Management Discussion and Analysis Year Ended

SPIDER RESOURCES INC.(A development stage company)

Interim Financial Statements

(Unaudited)

(Expressed in Canadian Dollars)

Three months ended March 31, 2010

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying unaudited interim financial statements of Spider Resources Inc. (A Development Stage Company)were prepared by management in accordance with Canadian generally accepted accounting principles. The mostsignificant of these accounting principles have been set out in the December 31, 2009 audited financial statements.Only changes in accounting policies have been disclosed in these unaudited interim financial statements.Management acknowledges responsibility for the preparation and presentation of the unaudited interim financialstatements, including responsibility for significant accounting judgments and estimates and the choice of accountingprinciples and methods that are appropriate to the Company’s circumstances.

Management has established processes, which are in place to provide them sufficient knowledge to supportmanagement representations that they have exercised reasonable diligence that (i) the unaudited interim financialstatements do not contain any untrue statement of material fact or omit to state a material fact required to be stated orthat is necessary to make a statement not misleading in light of the circumstances under which it is made, as of thedate of and for the periods presented by the unaudited interim financial statements and (ii) the unaudited interimfinancial statements fairly present in all material respects the financial condition, results of operations and cash flowsof the Company, as of the date of and for the periods presented by the unaudited interim financial statements.

The Board of Directors is responsible for reviewing and approving the unaudited interim financial statements togetherwith other financial information of the Company and for ensuring that management fulfills its financial reportingresponsibilities. An Audit Committee assists the Board of Directors in fulfilling this responsibility. The Audit Committeemeets with management to review the financial reporting process and the unaudited interim financial statementstogether with other financial information of the Company. The Audit Committee reports its findings to the Board ofDirectors for its consideration in approving the unaudited interim financial statements together with other financialinformation of the Company for issuance to the shareholders.

Management recognizes its responsibility for conducting the Company’s affairs in compliance with establishedfinancial standards, and applicable laws and regulations, and for maintaining proper standards of conduct for itsactivities.

NOTICE TO READER

Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interimfinancial statements, they must be accompanied by a notice indicating that the financial statements have not beenreviewed by an auditor.

The accompanying unaudited interim financial statements of the Company have been prepared by and are theresponsibility of the Company's management.

The Company's independent auditor has not performed a review of these unaudited interim financial statements inaccordance with standards established by the Canadian Institute of Chartered Accountants for a review of interimfinancial statements by an entity's auditor.

Spider Resources Inc.(A Development Stage Company)Interim Balance Sheets(Unaudited)

March 31, December 31,2010 2009

AssetsCurrent assets

Cash $ 3,731,461 $ 2,716,778Prepaid expenses and sundry receivables 551,055 496,746Due from KWG Resources Inc. - 200,000

4,282,516 3,413,524

Mining interests (Note 5) 22,928,707 21,971,700

$ 27,211,223 $ 25,385,224

LiabilitiesCurrent liabilities

Accounts payable and accrued liabilities $ 199,358 $ 334,164

Future income tax liability 3,415,306 2,285,206

3,614,664 2,619,370

Shareholders' Equity (Statement) 23,596,559 22,765,854

$ 27,211,223 $ 25,385,224

Nature of operations and going concern (Note 1)Subsequent events (Note 11)

See accompanying notes to unaudited interim financial statements

- 1 -

Spider Resources Inc.(A Development Stage Company)Interim Statements of Operations and Comprehensive Loss(Unaudited)

Three months ended Cumulative fromMarch 31, January 1,

2010 2009 1995

RevenueSale of geophysical and

geochemical data $ - $ - $ 454,168Gain on sale of mining interests - - 116,250

- - 570,418

ExpensesAdministrative expenses (Note 9) 359,942 244,598 8,163,257Stock-option compensation 47,917 - 2,752,617Loss on disposal of property, plant and equipment - - 10,844Write-down of marketable securities - - 43,050Write-down of investments - - 794,533Loss on foreign exchange - - 37,159Write-down of mining interests - - 4,925,236

407,859 244,598 16,726,696

Other income and expensesOperators fee (91,058) - (342,001)Interest - - (14,650)Gain on sale of marketable securities - - (134,257)

(91,058) - (490,908)

Net loss before income taxes (316,801) (244,598) (15,665,370)

