RYMM Royal Mines and Minerals Corp (CE)

DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES

Basis of Presentation – The accompanying unaudited financial statements have been prepared in accordance with the Securities and Exchange Commission requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. The financial statements should be read in conjunction with the Form 10-K for the fiscal year ended April 30, 2010 of Royal Mines and Minerals Corp. (the “Company”).

The interim financial statements present the balance sheets, statements of operations, stockholders’ equity, and cash flows of the Company. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

Description of Business – The Company is considered an exploration stage company. The Company's primary objectives are to 1) commercially extract and refine precious metals from its own and others mining assets, 2) joint venture, acquire and develop projects in North America, and 3) generate ongoing revenues from the licensing of its proprietary, environmentally-friendly lixiviation process. The Company has not yet realized significant revenues from its primary objectives.

History – The Company was incorporated on December 14, 2005 under the laws of the State of Nevada. On June 13, 2007, the Company incorporated a wholly-owned subsidiary, Royal Mines Acquisition Corp., in the state of Nevada.

On October 5, 2007, Centrus Ventures Inc. (Centrus) completed the acquisition of Royal Mines Inc. (“Royal Mines”). The acquisition of Royal Mines was completed by way of a “triangular merger” pursuant to the provisions of the Agreement and Plan of Merger dated September 24, 2007 (the “First Merger Agreement”) among Centrus, Royal Mines Acquisition Corp. (“Centrus Sub”), a wholly owned subsidiary of Centrus, Royal Mines and Kevin B. Epp, the former sole executive officer and director of Centrus. On October 5, 2007, under the terms of the First Merger Agreement, Royal Mines was merged with and into Centrus Sub, with Centrus Sub continuing as the surviving corporation (the “First Merger”).

On October 6, 2007, a second merger was completed pursuant to an Agreement and Plan of Merger dated October 6, 2007 (the “Second Merger Agreement”) between Centrus and its wholly owned subsidiary, Centrus Sub, whereby Centrus Sub was merged with and into Centrus, with Centrus continuing as the surviving corporation (the “Second Merger”). As part of the Second Merger, Centrus changed its name from “Centrus Ventures Inc.” to “Royal Mines And Minerals Corp.”(“the Company”). Other than the name change, no amendments were made to the Articles of Incorporation.

Under the terms and conditions of the First Merger Agreement, each share of Royal Mines’ common stock issued and outstanding immediately prior to the completion of the First Merger was converted into one share of Centrus’ common stock. As a result, a total of 32,183,326 shares of Centrus common stock were issued to former stockholders of Royal Mines. In addition, Mr. Epp surrendered 23,500,000 shares of Centrus common stock for cancellation in consideration of payment by Centrus of $0.001 per share for an aggregate consideration of $23,500. As a result, upon completion of the First Merger, the former stockholders of Royal Mines owned approximately 69.7% of the issued and outstanding common stock.

As such, Royal Mines is deemed to be the acquiring enterprise for financial reporting purposes. All acquired assets and liabilities of Centrus were recorded at fair value on the date of the acquisition, as required by the purchase method of accounting, and the tangible net liabilities were debited against equity of the Company. There are no continuing operations of Centrus from the date of acquisition.

DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (continued)

Going Concern - As of October 31, 2010, the Company has incurred cumulative net losses of approximately $10,328,221 from operations and has negative working capital of $634,670. The Company is still in the exploration stage and has not fully commenced its mining and minerals processing operations, raising substantial doubt about its ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on the Company raising additional sources of capital and the successful execution of the Company’s objectives. The Company will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents - The Company considers all investments with an original maturity of three months or less to be a cash equivalent.

Property and Equipment - Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which are generally 3 to 10 years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful life of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

Mineral Property Rights – Costs of acquiring mining properties are capitalized upon acquisition. Mine development costs incurred either to develop new ore deposits, to expand the capacity of mines, or to develop mine areas substantially in advance of current production are also capitalized once proven and probable reserves exist and the property is a commercially mineable property. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates the carrying value of capitalized mining costs and related property and equipment costs, to determine if these costs are in excess of their recoverable amount whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Evaluation of the carrying value of capitalized costs and any related property and equipment costs would be based upon expected future cash flows and/or estimated salvage value in accordance with Accounting Standards Codification (ASC) 360-10-35-15, Impairment or Disposal of Long-Lived Assets .

