration of its properties and general industry conditions.

The Company’s current investment practice is to invest its cash surplus in savings accounts with major Canadian financial institutions and in highly liquid short-term interest-bearing investments, generally with maturities of 90 days or less from the original date of acquisition, selected with regards to the expected timing of expenditures from continuing operations.

The Company expects its current capital resources will be sufficient to carry its exploration plans and operations beyond its current fiscal year.


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Notes15. Segmented Information

The Company’s operations involve the acquisition, exploration and advancement of mineral resource properties.

The Company’s reportable operating segments are as follows:

Assets by Geographical SegmentDecember 31, 2011 Canada Peru Mexico Other Total

$ $ $ $ $Property and equipment 128,660 143,492 46,901 - 319,053Mineral properties 4,212,024 25,333,758 2,189,957 - 31,735,739Total assets 47,090,359 25,613,502 2,764,378 9,569 75,477,808Total liabilities 499,477 367,324 55,210 859 922,870

December 31, 2010 Canada Peru Mexico Other Total$ $ $ $ $

Property and equipment 171,694 184,501 65,394 - 421,589Mineral properties 5,066,785 15,926,613 282,528 - 21,275,926Total assets 27,370,558 16,248,961 1,105,064 15,655 44,740,238Total liabilities 298,117 546,836 180,156 4,074 1,029,183

January 1, 2010 Canada Peru Mexico Other Total$ $ $ $ $

Property and equipment 191,010 130,151 21,707 - 342,928Mineral properties 5,758,070 7,237,266 144,888 - 13,140,224Total assets 28,210,768 7,464,626 269,436 - 35,944,830Total liabilities 279,163 229,406 5,940 - 514,509

Operating Loss by Geographical SegmentCanada Peru Mexico Other Total

$ $ $ $ $

Year ended December 31, 2011 Finance income (355,527) - - - (355,527) Depreciation 29,670 100,986 12,253 - 142,909 Loss from associate 515,643 - - - 515,643 Gain on dilution of investment in associate (242,860) - - - (242,860)Net loss 4,957,430 3,755,964 534,410 (23,691) 9,224,113

Year ended December 31, 2010 Interest income (155,020) - - - (155,020) Amortization 72,811 82,262 5,460 - 160,533 Loss from associate 366,820 - - - 366,820 Gain on dilution of investment in associate (579,286) - - - (579,286)Net loss 4,943,981 3,118,546 1,195,153 68,206 9,325,886

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16. Transition to IFRSIFRS 1 First-time Adoption of International Financial Reporting Standards (”IFRS 1”) sets forth guidance for the initial adoption of IFRS. Under IFRS 1, the standards are applied retroactively at the transitional statement of financial position date with all adjustments to assets and liabilities booked to retained earnings unless certain exemptions are applied. The Company has applied the following exemptions to its opening statement of financial position dated January 1, 2010.

(a) Share-based payment transactions

IFRS 1 encourages, but does not require, first-time adopters to apply IFRS 2 Share-based Payments to equity instruments that were granted on or before November 7, 2002, or equity instruments that were granted subsequent to November 7, 2002 and vested before the date of the transition to IFRS. The Company has elected not to apply IFRS 2 to awards that vested prior to January 1, 2010.

(b) Foreign currency translation

In accordance with IFRS 1 optional exemptions, the Company has elected to transfer the cumulative translation differences, recognized as a separate component of equity, to deficit at the January 1, 2010 transition date. Under IAS 21 The Effects of Changes in Foreign Exchange, the cumulative translation differences are the result of establishing the functional currency of certain of the Company’s subsidiaries to be the US dollar.

IFRS employs a conceptual framework that is similar to Canadian Generally Accepted Accounting Principles (“GAAP”). However, there are some differences in certain matters of recognition, measurement and disclosure that impact the Company’s financial statements. While the adoption of IFRS has not changed the Company’s actual cash flows, it has resulted in changes to the Company’s reported financial position and results of operations. In order to allow the users of the financial statements to better understand those changes, the Company’s Canadian GAAP statement of loss and comprehensive loss and statement of financial position for the year ended December 31, 2010 have been reconciled to IFRS. The Canadian GAAP statement of financial position for the year ended January 1, 2010 has also been reconciled to IFRS. The reconciliation differences are explained as follows.

(a) Share-based payments

Under Canadian GAAP, the fair value of share-based payments is calculated as one grant and the resulting fair value is recognized on a straight-line basis over the vesting period and forfeitures are recognized as they occur.