Future income tax recovery - - 1,827,093

Net loss and comprehensive loss for the period $ (316,801) $ (244,598) $(13,838,277)

Basic and diluted loss per share $ (0.00) $ (0.00)

Weighted average shares outstanding 456,197,145 316,211,767


- 2 -

Spider Resources Inc.(A Development Stage Company)Interim Statements of Deficit(Unaudited)


2010 2009 1995

Deficit, beginning of period $(16,949,367)$(16,201,090)$ (572,796)Retroactive restatement of 2001 future tax liability - - (2,855,095)

Deficit, beginning of period restated (16,949,367) (16,201,090) (3,427,891)

Net loss for period (316,801) (244,598) (13,838,277)

Deficit, end of period $(17,266,168)$(16,445,688)$ (17,266,168)


- 3 -

Spider Resources Inc.(A Development Stage Company)Interim Statements of Changes in Shareholders' Equity(Unaudited)

Share ContributedCapital Warrants Surplus Deficit Total

Balance, December 31, 2008 $ 31,269,134 $ 1,997,131 $ 2,348,460 $ (16,201,090) $ 19,413,635

Tax effect of flow-through renunciation (85,550) - - - (85,550)Expiry of warrants - (120,751) 120,751 - -Net loss for the period - - - (244,598) (244,598)

Balance, March 31, 2009 $ 31,183,584 $ 1,876,380 $ 2,469,211 $ (16,445,688) $ 19,083,487

Balance, December 31, 2009 $ 31,292,375 $ 4,887,487 $ 3,535,359 $ (16,949,367) $ 22,765,854

Tax effect of flow-through renunciation (1,130,100) - - - (1,130,100)Private placements 1,754,900 - - - 1,754,900Warrant valuation (1,337,653) 1,337,653 - - -Exercise of warrants 480,183 - - - 480,183Fair value of warrants exercised 242,224 (242,224) - - -Cost of issue - cash (5,394) - - - (5,394)Agents options valuation (298,448) - 298,448 - -Fair value of stock options granted - - 47,917 - 47,917Net loss for the period - - - (316,801) (316,801)

Balance, March 31, 2010 $ 30,998,087 $ 5,982,916 $ 3,881,724 $ (17,266,168) $ 23,596,559

See Note 6 for share capital, warrants and contributed surplus from the date of inception of the development stage, January 1, 1995 to March 31, 2010.

See accompanying notes to unaudited interim financial statements- 4 -

Spider Resources Inc.(A Development Stage Company)Interim Statements of Cash Flows(Unaudited)


2010 2009 1995

Cash flows used in operating activitiesNet loss for the period $ (316,801) $ (244,598) $(13,838,277)Adjustment for

Gain on sale of mining interests and exploration expenditures - - (116,250)

Gain on sale of marketable securities - - (134,257)Loss on disposal of property, plant

and equipment - - 10,844Write-down of mining interests - - 4,925,236Write-down of investments - - 794,533Write-down of marketable securities - - 43,050Stock-option compensation 47,917 - 2,752,617Future income tax recovery - - (1,827,093)

Changes in non-cash working capitalOther receivables 200,000 - (155,325)Funds held in trust - - 2,500Prepaid expenses and sundry receivables (54,309) (15,146) (428,801)Accounts payable and accrued liabilities (134,806) (85,164) 655,542

(257,999) (344,908) (7,315,681)

Cash flows used in investing activitiesAcquisition of mining interests (957,007) (229,855) (23,136,434)Acquisition of property, plant and equipment - - (61,079)Proceeds from sale of marketable securities - - 199,230Proceeds from disposition of mining interests - - 124,000Proceeds from disposition of investments - - 50,000Purchase of investments - - (695,622)

$ (957,007) $ (229,855) $(23,519,905)


- 5 -

Spider Resources Inc.(A Development Stage Company)Interim Statements of Cash Flows(Unaudited)


2010 2009 1995

Cash flows provided by financing activitiesProceeds from issuance of share capital $ 1,754,900 $ - $ 24,143,432Proceeds from issuance of warrants - - 5,619,260Proceeds from the exercise of stock options - - 878,232Proceeds from the exercise of warrants 480,183 - 5,486,920Issuance of convertible debentures - - 300,000Costs of share issue (5,394) - (2,842,741)Due from related parties - - 964,489Repayment of notes payable - - (22,018)