Exploration Costs – Mineral exploration costs are expensed as incurred.

Impairment of Long-Lived Assets – The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17, Measurement of an Impairment Loss , if events or circumstances indicate that their carrying amount might not be recoverable. As of July 31, 2010 exploration progress is on target with the Company’s exploration and evaluation plan and no events or circumstances have happened to indicate the related carrying values of the properties may not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using the rules of ASC 930-360-35, Asset Impairment , and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets .

DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (continued)

Various factors could impact our ability to achieve forecasted production schedules. Additionally, commodity prices, capital expenditure requirements and reclamation costs could differ from the assumptions the Company may use in cash flow models used to assess impairment. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically.

Material changes to any of these factors or assumptions discussed above could result in future impairment charges to operations.

Asset Retirement Obligation - The Company follows ASC 410, Asset Retirement and Environmental Obligations , which requires that an asset retirement obligation (“ARO”) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset. The cost of the tangible asset, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the asset. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. The fair value of the ARO is measured using expected future cash flow, discounted at the Company’s credit-adjusted risk-free interest rate. To date, no significant asset retirement obligation exists due to the early stage of exploration. Accordingly, no liability has been recorded.

Fair Value of Financial Instruments - Fair value accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (continued)

Research and Development - All research and development expenditures are expensed as incurred.

Earnings (Loss) Per Share - The Company follows ASC 260, Earnings Per Share, and ASC 480, Distinguishing Liabilities from Equity, which establish standards for the computation, presentation and disclosure requirements for basic and diluted earnings per share for entities with publicly held common shares and potential common stock issuances. Basic earnings (loss) per share are computed by dividing net income by the weighted average number of common shares outstanding. In computing diluted earnings per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities, such as stock options and warrants. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. Common stock equivalents, which include stock options and warrants to purchase common stock, on October 31, 2010 that were not included in the computation of diluted EPS because the effect would be antidilutive were 74,633,100.

Income Taxes - The Company accounts for its income taxes in accordance with ASC 740, Income Taxes , which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

For acquired properties that do not constitute a business as defined in ASC 805-10-55-4, Definition of a Business , deferred income tax liability is recorded on GAAP basis over income tax basis using statutory federal and state rates. The resulting estimated future federal and state income tax liability associated with the temporary difference between the acquisition consideration and the tax basis is computed in accordance with ASC 740-10-25-51, Acquired Temporary Differences in Certain Purchase Transactions that are Not Accounted for as Business Combinations , and is reflected as an increase to the total purchase price which is then applied to the underlying acquired assets in the absence of there being a goodwill component associated with the acquisition transactions.

Expenses of Offering - The Company accounts for specific incremental costs directly to a proposed or actual offering of securities as a direct charge against the gross proceeds of the offering.

Stock-Based Compensation – The Company accounts for share based payments in accordance with ASC 718, Compensation - Stock Compensation , which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on the grant date fair value of the award. In accordance with ASC 718-10-30-9, Measurement Objective – Fair Value at Grant Date , the Company estimates the fair value of the award using a valuation technique. For this purpose, the Company uses the Black-Scholes option pricing model. The Company believes this model provides the best estimate of fair value due to its ability to incorporate inputs that change over time, such as volatility and interest rates, and to allow for actual exercise behavior of option holders. The compensation cost is recognized over the requisite service period which is generally equal to the vesting period. Upon exercise, shares issued will be newly issued shares from authorized common stock.

Recent Accounting Standards – From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) that are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards did not or will not have a material impact on the Company’s financial statements upon adoption.

DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (continued)

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures About Fair Value Measurements , which requires reporting entities to make new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. ASU 2010-6 is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010. The Company does not have any assets or liabilities classified as Level 3. The Company has adopted the Level 1 and Level 2 amendments accordingly. As the update only pertained to disclosures, it had no impact on the Company’s financial position, results of operations, or cash flows upon adoption.

