- Report of Foreign Issuer (6-K)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the day of: November 29, 2010

Commission File Number 001-32500

TANZANIAN ROYALTY EXPLORATION CORPORATION

(Registrant's name)

404-1688 152nd Street

South Surrey, BC V4A 4N2

Canada

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F P Form 40-F ___

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):__

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):__

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ___ No P

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

Attached hereto as Exhibit 1 and incorporated by reference herein are the Registrant's Audited Consolidated Financial Statements for the years ended August 31, 2010, 2009 and 2008, Management Discussion and Analysis for the years ended August 31, 2010 and 2009, and CEO and CFO Certifications of Annual Filings.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Tanzanian Royalty Exploration Corp.

(Registrant)

“James Sinclair”

Date: November 29, 2010

James E. Sinclair,

Chief Executive Officer

Exhibit 1

Always place a Control Space after all positive amounts

(negative amounts do not require the space - for lining up columns)

Consolidated Financial Statements

(Expressed in Canadian dollars)

TANZANIAN ROYALTY EXPLORATION CORPORATION

(An Exploration Stage Company)

Years ended August 31, 2010, 2009 and 2008

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of Tanzanian Royalty Exploration Corporation

We have audited the accompanying consolidated balance sheets of Tanzanian Royalty Exploration Corporation ("the Company") as of August 31, 2010 and 2009 and the related consolidated statements of operations, comprehensive loss and deficit, and cash flows for each of the years in the three-year period ended August 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of August 31, 2010 and 2009 and the results of its operations and its cash flows for each of the year in the three-year period ended August 31, 2010 in conformity with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles vary in certain significant respects from US generally accepted accounting principles. Information relating to the nature and effect of such differences is presented in Note 14 to the consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of August 31, 2010, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated November 24, 2010 expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG LLP

Chartered Accountants

Vancouver, Canada

November 24, 2010

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Tanzanian Royalty Exploration Corporation

We have audited Tanzanian Royalty Exploration Corporation’s (the Company) internal control over financial reporting as of August 31, 2010, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company's internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Tanzanian Royalty Exploration Corporation

Page 2

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management's assessment: the Company has limited accounting personnel with expertise in generally accepted accounting principles to enable effective segregation of duties with respect to financial reporting matters and internal control over financial reporting. We do not express an opinion or any other form of assurance on management’s statements referring to corrective actions taken after August 31, 2010, relative to the aforementioned material weakness in internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of August 31, 2010 and 2009, and the related consolidated statements of operations, comprehensive loss and deficit, and cash flows for each of the years in the three-year period ended August 31, 2010. This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the August 31, 2010 consolidated financial statements, and this report does not affect our report-dated November 24, 2010, which expressed an unqualified opinion on those consolidated financial statements.

In our opinion, because of the effect of the aforementioned material weakness on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of August 31, 2010, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

Chartered Accountants

Vancouver, Canada

November 24, 2010

TANZANIAN ROYALTY EXPLORATION CORPORATION (An Exploration Stage Company) Consolidated Balance Sheets (Expressed in Canadian dollars) August 31, 2010 and 2009
				2010		2009

Assets

Current assets:
	Cash and cash equivalents			$	1,325,708	$		1,165,746
	Short term investment			40,425		-
	Accounts and other receivables			79,073		43,516
	Inventory			229,196		347,407
	Prepaid expenses			60,362		70,720
				1,734,764		1,627,389

Mineral properties and deferred exploration costs (note 3)				29,956,026		26,950,430

Equipment and leasehold improvements (note 4)				1,092,770		707,386

				$	32,783,560	$		29,285,205

Liabilities and Shareholders’ Equity

Current liabilities:
	Accounts payable and accrued liabilities (note 9)			$	620,795	$		644,477
	Current portion of obligations under capital lease (note 5)			-		39,693
				620,795		684,170

Convertible debt (note 6)				1,841,226		-

Shareholders’ equity:
	Share capital (note 8(b))			72,855,310		68,111,716
	Share subscriptions received (note 13(a))			874,149		473,211
	Contributed surplus (note 8(e))			476,205		472,578
	Deficit			(43,884,125)		(40,456,470)
				30,321,539		28,601,035

Nature of operations and going concern (note 1)
Commitments (notes 3 and 10)
Subsequent events (note 13)

				$	32,783,560	$		29,285,205

See accompanying notes to consolidated financial statements.


Approved on behalf of the Board:




“James E. Sinclair”		Director	“Norman Betts”				Director

TANZANIAN ROYALTY EXPLORATION CORPORATION (An Exploration Stage Company) Consolidated Statements of Operations, Comprehensive Loss and Deficit (Expressed in Canadian dollars) Years ended August 31, 2010, 2009 and 2008
			2010		2009				2008

Expenses:
	Amortization	$		202,229		$	100,563	$		101,597
	Annual general meeting			66,509			64,214			63,967
	Consulting and management fees			262,532			276,514			230,086
	Directors’ fees			381,690			446,927			437,567
	Insurance			95,375			101,798			91,084
	Memberships, courses and publications			7,806			9,262			3,819
	Office and administration			131,743			91,263			126,866
	Office rentals			68,575			76,545			63,216
	Press releases			5,074			1,260			16,554
	Printing and mailing			29,671			26,217			32,376
	Professional fees			346,966			481,179			394,628
	Promotions and shareholder relations			2,616			22,292			17,561
	Salaries and benefits			1,025,309			1,373,991			1,002,562
	Stock-based compensation			283,450			62,401			118,976
	Telephone and fax			31,767			17,274			21,005
	Training			-			370			459
	Transfer agent and listing			200,762			228,023			203,459
	Travel and accommodation			76,032			87,820			46,513
	Other			-			8,193			-
				3,218,106			3,476,106			2,972,295

Other expenses (earnings):
	Consulting income			-			-			(87,615)
	Foreign exchange			98,213			10,738			73,585
	Interest, net			7,592			14,786			(15,254)
	Interest accretion			23,010			-			-
	Loss on sale of short-term investments			24,925			-			-
	Property investigation costs			45,345			22,797			82,556
	Write-off of mineral properties and deferred exploration costs (note 3)			10,464			1,207,409			672,478
				209,549			1,255,730			725,750

Loss and comprehensive loss for the year				(3,427,655)			(4,731,836)			(3,698,045)

Deficit, beginning of year				(40,456,470)			(35,724,634)			(32,026,589)

Deficit, end of year		$		(43,884,125)		$	(40,456,470)	$		(35,724,634)

Basic and diluted loss per share		$		(0.04)		$	(0.05)	$		(0.04)

Weighted average number of shares outstanding				90,892,870			89,041,180			87,372,662

See accompanying notes to consolidated financial statements.

TANZANIAN ROYALTY EXPLORATION CORPORATION (An Exploration Stage Company) Consolidated Statements of Cash Flows (Expressed in Canadian dollars) Years ended August 31, 2010, 2009 and 2008
		2010			2009		2008
Cash provided by (used in):

Operations:
	Loss for the year	$		(3,427,655)	$	(4,731,836)	$	(3,698,045)
	Items not affecting cash:
	Amortization			202,229		100,563		101,597
	Stock-based compensation			283,450		62,401		118,976
	Non-cash directors’ fees			299,314		323,622		303,883
	Loss on short term investment held for sale			24,525		-		-
	Interest accretion			23,010		-		-
	Write-off of mineral properties and deferred exploration costs			10,464		1,207,409		672,478
				(2,584,663)		(3,037,841)		(2,501,111)
	Changes in non-cash working capital:
	Accounts receivable and other receivables			(35,557)		31,505		(3,246)
	Inventory			118,211		104,932		(78,811)
	Prepaid expenses			10,358		17,620		13,140
	Accounts payable and accrued liabilities			(23,682)		141,700		(63,406)
				(2,515,333)		(2,742,084)		(2,633,434)

Investing:(CP)
	Mineral properties and exploration expenditures (note 3)			(3,333,206)		(4,110,628)		(2,930,406)
	Option payments received and recoveries			274,055		416,313		390,246
	Proceeds onshort-term investment			11,830		-		-
	Equipment and leasehold improvement expenditures			(587,613)		(13,935)		(82,819)
				(3,634,934)		(3,708,250)		(2,622,979)

Financing:
	Share capital issued - net of issuance costs			3,511,268		5,990,000		4,880,026
	Issuance of convertible debt			1,964,535		-		-
	Share subscriptions received			874,119		473,211		-
	Repayment of obligations under capital lease			(39,693)		(42,368)		(30,646)
				6,310,229		6,420,843		4,849,380

Increase (decrease) in cash and cash equivalents				159,962		(29,491)		(407,033)

Cash and cash equivalents, beginning of year				1,165,746		1,195,237		1,602,270

Cash and cash equivalents, end of year			$	1,325,708	$	1,165,746	$	1,195,237

Supplementary information:
	Interest received, net		$	7,952	$	(14,786)	$	15,254
	Non-cash transactions:
	Mineral property recoveries by way of marketable securities			73,750		-		-
	Stock-based compensation capitalized to mineral properties			30,659		103,181		33,034
	Shares issued pursuant to RSU plan			664,115		416,316		367,124
	Shares issued in current year for subscriptions received in prior year			473,211		-		2,344,971
	Shares issued as fees on convertible debt (note 6)			95,000		-		-

See accompanying notes to consolidated financial statements.

TANZANIAN ROYALTY EXPLORATION CORPORATION (An Exploration Stage Company) Notes to Consolidated Financial Statements (Expressed in Canadian dollars) Years ended August 31, 2010, 2009 and 2008

1.	Nature of operations and going concern:
	The Company is in the process of exploring its mineral properties and has not yet determined whether these properties contain mineral deposits that are economically recoverable. The recoverability of the amounts shown for mineral properties and related deferred costs are dependent upon the existence of economically recoverable reserves, securing and maintaining title and beneficial interest in the properties, the ability of the Company to obtain necessary financing to explore and develop, and upon future profitable production or proceeds from disposition of the mineral properties. The amounts shown as deferred expenditures and property acquisition costs represent net costs to date, less amounts recovered, amortized and/or written off, and do not necessarily represent present or future values.
2.	Significant accounting policies:
	These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles. A reconciliation of material measurement differences to accounting principles generally accepted in the United States and practices prescribed by the Securities and Exchange Commission is provided in note 14.
	(a)	Principles of consolidation:
		These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany amounts are eliminated on consolidation.
	(b)	Translation of foreign currencies:
		The measurement currency of the Company in these consolidated financial statements is the Canadian dollar. The Company’s subsidiaries are considered integrated foreign subsidiaries and their accounts are translated using the temporal method. Under this method, monetary assets and liabilities are translated at the prevailing year-end exchange rates. Non-monetary assets are translated at historical exchange rates. Revenue and expense items are translated at the average rate of exchange for the year except for those arising from non-monetary assets which are translated at the historical exchange rate. Translation gains and losses are included in the statement of operations, comprehensive loss and deficit.
	(c)	Cash and cash equivalents:
		Cash and cash equivalents consist of cash on deposit with banks or highly liquid short-term interest-bearing securities with maturities of three months or less when acquired.
	(d)	Short-term investment:
		Short-term investment includes publicly traded common shares received as proceeds of mineral property option transactions. Short-term investments have been classified as held-for-trading and are carried at fair value abased on Level 1 hierarchy input of quoted market prices.

2.	Significant accounting policies (continued):
	(e)	Inventory:
		Inventory consists of supplies for the Company’s drilling rig to be consumed during the course of exploration development and operations. Cost represents the delivered price of the item.