2,229,689 - 34,527,574

Net change in cash 1,014,683 (574,763) 3,691,988

Cash, beginning of period 2,716,778 3,205,855 39,473

Cash, end of period $ 3,731,461 $ 2,631,092 $ 3,731,461

Supplement schedule of non-cash transactionsShares issued for acquisition of

mining interests $ - $ - $ 1,000,000Shares issued in settlement of debt $ - $ - $ 1,580,069Shares issued for conversion of

convertible debentures $ - $ - $ 300,000Warrants issued in settlement of debt $ - $ - $ 28,500


- 6 -

Spider Resources Inc.(A Development Stage Company)Notes to Interim Financial Statements(Unaudited)Three months ended March 31, 2010

1. NATURE OF OPERATIONS AND GOING CONCERN

Spider Resources Inc. (the "Company" or "Spider") is an exploration enterprise and carries on business in onesegment, being the exploration for valuable minerals, exclusively in Canada. To date, the Company has not earnedsignificant revenues from its exploration rights and is considered to be in the development stage. As such, theCompany has applied Accounting Guideline 11 "Enterprises in the Development Stage" from January 1, 1995, whichis the date of inception of the development stage.

The recoverability of amounts shown as mining interests is dependent upon a number of factors including, amongothers, environmental risk, legal and political risk, the discovery of economically recoverable reserves, confirmation ofthe Company's interest in the underlying properties, the ability of the Company to obtain necessary financing tocomplete the development and future profitable production or proceeds from the disposition thereof.

These financial statements have been prepared on the basis that the Company is a going concern, whichcontemplates the realization of its assets and the settlement of its liabilities in the normal course of operations. Theability of the Company to continue operations is dependent upon obtaining necessary financing to complete thedevelopment of its properties and/or the realization of proceeds from the sale of one or more of its properties. Thedevelopment of its properties and the future profitability of the Company is directly related to the market price ofcertain minerals. These financial statements do not include any adjustments related to the carrying values andclassifications of assets and liabilities that would be necessary should the Company be unable to continue as a goingconcern.

2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The unaudited interim financial statements have been prepared in accordance with Canadian generally acceptedaccounting principles ("Canadian GAAP") for interim financial information. Accordingly, they do not include all of theinformation and notes to the financial statements required by Canadian GAAP for annual financial statements. In theopinion of management, all adjustments considered necessary for a fair presentation have been included. Operatingresults for the three months ended March 31, 2010 may not necessarily be indicative of the results that may beexpected for the year ending December 31, 2010.

The balance sheet at December 31, 2009 has been derived from the audited financial statements at that date butdoes not include all of the information and footnotes required by Canadian GAAP for annual financial statements. Theinterim financial statements have been prepared by management in accordance with the accounting policiesdescribed in the Company's annual audited financial statements for the year ended December 31, 2009. For furtherinformation, refer to the audited financial statements and notes thereto for the year ended December 31, 2009.

Future accounting changes

Business Combinations, Consolidated Financial Statements and Non-Controlling Interests

The CICA issued three new accounting standards in January 2009: Section 1582, "Business Combinations", Section1601, "Consolidated Financial Statements" and Section 1602, "Non-Controlling interests". These new standards willbe effective for fiscal years beginning on or after January 1, 2011. Section 1582 replaces section 1581 andestablishes standards for the accounting for a business combination. It provides the Canadian equivalent to IFRS 3 -Business Combinations. Sections 1601 and 1602 together replace section 1600, Consolidated Financial Statements.Section 1601, establishes standards for the preparation of consolidated financial statements. Section 1602 establishesstandards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequentto a business combination. It is equivalent to the corresponding provisions of IFRS lAS 27 - Consolidated andSeparate Financial Statements. The Company is in the process of evaluating the requirements of the new standards.