Under IFRS, each tranche of an award with different vesting dates is considered a separate grant for the purposes of calculating fair value and the fair values are amortized over the vesting period for the respective tranches. Forfeitures are estimated and recognized in the period they are estimated to occur and are revised to reflect actual forfeitures in subsequent periods.

The impact of accounting for share-based payments under IFRS is a credit to share option reserve and corresponding debit to share-based payments of $1,188,484 at January 1, 2010 and a debit to share-based payment reserve and a corresponding credit to share-based payments of ($394,711) at December 31, 2010.

(b) Deferred income tax on flow-through shares

Upon the renouncement of exploration expenditures, a deferred tax liability is established. Under Canadian GAAP, the corresponding entry is booked to share capital whereas under IFRS, the corresponding entry is booked to the statement of loss.

The impact of the accounting for deferred income tax on flow-through shares under IFRS is a credit to share capital and a corresponding debit to deficit of $1,370,764 at January 1, 2010.

(c) Elimination of intercompany gains

Under Canadian GAAP, the Company eliminated all profit pertaining to the sale of five mineral properties in 2010 to its equity-accounted for associate, Paget. Under IFRS, downstream transactions with an equity-accounted associate require the elimination of profit only to the extent that the Company holds an interest in the equity-accounted associate.

The impact under IFRS is a debit to the investment in Paget and a corresponding credit to recovery of mineral property costs of $164,116 at December 31, 2010.

(d) Consolidation of foreign subsidiaries denominated in foreign currencies

Under Canadian GAAP, the concept of a group functional currency is applied. Under IFRS, each subsidiary is evaluated to establish its functional currency on an entity by entity basis. The Company has determined that as at the January 1, 2010 transition date, the US dollar was the functional currency of Paget Southern Resources S. de R.L. de C.V., Pembrook Offshore Corp., Pembrook Peru Corp., and Compania de Exploraciones Orion S.A.C. whereas the Canadian dollar is the functional currency of the legal entity Pembrook Mining Corp. The revision of the functional currency of these entities impacts the consolidation of the Company into its presentation currency, the Canadian dollar.

The impact of accounting for the translation of subsidiaries under IFRS to the presentation currency is summarized as follows:

January 1, 2010

December 31, 2010

$ $Property & equipment (7,450) (12,173)Mineral properties (69,175) (464,517)Deficit 76,625 -Foreign currency translation differences - (145,232)Foreign exchange gain/(loss) - (254,834)

(e) Investment in associate

The Company’s investment in Paget Minerals Corp., gain on dilution of equity investment and share of loss of associate were adjusted following Paget’s adjustments on its own financial statements upon its adoption of IFRS.

The impact of the Paget’s transition to IFRS on Pembrook’s financial statements is summarized as follows:

January 1, 2010

December 31, 2010

$ $Deficit 85,365 -Share in loss of associate - (58,888)Gain on dilution of associate - 17,925Investment in associate (85,365) (126,329)

The impacts of the transition from Canadian GAAP to IFRS on the cash flows are immaterial and therefore reconciliations of the consolidated statements of cash flow have not been presented.


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NotesThe January 1, 2010 Canadian GAAP statement of financial position has been reconciled to IFRS as follows:

January 1, 2010

Note Canadian GAAPEffect of Transition

to IFRS IFRS$ $ $

ASSETSCurrent Assets Cash and cash equivalents 21,153,760 - 21,153,760 Trade and other receivables 136,475 - 136,475 Mineral Exploration Tax Credit receivable 19,507 - 19,507 Deposits 125,000 - 125,000 Prepaid expenses 96,314 - 96,314

21,531,056 - 21,531,056

Reclamation Deposits 53,750 - 53,750Property and Equipment (d) 350,378 (7,450) 342,928Investment in Associate (e) 962,237 (85,365) 876,872Mineral Properties (d) 13,209,399 (69,175) 13,140,224

36,106,820 (161,990) 35,944,830

LIABILITIESCurrent LiabilitiesTrade and other payables 380,809 - 380,809Finance lease obligation – current portion 11,630 - 11,630Lease inducement – current portion 12,516 - 12,516

404,955 - 404,955

Finance Lease Obligation 24,424 - 24,424Lease Inducement 21,903 - 21,903Provision for Environmental Rehabilitation 63,227 - 63,227