	(f)	Mineral properties and deferred exploration costs:
		The Company holds various positions in mineral property interests, including prospecting licences, reconnaissance licences, and options to acquire mining licences or leases. All of these positions are classified as mineral properties for financial statement purposes.
		Acquisition costs and exploration costs, including option payments, relating to mineral properties are deferred until the properties are brought into production, at which time they will be amortized on a unit-of-production basis, or until the properties are abandoned, sold or to be sold or management determines that the mineral property is not economically viable, at which time the unrecoverable deferred costs are written off. Option payments arising on the acquisition of mineral property interests are exercisable at the discretion of the Company and are recognized as paid or payable.
		Amounts recovered from third parties to earn an interest in the Company’s mineral properties are applied as a reduction of the mineral property and deferred exploration costs.
		Overhead costs directly related to exploration are allocated to the mineral properties explored during the year and are deferred and are to be amortized using the same method applied to property-specific exploration costs. All other overhead and administration costs are expensed in the year they are incurred.
		Under CICA Handbook Section 3061, Property, Plant, and Equipment , for a mining property, the cost of the asset includes exploration costs if the enterprise considers that such costs have the characteristics of property, plant, and equipment. Emerging Issue Committee Abstract 174, Mining Exploration Costs , (EIC-174) states that a mining enterprise that has not established mineral reserves objectively, and therefore does not have a basis for preparing a projection of the estimated cash flow from the property, is not precluded from considering the exploration costs to have the characteristics of property, plant and equipment. Therefore a mining enterprise in the development stage is not required to consider the conditions in Accounting Guideline No. 11, Enterprises in the Development Stage , (AcG 11) regarding impairment in determining whether exploration costs may be initially capitalized.
		With respect to impairment of capitalized exploration costs, a mining enterprise in the development stage has not established mineral reserves objectively, and, therefore, does not have a basis for preparing a projection of the estimated cash flow from the property. However, such an enterprise should consider the conditions set forth in AcG 11 and CICA Handbook Section 3061 in determining whether a subsequent write-down of capitalized exploration costs related to mining properties is required.

2.		Significant accounting policies (continued):
		(f)		Mineral properties and deferred exploration costs (continued):
				The Company considers that its exploration costs have the characteristics of property, plant, and equipment, and, accordingly, defers such costs. Furthermore, pursuant to EIC-174, deferred exploration costs are not automatically subject to regular assessment of recoverability, unless conditions, such as those discussed in AcG 11, exist.
				The Company follows these recommendations and therefore the unproven mineral property claim costs are initially capitalized. Mineral properties and deferred exploration costs are tested for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. An impairment loss is recognized if, at the date it is tested for recoverability, the carrying amount of the mineral property exceeds the sum of the undiscounted cash flows expected to result from its production and/or eventual disposition. The impairment loss is measured as the amount by which the carrying amount of the mineral property exceeds its fair value.
		(g)		Equipment and leasehold improvements:
				Equipment and leasehold improvements, other than mineral properties and deferred exploration and development costs, are recorded at cost and amortization is provided for on a declining balance basis using the following rates:

				Assets	Rate

				Machinery and equipment	20% to 30%
				Automotive	30%
				Computer equipment	30%
				Drilling equipment and automotive equipment under capital lease	6.67%
				Leasehold improvements	20%


	(h)		Stock-based compensation:
			All stock-based compensation is determined based on the fair value method and expensed over the expected vesting period. The fair value of restricted stock units (RSUs) is determined as the market price of the Company’s shares on the grant date multiplied by the number of RSUs granted.

2.	Significant accounting policies (continued):
	(i)	Income taxes:
		The Company follows the asset and liability method of accounting for income taxes. Under the asset and liability method, future income tax assets and liabilities are determined based on differences between the financial statement carrying values of existing assets and liabilities and their respective income tax bases (temporary differences) and loss carry forwards, and are measured using the enacted or substantively enacted tax rates expected to be in effect when the temporary differences are likely to reverse. Future tax benefits, such as non-capital loss carry forwards, are recognized if realization of such benefits is considered more likely than not.

	(j)		Asset retirement obligation:
			The Company recognizes the fair value of a future asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that results from the acquisition, construction, development, and/or normal use of the assets if a reasonable estimate of fair value can be made. The Company concurrently recognizes a corresponding increase in the carrying amount of the related long-lived asset that is depreciated over the life of the asset. The fair value of the asset retirement obligation is estimated using the expected cash flow approach that reflects a range of possible outcomes discounted at a credit-adjusted risk-free interest rate. Subsequent to the initial measurement, the asset retirement obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. Changes in the obligation due to the passage of time are recognized in income as an operating expense using the interest method. Changes in the obligation due to changes in estimated cash flows are recognized as an adjustment of the carrying amount of the related long-lived asset that is depreciated over the remaining life of the asset.
			The Company has determined that it has no material asset retirement obligations as at August 31, 2010 and 2009.
	(k)		Loss per share:
			Loss per share has been calculated using the weighted average number of common shares issued and outstanding. Shares held in escrow subject to performance conditions for release are considered contingently issuable shares and are excluded from the weighted average number of shares used in calculating loss per share prior to their eligibility for release. All outstanding stock options, restricted stock units, special warrants and share purchase warrants, all of which could potentially dilute basic loss per share, have not been included in the computation of diluted loss per share because to do so would be anti-dilutive.

2.	Significant accounting policies (continued):
	(l)	Use of estimates:
		The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the year. Areas requiring the use of estimates and measurement uncertainties include the valuation and impairment of value of mineral properties and deferred exploration costs and the determination of future income taxes. Actual results may differ from management’s estimates.
	(m)	Segmented information:
		The Company’s principal operations are located in Tanzania. The Company conducts its business in a single operating segment being the investment in and exploration of mineral properties. All mineral properties (note 3) and significant equipment and leasehold improvements are situated in Tanzania (note 4).
	(n)	Comparative figures:
		Certain comparative figures have been reclassified to conform with the financial statement presentation adopted for the current year.
	(o)	Financial Instruments - Recognition and Measurement:
		Financial assets and liabilities, including derivative instruments, are classified into one of the following balance sheet categories:
		· Held-for-trading financial assets and liabilities are initially measured at fair value with subsequent changes in fair value being recognized in the net earnings; · Available-for-sale financial assets are initially measured at fair value with subsequent changes in fair value being recognized in other comprehensive income until the instrument is derecognized or impaired at which time the amount would be recorded in net earnings; or · Held-to-maturity investments, loans and receivables, or other financial liabilities are initially measured at fair value with subsequent changes measured at amortized cost utilizing the effective interest rate method.

2.	Significant accounting policies (continued):
	(o)		Financial Instruments - Recognition and Measurement (continued):
			The Company classified financial instruments as follows:
			· Cash and cash equivalents and short term investments are classified as held-for-trading and accordingly carried at their fair values; · Accounts and other receivables are classified as loans and receivables; and · Accounts payable and accrued liabilities and convertible debt are classified as other financial liabilities.
			As at August 31, 2010 and 2009, the carrying value of cash and cash equivalents, accounts and other receivables and accounts payable and accrued liabilities approximate their fair values due to their short term to maturity. Cash and cash equivalents and short term investment fair values are based on Level 1 hierarchy inputs.
			Transaction costs that are directly attributable to the issuance of financial assets or liabilities are accounted for as part of the carrying value at inception, and are recognized over the term of the assets or liabilities using the effective interest method.
	(p)	Adoption of new accounting policies and pronouncements: Effective September 1, 2009, the Company adopted on a prospective basis, the following new accounting standards issued by the Canadian Institute of Chartered Accountants (CICA):

		( i )		Handbook Section 3862, Financial Instruments – Disclosures establishes revised standards for the disclosure of financial instruments. The new standard establishes a three-tier hierarchy as a framework for disclosing fair value of financial instruments based on inputs used to value the Company’s investments. The hierarchy of inputs and description of inputs is described as follows:
				· Level 1 – fair values are based on quoted prices (unadjusted in active markets for identical assets or liabilities;
				· Level 2 – fair values are based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); or
				· Level 3 – fair values are based on inputs for the asset or liability that are not based on observable market data, which are unobservable inputs.
				The required disclosure can be found in notes 2(d) and 2(o).
		( ii )		CICA 3064 Goodwill and Intangible Assets:
				In February 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible Assets , which replaces Section 3062, Goodwill and Intangible Assets , and Section 3450, Research and Development Costs . Section 3064 establishes standards for the recognition, measurement, and disclosure of goodwill and intangible assets. This new standard applies to the Company’s interim and annual financial statements effective September 1, 2009 and had no material impact upon adoption on the Company’s consolidated financial statements.

2.	Significant accounting policies (continued):
	(p)	Future Canadian accounting standards:
		( i )	International Financial Reporting Standards (IFRS):
			In 2006, the Canadian Accounting Standards Board (AcSB) published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canadian GAAP. The changeover date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The Company will therefore adopt IFRS for its August 2012 year end. The transition date of September 1, 2010 will require the restatement for comparative purposes of amounts reported by the Company for the year ended August 31, 2011. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.

3.	Mineral properties and deferred exploration costs:
	The Company explores or acquires gold or other precious metal concessions through its own efforts or through the efforts of its subsidiaries. All of the Company’s concessions are located in Tanzania.
	For each concession granted in Tanzania under a prospecting or a reconnaissance licence, the Company is required to carry out a minimum amount of exploration work before a mining licence can be granted for further development. Commencing with the new mining act issued in Tanzania in 1998, a prospecting licence is issued for a period of up to three years and renewable two times for a period up to two years each. At each renewal at least 50% of the remaining area is relinquished. A reconnaissance licence is issued for two years and renewed for a period not exceeding a year. All prospecting licences are granted subject to an annual rental fee of not more than USD$50 per square kilometer payable to the government of Tanzania, a minimum exploration work commitment, and employment and training of Tanzanians. In addition, the government of Tanzania imposes a royalty on the gross value of all production at the rate of 3% of all gold produced.