- 7 -


2. BASIS OF PRESENTATION AND ACCOUNTING POLICIES (Continued)

Future accounting changes (Continued)

International Financial Reporting Standards (“IFRS”)

In January 2006, the CICA’s Accounting Standards Board ("AcSB") formally adopted the strategy of replacingCanadian GAAP with IFRS for Canadian enterprises with public accountability. The current conversion timetable callsfor financial reporting under IFRS for accounting periods commencing on or after January 1, 2011. On February 13,2009 the AcSB confirmed that the use of IFRS will be required in 2011 for publicly accountable profit-orientedenterprises. For these entities, IFRS will be required for interim and annual financial statements relating to fiscal yearsbeginning on or after January 1, 2011.

The Company is currently assessing the impact of IFRS on its financial statements. 3. CAPITAL MANAGEMENT

The Company’s objective when managing capital is to maintain adequate levels of funding to support the acquisition,exploration and development of mineral properties.

The Company considers its capital to be equity, which comprises share capital, warrants, stock options, contributedsurplus, and deficit, which at December 31, 2009 totaled $23,596,559 (December 31, 2009 - $22,765,854).

The Company manages its capital structure in a manner that provides sufficient funding for acquisition, explorationand development of mineral properties. Funds are primarily secured through equity capital raised by way of privateplacements. There can be no assurance that the Company will be able to continue raising equity capital in thismanner.

The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies onthe expertise of the Company's management to sustain future development of the business.

Management reviews its capital management approach on an ongoing basis and believes that this approach, giventhe relative size of the Company, is reasonable.

There were no changes in the Company's approach to capital management during the three months ended March 31,2010. The Company is not subject to externally imposed capital requirements.

4. PROPERTY AND FINANCIAL RISK FACTORS

(a) Property risk

The Company's mining interests are the only properties that are currently material to the Company. Unless theCompany acquires or develops additional material properties, the Company will be solely dependent upon its currentmining interests. If no additional mineral properties are acquired by the Company, any adverse development affectingthe Company's mining interests would have a material adverse effect on the Company's financial condition and resultsof operations.

- 8 -


4. PROPERTY AND FINANCIAL RISK FACTORS (Continued)

(b) Financial risk

The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (includinginterest rate, foreign exchange rate and commodity and equity price risk). Risk management is carried out by theCompany's management team with guidance from the Audit Committee under policies approved by the Board ofDirectors. The Board of Directors also provides regular guidance for overall risk management.

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company'scredit risk is primarily attributable to sundry receivables. The Company has no significant concentration of credit riskarising from operations. Financial instruments included in sundry receivables consist of sales tax receivable due fromgovernment authorities in Canada and deposits held with service providers. Sundry receivables are in good standingas of March 31, 2010. Management believes that the credit risk concentration with respect to financial instruments isminimal.

Liquidity risk

Liquidity risk refers to the risk that the Company will not be able to meet its financial obligations when they becomedue, or can only do so at excessive cost. The Company's approach to managing liquidity risk is to ensure that it willhave sufficient liquidity to meet liabilities when due. As at March 31, 2010, the Company had a cash balance of$3,731,461 (December 31, 2009 - $2,716,778) to settle current liabilities of $199,358 (December 31, 2009 -$334,164). All of the Company's financial liabilities have contractual maturities of less than 30 days and are subject tonormal trade terms. The Company is committed to spending eligible exploration expenditures of approximately$1,953,000 resulting from flow-through offerings that were completed in fiscal 2009 and January 22, 2010 (Note6(a)(i)).

Market risk

(i) Interest rate risk

Interest rate risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market interestrates. The Company has cash balances and no interest-bearing debt. The Company's current policy is to investexcess cash in investment-grade short-term deposit certificates issued by its banking institutions. The Companyperiodically monitors the investments it makes and is satisfied with the creditworthiness of its banks.

(ii) Foreign currency risk

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominatedin a currency that is not the entity’s functional currency. The risk is measured using cash flow forecasting. TheCompany's functional and reporting currency is the Canadian dollar and major purchases are transacted in Canadiandollars. As a result, the Company's exposure to foreign currency risk is minimal.

(iii) Price risk

The Company is exposed to price risk with respect to commodity price. Commodity price risk is defined as thepotential adverse impact on earnings and economic value due to commodity price movements and volatilities. TheCompany closely monitors commodity prices to determine the appropriate course of action to be taken by theCompany.

