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  • Unaudited Interim Consolidated Financial Statements

    Three and Twelve Months Ended October 31, 2011

  • Page 2

    ADRIANA RESOURCES INC.

    (An Exploration Stage Company)

    Interim Consolidated Balance Sheets(Unaudited and expressed in Canadian dollars)

    As at October 31 October 31

    2011 2010

    ASSETS

    Current assets

    Cash and cash equivalents 18,172,940$ 1,879,633$

    Marketable securities (Note 4) 345,000 -

    Other receivables 1,385,701 494,988

    Prepaid expenses 359,258 103,201

    20,262,899 2,477,822

    Capital assets (Note 5) 82,154,539 68,923,389

    102,417,438$ 71,401,211$

    LIABILITIES

    Current liabilities

    Accounts payable and accrued liabilities 4,771,544$ 4,145,664$

    Current portion of interest payable (Note 6) 1,580,973 34,117

    Convertible debentures, current portion (Note 6) 6,080,649 3,273,373

    12,433,166 7,453,154

    Interest payable (Note 6) - 1,034,863

    Convertible debentures (Note 6) - 5,678,968

    Future income tax liabilities (Note 7) 8,973,556 7,236,990

    21,406,722 21,403,975

    Non-controlling interest (Note 8) 11,719,170 11,350,566

    EQUITY

    Share capital (Note 9) 122,203,578 84,309,312

    Equity portion of convertible debentures 1,423,529 2,207,021

    Warrants (Note 9d) 528,559 530,552

    Contributed surplus (Note 10) 4,988,724 4,667,714

    Deficit (59,852,844) (53,067,929)

    69,291,546 38,646,670

    102,417,438$ 71,401,211$

    Commitments and contingencies (Note 13)

    Subsequent event (Note 16)

    The accompanying notes form an integral part of the consolidated financial statements.

  • Page 3

    ADRIANA RESOURCES INC.

    (An Exploration Stage Company)

    Interim Consolidated Statements of Loss and Comprehensive Loss and Deficit(Unaudited and expressed in Canadian dollars)

    Three months ended October 31 Twelve months ended October 31

    2011 2010 2011 2010

    Administrative expenses

    Amortization 17,999$ 23,541$ 63,427$ 36,542$

    Business development 132,136 (54,868) 659,929 159,290

    Interest on convertible debentures 241,927 411,152 1,189,330 1,563,897

    Investor relations 27,488 69,426 177,726 183,668

    Professional and consulting fees 826,719 351,591 3,383,341 1,091,215

    Rent and office expenses 85,953 66,693 330,230 525,655

    Salaries and benefits 368,357 429,601 1,514,702 1,599,139

    Stock-based compensation (Note 9c) 278,051 232,428 948,359 1,136,406

    Transfer agent and filing fees 2,512 4,426 87,169 47,955

    Travel 9,186 9,157 30,115 45,627

    Loss before the following: 1,990,328 1,543,147 8,384,328 6,389,394

    Other (income) expenses

    Interest income (53,942) (3,176) (185,666) (7,938)

    Gain on foreign exchange (493,740) (120,236) (238,309) (257,451)

    Loss realized on former premises - 15,930 - 367,466

    Loss on disposal of capital assets 8,352 - 8,352 -

    Write-off of mineral property interests - - - 200,183

    Non-controlling interest (Note 8) (4,357) (249,280) (281,396) (336,270)

    Unrealized (gain) loss

    on marketable securities (Note 4) (40,000) - 375,000 -

    Loss (gain) on disposal of mineral

    property interests (Note 5biii) - 364,375 (1,185,252) (375,716)

    Other income (92,142) - (92,142) -

    Loss before income taxes 1,314,499 1,550,760 6,784,915 5,979,668

    Future income tax recovery (Note 9b) - (321,000) - (321,000)

    Loss and comprehensive loss

    for the period 1,314,499 1,229,760 6,784,915 5,658,668

    Deficit, beginning of the period 58,538,345 51,838,169 53,067,929 47,409,261

    Deficit, end of the period 59,852,844$ 53,067,929$ 59,852,844$ 53,067,929$

    Basic and diluted loss

    per common share (0.01)$ (0.01)$ (0.05)$ (0.07)$

    Weighted average number

    of shares outstanding 149,106,709 87,800,775 134,844,931 81,516,902

    The accompanying notes form an integral part of the consolidated financial statements.