3.	Mineral properties and deferred exploration costs (continued):
	The continuity of expenditures on mineral properties is as follows:

			Itetemia Project (a)	Luhala Project (b)	Kigosi (c)	Lunguya (d)	Kanagele (e)	Tulawaka (f)	Ushirombo (g)	Mbogwe (h)	Biharamulu (i)	Other (j)	Total

		Balance, August 31, 2007	$ 6,316,844	$ 4,233,154	$ 4,061,498	$ 2,834,740	$ 1,140,999	$ 876,756	$ -	$ 462,473	$ 348,308	$ 2,184,855	$ 22,459,627
		Exploration expenditures:
		Camp, field supplies and travel	-	-	312,588	13,163	6,311	-	4,004	1,015	3,497	65,647	406,225
		Exploration and field overhead	-	6,344	895,209	40,114	14,770	31,636	25,037	18,681	19,091	223,454	1,274,336
		Geological consulting and field wages	-	-	-	-	-	-	-	-	-	-	-
		Geophysical and geochemical	-	-	179,631	3,813	9,988	603	9,512	3,277	2,883	99,548	309,255
		Property acquisition costs	-	-	19,260	-	47,711	14,077	-	-	-	298,176	379,224
		Trenching and drilling	-	-	594,400	-	-	-	-	-	-	-	594,400
		Recoveries	(108,533)	(123,451)	-	-	-	(59,440)	-	-	(98,822)	-	(390,246)
			(108,533)	(117,107)	2,001,088	57,090	78,780	(13,124)	38,553	22,973	(73,351)	686,825	2,573,194

		Write-offs	-	-	(31,220)	(129,566)	(6,801)	(190,020)	-	(8,472)	(256,438)	(49,961)	(672,478)

		Balance, August 31, 2008	6,208,311	4,116,047	6,031,366	2,762,264	1,212,978	673,612	38,553	476,974	18,519	2,821,719	24,360,343
		Exploration expenditures:
		Camp, field supplies and travel	-	-	271,912	5,476	-	-	830	4,680	-	10,375	293,273
		Exploration and field overhead	30,458	1,203	1,315,001	41,178	15,968	6,100	26,758	25,661	2,743	230,919	1,695,989
		Geophysical and geochemical	-	-	266,525	12,776	-	-	10,375	16,577	-	24,164	330,417
		Property acquisition costs	29,833	-	24,866	-	47,213	14,675	-	1,692	-	354,008	472,287
		Trenching and drilling	-	-	1,421,843	-	-	-	-	-	-	-	1,421,843
		Recoveries	(159,016)	(193,514)	(60,006)	-	-	(1,661)	-	-	(2,116)	-	(416,313)
			(98,725)	(192,311)	3,240,141	59,430	63,181	19,114	37,963	48,610	627	619,466	3,797,496
			6,109,586	3,923,736	9,271,507	2,821,694	1,276,159	692,726	76,516	525,584	19,146	3,441,185	28,157,839
		Write-offs	-	-	-	-	(246,546)	-	-	(486,919)	-	(473,944)	(1,207,409)

		Balance, August 31, 2009	6,109,586	3,923,736	9,271,507	2,821,694	1,029,613	692,726	76,516	38,665	19,146	2,967,241	26,950,430
		Exploration expenditures:
		Camp, field supplies and travel	-	-	272,210	10,706	-	-	52	-	93	312	283,373
		Exploration and field overhead	1,265	1,773	998,291	114,215	12,097	3,508	169,735	42,088	190,195	215,759	1,748,926
		Geological consulting and field wages	-	-	8,526	-	-	-	-	-	-	-	8,526
		Geophysical and geochemical	-	-	478,520	6,748	-	-	-	-	35	518	485,821
		Property acquisition costs	27,343	-	24,110	-	55,421	14,851	-	-	-	243,796	365,521
		Trenching and drilling	-	-	471,698	-	-	-	-	-	-	-	471,698
		Recoveries	(192,260)	(83,395)	(35)	-	-	(32,042)	-	-	(40,073)	-	(347,805)
			(163,652)	(81,622)	2,253,320	131,669	67,518	(13,683)	169,787	42,088	150,250	460,385	3,016,060
			5,945,934	3,842,114	11,524,827	2,953,363	1,097,131	679,043	246,303	80,753	169,396	3,427,626	29,966,490
		Write-offs	-	-	-	-	-	-	-	-	-	(10,464)	(10,464)

		Balance, August 31, 2010	$ 5,945,934	$ 3,842,114	$ 11,524,827	$ 2,953,363	$ 1,097,131	$ 679,043	$ 246,303	$ 80,753	$ 169,396	$ 3,417,162	$ 29,956,026

3.	Mineral properties and deferred exploration costs (continued):
	The Company assessed the carrying value of mineral properties and deferred exploration costs as at August 31, 2010 and recorded a write-down of $10,464.
	(a)	Itetemia Project:
		Through prospecting and mining option agreements, the Company has options to acquire interests in several ltetemia property prospecting licenses. The prospecting licenses comprising the Itetemia property are held by the Company; through the Company's subsidiaries, Tancan or Tanzam. In the case of one prospecting license, Tancan acquired its interest pursuant to the Stamico Venture Agreement, as amended June 18, 2001 and July 2005.
		Stamico retains a 2% royalty interest as well as a right to earn back an additional 20% interest in the prospecting licence by meeting 20% of the costs required to place the property into production. The Company retains the right 10 purchase one-half of Stamico's 2% royalty interest in exchange for USD$1,000,000.
		The Company is required pay to Stamico an annual option fee of USD$25,000 per annum until commercial production.
		As at August 31, 2010, two of the licenses are subject to an Option Agreement with Barrick Exploration Africa Ltd. (BEAL) (note 3(k)).
		In January 2007, the Company concluded an Option and Royalty Agreement with Sloane over a portion of the Company's Itetemia Property. Under the Option Agreement, the Company granted Sloane the right to earn a beneficial interest ranging from 90% to 100% in certain ltetemia prospecting licenses in the Lake Victoria greenstone belt of Tanzania.
		During the year ended August 31, 2010, the Company did not abandon any licences in the area and no write-off was taken in this area (2009 - nil; 2008 - nil).
	(b)	Luhala Project:
		The Luhala property consists of prospecting licenses covering an area of approximately 60 square kilometres.
		In January 2007, the Company concluded an Option Royalty Agreement with Sloane for its Luhala property. Under the Option Agreement, the Company granted Sloane the right to earn a 100% beneficial interest in the Luhala Project. In December 2009, Sloane returned seven Luhala licences to the Company.
		During the year ended August 31, 2010, the Company did not abandon any licences in the area and no write-off was taken in this area (2009 - nil; 2008 - nil).

3.	Mineral properties and deferred exploration costs (continued):
	(c)	Kigosi:
		The Kigosi Project area encompasses approximately 650 square kilometres, principally located within the Kigosi Game Reserve controlled area. Through prospecting and mining option agreements, the Company has options to acquire interests in several Kigosi prospecting licenses. To maintain the options, the Company is required to make certain expenditures and fund all exploration costs of the properties.
		The Company must make payments totalling USD$162,000 over eight years (USD$136,000 paid to date with the balance required as follows: 2011 - USD$26,000) and is required to fund all costs of exploration of the properties in order to maintain the options.
		During the year ended August 31, 2010, the Company did not abandon any licences in the area therefore no write off was taken for this property (2009 - nil; 2008 - $31,220).
		The Company entered into a Purchase and Sale Agreement with Ashanti Goldfields (Cayman) Limited (Ashanti) dated September 26, 2006 for the repurchase of its rights to the Kigosi property, including all related camp and equipment, along with the purchase of a non-associated property, the Dongo property, from Ashanti.
		The acquisition will be satisfied by the issuance to Ashanti a total of 180,058 common shares of the Company in two tranches and subject to certain conditions set out below. The two tranches consist of: ( i ) the issuance of 160,052 common shares which were issued in consideration of the transfer to the Company of the Kigosi Rights, as defined in the Agreement; and ( ii ) subject to receipt of ministerial consent from the Tanzanian government to the transfer from Ashanti to the Company of the Dongo Rights, as defined in the Agreement, the issuance to Ashanti of 20,006 common shares of the Company. As at August 31, 2010, the issuance of 20,006 common shares remains outstanding.
	(d)	Lunguya:
		The Lunguya property is situated in the Lake Victoria Greenstone Belt. The Lunguya property covers an area of approximately 140 square kilometres.
		Through Prospecting and Mining Option Agreements, the Company has options to acquire interests ranging from 60% to 75% in certain Lunguya licences. To maintain the options, the Company is required to meet certain expenditure requirements and fund all exploration costs of the properties.
		During the year ended August 31, 2010, the Company did not abandon any licences in the area no write off was taken for this property (2009 - nil; 2008 - $129,566).

3.	Mineral properties and deferred exploration costs (continued):
	(e)	Kanagele:
		In 2002, the Company entered into an Option Agreement requiring payments totaling USD$72,000 over eight years (USD$72,000 paid) in exchange for a 90% interest in three prospecting licences and an option to purchase the remaining 10% upon production decision. In 2004, the Company entered into an Option Agreement for one prospecting license requiring payments of USD$145,000 (USD$91,000 paid to date) over nine years.
		In 2005, the Company entered into two agreements for two prospecting licenses for an 85% interest requiring payments of USD$173,000 over six years (USD$132,000 paid to date). The Company has options to acquire a 65% interest in the other licences acquired through Prospecting and Option Agreements. The Company is required to fund all exploration costs of the properties.
		During the year ended August 31, 2010, the Company did not abandon any licences in the area therefore no write off was taken for this property (2009 - $246,546; 2008 - $6,801).
	(f)	Tulawaka:
		The Company owns or has options to acquire interests ranging from 65% to 90% in the licences through prospecting and option agreements. Three licences are subject to an option agreement with MDN Inc. (MDN) (note 3(l)).
		During the year ended August 31, 2003, the Company entered into a prospecting mining option agreement to acquire a 90% interest in a prospecting license. The Company must make payments of USD$117,000 over eight years, (USD$84,000 paid to date with the balance required as follows: 2011 - USD$16,000; 2012 - USD$17,000) and is required to fund all exploration costs of the property to maintain its option.
		During the year ended August 31, 2010, the Company did not abandon any licences in the area therefore no write off was taken for this property (2009 - nil; 2008 - $190,020).
	(g)	Ushirombo:
		The Company holds 100% interest or through Prospecting and Option Agreements has options to acquire interests ranging from 65% to 80% in the other licences. The Company is required to fund all exploration costs of the properties.
		During the year ended August 31, 2010, the Company did not abandon any licences in the area and no write off was taken in this area (2009 - nil; 2008 - nil).

3.	Mineral properties and deferred exploration costs (continued):
	(h)	Mbogwe:
		Through prospecting and option agreements the Company has options to acquire interests ranging from 51% to 80% in these licences. The Company is required to fund all exploration costs of the properties.
		During the year ended August 31, 2010, the Company did not abandon licences in the area and no write off was taken for this property (2009 - $468,919; 2008 - $8,472).
	(i)	Biharamulo:
		The Company has options to acquire interests ranging from 51% to 65% in the other licences. The Company is required to fund all exploration costs of the properties. Three of the licences are subject to the option agreement with MDN (note 3(l)).
		During the year ended August 31, 2010, the Company did not abandon any licences in the area no write off was taken for this property (2009 - nil; 2008 - $256,438).
	(j)	Summary:
		The Company has options to acquire interests in their other properties ranging from 51% to 100%. To maintain these options and licences, the Company must make the following future payments:


		2011	408,500
		2012	209,000
		2013	160,000
		2014	45,000
		Thereafter	-


		During the year ended August 31, 2010, the Company abandoned certain licences in the areas and wrote off $10,464 (2009 - $473,944; 2008 - $49,961) of costs related to the abandoned area located within the other properties category.
	(k)	Joint venture with BEAL:
		BEAL had the option to acquire the total rights, titles, and interests of the Company in prospecting licences in various properties, herein called the BEAL project. In exchange for this option, BEAL paid USD$100 to the Company. To maintain and exercise the option, BEAL was required to incur USD$250,000 in exploration and development costs on the BEAL project within a year of closing the agreement (completed), and thereafter, BEAL must expend USD$50,000 each year for each retained prospecting licence. In addition, BEAL must make USD$40,000 annual payments to the Company for each retained prospecting licences in December 2006 and subsequent years.
		Within thirty days after commercial production, BEAL must pay the Company USD$1,000,000 and an additional USD$1,000,000 on each of the next two years. BEAL will also pay the owner of the licence 1.5% of net smelter returns.