- 9 -


4. PROPERTY AND FINANCIAL RISK FACTORS (Continued)

(c) Fair Value Hierarchy and Liquidity Risk Disclosure

Fair value measurement of assets and liabilities recognized on the balance sheet are categorized into levels within afair value hierarchy based on the nature of valuations inputs. The Company's cash is classified in Level 1 within thefair value hierarchy as at March 31, 2010.

Sensitivity analysis

Sundry receivables which are classified for accounting purposes as loans and receivables, are measured at amortizedcost. Accounts payable and accrued liabilities are classified for accounting purposes as other financial liabilities, whichare measured at amortized cost. Due to the short-term nature of these instruments, their carrying value approximatesfair value.

Fair value represents the amount that would be exchanged in an arm's length transaction between willing parties andis best evidenced by a quoted market price, if one exists.

Commodity price risk could adversely affect the Company. In particular, the Company’s future profitability and viabilitydepends upon the world market price of valuable minerals. Commodity prices have fluctuated significantly in recentyears. There is no assurance that, even as commercial quantities of valuable minerals may be produced in the future,a profitable market will exist for them. As of March 31, 2010, the Company was not a producer of valuable minerals.As a result, commodity price risk may affect the completion of future equity transactions such as equity offerings andthe exercise of stock options and warrants. This may also affect the Company's liquidity and its ability to meet itsongoing obligations.

5. MINING INTERESTSCumulative Cumulative Deferred

Acquisition Costs Exploration ExpendituresMarch 31, December 31, March 31, December 31,

2010 2009 2010 2009

Big Daddy Chromite Deposit $ 34,000 $ 34,000 $ 5,572,025 $ 4,625,772Diagnos 39 39 66,919 66,919McFaulds Lake - - 6,176,530 6,176,530Spider #1 1,983,760 1,983,760 7,379,737 7,379,737Wawa 466,173 466,173 1,249,524 1,238,770

$ 2,483,972 $ 2,483,972 $ 20,444,735 $ 19,487,728

Acquisition costs and deferred exploration expendituresMarch 31, December 31,

2010 2009

Balance at beginning of period $ 21,971,700 $ 18,833,397Acquisition cost and deferred exploration expenditures 957,007 3,138,303

Balance at end of period $ 22,928,707 $ 21,971,700

- 10 -


5. MINING INTERESTS (Continued)

On a quarterly basis, management of the Company reviews mining interests to determine if exploration costs areeligible for capitalization. For a description of mining interests owned by the Company, refer to Note 6 of the auditedfinancial statements of Spider as at December 31, 2009. No specific changes to mining interests occurred fromJanuary 1, 2010 to March 31, 2010.

6. SHARE CAPITAL

(a) COMMON SHARES

AuthorizedAn unlimited number of common and preference shares issuable in series.

Issued:Number of Shares Amount

Balance, date of Inception on January 1, 1995 39,239,070 $ 4,099,577Private placements 11,284,045 2,468,043Shares issued for acquisition of mineral properties 150,000 31,000Exercise of stock options 32,000 6,720Exercise of warrants 3,414,689 631,904

Balance, December 31, 1995 54,119,804 7,237,244Private placements 17,950,100 4,367,344Exercise of stock options 740,000 155,400Exercise of warrants 200,000 66,000

Balance, December 31, 1996 73,009,904 11,825,988Private placements 4,154,000 1,890,080Shares issued in settlement of debt 3,913,044 450,000Exercise of stock options 840,000 176,400Exercise of warrants 2,050,204 623,954

Balance, December 31, 1997 83,967,152 14,966,422Shares issued in settlement of debt 4,608,695 530,069

Balance, December 31, 1998 88,575,847 15,496,491Private placements 3,450,000 330,000

Balance, December 31, 1999 92,025,847 15,826,491Private placements 13,500,000 1,350,000Conversion of convertible debt 4,000,000 300,000Exercise of stock options 621,300 62,130

Balance, December 31, 2000 110,147,147 $ 17,538,621

- 11 -


6. SHARE CAPITAL (Continued)

(a) COMMON SHARES (Continued)Number of Shares Amount

Balance, December 31, 2000 110,147,147 $ 17,538,621Private placements 1,500,000 150,000Shares issued in settlement of debt 4,500,000 450,000Exercise of stock options 436,364 43,636

Balance, December 31, 2001 116,583,511 18,182,257Retroactive restatement of share issue costs - (942,171)Exercise of stock options 320,000 32,000