  • Page 4

    ADRIANA RESOURCES INC.

    (An Exploration Stage Company)

    Interim Consolidated Statements of Cash Flows

    (Unaudited and expressed in Canadian dollars)

    Three months ended October 31 Twelve months ended October 31

    2011 2010 2011 2010

    Cash provided by (used in)

    Operating activities

    Loss for the period (1,314,499)$ (1,229,760) (6,784,915)$ (5,658,668)

    Items not involving cash:

    Amortization 17,999 23,541 63,427 36,542

    Unrealized portion of foreign

    exchange gain (438,375) (150,517) (164,382) (289,253)

    Loss on disposal of capital assets 8,352 - 8,352 -

    Accretion on convertible debentures 103,009 184,250 535,203 703,413

    Stock-based compensation 278,051 232,428 948,359 1,136,406

    Application of provision for loss

    on former premises (11,000) (20,000) (58,000) 281,000

    Write-off of mineral property interests - - - 200,183

    Unrealized (gain) loss on marketable securities (40,000) - 375,000 -

    Non-controlling interest (4,357) (249,280) (281,396) (336,270)

    Loss (gain) on disposal of mineral

    property interests - 364,375 (1,185,252) (375,716)

    Future income tax liabilities - (321,000) - (321,000)

    (1,400,820) (1,165,963) (6,543,604) (4,623,363) Changes in non-cash working capital:

    Other receivables and prepaid expenses (681,032) 228,937 (1,146,770) 319,728

    Accounts payable and accrued liabilities 64,938 70,850 1,195,873 548,170

    Cash used in operating activities (2,016,914) (866,176) (6,494,501) (3,755,465)

    Investing activities

    Port facility expenditures (316,334) (90,695) (896,297) (405,302)

    Mineral property expenditures (6,947,482) (1,638,863) (11,333,611) (4,794,670)

    Office equipment expenditures (54,357) (5,616) (88,174) (25,448)

    Proceeds from disposal

    of mineral property interests - 35,625 465,252 375,716

    Cash used in investing activities (7,318,173) (1,699,549) (11,852,830) (4,849,704)

    Financing activities

    Proceeds from share issuance, net

    of issue costs - 1,920,076 33,651,723 10,096,642

    Proceeds from exercise of options and warrants 82,500 - 988,915 26,291

    Cash provided by financing activities 82,500 1,920,076 34,640,638 10,122,933

    (Decrease) increase in cash and cash equivalents (9,252,587) (645,649) 16,293,307 1,517,764

    Cash and cash equivalents,

    beginning of the period 27,425,527 2,525,282 1,879,633 361,869

    Cash and cash equivalents, end of the period 18,172,940$ 1,879,633$ 18,172,940$ 1,879,633$

    Supplementary cash flow informationInterest paid -$ 256,629$ 142,112$ 256,629$

    The accompanying notes form an integral part of the consolidated financial statements.

  • ADRIANA RESOURCES INC. (An Exploration Stage Company)

    NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

    FOR THE TWELVE MONTHS ENDED OCTOBER 31, 2011 AND 2010

    (Unaudited and expressed in Canadian Dollars)

    Page 5

    1. NATURE OF OPERATIONS

    Adriana Resources Inc. (along with its subsidiaries, Adriana or the Company) was incorporated under the laws of British Columbia and continued under the Canada Business Corporations Act. The Companys principal business activities include the acquisition, exploration and development of resource properties including its Lac Otelnuk Iron Ore Project in Nunavik, Qubec (the Lac Otelnuk Property) and the development of an iron ore port facility in Br

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