3.	Mineral properties and deferred exploration costs (continued):
	(k)	Joint venture with BEAL (continued):
		The Company has received from BEAL notices of relinquishment for all rights, titles, and interests in all but two prospecting licenses included in the Option Agreement, which are located at Itetemia.
	(l)	Option Agreement with MDN:
		On January 20, 2003, as amended on March 18, 2003 and January 9, 2007, the Company entered into an agreement with MDN granting MDN the exclusive option to acquire the total rights, titles, and interests of the Company in certain prospecting licences. To maintain and exercise the option, MDN has made annual payments for each retained prospecting licence, incurred minimum exploration and development expenditures and certain drilling requirements undertake all obligations of the Company in respect of the licences and complete a feasibility study by December 31, 2009. Upon exercise of the option, the Company shall retain a net smelter return royalty fluctuating between 0.5% to 2% depending on the price of gold. On November 11, 2009, the Company was advised by MDN that a feasibility study and production decision would not be made by December 31, 2009. In consideration for a second extension of the feasibility study and production decision date to December 31, 2010, MDN issued 125,000 common shares of MDN to the Company. The prospecting licences under option to MDN are located at Biharamulo and Tulawaka.
		These 125,000 shares were issued to the Company on November 17, 2009 at a cost basis of $73,750. The Company designed the short term investment as held-for-trading. On May 31, 2010, the Company sold 10,000 of these shares for proceeds of $4,100 and recognized a loss of $1,800. On June 1, 2010, the Company sold 10,000 of the shares for proceeds of $4,300 and recognized a loss of $1,600. As at August 31, 2010, the remaining 105,000 shares had a fair value of $40,425. The Company recorded a loss of $24,525 during the period.
	(m)	Option Agreement with Kazakh Africa Mining Ltd. (Kazakh):
		In January 2009, the Company signed an Option and Royalty Agreement with Kazakh over the Company’s Mwadui Project area diamond prospecting licenses and applications located in the Lake Victoria Greenstone Belt of Tanzania. Kazakh has the option to acquire a 100% interest in the licenses by fulfilling various option payments over a 72-month period, whereby the Company will then receive a gross overriding royalty of 1.5% on all diamonds sold, and a net smelter returns royalty of up to 2% on any other minerals produced.

3.	Mineral properties and deferred exploration costs (continued):
	(n)	Option Agreement with Songshan Mining Co. Ltd., a corporation based in the People's Republic of China (Songshan):
		On February 25, 2009, the Company entered into an Option and Royalty Option Agreement with Songshan, granting Songshan an option to acquire a 100% interest in the Company's 26 Kabanga nickel licenses and applications located in northwestem Tanzania, by completing certain exploration work over a period of three years, and then making a production decision, subject to a 3% net smeller royalty reserved in favor of the Company. In January 2010, Jinchuan Mining, a Chinese metals company, concluded an agreement with Songshan to participate in the exploration and development of the Kabanga nickel properties. Jinchuan Mining has agreed to act as operator and hold complete financial responsibility for all exploration activities on the nickel exploration licences.
	(o)	Option Agreement with Joseph Magunila and Partners (JMP):
		In February 2010, the Company entered into an Option and Royalty Agreement with JMP over an area in the Kahama District of the Shinyanga Region in Tanzania 100% owned by JMP. The agreement grants the Company an option to acquire up to 90% of JMP’s interest and/or, at the sole discretion of the Company in licenses surrounding the Lunguaya and Kahama properties, to enter into a mining and exploration services agreement with the remuneration, or royalty system, which will have the same monetary effect of a 90% interest. The Company paid US$90,000 for this option.

4.	Equipment and leasehold improvements:

	2010		Cost		Accumulated amortization		Net book value

	Drilling equipment	$	464,487	$	199,997	$	264,490
	Automotive equipment under capital lease		173,034		68,531		104,503
	Automotive		209,434		95,996		113,438
	Computer equipment		120,597		81,715		38,882
	Machinery and equipment		780,394		209,309		571,085
	Leasehold improvements		5,594		5,222		372

		$	1,753,540	$	660,770	$	1,092,770


	2009		Cost		Accumulated amortization		Net book value

	Drilling equipment	$	568,632	$	168,995	$	399,637
	Automotive equipment under capital lease		207,842		58,581		149,261
	Automotive		214,574		157,446		57,128
	Computer equipment		120,574		99,903		20,671
	Machinery and equipment		184,769		104,722		80,047
	Leasehold improvements		6,718		6,076		642

		$	1,303,109	$	595,723	$	707,386

5.	Obligations under capital lease:
	During the year ended August 31, 2010, the Company has continued to finance two vehicles under capital lease arrangements. The capital lease has been fully paid for on July 29, 2010. There are no other capital leases.

6.	Convertible debt:
	Allocation of gross proceeds at inception:

			May		June		Total

	Gross proceeds	$	1,000,000	$	1,000,000	$	$2,000,000
	Fair value of liability portion		978,997		965,375		1,944,372
	Fair value of equity portion		21,003		34,625		55,628

	Liability portion of convertible debt:
	Opening balance		-		-		-
	Initial fair value of debt component		978,997		965,375		1,944,372
	Issuance costs		(14,996)		(111,160)		(126,156)
	Accretion expense		12,540		10,470		23,010
	Interest paid		-		-		-
	Conversion into common shares		-		-		-

	Closing balance of liability portion	$	976,541	$	864,685	$	1,841,226

	Equity portion of convertible debt:
	Opening balance	$	-	$	-	$	-
	Initial fair value of debt component		21,003		34,625		55,628
	Issuance costs		(322)		(3,987)		(4,309)
	Conversion into common shares		-		-		-

	Closing balance of liability portion	$	20,681	$	30,638	$	51,319

	On May 28, 2010, the Company issued a three-year convertible promissory note to an arm's length third party in the principal amount of $1,000,000 bearing interest at 3% and convertible into 222,173 common shares at a price of $4.501. A bonus of 25,000 common shares will be payable if the note is converted into common shares by October 11, 2011.
	On August 17, 2010, the Company issued a three-year convertible promissory note to an arm’s length third party, in the principal amount of $1,000,000 bearing interest at 3% and convertible into 255,484 common shares at a price of $4.286. The agreement charged finance and commitment fees of $95,000 which was paid by issuing 22,166 common shares. These shares will be refundable to the Company if the remaining principal is not fully converted into common shares by December 9, 2011.
	Each of the convertible debentures includes a conversion feature. The Company determined a fair value of the financial liability by obtaining independent bank rates of 3.75% for the May 2010 debt and 4.25% for the August 2010 debt, assuming a three-year expected life and assigned the residual value of the equity conversion features for both debts of $55,628. Total transaction costs for the two debt agreements was $130,465 of which $4,309 was allocated to the equity component, which aggregated to $51,319 (note 8(e)).

7.	Income taxes:
	The tax effects of significant temporary differences which would comprise tax assets and liabilities at August 31, 2010 and 2009 are as follows:

				2010				2009

	Future income tax assets:
		Equipment	$	63,000		$		67,000
		Non-capital losses for tax purposes		6,103,000				6,248,000
		Capital losses for tax purposes		32,000				34,000
		Resource related deductions carried forward		445,000				1,746,000
		Finance costs		(5,000)				-
				6,638,000				8,095,000

	Valuation allowance			(6,638,000)				(8,095,000)

	Net future income tax assets		$	-		$		-

	Future income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the recoverability of future tax assets, management considers whether it is more likely than not that some portion or all of the future tax assets will not be realized. The ultimate realization of future tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. During 2009, management identified that certain of the Company’s future income tax assets at August 31, 2008 were overstated and this has been amended resulting in decrease of $770,000 in the future income tax asset and related valuation allowance previously disclosed.
	At August 31, 2010, the Company has non-capital losses for Canadian income tax purposes of approximately $9,358,000, which are available to carry forward to reduce future years’ taxable income. These income tax losses expire as follows:


	2014				$		914,000
	2015						997,000
	2026						1,711,000
	2027						1,388,000
	2028						1,333,000
	2029						1,588,000
	2030						1,427,000

					$		9,358,000

7.	Income taxes (continued):
	The Company has non-capital losses for Tanzania tax purposes of approximately $12,545,000 which have no expiry date.
	The reconciliation of income tax attributable to continuing operations computed at the statutory tax rates to income tax expense is:

				2010		2009		2008

	Combined basic Canadian federal and provincial statutory income tax rates including surtaxes			30.3%		31.8%		30.4%

	Statutory income tax rates applied to accounting income		$	(1,040,000)	$	(1,502,000)	$	(1,123,000)

	Increase (decrease) in provision for income taxes:
		Valuation allowance		(1,457,000)		1,256,000		(71,000)
		Foreign tax rates different from statutory rate		236,000		157,000		683,000
		Permanent differences and other items		1,804,000		(144,000)		300,000
		Loss expired in year		457,000		233,000		211,000
				1,040,000		1,502,000		1,123,000

	Recovery (provision) for income taxes		$	-	$	-	$	-

8.	Share capital:
	(a)	Authorized:
		The Corporation’s Restated Articles of Incorporation authorize the Corporation to issue an unlimited number of common shares. As of January 9, 2008, the Board resolved that the Corporation authorize for issuance up to a maximum of 96,000,000 common shares, subject to further resolutions of the Company’s Board of Directors.

8.	Share capital (continued):
	(b)	Issued common shares, warrants and share subscriptions:

			Number of shares		Amount

		Balance, August 31, 2007	86,748,493	$	54,113,279
		Issued for private placements (note 8(b))	1,031,695		5,724,997
		Issued pursuant to share subscriptions agreement (note 8(b))	271,374		1,500,000
		Issued pursuant to Restricted Shares Unit Plan (note 8(d))	62,790		367,124

		Balance, August 31, 2008	88,114,352		61,705,400
		Issued for private placements (note 8(b))	1,456,801		5,240,000
		Issued pursuant to share subscriptions agreement (note 8(b))	141,809		750,000
		Issued pursuant to Restricted Shares Unit Plan (note 8(d))	69,582		416,316

		Balance, August 31, 2009	89,782,544		68,111,716
		Issued for private placements, net (note 8(b))	1,462,584		3,984,479
		Issued pursuant to Restricted Shares Unit Plan (note 8(d))	148,165		664,115
		Issued for financing and commitment fees in convertible debt agreements (note 6)	22,166		95,000

		Balance, August 31, 2010	91,415,459	$	72,855,310

		On August 8, 2006, the Company entered into a private placement subscription agreement with the Chairman and CEO for the purchase of an aggregate of $3,000,000 worth of common shares of the Company in eight separate quarterly tranches of $375,000 each. The initial quarterly period commenced February 1, 2007. As at August 31, 2009 all of the eight quarterly tranches had been subscribed for.
		On February 19, 2008, the Company completed a $1,000,000 private placement pursuant to a subscription agreement dated February 4, 2008 with Chairman and CEO, for the purchase of 167,196 common shares at a price of $5.981 per share.
		On May 14, 2008, the Company completed a $1,725,000 private placement pursuant to a subscription agreement dated may 1, 2008 with the Chairman and CEO, for the purchase of 332,434 common shares at a price of $5.189 per share.
		On August 7, 2008, the Company completed a $1,000,000 private placement pursuant to a subscription agreement dated July 15, 2008 with the Chairman and CEO, for the purchase of 184,843 common shares at a price of $5.41 per share.