In February 2010, the FASB issued ASU 2010-09, Subsequent Events (Topic 855), Amendment to Certain Recognition and Disclosure Requirements , to remove the requirement for SEC filers to disclose the date through which an entity has evaluated subsequent events. This change removes potential conflicts with current SEC guidance and clarifies the intended scope of the reissuance disclosure provisions. The update was effective upon its date of issuance, February 24, 2010, and the Company has adopted the amendments accordingly. As the update only pertained to disclosures, it had no impact on the Company’s financial position, results of operations, or cash flows upon adoption.

LOAN RECEIVABLE

As of October 31, 2010 and April 30, 2010, the Company has advanced $600,000 and $400,000, respectively, to Golden Anvil to permit Golden Anvil to complete its refurbishment and relocation of its mineral processing plant in Nayarit, Mexico. On August 25, 2010, the Company entered into a loan agreement with Golden Anvil, covering the total $600,000 advanced by the Company to Golden Anvil. The loan bears no interest, matures on December 31, 2011, and is secured by Golden Anvil’s equipment and mineral claims. The loan agreement replaces the loan provisions of the toll processing agreement dated December 3, 2009.

PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

INTELLECTUAL PROPERTY

On April 2, 2007 the Company entered into a Technology and Asset Purchase Agreement (“NVRM Agreement”) with Robert H. Gunnison and New Verde River Mining Co. Inc. (“NVRM”), whereby the Company acquired equipment and the technology for lixiviation of metals from ore utilizing thiourea stabilization (“Intellectual Property”). The equipment and intellectual property were acquired with the issuance of 2,000,000 shares of the Company’s $0.10 per share common stock and a future cash payment of $300,000, for a purchase price of $500,000. The purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values at the date of acquisition. The intellectual property was valued at $200,000 and is being amortized quarterly on a straight-line basis over a 5 year period. The Company recorded $20,000 of amortization expense for the six months ended October 31, 2010 and 2009.

MINERAL PROPERTIES

As of October 31, 2010 and April 30 2010, mineral properties totaling $42,600 and $35,800, respectively, consist of twenty-one (21) mining claims located south of Searchlight, Nevada in the Piute Valley. On January 28, 2007, the Company entered into mineral option agreements to acquire an 87.5% interest in twenty-four (24) mining claims with the issuance of 1,050,000 shares of the Company’s common stock on the date of signing of the option agreement, with the provision that the Company issue an additional 420,000 and 210,000 shares on the fifth anniversary and tenth anniversary, respectively, of the signing of the option agreement if the Company wishes to acquire legal interest to the mining claims. The transaction was valued at an agreed upon price of $10,500. Annual renewal fees are capitalized. Each mining claim is comprised of 160 acres. In August 2008 the Company did not pay the renewal fee on four (4) of the mining claims after confirming title to the claims were void due to not being properly located and being subject to prior segregation.

On March 16, 2007 the Company entered into a lease agreement of property with one (1) mining claim, for a term of twenty years, for exploration and potential mining production on 20 acres in Searchlight, Nevada. The Company paid a one-time signing bonus of $5,000 upon execution of the agreement and pays a $4,000 rental fee each August. The Company will also pay an annual royalty equal to five (5) percent of the net profit from any mining production on the property.

Mining claims are capitalized as tangible assets in accordance with Emerging Issues Task Force abstract 04-02. Upon completion of a bankable feasibility study, the claims will be amortized using the unit-of-production method over the life of the claim. If the Company does not continue with exploration after the completion of the feasibility study, the claims will be expensed at that time.

ACCOUNTS PAYABLE - RELATED PARTY

As of October 31, 2010 and April 30, 2010, accounts payable – related party consisted of $135,000 and $87,000, respectively, due to directors and officers of the Company for consulting fees.

NVRM PAYABLE

As of October 31, 2010 and April 30, 2010, NVRM payable consists of $90,000, payable to New Verde River Mining and Robert H. Gunnison pursuant to the NVRM Agreement noted above (see Note 4). Mr. Gunnison signed an extension agreement extending the payment deadline to June 30, 2011. The payable bears 6% interest annually.

LOANS PAYABLE AND ACCRUED INTEREST – RELATED PARTY

As of October 31, 2010 and April 30, 2010, loans payable – related party of $867,200 and $245,277, respectively, mainly consists of borrowings, directly and indirectly, from one director of the Company. The balances bear 10% interest, are unsecured and are due on demand. As of October 31, 2010 and April 30, 2010, accrued interest – related party was $148,720 and $121,123, respectively.