514,509 - 514,509

EQUITYShare Capital (b) 45,783,386 1,370,764 47,154,150Reserves (a) 3,982,048 1,188,484 5,170,532Deficit (a) (b) (d) (e) (14,173,123) (2,721,238) (16,894,361)

35,592,311 (161,990) 35,430,32136,106,820 (161,990) 35,944,830

52

The Canadian GAAP statements of loss and comprehensive loss for the year ended December 31, 2010 have been reconciled to IFRS as follows:

Year ended December 31, 2010


to IFRS IFRS$ $ $

Operating and Administrative Expenses General exploration 2,085,768 - 2,085,768 Write-off of mineral property costs 1,965,002 - 1,965,002 Recovery of mineral property costs (c) (40,451) (164,116) (204,567) General and administration (a) 5,649,699 (394,711) 5,254,988Loss before other items (9,660,018) 558,827 (9,101,191)Other Items Share of loss of associate (e) (307,932) (58,888) (366,820) Gain on dilution of equity investment (e) 561,361 17,925 579,286 Loss on disposal of property and equipment (8,763) - (8,763) Foreign exchange loss (d) (161,560) (254,834) (416,394) Finance income 155,020 - 155,020 Finance expense (167,024) - (167,024)

Net Loss (9,588,916) 263,030 (9,325,886)Other Comprehensive Income Unrealized gain/(loss) on available-for-sale investments (net of taxes) 190,000 - 190,000 Foreign currency translation differences (d) - (145,232) (145,232)Total Comprehensive Loss (9,398,916) 117,798 (9,281,118)

The Canadian GAAP statement of financial position as at December 31, 2010 has been reconciled to IFRS as follows:

December 31, 2010


to IFRS IFRS$ $ $

ASSETSCurrent Assets Cash and cash equivalents 20,196,991 - 20,196,991 Trade and other receivables 283,587 - 283,587 Deposits 125,000 - 125,000 Prepaid expenses 449,721 - 449,721

21,055,299 - 21,055,299Reclamation Deposits 58,750 - 58,750Investment 500,000 - 500,000Property and Equipment (d) 433,762 (12,173) 421,589Investment in Associate (c) (e) 1,390,887 37,787 1,428,674Mineral Properties (d) 21,740,443 (464,517) 21,275,926

45,179,141 (438,903) 44,740,238

LIABILITIESCurrent Liabilities Trade and other payables 914,136 - 914,136 Finance lease obligation – current portion 5,141 - 5,141 Lease inducement – current portion 12,516 - 12,516

931,793 - 931,793Finance Lease Obligation 18,285 - 18,285Lease Inducement 9,387 - 9,387Provision for Environmental Rehabilitation 69,718 - 69,718

1,029,183 - 1,029,183

EQUITYShare Capital (b) 62,129,182 1,370,764 63,499,946Reserves (a)(d) 5,782,815 648,541 6,431,356Deficit (a)(b)(c)(d)(e) (23,762,039) (2,458,208) (26,220,247)

44,149,958 (438,903) 43,711,05545,179,141 (438,903) 44,740,238


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Notes17. Mineral properties

December 31, 2011 Peru

Huiniccasa Hurricane Tambo Cecilia

SamanaSanta

Helena Lidia Viruna Sajapampa Viento OtherTotal Peru

$ $ $ $ $ $ $ $ $ $ $ Balance, December 31, 2010 3,602,541 4,418,391 763,649 613,177 748,954 2,327,767 1,325,958 188,082 874,596 1,063,498 15,926,613Acquisition and mineral licenses 4,886 250,293 (16,522) 163 - 199,495 33,968 140 375,441 451,371 1,299,235Assays and sample storage 231 5,932 7 17 68 137,646 40,445 6 236,153 18,534 439,039Camp costs, supplies and other 126,858 111,201 15,360 3,889 374 1,892,983 422,495 1,825 1,128,719 187,416 3,891,120Drilling 18,114 161,977 14,407 - - 810,497 182,199 - 1,048,658 7,414 2,243,266Geological consulting fees and salaries 282,346 193,085 10,108 3,414 84 377,168 197,179 422 548,731 219,331 1,831,868Geophysical surveys - 252,556 - - - 26,141 - - 65,762 42,859 387,318Transportation 22,955 382,031 2,264 - - 124,285 49,126 - 16,931 18,797 616,389Road construction 1,690 - - - - - - - - - 1,690Total 4,059,621 5,775,466 789,273 620,660 749,480 5,895,982 2,251,370 190,475 4,294,991 2,009,220 26,636,538Write-offs - - - - (771,033) - - - - (495,471) (1,266,504)Sale of mineral property - - - (637,909) - - - - - - (637,909)Foreign exchange movement 122,814 154,290 25,706 17,249 21,553 94,404 48,685 9,898 45,032 62,002 601,633Balance, December 31, 2011 4,182,435 5,929,756 814,979 - - 5,990,386 2,300,055 200,373 4,340,023 1,575,751 25,333,758