Balance, December 31, 2002 116,903,511 17,272,086Private placement - flow-through 14,920,000 1,492,000Private placement - non-flow-through 9,100,000 910,000Warrant valuation - (724,280)Shares issued in settlement of debt 1,500,000 150,000Exercise of stock options 2,830,468 283,047Exercise of warrants 100,000 12,000Reversal of warrant valuation on exercise of warrants - 1,900Costs of issue - (191,756)

Balance, December 31, 2003 145,353,979 19,204,997Private placement - flow-through 19,409,583 2,675,046Private placement - non-flow-through 5,000,000 500,000Warrant valuation - (1,350,411)Broker warrant valuation - (158,529)Conversion of property rights 9,600,000 960,000Exercise of stock options 4,049,500 410,450Exercise of warrants 11,650,000 1,398,000Reversal of warrant valuation on exercise of warrants - 221,350Expiry of warrants - 94,050Cost of issue - cash - (439,665)


- 12 -




Balance, December 31, 2004 195,063,062 $ 23,515,288Exercise of stock options 200,000 20,000Reversal of stock option valuation on exercise of stock options - 6,260Exercise of warrants 583,333 74,167Reversal of warrant valuation on exercise of warrants - 29,500Private placement - flow-through 8,276,285 579,340Warrant valuation - (256,565)Broker warrant valuation - (30,622)Private placements 8,480,000 424,000Warrant valuation - (110,240)Private placement - flow-through 3,840,000 192,000Warrant valuation - (49,920)Expiry of warrants - 382,480Cost of issue - cash - (80,828)

Balance, December 31, 2005 216,442,680 24,694,860Tax effect of flow-through renunciation - (278,610)Shares issued for mineral property 150,000 9,000Private placements - flow-through 12,100,855 819,060Warrant valuation - (381,128)Broker warrant valuation - (22,162)Private placement 2,500,000 150,000Warrant valuation - (57,500)Expiry of warrants - 1,503,940Cost of issue - cash - (79,379)

Balance, December 31, 2006 231,193,535 26,358,081Tax effect of flow-through renunciation - (295,844)Private placement - flow-through 6,400,000 320,000Private placement 4,600,000 230,000Warrant valuation - (253,000)Private placement 400,000 20,000Warrant valuation - (7,245)Private placement - flow-through 20,000,000 1,800,000Private placement 10,666,666 960,000Warrant valuation - (1,594,667)Broker warrant valuation - (190,133)Exercise of warrants 26,998,216 2,676,870Fair value of warrants exercised - 622,678Exercise of stock options 575,000 57,500Fair value of stock options exercised - 48,004Cost of issue - cash - (304,044)


- 13 -




Balance, December 31, 2007 300,833,417 $ 30,448,200Tax effect of flow-through renunciation - (609,000)Private placement - flow-through 4,700,000 235,000Warrant valuation - (65,800)Broker warrant valuation - (6,580)Private placement - flow-through 1,200,000 60,000Warrant valuation - (19,200)Exercise of stock options 1,072,350 107,235Fair value of stock options exercised - 31,902Exercise of warrants 8,406,000 840,600Fair value of warrants exercised - 267,927Cost of issue - cash - (21,150)

Balance, December 31, 2008 316,211,767 31,269,134Private placement - flow-through 73,333,333 2,200,000Warrant valuation - (660,000)Broker warrant valuation - (91,000)Broker compensation options - (105,000)Tax effect of flow-through renunciation - (73,750)Warrant extension adjustment - (674,667)Private placement - flow-through 22,887,999 1,373,280Warrant valuation - (1,052,848)Agents option valuation - (343,915)Private placement - flow-through 15,785,332 947,120Warrant valuation - (726,125)Exercise of warrants 170,000 5,100Fair value of warrants exercised - 3,400Cost of issue - cash - (778,354)

Balance, December 31, 2009 428,388,431 31,292,375Tax effect of flow-through renunciation - (1,130,100)Private placement - flow-through (i) 9,823,336 589,400Warrant valuation (i) - (451,873)Agents options valuation (i) - (93,320)Private placement - non flow-through (i) 23,310,000 1,165,500Warrant valuation (i) - (885,780)Agents options valuation (i) - (205,128)Cost of issue - cash - (5,394)Exercise of warrants 9,672,666 480,183Fair value of warrants exercised - 242,224