COMMITMENTS AND CONTINGENCIES

Lease obligations – The Company has operating leases for its corporate office and plant facility. Future minimum lease payments under the operating leases as of October 31, 2010 are as follows:

COMMITMENTS AND CONTINGENCIES (continued)

Legal proceedings – The Company is not a party to any legal proceeding and, to our knowledge, no other legal proceedings are pending, threatened or contemplated.

STOCKHOLDERS’ EQUITY

Common and Preferred Stock:

As of October 31, 2010 and April 30, 2010, there were 111,785,352 shares of common stock outstanding and zero shares of preferred stock outstanding. Outstanding shares of common stock consist of the following:

On March 16, 2006, the Company issued 1,000 shares of common stock to one individual for cash at $0.001 per share.

On November 30, 2006, the Company issued 12,500,000 shares of common stock to three individuals for cash at $0.001 per share.

On December 29, 2006, the Company issued 7,800,000 shares of common stock for cash at $0.01 per share.

On January 10, 2007, the Company issued 1,050,000 shares of common stock for the purchase of 7/8ths interest in 24 minerals claims at $0.01 per share.

On February 28, 2007, the Company issued 1,250,000 shares of common stock to three individuals for cash at $0.10 per share.

On March 31, 2007, the Company issued 1,800,000 shares of common stock to four individuals for cash at $0.10 per share.

On April 2, 2007, the Company issued 2,000,000 shares of common stock to one individual, in connection with the NVRM Agreement, for the purchase of intellectual property and equipment.

h)

On May 31, 2007, the Company closed a private placement offering for proceeds of $620,582, of which $505,114 was received and recorded as share subscriptions received as of April 30, 2007. The Company issued 2,482,326 shares of common stock, at $0.25 per share, to non-U.S. investors pursuant to Regulation S of the Securities Act of 1933.

i)

On June 4, 2007, the Company closed a private placement offering for proceeds of $825,000 and issued 3,300,000 shares of common stock, at $0.25 per share, to accredited U.S. investors pursuant to Regulation D of the Securities Act of 1933.

On October 5, 2007, the Company issued 13,968,926 shares of common stock in the reverse acquisition of Centrus Ventures Inc.

On September 3, 2008, the Company completed a private placement of 200,000 units at a price of $0.50 per unit for total proceeds of $100,000. Each unit is comprised of one share of common stock and one-half of one share purchase warrant. Each whole share purchase warrant will entitle the holder to purchase one additional share of common stock at a price of $0.75 per share for a period ending September 2, 2010.

On November 15, 2008, under the terms of a settlement agreement, the Company issued 450,760 units at a price of $0.30 per unit, with each unit consisting of one common share and one share purchase warrant of the Company. Each warrant is exercisable to purchase an additional common share at a price of $0.50 per share for a period of two (2) years from the date of issuance. The units were issued pursuant to the provisions of Regulation S promulgated under the Securities Act of 1933.

STOCKHOLDERS’ EQUITY (continued)

On February 24, 2009, the Company issued 9,140,000 units for $457,000 in cash, 12,400,000 units for $620,000 ($400,000 from one director) in loans made to the Company and 1,336,840 units to retire $65,505 in corporate indebtedness under three separate private placement offerings. Each unit was comprised of one share of the Company’s common stock and one share purchase warrant, with each warrant entitling the holder to purchase an additional share of common stock for a period of two years at an exercise price of $0.10 per share. The Company also entered into a management consulting agreement with an officer of the Company, and pursuant to the terms of the agreement issued an aggregate of 3,000,000 restricted shares of its common stock.

On July 16, 2009, the Company issued 2,000,000 units for $100,000 in loans made to the Company and 500,000 units to retire $25,000 in corporate indebtedness for consulting services under two separate private placement offerings. Each unit was comprised of one share of the Company’s common stock and one share purchase warrant, with each warrant entitling the holder to purchase an additional share of common stock for a period of two years at an exercise price of $0.10 per share.

On August 4, 2009, the Company issued 295,000 shares of common stock for warrants exercised at $0.10 per share and 750,000 shares of common stock for options exercised at $0.05 per share in satisfaction of debt for legal services.