8.	Share capital (continued):
	(b)				Issued common shares, warrants and share subscriptions (continued):
				On October 10, 2008, the Company completed a private placement with the Chairman and CEO, for 327,225 common shares at a price of $3.056 per share for total proceeds of $1,000,000.
				On December 9, 2008, the Company completed a private placement with Van Tongeren Management LLC for 352,381 common shares at a price of $2.10 per share for total proceeds of $740,000.
				On February 1, 2009, the Chairman and CEO of the Company confirmed his intention to continue his regular investments in Tanzanian Royalty by entering into a new Private Placement Subscription Agreement dated February 1, 2009 with the Company under which he agreed to subscribe for common shares of the Company for an aggregate amount of $3,000,000.
				On March 4, 2009, the Company completed a private placement with the Chairman and CEO for 189,036 common shares at a price of $5.29 per share for total proceeds of $1,000,000.
				On April 14, 2009, the Company completed a private placement with the Chairman and CEO for 248,139 common shares at a price of $6.045 per share for total proceeds of $1,500,000.
				On May 28, 2009, the Company completed a private placement for 340,020 common shares at a price of $2.941 per share for total proceeds of $1,000,000.
				On October 26, 2009, the Company completed a private placement with the Company’s Chairman and CEO, for 306,749 common shares at a price of $3.26 per share, resulting in net proceeds of $1,000,000 to the Company. With completion of this $1,000,000 private placement, the $3,000,000 private placement agreement dated February 1, 2009 between the Company and the Chairman and CEO is complete.
				On December 21, 2009, the Company completed private placements 1,155,835 common shares at a price of $2.718 per share for net proceeds of $2,984,479 pursuant to subscription agreements dated November 6, 2009 with arm’s length third party European investment funds.
				On August 17, 2010, the Company issued 22,166 common shares at a price of $4,286 per share for fee related to convertible debt to an arm’s length third party (note 6).
		(c)	Employee stock ownership plan:
			On May 1, 2003, the Company established a non-leveraged employee stock ownership plan (ESOP) for all eligible employees, consultants, and directors. The Company matches 100 percent of participants’ contributions up to 5 percent of the participants’ salaries and 50 percent of participants’ contributions between 6 percent and 30 percent of the participants’ salaries. All contributions vest immediately. ESOP compensation expense for the year ended August 31, 2010 was $73,361 (2009 - $83,181, 2008 – 62,568) and is included in salaries and benefits expense.

8.	Share capital (continued):
	(d)		Restricted share units:
			The Restricted Stock Unit (RSU) Plan is designed to compensate employees and directors for their service to the Company. Of the 500,000 shares authorized for issuance under the Plan, 312,779 shares have been issued as at August 31, 2010, of which 148,165 were issued in 2010 with a value of $664,115; 69,582 were issued in 2009 with a value of $416,316; 62,790 were issued in 2008 with a value of $367,124; and 32,242 were issued in 2007 with a value of $231,627. A total of 731,271 RSUs have been granted as of August 31, 2010 (2009 – 541,892). A total of 89,229 RSUs were forfeited since the inception of the Plan, of which 23,460 were forfeited in 2010 resulting in a reversal of unvested compensation cost of $34,538. Total stock-based compensation expense related to the issue of restricted stock was $650,961 (2009 - $541,633).
	(e)		Contributed surplus:


			Balance, August 31, 2007:	$	310,921
			Stock-based compensation		455,893
			Shares issued pursuant to Restricted Share Unit Plan (note 8(d))		(367,124)

			Balance, August 31, 2008:		399,690
			Stock-based compensation		541,633
			Shares issued pursuant to Restricted Share Unit Plan (note 8(d))		(416,316)
			Shares forfeited (note 8(d))		(52,429)

			Balance, August 31, 2009:		472,578
			Stock-based compensation		650,961
			Shares issued pursuant to Restricted Share Unit Plan (note 8(d))		(664,115)
			Shares forfeited (note 8(d))		(34,538)
			Equity conversion value for convertible debt (note 6)		51,319

			Balance, August 31, 2010	$	476,205

9.		Related party transactions:
		During the year ended August 31, 2010, $381,690 (2009 - $446,927) was paid or payable by the Company to directors for directors’ fees. Directors were paid $75,298 (2009 - $104,877) in cash and $299,314 (2009 - $323,622) in non-cash equivalent RSUs.
		The Company engages a legal firm for professional services in which one of the Company’s directors is a partner. During the year ended August 31, 2010, the legal expense charged by the firm was $143,524 (2009 - $257,006), of which $63,568 remains payable at year end.
		During the year ended August 31, 2010, $204,777 (2009 - $121,891) was paid or payable by the Company to directors as consulting fee for serving on the Technical Committee.
		The above transaction were in the normal course of operations and were measured at the exchange amount which is the amount agreed to by the related parties.

10.	Commitments:
	In addition to the property payments committed to by the Company to maintain options in certain prospecting and mining option agreements (note 3), the Company is committed to rental payments of approximately $13,860 for premises in 2011.

11.	Financial risk:
		(a)	Credit risk:
			Credit risk is the risk of an unexpected loss if a third party to a financial instruments fails to meet its contractual obligations. The Company is subject to credit risk on the cash balances at the bank, its short-term bank investments and accounts and other receivables. The Company’s cash and cash equivalents and short-term bank investments are with Schedule 1 banks or equivalents. The accounts and other receivables consist of GST/HST receivable from the Custom Revenue Agency and due from the CEO.
		(b)	Liquidity risk:
			The Company manages liquidity risk by maintaining adequate cash balances in order to meet short term business requirements. Because the Company does not currently derive any production revenue from operations, its ability to conduct exploration and development work on its properties is largely based upon its ability to raise capital by equity funding. Throughout the year, the Company has obtained funding via private placements from various sources, including the Company’s Chairman. Refer to notes 3, 6 and 10 which discussed payments the Company is committed to funding.
		(c)	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 rate. The Company’s bank accounts earn interest income at variable rates. The Company’s future interest income is exposed to changes in short-term rates.
			The Company’s convertible debt fair value is based on market interest rate. As at August 31, 2010 the fair value of the convertible debt agreements did not differ materially from their carrying value.
		(d)	Currency risk:
			The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company has offices in Canada, USA, and Tanzania, but holds cash mainly in Canadian and United States currencies. A significant change in the currency exchange rates between the Canadian dollar relative to US dollar could have an effect on the Company’s results of operations, financial position, or cash flows. At August 31, 2010, the Company had no hedging agreements in place with respect to foreign exchange rates.

11.	Financial risk (continued):
			(d)	Currency risk (continued):
				At August 31, 2010, the Company is exposed to currency risk through the following assets and liabilities denominated in US dollars:

						2010		2009

				Cash and cash equivalents	CDN$	1,028,109	CDN$	1,128,240
				Accounts and other receivables		44,932		14,282
				Accounts payable and accrued liabilities		(196,865)		(184,349)

					CDN$	876,176	CDN$	958,173
			A 10% change in the Canadian dollar against the United States dollar at August 31, 2010 would have resulted in a change of $87,618 (2009 - $95,815) to net income.

12.		Capital management:
		The Company’s objective when managing capital is to maintain adequate funds to support its exploration and development of its projects. The Company considers shareholders’ equity as capital. The adequacy of the capital structure and management approach is assessed on an ongoing basis and is adjusted as necessary after taking into consideration the Company’s strategy, metals markets, the mining industry, economic conditions and associated risks. The Company’s capital management approach is reviewed on an ongoing basis. The Company is not subject to externally imposed capital requirements.

13.	Subsequent events:
			(a)	On September 7, 2010 the Company completed a $800,000 private placement pursuant to a subscription agreement dated August 24, 2010 with the Chairman and CEO for 144,430 common shares at a price of $5.539 per share.
			(b)	On September 23, 2010, the Company completed a private placement with an arm's length third party consisting of a three-year convertible promissory note in the principal amount of $1,000,000 bearing interest at 3% and convertible into 221,337 common shares at a price of $4.518 per share.
			(c)	On October 4, 2010, the Company completed a private placement with arm's length third parties consisting of three-year convertible promissory notes in the aggregate principal amount of $1,060,000 bearing interest at 3% and convertible into 204,772 common shares at a price of $5.1765 per share.
			(d)	On November 5, 2010, the Company completed $4,841,600 private placements with arm’s length third parties for an aggregate 800,000 common shares at a price of $6.052 per share and an aggregate 200,000 common share purchase warrants exercisable at the price of $7.309 per share and expiring on October 20, 2012. In addition, the Company paid a finder’s fee payable in 64,000 common shares at the subscription price of $6.052 per share.

13.	Subsequent events (continued):
		(e)	The Company entered into Subscription Agreements dated November 10 and 17,2010 for private placements with arm's length third parties for an aggregate 2,553,627 common shares at the price of $5.874/share and an aggregate 638,407 common share purchase warrants exercisable at the price of $7.05 per share exercisable at any time prior to the second anniversary date of the Agreements. In addition, the Company will pay a finder's fee payable in 212,802 common shares at the subscription price of $5.874/share. On November 23, 2010 the Company completed one private placement and 851,209 common shares were issued for proceeds of $5,000,000. 212,802 common share purchase warrants were issued and 68,097 common shares were issued to arm's length third parties in respect of the finder's fee.

14.	Reconciliation between Canadian and United States generally accepted accounting principles:
	These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP). A description of United States generally accepted accounting principles (US GAAP) and rules prescribed by the United States Securities and Exchange Commission (SEC) that result in material measurement differences from Canadian GAAP follows:
	(a)	Mineral property and deferred exploration cost:
		Under Canadian GAAP, the Company capitalizes mineral property acquisition and exploration costs as described in note 2(e).
		For US GAAP purposes, exploration and land use costs on mineral properties are expensed as incurred for US GAAP purposes, until commercially minable deposits are determined to exist within a particular property. Property acquisition costs are capitalized as incurred and are subject to impairment analysis on occurrence of a triggering event, which is effectively a negative event that differs from the Company’s original expectations made at the time of the acquisition. Such acquisition costs will be amortized on a unit of production basis once production commences.
		For Canadian GAAP purposes, cash flows relating to mineral property exploration and land use costs are reported as investing activities in the consolidated statements of cash flows. For US GAAP purposes, these costs would be characterized as operating activities in the consolidated statements of cash flows.
		During the years ended August 31, 2010, 2009, and 2008, the Company wrote down mineral property and deferred exploration costs in its consolidated financial statements prepared in accordance with Canadian GAAP (note 3). The mineral property exploration costs incurred would previously have been expensed for US GAAP and, as such, have been added back to loss from operations under US GAAP for the years ended August 31, 2010, 2009, and 2008.

14.	Reconciliation between Canadian and United States generally accepted accounting principles (continued):
		(a)	Mineral property and deferred exploration cost (continued): As described in note 2(h), the Company follows the asset and liability method of accounting for income taxes. This is consistent with the method used for US GAAP purposes. However, differences to amounts recorded for future income taxes arose in prior years on the application of US GAAP to the financial statements due to the differences in accounting for mineral property exploration and land use costs. The Company recognizes interest expense and penalties related to income tax uncertainty in the statement of operations, comprehensive loss, and deficit.
		(c)	Stock-based compensation:
			The Company followed the intrinsic value principles up to August 31, 2005, in measuring compensation expense for employee options. Under the intrinsic value method, compensation cost is the excess, if any, of the quoted market value of the stock at the measurement date, which is generally the grant date, over the amount an employee must pay to acquire the stock. The application of the intrinsic value resulted in compensation expense of $61,850 being recognized for stock-based compensation plans for employees prior to August 31, 2001, and no material expense for any of the other periods presented up to August 31, 2005.

		On September 1, 2005, the Company adopted the new stock-based compensation for US GAAP purposes, which requires the cost of employee services received in exchange for an award of equity instruments to be based on the grant-date fair value of the award. The accounting for employee awards under US GAAP was now similar to the Company’s accounting policy for Canadian GAAP purposes, and, as such, a GAAP difference does not arise during the year ended August 31, 2006 and there is no cumulative effect on adoption on September 1, 2005.
		The cumulative effect of stock options granted to non-employees for the period from implementation of the new US GAAP stock-based compensation rules to August 31, 2002 would have been a $393,078 increase in the deficit and share capital. There were no options granted to non-employees after August 31, 2002.
		With respect to escrowed shares, US GAAP generally considers escrowed shares to be a compensatory arrangement between the Company and the holder of the shares. Accordingly, the difference between the market value of escrowed shares at the time the shares are eligible for release from escrow and the consideration paid or payable on the issue of the shares is recognized and charged to operations as compensation expense in the period the escrowed shares are eligible for release from escrow.
	(d)	5,000,000 common shares of the Company held in escrow at August 31, 2002 became eligible for release during fiscal 2003. Based on the market price at that time, $2,300,000 was charged to operations for US GAAP purposes in 2003. No charge was made or required under Canadian GAAP. Convertible debt:

14.