December 31, 2011 Canada Mexico

Ball Creek Fernie Cariboo Schaft Creek

Total Canada

Rio Sonora

Japonesas Norte Batamote Other

Total Mexico Total

$ $ $ $ $ $ $ $ $ $ $ Balance, December 31, 2010 4,677,374 230,811 17,733 140,867 5,066,785 212,313 - - 70,215 282,528 21,275,926 Acquisition and mineral licenses 2,573 - - - 2,573 34,562 158,845 247,300 97,692 538,399 1,840,207 Assays and sample storage - - - - - 3,385 78,298 110,128 43,776 235,587 674,626 Camp costs, supplies and other 736 - 25,178 - 25,914 7,913 38,870 28,134 28,344 103,261 4,020,295 Drilling - - - - - 160,084 357,392 286,603 - 804,079 3,047,345 Geological consulting fees and salaries 530 - 352 - 882 10,349 49,846 46,317 55,345 161,857 1,994,607 Geophysical surveys - - - - - - - - - - 387,318 Transportation - - - - - 1,600 6,159 6,483 9,657 23,899 640,288 Road construction - - - - - - - - - - 1,690 Recovery of mineral exploration expenses (700,000) - - - (700,000) - - - - - (700,000)Total 3,981,213 230,811 43,263 140,867 4,396,154 430,206 689,410 724,965 305,029 2,149,610 33,182,302 Write-offs - - (43,263) - (43,263) - - - (13,291) (13,291) (1,323,058)Sale of mineral property - - - (140,867) (140,867) - - - - - (778,776)Foreign exchange movement - - - - - 11,733 11,797 22,704 7,404 53,638 655,271 Balance, December 31, 2011 3,981,213 230,811 - - 4,212,024 441,939 701,207 747,669 299,142 2,189,957 31,735,739

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December 31, 2010 Peru

Huiniccasa Hurricane Tambo Cecilia Samana

Santa Helena Lidia Viruna Sajapampa La Golda Viento Other

Total Peru

$ $ $ $ $ $ $ $ $ $ $ $ Balance, December 31, 2009 1,721,777 1,292,285 775,869 608,609 748,357 773,400 386,276 293,452 191,499 12,761 432,981 7,237,266 Acquisition and mineral licenses 19,325 194,571 479 19,162 8,121 314,322 61,774 17,989 19,164 242,961 364,329 1,262,197 Assays and sample storage 40,845 59,659 143 140 70 109,383 29,632 17 42,023 25,134 31,157 338,203 Camp costs, supplies and other 929,610 733,290 2,178 1,335 4,873 387,821 493,190 3,499 249,802 185,110 295,449 3,286,157 Drilling 413,124 1,233,607 - - - 112,836 155,053 1,306 104,628 33,965 82,143 2,136,662 Geological consulting fees and salaries 350,617 419,085 - 468 1,884 297,355 179,114 2,303 96,021 297,499 115,612 1,759,958 Geophysical surveys 13,659 443,639 - - - 247,495 9,073 - 26,773 95,449 39,576 875,664 Ministry assessment - - - - - - - - - - - - Stock-based compensation - - - - - - - - - - - - Transportation 25,873 157,297 - - 99 144,816 46,438 - 5,899 6,765 6,127 393,314 Recovery of mineral exploration expenses - - - - - - - - - - - - Road construction 175,457 - - - - - - - - - - 175,457 Asset retirement costs - - - - - - - - - - - - METC - - - - - - - - - - - - Option payment received – share - - - - - - - (124,000) - - - (124,000)Total 3,690,287 4,533,433 778,669 629,714 763,404 2,387,428 1,360,550 194,566 735,809 899,644 1,367,374 17,340,878 Write-offs - - - - - - - - (737,595) - (277,252) (1,014,847)Foreign exchange movement (87,746) (115,042) (15,020) (16,537) (14,450) (59,661) (34,592) (6,484) 1,786 (25,048) (26,624) (399,418)Balance, December 31, 2010 3,602,541 4,418,391 763,649 613,177 748,954 2,327,767 1,325,958 188,082 - 874,596 1,063,498 15,926,613