On August 14, 2009, the Company issued 1,500,000 shares of common stock to an investor relations services firm pursuant to the terms of the consulting agreement.

On August 18, 2009, the Company issued 3,500,000 units, for $350,000 in loans made to the Company by one director, at a price of $0.10 per unit, with each unit consisting of one share of common stock and one share purchase warrant, with each warrant entitling the holder to purchase one additional share of common stock at a price of $0.20 per share for a period of two years from the date of issue.

On December 15, 2009, the Company issued 900,000 shares of common stock for options exercised at $0.05 per share in satisfaction of debt for legal services.

On January 31, 2010, the Company issued 19,400,000 units for $970,000 ($900,000 from one director) in loans made to the Company, 8,280,000 units for $414,000 in cash and 1,775,500 units to retire $88,775 in corporate indebtedness, at a price of $0.05 per unit, with each unit consisting of one share of common stock and one share purchase warrant, with each warrant entitling the holder to purchase one additional share of common stock at a price of $0.10 per share for a period of two years from the date of issue.

On February 26, 2010, the Company issued 105,000 shares of common stock for warrants exercised at $0.10 per share and 100,000 shares of common stock for options exercised at $0.05 per share in satisfaction of debt for legal services.

STOCK INCENTIVE PLANS

2011 Stock Incentive Plan - Effective September 7, 2010, the Company adopted the 2011 Stock Incentive Plan (the “2011 Plan"). The 2011 Plan allows the Company to grant certain options to its directors, officers, employees and eligible consultants. A total of 16,700,000 shares of the Company’s common stock are available for issuance under the 2011 Plan. However, the Company may increase the maximum aggregate number of shares of the Company’s common stock that may be optioned and sold under the 2011 Plan provided the maximum aggregate number of shares of common stock that may be optioned and sold under the 2011 Plan shall at no time be greater than 15.0% of the total number of shares of common stock outstanding.

STOCK INCENTIVE PLANS (continued)

On September 7, 2010, the Company granted non-qualified stock options under the 2011 Plan for the purchase of 6,000,000 shares of common stock at $0.02 per share. The nonqualified stock options were granted to various officers, directors and consultants, are fully vested and expire September 6, 2014. As of October 31, 2010, zero options under the 2011 Plan have been exercised.

From the date of inception through October 31, 2010, compensation expense related to the granting of stock options under the 2011 Plan was $178,159 and is included in general and administrative expense. The Company calculated the value of the options using the Black-Scholes option pricing model using the following assumptions: a bond equivalent yield of 12.50%, volatility of 240%, estimated life of 4 years and closing stock price of $0.03 per share on the date of grant.

2010 Stock Incentive Plan - Effective December 7, 2009, the Company adopted the 2010 Stock Incentive Plan (the “2010 Plan"). The 2010 Plan allows the Company to grant certain options to its directors, officers, employees and eligible consultants. A total of 10,000,000 shares of the Company’s common stock are available for issuance under the 2010 Plan. However, the Company may increase the maximum aggregate number of shares of the Company’s common stock that may be optioned and sold under the 2010 Plan provided the maximum aggregate number of shares of common stock that may be optioned and sold under the 2010 Plan shall at no time be greater than 12.5% of the total number of shares of common stock outstanding.

On December 8, 2009, the Company granted non-qualified stock options under the 2010 Plan for the purchase of 7,000,000 shares of common stock at $0.05 per share. The nonqualified stock options were granted to various officers, directors and consultants, are fully vested and expire December 7, 2011. As of July 31, 2010, 1,000,000 options under the 2010 Plan have been exercised.

From the date of inception through July 31, 2010, compensation expense related to the granting of stock options under the 2010 Plan was $391,478 and is included in general and administrative expense. The Company calculated the value of the options using the Black-Scholes option pricing model using the following assumptions: a risk-free rate of 1.00%, volatility of 252%, estimated life of 2 years and closing stock price of $0.06 per share on the date of grant.

Effective September 7, 2010, the Company suspended the 2010 Plan. No new options may be granted under the 2010 Plan and the 2010 Plan will be terminated once all outstanding options granted under the 2010 Plan have been exercised, expired or otherwise terminated.