Reconciliation between Canadian and United States generally accepted accounting principles (continued):

		The Company entered into two convertible debt agreements during the year ended August 31, 2010 (see note 6). The accounting for convertible debt under US GAAP is different to the Company’s accounting policy for Canadian GAAP purposes, and, as such, a GAAP difference does arise during the year ended August 31, 2010. Under US GAAP, the Company assigned a $264,569 value to the equity conversion feature in APIC using the intrinsic value method which was $213,250 higher than that recorded under Canadian GAAP, as described in note 6. Further, US GAAP requires deferred issuance costs to be recorded as an asset and amortized using the effective interest method whereas under Canadian GAAP requires the amount to be netted against the associated debt. Accordingly, a reclassification adjustment to the balance sheet of $122,792 was included in the reconciliation note. As such, the financial liability component under US GAAP is $1,764,375 which was $76,851 lower than that recorded under Canadian GAAP and accretion expense under US GAAP is $36,617 which was $13,607 higher than under Canadian GAAP.
(e)	Reconciliation:
	The effect of the measurement differences between Canadian GAAP and US GAAP on the consolidated balance sheets and statements of operations and cash flows is summarized as follows:
	( i )Assets:

		2010		2009

Assets, under Canadian GAAP	$	32,783,560	$	29,285,203
Adjustment for mineral properties and deferred exploration (note 14(a)) Adjustment for convertible debt (note 14(d))		(24,027,082) 122,792		(20,996,034)

Assets, under US GAAP	$	8,879,270	$	8,289,169

14.	Reconciliation between Canadian and United States generally accepted accounting principles (continued):
	(e)	Reconciliation:
		( ii )Share capital and share subscriptions received:
					2010		2009

			Share capital and share subscriptions received, under Canadian GAAP	$	73,729,459	$	68,584,926
			Adjustment for stock-based compensation for employees (note 14 (c))		61,850		61,850
			Adjustment for stock-based compensation for non-employees (note 14(c))		393,078		393,078
			Adjustment for escrow shares (note 14(c))		2,300,000		2,300,000

			Share capital and share subscriptions received,under US GAAP	$	76,484,387	$	71,339,854

( iii )Deficit:

			2010		2009

	Deficit, under Canadian GAAP	$	(43,884,125)	$	(40,456,469)
	Adjustment for stock-based compensation for employees (note 14(c))		(61,850)		(61,850)
	Adjustment for stock-based compensation for non-employees (note 14(c))		(393,078)		(393,078)
	Adjustment for escrow shares (note 14(c))		(2,300,000)		(2,300,000)
	Adjustment for mineral property exploration costs (note 14(a)) Adjustment for convertible debt (note 14(d))		(24,027,082) (13,607)		(20,996,034) -

	Deficit, under US GAAP	$	(70,679,742)	$	(64,207,431)

14.	Reconciliation between Canadian and United States generally accepted accounting principles (continued):
		( iv )Loss and loss per share:

					Years ended August 31,
						2010		2009		2008

			Loss for the year, under Canadian GAAP	$		(3,427,655)	$	(4,731,836)	$	(3,698,045)
			Adjustment for mineral property exploration costs (note 14(a)) Adjustment for convertible debt (note 14(d))			(3,031,049) (13,607)		(2,957,512) -		(2,040,385) -

			Loss for the year, under US GAAP	$		(6,472,311)	$	(7,689,348)	$	(5,738,430)

			Basic and diluted loss per share, under US GAAP	$		(0.07)	$	(0.09)	$	(0.07)

			Weighted average number of shares outstanding			90,892,870		89,041,180		87,372,662

( v )Cash flows:

			Years ended August 31,
				2010		2009		2008

	Cash used in operating activities, under Canadian GAAP	$		(2,515,333)	$	(2,638,904)	$	(2,633,434)
	Adjustment for mineral properties and deferred exploration (note 14(a))			(2,835,896)		(3,591,879)		(2,319,401)

	Cash used in operating activities, under US GAAP	$		(5,351,229)	$	(6,230,783)	$	(4,952,835)

	Cash used in investing activities, under Canadian GAAP	$		(3,634,934)	$	(3,811,430)	$	(2,622,982)
	Adjustment for mineral properties and deferred exploration (note 14(a))			2,835,896		3,591,879		2,319,401

	Cash provided by (used in) investing activities, under US GAAP	$		(799,038)	$	(219,551)	$	(303,581)
Under US GAAP, there would be no subtotal in the operations section of the cash flow statement.

14.	Reconciliation between Canadian and United States generally accepted accounting principles (continued):
	(f)	New accounting pronouncements:
		( i )	The FASB issued guidance to modify the US generally accepted accounting principles to act as the single source of authoritative accounting principles recognized by the FASB to be applied in preparation of financial statements in conformity with GAAP. This guidance establishes two levels of GAAP, authoritative and non-authoritative and includes certain grandfathering provisions. is the guidance was effective for financial statements issued for interim and annual periods ending after September 15, 2009 and there was no material impact on its consolidated financial statements.

	( ii )		In April 2009, the FASB issued an amendment to Interim Financial Statement guidance relating of fair value of financial instruments, which requires disclosures about the fair value of financial instruments to be presented in interim financial statements in addition to annual financial statements. The guidance is effective for interim reporting periods ending after June 15, 2009 and the Company began utilizing the disclosure guidance in first quarter of fiscal year 2010.
(g)		Recent pronouncements:
	( i )		In June 2008, the guidance on determining whether instruments granted in share-based payment transactions are participating securities, which clarified whether certain instruments granted in share-based payment transactions are participating securities. This guidance specified that unvested share-based payment awards that contain non-forfeitable rights to dividends are participating securities and shall be included in the computation of earnings per share pursuant to the “two-class” method. The “two-class” method allocates undistributed earnings between common shares and participating securities. This authoritative guidance is effective as of the Company’s first quarter of fiscal 2010. There was no impact on the Company’s August 31, 2010 consolidated financial statements resulting from adoption this guidance.

14.	Reconciliation between Canadian and United States generally accepted accounting principles (continued):
		(g)		Recent pronouncements (continued):
			( ii )		In June 2009, the FASB amended previous guidance to require an enterprise to perform an analysis to determine whether the enterprise's variable interest or interests give it a controlling financial interest in a variable interest entity. Additionally, an enterprise is required to assess whether it has an implicit financial responsibility to ensure that a variable interest entity operates as designed when determining whether it has the power to direct the activities of the variable interest entity that most significantly impact the entity's economic performance. This amendment requires enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise's involvement in a variable interest entity. It would also require ongoing assessments to determine whether an entity is a variable interest entity and whether an enterprise is the primary beneficiary of a variable interest entity. The amendment is effective for the Company's fiscal year 2010. There is no impact on the Company’s August 31, 2010 consolidated financial statements resulting from the adoption of this amendment.

Tanzanian Royalty Exploration Corporation

Management’s Discussion and Analysis

Years ended August 31, 2010 and 2009

The Management’s Discussion and Analysis of Financial Condition and Results of Operation (“MD&A”) for Tanzanian Royalty Exploration Corporation (the “Company”) should be read in conjunction with the audited Consolidated Financial Statements for the years ended August 31, 2010 and 2009.

The financial information in the MD&A is derived from the Company’s Consolidated Financial Statements which have been prepared in accordance with Canadian generally accepted accounting principles. All dollar amounts are expressed in Canadian dollars unless otherwise described. The effective date of this MD&A is November 26, 2010.

Overall Performance

As of August 31, 2010, the Company had Current Assets of $1,735,000 as compared to $1,627,000 on August 31, 2009. The increase of $108,000 in current assets is mainly attributed to increase in cash and cash equivalents. Mineral Properties and Deferred Exploration costs amounted to $29,956,000 as of August 31, 20010, an increase of $3,006,000 as compared to $26,950,000 at August 31, 2009. The current year’s net expenditures on Mineral Property exploration is $3,016,000 (2009 - $3,798,000) and the Company recovered $348,000 of exploration costs from its option partners in 2010 (2009 - $416,000). The Company has also recorded a write-down in 2010 of $10,000 (2009 - $1,207,000) on mineral properties abandoned.

The Company has financed its operations and investments through the issuance of common shares. During 2010, the Company raised $3,511,000 (2009 - $5,990,000) through the issuance of share capital and share subscriptions and $1,965,000 through issuances of convertible debt.

Selected Annual Information

	2010 August 31	2009 August 31	2008 August 31
Total Revenues	$0	$0	$0
Net Loss for the period	($3,427,655)	($4,731,836)	($3,698,045)
Basic and diluted loss per share	($0.04)	($0.05)	($0.04)
Total assets	$32,783,560	$29,285,205	$26,965,294
Total Long Term Financial Liabilities	$1,841,226	$0	$38,435
Cash dividends declared per share	$0	$0	$0

Results of Operations

The loss before income tax in 2010 was $3,428,000 a $1,304,000 decrease from last year’s loss before income taxes of $4,732,000. The decrease in loss before income taxes in 2010 was due to a significant decrease in write off of mineral properties and deferred exploration costs ($1,197,000).

During the year, the Company has made significant purchases in capital equipment to further its bulk sampling operation, therefore there is an increase in amortization of $101,000 from $ 101,000 in 2009 to $ 202,000 in 2010. Due to the increase in capital equipment purchases, office administration expenses including freight forwarding and handling of purchases also increased from $91,000 in 2009 to $132,000 in 2010.

Property investigation costs were $45,000 for the year ended August 31, 2010 as compared to $23,000 for 2009. The increase of $22,000 was a result of the Company’s review of new licenses becoming available.

Transfer agent and listing fees decreased from $228,000 in 209 to $201,000 in 2010 due to fewer private placements during 2010. Professional fees have also decreased by $134,000 from $481,000 in 2009 to $347,000 in 2010. Legal expenses decreased due to fewer contract negotiations.

During the year, the Company sold 20,000 of 125,000 shares held in short term investments for proceeds of $8,400 and recognized a loss of $3,400. As at August 31, 2010, the remaining 105,000 shares had a fair value of $40,425. The Company recorded a loss of $24,525 during the period.

Salaries and benefit expense decreased by $348,000 in 2010 to $1,025,000 from $1,374,000 in 2009. During the year, the Company’s exploration manager position, vacated in September 2009, was not replaced until January 2010. In addition, the drill manager position, vacated in November 2009, was not immediately replaced and certain consultants were hired as employees during the last quarter, thus incurring savings of full time salaries and benefit expense for part of the year. Further, there was an accrual of $132,000 for severance pay in 2009 that was not applicable in 2010.

In 2010, stock based compensation increased by $221,000, due to previously granted Restricted Stock Units (“RSU”) to certain employees whose RSUs vested early due to fulfillment of performance goals. Directors’ fees decreased by $65,000 from $447,000 in 2009 to $382,000 in 2010 because most directors elected to receive payment in the form of RSUs instead of cash. The full value of the RSUs will come into effect in the next fiscal year.

For the years ended August 31, 2010 and 2009, the Company did not record any income tax expense or recovery.