Balance, March 31, 2010 471,194,433 $ 30,998,087

- 14 -



(a) COMMON SHARES (Continued)

(i) On January 22, 2010, the Company completed a private placement where an aggregate of 9,823,336 flow-throughunits, at a price of $0.06 per unit, and 23,310,000 non-flow-through units at price of $0.05 per unit, were issued tosubscribers for aggregate proceeds of $1,754,900. Each flow-through unit consists of one common share (issued on aflow-through basis) and one common share purchase warrant (non-flow-through). Each non-flow-through unit consistsof one common share and one common share purchase warrant. Each common share purchase warrant entitles theholder to acquire one common share (which share shall not be issued on a flow-through basis) at a price of $0.10 for aperiod of two years from date of issue.

Spider issued non-transferable compensation options (the “Agent Options”) to purchase up to 3,313,334 Units (the“Agent Units”), of which 982,334 Agent Units are exercisable at an exercise price of $0.06 per Agent Unit and2,331,000 Agent Units are exercisable at an exercise price of $0.05 per Agent Unit. The Agent Options areexercisable at any time before 5:00 p.m. (Toronto time) on January 22, 2012. Each Agent Unit consists of onecommon share and one common share purchase warrant exercisable to acquire one common share at an exerciseprice of $0.10 per share on or before 5:00 p.m. (Toronto time) on the day that is 24 months from January 22, 2010.

The securities issued under the private placement were subject to a hold period from the date of issuance until May23, 2010 in accordance with applicable securities laws and TSX Venture Exchange policies.

The fair value of the 9,823,336 warrants issued for the flow-through units was estimated to be $451,873 using theBlack-Scholes valuation model with the following assumptions: a two year expected term, 190% volatility, risk-freeinterest rate of 1.17% per annum and a dividend rate of 0%.

The fair value of the 23,310,000 warrants issued for the non flow-through units was estimated to be $885,780 usingthe Black-Scholes valuation model with the following assumptions: a two year expected term, 190% volatility, risk-freeinterest rate of 1.17% per annum and a dividend rate of 0%.

The fair value of the 982,334 Agent Options was estimated to be $93,320 using the Black-Scholes valuation modelwith the following assumptions: a two year expected term, 190% volatility, risk-free interest rate of 1.17% per annumand a dividend rate of 0%.

The fair value of the 2,331,000 Agent Options was estimated to be $205,128 using the Black-Scholes valuation modelwith the following assumptions: a two year expected term, 190% volatility, risk-free interest rate of 1.17% per annumand a dividend rate of 0%.

- 15 -



(b) STOCK OPTIONS

The following table reflects the continuity of stock options and agent options for the three months ended March 31,2010:

Number ofStock Options Weighted Average

and Agent Options Exercise Price ($)

Balance, December 31, 2009 37,005,181 0.10Granted (Note 6(a)(i)) 3,313,334 0.05

Balance, March 31, 2010 40,318,515 0.09

The following table reflects the actual stock options and agent options issued and outstanding as of March 31, 2010:

ExercisableOutstanding Number of Weighted

Weighted Number of Stock Options Average Average Stock Options and Remaining

Exercise and Agent Agent Contractual LifeExpiry Date Price ($) Options Options (Years)

Stock optionsAugust 2, 2010 0.10 300,000 300,000 0.34February 8, 2011 0.10 5,085,018 5,085,018 0.86July 25, 2011 0.10 1,000,000 1,000,000 1.32October 2, 2013 0.10 10,900,000 10,900,000 3.51April 21, 2014 0.10 7,100,000 7,100,000 4.06December 21, 2014 0.10 4,500,000 4,500,000 4.73December 21, 2014 0.10 2,000,000 500,000 4.73

30,885,018 29,385,018Agents optionsAugust 7, 2011 0.03 - 0.06 2,500,000 2,500,000 1.35December 24, 2011 0.06 2,083,298 2,083,298 1.73December 30, 2011 0.06 1,536,865 1,536,865 1.75January 22, 2012 0.06 982,334 982,334 1.81January 22, 2012 0.05 2,331,000 2,331,000 1.81