2009 Stock Incentive Plan - Effective January 12, 2009, the Company adopted the 2009 Stock Incentive Plan (the “2009 Plan"). The 2009 Plan allows the Company to grant certain options to its directors, officers, employees and eligible consultants. A total of 5,000,000 shares of the Company’s common stock are available for issuance under the 2009 Plan.

On January 16, 2009, the Company granted non-qualified stock options under the 2009 Plan for the purchase of 5,000,000 shares of common stock at $0.05 per share. The nonqualified stock options were granted to various officers, directors and consultants, are fully vested and expire January 15, 2011. As of July 31, 2010, 750,000 options under the 2009 Plan have been exercised.

From the date of inception through July 31, 2010, compensation expense related to the granting of stock options under the 2009 Plan was $342,550 and is included in general and administrative expense. The Company calculated the value of the options using the Black-Scholes option pricing model using the following assumptions: a risk-free rate of 1.00%, volatility of 316%, estimated life of 2 years and closing stock price of $0.07 per share on the date of grant.

STOCK INCENTIVE PLANS (continued)

Effective December 7, 2009, the Company suspended the 2009 Plan. No new options may be granted under the 2009 Plan and the 2009 Plan will be terminated once all outstanding options granted under the 2009 Plan have been exercised, expired or otherwise terminated.

2008 Stock Incentive Plan - Effective February 1, 2008, the Company adopted the 2008 Stock Incentive Plan (the “2008 Plan"). The 2008 Plan allowed the Company to grant certain options to its directors, officers, employees and eligible consultants. A total of 4,600,000 shares of the Company’s common stock were available for issuance under the 2008 Plan.

On February 1, 2008, the Company granted non-qualified stock options under the 2008 Plan for the purchase of 4,340,000 shares of common stock at $0.74 per share. The nonqualified stock options were granted to various officers, directors and consultants, were fully vested and expired January 31, 2010. All 4,340,000 stock options expired without exercise.

Compensation expense related to the granting of stock options under the 2008 Plan was $3,583,702 and is included in general and administrative expense. The Company calculated the value of the options using the Black-Scholes option pricing model using the following assumptions: a risk-free rate of 4.50%, volatility of 107%, estimated life of 2 years and closing stock price of $1.22 per share on the date of grant.

RELATED PARTY TRANSACTIONS

For the six months ended October 31, 2010 and 2009, the Company incurred $162,000 and $192,000, respectively, in consulting fees expense from companies with a common director or officer. In addition, for the six months ended October 31, 2010, the Company incurred $106,896 in compensation expense for the issuance of stock options to directors and officers of the Company.

SUBSEQUENT EVENTS

Between November 1, 2010 and December 8, 2010, the Company has loaned Golden Anvil an additional $200,000 for working capital in accordance with the terms of the Memorandum of Understanding executed on October 19, 2010. As of December 8, 2010, Loan Receivable due from Golden Anvil totals $800,000.

Between November 1, 2010 and December 8, 2010, the Company has raised $535,000 through its private placement offering announced on October 29, 2010. As of December 8, 2010, the $535,000 is recorded as Share Subscriptions Received under Other Current Liabilities.

On November 9, 2010, the Company issued 1,700,000 shares of common stock for options exercised by one director and one consultant in satisfaction of debt owed by the Company.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Loan to Golden Anvil

We have loaned Golden Anvil an additional $200,000 for working capital in accordance with the terms of the Memorandum of Understanding signed on October 19, 2010. This brings the total advanced to Golden Anvil to $800,000. We anticipate advancing an additional $100,000 before the end of 2010.

Private Placement Offering

Under our previously announced U.S. Private Placement and Foreign Private Placement offerings, as describe in detail below, we have raised an aggregate of $535,000. To date, we have not issued any securities under these offerings. There is no assurance that these private placement offerings will be completed.

Stock Options Exercised

On November 9, 2010, we issued 1,700,000 shares of common stock for options exercised by a director and a consultant of Royal Mines. The shares were issued at a deemed price of $0.05 per share and settled total indebtedness of $85,000.

$300,000 to New Verde for the purchase of the equipment within the Phoenix Facility as follows:

$175,000 upon execution of the Technology Agreement (which amount has been paid); and

$125,000 of which $90,000 is outstanding.

issued 2,000,000 shares to Mr. Gunnison for the Lixiviation Technology.