Summary of Quarterly Results

	2010 August 31	2010 May 31	2010 February 28	2009 November 30	2009 August 31	2009 May 31	2009 February 29	2008 November 30
Total Revenues	$0	$0	$0	$0	$0	$0	$0	$0
Net Loss	$(807,927)	($934,445)	($881,166)	($804,117)	($505,397)	($2,712,395)	($919,131)	($594,913)
Basic and diluted loss per share	($0.011)	($0.011)	($0.009)	($0.009)	($0.006)	($0.030)	($0.010)	($0.007)

There are two primary reasons for fluctuations in quarterly operating results. If a property is deemed uneconomical it results in a write-off of the deferred exploration cost which can result in a large one-time loss. This explains the variation experienced in the quarters of 2009. Another cause for quarterly fluctuations is the amount of new property investigations in a given quarter. Exploration costs associated with investigating properties are not deferred but rather are expensed as incurred.

Liquidity

Because the Company does not currently derive any production revenue from operations, its ability to conduct exploration and development work on its properties is largely based upon its ability to raise capital by equity funding. Throughout the year, the Company issued 1,462,584 shares in private placements with the Chairman and CEO of the Company and others in consideration for cash received of $3,985,000. In addition, the Company has received $1,965,000 for 3 year promissory notes which were issued in May and July of 2010.

As of August 31, 2010 the Company’s working capital was $1,114,000 as compared to $943,000 on August 31, 2009. As the Company’s mineral properties advance under various exploration agreements, option payments could increasingly play a role in funding exploration activities for our own account.

The Company has no contractual obligations as of the latest fiscal year end.

Capital Resources

The Company acquires gold and other mineral concessions through its own efforts or those of its subsidiaries. All of the Company’s concessions are located in Tanzania.

For each concession granted in Tanzania under a prospecting or a reconnaissance licence, the Company is required to carry out a minimum amount of exploration work before a mining licence is granted for further development. There are no set work requirements to keep the concessions in good standing. A prospecting licence is issued for a period of up to three years and they are renewable two times for a period up to two years each. At each renewal, at least 50% of the area must be relinquished. A reconnaissance license is issued for one year and renewed for a period not exceeding a year. All prospecting licenses granted by the Tanzanian government are subject to an annual rental fee of not more than U.S. $50 per square kilometer, a minimum exploration work commitment, and employment and training of Tanzanians. In addition, the government of Tanzania imposes a royalty on the gross value of all gold production at the rate of 3%.

Many of the Company’s mineral properties are being acquired over time by way of option payments. It is at the Company’s option as to whether to continue with the acquisition of the mineral properties and to incur these option payments. Current details of option payments required in the future if the Company elects to maintain its interest are as follows:

Option Agreement Commitments	Option Payments Due by Period (US$)
Option Agreement Commitments	Total	Less than 1 year	2-3 years	4-5 years	More than 5 years
	$822,500	$408,500	$369,000	$Nil	$Nil

On October 26, 2009, the Company completed a private placement with the Company’s Chairman and CEO for 306,749 common shares at a price of $3.26 per share, resulting in net proceeds of $1,000,000 to the Company. With completion of this $1 million private placement, the $3 million private placement agreement dated February 1, 2009 between the Company and the Chairman and CEO is complete.

On December 21, 2009, the Company completed private placements 1,155,835 common shares at a price of $2.718 per share for net proceeds of $2,984,479 pursuant to subscription agreements dated November 6, 2009 with arm’s length third party European investment funds.

Convertible debt:

On May 28, 2010 the Company issued a three-year convertible promissory note to an arm’s length third party, in the principal amount of $1,000,000 bearing interest at 3% and convertible into 222,173 common shares at the price of $4.501. A bonus of 25,000 common shares will be payable if the note is converted into common shares by October 11, 2011.

On August 17, 2010 the Company issued a three-year convertible promissory note to an arm’s length third party, in the principal amount of $1,095,000 bearing interest at 3% and convertible into 255,484 common shares at the price of $4.286. $95,000 of the outstanding principal was converted into 22,166 common shares, which shares will be refundable to the Company if the remaining principal is not fully converted into common shares by December 9, 2011.

Although no assurance can be given, the Company believes it will be able to raise additional capital as required to fund its commitments. In addition, if necessary, the Company could adjust the extent and timing of certain expenditures. Since August 31, 2010, the Company continues to raise additional capital, as more fully described under Subsequent Events.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements.

Transactions with Related Parties

During the year ended August 31, 2010, $381,690 (2009 - $446,927) was paid or payable by the Company to directors for directors’ fees. Directors were paid $75,298 (2009 - $104,877) in cash and $302,314 (2009 - $323,622) in non-cash equivalent RSUs.

The Company engages a legal firm for professional services in which one of the Company’s directors is a partner. During the year ended August 31, 2010, the legal expense charged by the firm was $143,524 (2009 - $257,006), of which $63,568 remains payable at year end.

During the year ended August 31, 2010, $204,777 (2009 - $121,891) was paid or payable by the Company to directors as consulting fee for serving on the Technical Committee.

At August 31, 2010, the Company was owed $42,451 from the Company’s Chairman and CEO (2009 - nil).

Restricted Stock Unit Plan

The Board of Directors has implemented the Restricted Stock Unit (“RSU”) Plan under which employees and outside directors are compensated for their services to the Company. Annual compensation for directors is $68,750 per year, plus $6,875 per year for serving on Committees, plus $3,437 per year for serving as Chair of a Committee. At the election of each individual director, up to one-third of the annual compensation may be received in cash, paid quarterly. The remainder of the director’s annual compensation (at least two-thirds, and up to 100%) will be awarded as RSUs in accordance with the terms of the RSU Plan and shall vest within a minimum of one (1) year and a maximum of three (3) years, at the election of the director, subject to the conditions of the RSU Plan with respect to earlier vesting. In 2010 outside directors had the option to elect to receive 100% of their compensation in RSUs. If 100% compensation in RSUs elected, the compensation on which the number of RSUs granted in excess of the required 2/3 shall be increased by 20%.

Of the 500,000 shares authorized for issuance under the Plan, 312,779 shares have been issued as at August 31, 2010, of which 148,165 were issued in 2010 with a value of $664,115; 69,582 were issued in 2009 with a value of $416,316; 62,790 were issued in 2008 with a value of $367,124; and 32,242 were issued in 2007 with a value of $231,627. A total of 731,271 RSUs have been granted as of August 31, 2010 (2009 - 541,892). A total of 89,229 RSUs were forfeited since the inception of the Plan, of which 23,460 were forfeited in 2010 resulting in a reversal of unvested compensation cost of $34,538. Total stock-based compensation expense related to the issue of restricted stock was $650,961 (2009 - $541,633).

Fourth Quarter

Net loss for the fourth quarter 2010 was $808,000 compared to $505,000 for the same period in the previous year . The primary reason for the increase in the loss was due to an increase of $245,000 in stock based compensation expense for early vesting of RSUs for certain employees for fulfillment of performance goals and the Company did not experience a similar reversal of expense in 2010 as in 2009 for forfeited RSU’s. . Professional fees were $83,000 and $145,000 for the fourth quarter 2010 and 2009, respectively. The fees include accrual for the annual audit fee of $120,000. Salaries and benefit expense was $287,000 in the quarter ended August 31, 2010 as compared to $438,000 in 2009. The decrease was due to an accrual of $132,000 for severance pay in 2009.

Changes in Accounting Policies including Initial Adoption

Adoption of new accounting policies and pronouncements:

Effective September 1, 2009, the Company adopted on a prospective basis, the following new accounting standards issued by the Canadian Institute of Chartered Accountants (CICA):

(i) Handbook Section 3862, Financial Instruments – Disclosures establishes revised standards for the disclosure of financial instruments. The new standard establishes a three-tier hierarchy as a framework for disclosing fair value of financial instruments based on inputs used to value the Company’s investments. The hierarchy of inputs and description of inputs is described as follows:

·	Level 1 – fair values are based on quoted prices (unadjusted in active markets for identical assets or liabilities;

·	Level 2 – fair values are based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); or

·	Level 3 – fair values are based on inputs for the asset or liability that are not based on observable market data, which are unobservable inputs. CICA 3064 Goodwill and Intangible Assets:

(ii) CICA 3064 Goodwill and Intangible Assets:

In February 2008, the CICA issued Handbook Section 3064, Goodwill and Intangible Assets , which replaces Section 3062, Goodwill and Intangible Assets , and Section 3450, Research and Development Costs . Section 3064 establishes standards for the recognition, measurement, and disclosure of goodwill and intangible assets. This new standard applies to the Company’s interim and annual financial statements effective September 1, 2009 and had no material impact upon adoption on the Company’s consolidated financial statements.

Future Canadian accounting standards:

(i) International Financial Reporting Standards (IFRS):

In 2006, the Canadian Accounting Standards Board (AcSB) published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canadian GAAP. The changeover date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The Company will therefore adopt IFRS for its August 2012 year end. The transition date of September 1, 2010 will require the restatement for comparative purposes of amounts reported by the Company for the year ended August 31, 2011. The impact of the new standards on the Company’s financial statements is currently being evaluated by management.

The significant differences identified to date between Canadian GAAP and IFRS that affect the Company and the impact on the Company’s financial statements has been done on a high level basis.

For mineral properties, Canadian GAAP requires acquisition costs to be capitalized and allows exploration costs to be expensed or capitalized. IFRS allows for the same treatment but the exploration costs need to be classified as either tangible or intangible assets.

Under Canadian GAAP, fair value of stock options are allowed to be recognized under either graded or straight-line method. IFRS requires that graded vesting be used with each instalment accounted for as a separate arrangement. Currently, the Company does not have any stock options but grants Restricted Stock Units (RSUs) which has similar features. The impact of IFRS on RSUs needs to be further investigated by the Company.

Critical Accounting Estimates

The Company’s most critical accounting estimate relates to the write-off of exploration licenses and associated costs. The Company has recorded a write-down in 2009 of $1,207,000 on mineral properties abandoned. Management assesses impairment of its exploration prospects quarterly. If an impairment results, the capitalized costs associated with the related project or area of interest are charged to expense. Other areas requiring the use of estimates include the determination of stock-based compensation and future income taxes.

Disclosure of Outstanding Share Data

As at the date of this MD&A, 93,358,352 common shares are outstanding and a total of 327,936 RSU shares have been issued.

Subsequent Events

On September 7, 2010 the Company completed an $800,000 private placement pursuant to a subscription agreement dated August 24, 2010 with the Chairman and CEO for 144,430 common shares at a price of $5.539 per share.

On September 23, 2010 the Company completed a private placement with an arm’s length third party consisting of a three-year convertible promissory note in the principal amount of $1,000,000 bearing interest at 3% and convertible into 221,337 common shares at the price of $4.518 per share.

On October 4, 2010 the Company completed a private placement with arm’s length third parties consisting of three-year convertible promissory notes in the aggregate principal amount of $1,060,000 bearing interest at 3% and convertible into 204,772 common shares at the price of $5.1765 per share.

On November 5, 2010 the Company completed $4,841,600 private placements with arm’s length third parties for an aggregate 800,000 common shares at the price of $6.052/share and an aggregate 200,000 common share purchase warrants exercisable at the price of $7.309 per share and expiring on October 20, 2012. In addition, the Company paid a finder’s fee payable in 64,000 common shares at the subscription price of $6.052/share.

The Company entered into Subscription Agreements dated November 10 and 17, 2010 for private placements with arm’s length third parties for an aggregate 2,553,627 common shares at the price of $5.874/share and an aggregate 638,407 common share purchase warrants exercisable at the price of $7.05 per share exercisable at any time prior to the second anniversary date of the Agreements. In addition, the Company will pay a finder’s fee payable in 212,802 common shares at the subscription price of $5.874/share. On November 23, 2010 the Company completed one private placement and 851,209 common shares were issued for proceeds of $5,000,000. 212,802 common share purchase warrants were issued and 68,097 common shares were issued to arm’s length third parties in respect of the finder’s fee.