December 31, 2010 Canada MexicoBall

Creek Fernie Dragon Cariboo Schaft Creek Other

Total Canada Jacala

Rio Sonora Other

Total Mexico Total

$ $ $ $ $ $ $ $ $ $ $ $ Balance, December 31, 2009 4,677,238 230,594 198,118 203,137 140,867 308,116 5,758,070 75,893 68,995 - 144,888 13,140,224 Acquisition and mineral licenses - - - 20 - 7,829 7,849 69,238 44,583 71,887 185,708 1,455,754 Assays and sample storage - - - - - 505 505 51,504 - - 51,504 390,212 Camp costs, supplies and other - - - - - - - 48,271 17,748 - 66,019 3,352,176 Drilling - - - - - - - 286,536 49,416 - 335,952 2,472,614 Geological consulting fees and salaries 328 217 - 9,064 - 3,300 12,909 69,735 26,065 - 95,800 1,868,667 Geophysical surveys - - - - - - - - - - - 875,664 Ministry assessment - - - - - - - - - - - - Stock-based compensation - - - - - - - - - - - - Transportation 513 - - - - - 513 2,011 2,781 - 4,792 398,619 Recovery of mineral exploration expenses - - - (8,488) - - (8,488) - - - - (8,488)Road construction - - - - - - - - - - - 175,457 Asset retirement costs - - - - - - - - - - - - METC (705) - - - - - (705) - - - - (705)Option payment received – share - - - (186,000) - - (186,000) - - - - (310,000)Total 4,677,374 230,811 198,118 17,733 140,867 319,750 5,584,653 603,188 209,588 71,887 884,663 23,810,194 Transfer to Paget Minerals - - - - - (175,221) (175,221) - - - - (175,221)Write-offs - - (198,118) - - (144,529) (342,647) (607,508) - - (607,508) (1,965,002)Foreign exchange movement - - - - - - - 4,320 2,725 (1,672) 5,373 (394,045)Balance, December 31, 2010 4,677,374 230,811 - 17,733 140,867 - 5,066,785 - 212,313 70,215 282,528 21,275,926


55

Corporate InformationBoard of DirectorsAlan Moon 3 5 Chair of the BoardBrian Booth 4 President & CEOJorge Benavides1 2 5 Dan Innes 4 Chair of Health, Safety, Environment & Community CommitteeStephen Kurtz 1 3 5 Chair of Audit CommitteeAnthony Makuch1 2 5 Chair of Compensation CommitteeKevin McArthur 2 3 5 Chair of Corporate Governance & Nominating CommitteeRichard Petersen 4

Wang Dongbo5

ManagementBrian Booth President & CEOApril Hashimoto Chief Financial OfficerBruce Harvey Executive VP & President, South AmericaPaul Simpson Corporate Secretary & Legal CounselHenry Marsden VP Exploration, MexicoAngela Dearie Director of Corporate CommunicationsBuks Lubbe Chief Geophysicist, South America

Share StructureCommon shares 133,562,889Stock options* 9,013,414Total shares* 142,576,303Cash position* $40.5 millionLast private placement Jun & Aug 2011 $2.50/share15,430,000 shares for gross proceeds of $38.58 million

*At Dec 31, 2011

AuditorsDeloitte & Touche LLP2800-1055 Dunsmuir Street4 Bentall CentreVancouver BCCanada V7X 1P4T 604 669 4466F 604 685 0395

ContactAngela A. DearieDirector of Corporate [email protected] Mining Corp.1160-1040 W Georgia StVancouver BCCanada V6E 4H1T 778 327 6540F 778 327 6546

Committees1 Audit2 Compensation3 Corporate Governance & Nominating4 Health, Safety, Environment & Community5 Independent

Paper: cover and editorial on Productolith 30% PCW recycled paper, and financial review on Astrolite 100% PCW recycled paper.

56

Suite 1160, 1040 West Georgia Street, Vancouver, BC, Canada V6E 4H1T 778 327 6540, F 778 327 6546

www.pembrookmining.com

Pembrook is committed to sustainability in all its practices. The Company chose to supportFSC goals by requesting its reports be printed on FSC chain of custody certified materials.

Lidia – “pot of gold”

annual report 2011 - pembrook · pdf fileannual report 2011. cover photo: core from viento ......

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