$300,000 within 45 days of the date of the Memorandum of Understanding (of which $200,000 has been paid); and

The balance of $2,100,000 within 180 days of the date that Golden Anvil delivers to the Phoenix Plant the first 20 tons of concentrate generated from the Processing Plant.

pay $5,000 to the Lessors upon execution of the Lease Agreement (which amount has been paid);

pay an annual rental fee of $1,000 to the Lessors per each five acre parcel of the Smith Lease (we have paid the annual rental fee through August 13, 2011); and

pay an annual royalty equal to five percent of “net smelting profit” from production. Net smelting profit is defined as the net profit derived from the sale of metals and minerals produced from the Smith Lease.

1,050,000 shares of common stock on execution of the Option Agreements (which shares have been issued);

an additional 420,000 shares of common stock on the fifth anniversary of the Option Agreements; and

an additional 210,000 shares of common stock on the tenth anniversary of the Option Agreements.

Upgrading our Phoenix Facility by installing another vibratory drum mill and filter press to increase the process rate at the Phoenix Facility to 2,000 lbs per hour. We anticipate that we will require $400,000 in order to implement these upgrades at our Phoenix Facility.

Implementing our drilling program of prime targets on the Smith Lease. The implementation of this drilling program may require the filing of a Notice with the Federal Bureau of Land Management. We anticipate that this drilling program will cost approximately $500,000. The completion of this drilling program will depend on obtaining sufficient funds for the drilling and mineral analysis.

Exploring strategic partnerships for the exploration of additional Piute Valley Property.

U.S. Private Placement : On October 29, 2010, our Board of Directors approved a private placement offering of up to 20,000,000 units (the “Units”) at a price of $0.05 US per Unit, with each Unit consisting of one share of our common stock and one share purchase warrant. Each warrant entitles the holder to purchase an additional share of common stock exercisable for a period of one year at a price of $0.10 US per share. The offering will be made in the United States to persons who are accredited investors as defined in Regulation D of the Securities Act of 1933.

Foreign Private Placement : On November 4, 2010, our Board of Directors approved a private placement offering of up to 20,000,000 units (the “Units”) at a price of $0.05 US per Unit, with each Unit consisting of one share of our common stock and one share purchase warrant. Each warrant entitles the holder to purchase an additional share of common stock exercisable for a period of one year at a price of $0.10 US per share. The offering will be made to persons who are not residents of the United States and are otherwise not “U.S Persons” as that term is defined in Rule 902(k) of Regulation S of the Securities Act of 1933.

Agreement and Plan of Merger dated September 24, 2007 among the Company, Royal Mines Acquisition Corp., Royal Mines Inc. and Kevin B. Epp. ⁽⁴⁾

Agreement and Plan of Merger dated October 6, 2007 between the Company and Royal Mines Acquisition Corp. ⁽⁵⁾

Articles of Incorporation. ⁽¹⁾

Certificate of Change Pursuant to NRS 78.209 increasing the authorized capital of common stock to 300,000,000 shares, par value $0.001 per share. ⁽²⁾

Bylaws. ⁽¹⁾

Articles of Merger between the Company and Royal Mines Acquisition Corp. ⁽⁵⁾

Form of Share Certificate. ⁽¹⁾

Mineral Property Option Agreement dated January 28, 2007 between Eugene E. Phebus and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 28, 2007 between Charles G. Moore and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 10, 2007 between James E. Sharp and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 28, 2007 between Ben Barnes and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 28, 2007 between Walter Simmons II and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 28, 2007 between Leo Corbet and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 28, 2007 between William Tao and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 28, 2007 between Dr. Wilbur J. Guay and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 28, 2007 between Olivia Tearnan and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 28, 2007 between Jim Mack and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 28, 2007 between Ron Manarey and Royal Mines Inc. ⁽⁵⁾

Mineral Property Option Agreement dated January 28, 2007 between William Lintz and Royal Mines Inc. ⁽⁵⁾

Technology and Asset Purchase Agreement dated April 2, 2007 among New Verde River Mining Co., Inc., Robert H. Gunnison and Royal Mines Inc. ⁽⁵⁾