Financial and Other Instruments

The Company’s financial assets and liabilities consist of cash and cash equivalents, accounts and other receivables, accounts payable, and accrued liabilities and obligations under the capital lease, of which some are held in different currencies. The Company does not engage in any hedging activities relating to these foreign denominated assets and liabilities. The fair value of the Company’s financial assets and liabilities is estimated to approximate their carrying value.

Litigation

There are no legal proceedings which may have or have had a significant affect on the Company’s financial position or profitability.

Exploration Summary

The Company completed a series of National Instrument 43-101 compliant technical reports for various properties during the year including one for its 235 square kilometres Ushirombo mineral property in the Lake Victoria Goldfields of Tanzania.

Among the most prominent geological features cited in the Ushirombo report is the fact it occurs in the same structural setting as the known gold mineralization at the Tulawaka gold mine 30 kilometres to the northwest. Both Ushirombo and Tulawaka are known to host extensive gold-bearing quartz rubble deposits at or near surface. In the former's case, this rubble is largely the main target for artisanal mining sites. A new geological interpretation of the Ushirombo property subsequently identified the "Ushirombo Gold Corridor” - a 12 kilometres long by six kilometres wide northwest-trending zone - as the prime target area. The bulk of the Ushirombo gold corridor is underlain by basaltic greenstones often surrounded by and occasionally intruded by younger granitic rocks. Greenstone belt rocks account for the majority of global gold production. The report recommends extensive follow-up exploration work in the core area of the Ushirombo property in an effort to confirm strike and dip extensions of surface gold-in-quartz reef mineralization as well as the auriferous quartz rubble beds on which the principal artisanal workings are sited. The Ushirombo 43-101 report was prepared by Martin J. Taylor, P.Geo, a Toronto-based independent consulting geologist who fulfills the requirements to be a "Qualified Person" for the purposes of NI 43-101.

A 43-101 compliant technical report was also completed for the 375 square kilometres Kibara Mineral Project in northern Tanzania. The project area is situated within the Musoma-Mara Greenstone Belt about 145 kilometres southwest of the North Mara gold mine. Significant gold and copper mineralization has been identified at Kibara in trenches within the Nyakona Hill area and in artisanal gold workings. Several grab samples taken in 2005 returned values up to 6.0 g/t gold and 13% copper. The Company began exploration work on the Kibara Project in August 2002 with mini-BLEG (Bulk Leach Extractable Gold) sampling. This program was followed by rock and termite mound sampling to validate the BLEG anomalies and later by trenching, biogeochemical (BGC) sampling and gradient IP surveys. Follow-up exploration work including RAB (Rotary Air Blast) and/or RC (Reverse Circulation) drilling has been recommended for each of the target areas identified in the 43-101 report which was prepared by Martin J. Taylor, P.Geo. The objective of this program will be to confirm the existence at depth of any gold/copper-in- quartz mineralization returned previously in trenches at Nyakona Hill and to extend any gold mineralization identified in the artisanal mine workings.

In January of this year, Chinese metals company Jinchuan Mining, concluded an agreement with Songshan Mining Co. Ltd. and Tanzanian Royalty to participate in the exploration and development of the Kabanga nickel properties in northwestern Tanzania. Jinchuan Mining has agreed to act as operator and hold complete financial responsibility for all exploration activities on the nickel exploration licenses. Tanzanian Royalty's Kabanga properties comprise a project area of 4,200 square kilometres, with targets for nickel, cobalt and PGM mineralization. The project area is situated to the north of the high grade Kabanga nickel deposit which is currently under development by a joint venture consisting of Barrick and Xstrata.

In February 2010, the Company announced the completion of a 43-101 compliant technical report for its Lunguya Project in the Lake Victoria Goldfields of northern Tanzania. The Lunguya property is located within one of the principal archaean greenstone belts of Tanzania, 15-30 kilometres south of Barrick Gold's Bulyanhulu gold mine. The project area includes northwest-trending magnetic lineaments and shear sets that are parallel to those hosting the Bulyanhulu mine, Tanzania's largest gold producer. A program of ground magnetics has been recommended for the Lunguya property, followed by an orientation MMI (Mobile Metal Ion) soil survey on at least two of the east-west magnetic survey lines which is intended to provide a clearer picture of any gold anomalies. Following the integration of this new exploration data with previous geochemical, geophysical and pre-existing drilling data, drill targets will be selected for either RAB (Rotary Air Blast) or RC (Reverse Circulation) drilling. The Lunguya report was prepared by Martin J. Taylor, P.Geo.

The Company has also acquired primary mining licenses covering a 1km long x 200m wide swath of highly auriferous quartz rubble zone that was being actively mined by local artisanal miners in the centre of the Lunguya project area. Preliminary assay results from a 45kg-bulk sample returned average gold grades of 3.74g/t. Further mineralogical analysis of the bulk sample established that the auriferous quartz rubble gold ore is composed of 76% quartz, 13% kaolinite and minor amounts of feldspars, chlorite, muscovite and zircon. Sulphide mineralization associated with the gold includes trace amounts of pyrite, galena, bismuthinite, chalcopyrite/bornite and chalcocite. No refractory issues with respect to the ore grade mineralization were identified. The company plans to now conduct further detailed evaluation of this quartz rubble zone through close-spaced pitting and trenching (bulk sampling) and RC drilling for reef and resource definition purposes. A bulk sampling program with a mobile 100tonne per hour gravity plant will also be acquired for the project as part of the preliminary establishment of possible cost effective and practical means for the recovery of gold from this rubble deposit.

On the Kigosi Gold Project, a series of RC and RAB drilling programs were conducted over the year on a 7km-long Au-in-soil anomaly situated on virgin ground with no pre-existing workings from small-scale artisanal mining activity on the Msonga Gold Prospect. The preliminary assay results from this drilling program confirmed our initial expectations on this new discovery. Significant gold intersections include KG224RC006 with 0.5m @ 5.25g/t, KG224RC014 with 1m @ 16. 8g/t, KG45RC005 with 4m @ 2.06g/t including 1m @ 4.02g/t, KG45RC006 with 12m @ 1.33g/t including 4m @ 4.40g/t, KG45RC007 with 4m @ 1.24g/t including 1m @ 3.03g/t and 6m @ 1.24g/t including 1m @ 4.62g/t, KG45RC013 with 5m @ 0.80g/t including 1m @ 2.82g/t, KG45RC024 with 5m @ 2.92g/t including 0.5m @ 31.90g/t and 7m @ 0.34g/t including 1m @ 1.73g/t and KG45RC033 with 1m @ 2.03g/t.

By mid-2010 the Company shifted its focus from exploration drilling to the bulk sampling tests on gold bearing gravels on the Luhwaika Gold Prospect on the Kigosi Project. During the previously completed RC drilling programs within the Luhwaika Prospect Area, a substantial gold-mineralized surface gravel resource was delineated on a 30 metres x 100 metres grid system.

Highlights from preliminary metallurgical test work conducted on two bulk samples recovered from Luhwaika Prospect Area returned head grades for gold averaging 1.77g/t and 1.59g/t. Gravity separation analyses on the two bulk samples further indicated that the majority of gold in this rubble deposit is extractable by using simple gravity separation techniques with 91% and 98% of the gold recoverable as free gold for the two samples and no refractory issues with respect to the ore grade mineralization were identified. In June 2010, the Company announced that a 20 ton per hour mobile gravity separation plant had arrived at Kigosi. In the following months the plant was optimized to facilitate gold recoveries and confirm the grade of the surface gravels at Kigosi.

Property Acquisitions and Abandonments

Properties are acquired on the basis of favorable geology and will be evaluated in detail by our in-house technical staff to firm up exploration potential and make them attractive to potential partners under standard royalty agreements.

Risk Factors

The Company is subject to a number of extraneous risk factors over which it has no control. These factors are common to most exploration companies and include, among others: project ownership and exploration risk, depressed equity markets and related financing risk, commodity price risk, fluctuating exchange rates, environmental risk, insurance risk and sovereign risk.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Company’s management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of August 31, 2010. In making this assessment, the Company’s management used the criteria established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

The Public Company Accounting Oversight Board’s Auditing Standard No. 5 defines a material weakness as a control deficiency, or a combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the Company’s annual financial statements will not be prevented or detected. The company identified a material weakness in its internal control over financial reporting as of August 31, 2010:

The Company has limited accounting personnel with expertise in generally accepted accounting principles to enable effective segregation of duties over transaction processes with respect to financial reporting matters and internal control over financial reporting. This control deficiency resulted in audit adjustments to inventory, foreign exchange gain, convertible debt, contributed surplus and equity which were corrected in the financial statements prior to issuance.

In order to mitigate the reasonable possibility, resulting from this material weakness, that a material misstatement of the financial statements would not be prevented or detected in the future, management’s remediation plan includes continuing to obtain expert advice to assist with the accounting for complex matters and continuing to review the assignment of responsibilities to address, where practicable, any segregation of duties concerns.

The Company’s independent auditor, KPMG LLP, the independent registered public accounting firm that audited the financial statements, has issued an audit report on the Company’s internal control over financial reporting which is included with the financial statements.

Changes in Internal Controls over Financial Reporting

During the fiscal year ended August 31, 2010 there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered in this report, evaluated the effectiveness of our disclosure controls and procedure and determined that, as a result of the material weakness in internal control over financial reporting described above, as of August 31, 2009 our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us is recorded, processed, summarized and reported within the time periods specified.

Inherent Limitations of Disclosure Controls and Internal Control over Financial Reporting

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Approval

The Board of Directors of Tanzanian Royalty Exploration Corporation has approved the disclosure contained in the Annual MD&A. A copy of this Annual MD&A will be provided to anyone who requests it and can be located while additional information will be available on the SEDAR website at www.sedar.com .

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in the foregoing Management’s Discussion and Analysis and elsewhere constitute forward-looking statements. Such forward-looking statements involve a number of 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 such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statements were made, and readers are advised to consider such forward-looking statements in light of the risk set above.

Additional Information

Additional information about the company and its business activities is available on SEDAR at www.sedar.com.

FORM 52-109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

I, James E. Sinclair, Chief Executive Officer, certify the following:

1. Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of Tanzanian Royalty Exploration Corporation (the “issuer”) for the financial year ended August 31, 2010.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings , for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

(a)	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end

	(a)	a description of the material weakness;
	(b)	the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer(s) and I have

(a)

evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b)

evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

(i)

our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii)

for each material weakness relating to operation existing at the financial year end

(A)

a description of the material weakness;

(B)

the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(C)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning on June 1, 2010 and ended on August 31, 2010 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

8. Reporting to the issuer’s auditors and board of directors or audit committee: The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

Date: November 29, 2010

“James Sinclair”

James E. Sinclair

Chief Executive Officer

FORM 52-109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

I, Regina Kuo-Lee, Chief Financial Officer, certify the following:

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

(a)	designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii)

(b)	designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end

	(a)	a description of the material weakness;
	(b)	the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(c)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 Limitation on scope of design: N/A

6. Evaluation: The issuer’s other certifying officer(s) and I have

(a)

(b)

evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

(i)

our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii)

for each material weakness relating to operation existing at the financial year end

(A)

a description of the material weakness;

(B)

the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

(C)

the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

Date: November 29, 2010

“Regina Kuo-Lee”

Regina Kuo-Lee

Chief Financial Officer

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