Restatement and Amendment to Lease Agreement dated April 12, 2007 among Erline Y. Smith, Trustee, Erline Y. Smith Trust, Lawana Hooper and Royal Mines Inc. ⁽⁵⁾

AV Executive Suites Service Agreement dated September 13, 2007 between Royal Mines Inc. and Anthem Village Executive Suites, LLC. ⁽⁵⁾

Residential Lease Agreement of La Cienega Office. ⁽⁵⁾

Lease Agreement dated June 6, 2007 among McKendry Enterprises Inc., Profit Sharing Plan and Retirement Trust and Royal Mines Inc. ⁽⁵⁾

2008 Stock Incentive Plan. ⁽⁶⁾

Non-Qualified Stock Option Agreement between the Company and William C. Tao. ⁽⁶⁾

Non-Qualified Stock Option Agreement between the Company and Jason S. Mitchell. ⁽⁶⁾

Extension Agreement between the Company and Robert H. Gunnison. ⁽⁷⁾

Settlement Agreement and Mutual Release dated effective November 15, 2008 between the Company and William C. Tao. ⁽⁸⁾

Extension Agreement dated November 18, 2008 between the Company and Robert H. Gunnison. ⁽⁹⁾

2009 Stock Incentive Plan. ⁽¹⁰⁾

Form of Non-Qualified Stock Option Agreement for Directors and Executive Officers. ⁽¹⁰⁾

Management Consulting Agreement dated February 24, 2009 between the Company and Jason S. Mitchell. ⁽¹¹⁾

Payment Extension and License Agreement dated March 13, 2009 between New Verde River Mining Co., Inc., Robert H. Gunnison and the Company. ⁽¹²⁾

Proprietary Intellectual Property License Agreement dated March 24, 2009 between the Company and Greene Lyon Group, LLC. ⁽¹³⁾

Consulting Agreement dated August 14, 2009 between the Company and Mirador Consulting, Inc. ⁽¹⁴⁾

Brecheisen License Agreement dated August 12, 2009 between Brecheisen Company, Inc., Keith D. Brecheisen, Lorna J. Brecheisen and the Company. ⁽¹⁵⁾

Letter of Intent dated October 21, 2009 between the Company and Golden Anvil, SA de CV. ⁽¹⁶⁾

First Amendment of Lease Agreement dated November 20, 2009 among McKendry Enterprises Inc., Profit Sharing Plan and Retirement Trust and Royal Mines Inc. ⁽⁵⁾

Toll Processing Agreement dated December 3, 2009 between the Company and Golden Anvil, SA de CV. ⁽¹⁷⁾

2010 Stock Incentive Plan. ⁽¹⁷⁾

Form of Non-Qualified Stock Option Agreement for Directors and Executive Officers. ⁽¹⁷⁾

Extension Agreement dated for reference February 15, 2010 between the Company and Golden Anvil, SA de CV. ⁽¹⁸⁾

Loan Agreement between Royal Mines And Minerals Corp. (Lender) and Golden Anvil, SA de CV (Borrower). ⁽¹⁹⁾

Extension Agreement dated July 22, 2010, between Robert H. Gunnison (Lender) and Royal Mines and Minerals Corp (Borrower) ⁽²⁰⁾

2011 Stock Incentive Plan ⁽²⁰⁾

Code of Ethics. ⁽³⁾

Certification of Chief Executive Officer as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002.

Certification of Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 .

Certification of Chief Executive Officer as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

Certification of Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

Filed with the SEC as an exhibit to our Registration Statement on Form SB-2 originally filed on August 17, 2006, as amended.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed June 12, 2007.

Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed July 30, 2007.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on September 28, 2007

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed October 12, 2007.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed February 5, 2008.

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed September 15, 2008.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed November 18, 2008.

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed December 15, 2008.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed January 16, 2009.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed February 26, 2009.

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed March 17, 2009.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed March 26, 2009.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed August 17, 2009.

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed September 14, 2009.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed November 3, 2009.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed December 10, 2009.

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed March 16, 2010.

Filed with the SEC as an exhibit to our Current Report on Form 8-K filed August 31, 2010.

Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed September 15, 2010.