0.09 40,318,515 38,818,515 2.96

- 16 -



(c) WARRANTS

The following table reflects the continuity of warrants from January 1, 1995 to March 31, 2010:

Number ofWarrants Fair Value

Balance, January 1, 1995 - $ -Private placements 4,150,000 -

Balance, December 31, 1995 4,150,000 -Private placements 4,429,550 -Expiry of warrants (3,950,000) -Exercise of warrants (200,000) -

Balance, December 31, 1996 4,429,550 -Private placements 2,077,000 -Expiry of warrants (864,146) -Exercise of warrants (2,050,204) -

Balance, December 31, 1997 3,592,200 -Private placements 1,650,000 -Expiry of warrants (3,592,200) -

Balance, December 31, 1998 and 1999 1,650,000 -Private placements 5,000,000 -Broker warrants 1,150,000 -Expiry of warrants (1,650,000) -

Balance, December 31, 2000 6,150,000 -Private placements 1,500,000 -

Balance, December 31, 2001 7,650,000 -Expiry of warrants (7,650,000) -

Balance, December 31, 2002 - -Private placement - flow-through 14,920,000 440,080Private placement - non-flow-through 9,100,000 255,700Settlement of debt 1,500,000 28,500Exercise of warrants (100,000) (1,900)

Balance, December 31, 2003 25,420,000 722,380Private placement - flow-through 14,409,583 1,105,411Private placement - non-flow-through 5,000,000 245,000Broker warrants 2,264,705 158,529Expiry of warrants (4,950,000) (94,050)Exercise of warrants (11,650,000) (221,350)


- 17 -



(c) WARRANTS (Continued)

Number ofWarrants Fair Value

Balance, December 31, 2004 30,494,288 $ 1,915,920Private placements - flow-through 12,116,285 306,485Private placement 8,480,000 110,240Broker warrants 827,629 30,622Expiry of warrants (8,320,000) (382,480)Exercise of warrants (583,333) (29,500)

Balance, December 31, 2005 43,014,869 1,951,287Private placement - flow-through 12,100,855 381,128Private placement 2,500,000 57,500Broker warrants 671,585 22,162Expiry of warrants (21,590,955) (1,503,940)

Balance, December 31, 2006 36,696,354 908,137Private placement - flow-through 11,000,000 253,000Private placement 400,000 7,245Private placement - flow-through 30,666,666 1,594,667Broker warrants on above private placement 3,066,667 190,133Expiry of warrants (4,059,737) (57,107)Exercise of warrants (26,998,216) (622,678)

Balance, December 31, 2007 50,771,734 2,273,397Private placement - flow-through 4,700,000 65,800Broker warrants on above private placement 470,000 6,580Private placement - flow-through 1,200,000 19,200Expiry of warrants (3,382,401) (99,919)Exercise of warrants (8,406,000) (267,927)

Balance, December 31, 2008 45,353,333 1,997,131Private placement - flow-through 36,666,661 660,000Broker warrants on above private placement 4,550,000 91,000Private placement - flow-through 22,887,999 1,052,848Expiry of warrants (8,316,667) (310,884)Warrant extension adjustment - 674,667Exercise of warrants (170,000) (3,400)Private placement - flow-through 15,785,332 726,125

Balance, December 31, 2009 116,756,658 4,887,487Private placement - flow-through (Note 6(a)(i)) 9,823,336 451,873Private placement - non-flow-through (Note 6(a)(i)) 23,310,000 885,780Exercise of warrants (9,672,666) (242,224)

Balance, March 31, 2010 140,217,328 $ 5,982,916

- 18 -



(c) WARRANTS (Continued)

The following table summarizes the warrants issued and outstanding as at March 31, 2010:

Number of Exercise Expiry Date Warrants Price ($) Fair Value

October 11, 2010 29,555,666 $ 0.10 $ 2,187,120November 27, 2010 4,700,000 0.10 65,800November 27, 2010 470,000 0.10 6,580December 30, 2010 1,200,000 0.10 19,200July 24, 2011 18,554,996 0.05 - 0.10 333,990July 28, 2011 1,429,999 0.03 - 0.06 28,600August 7, 2011 12,500,000 0.05 - 0.10 225,000December 24, 2011 22,887,999 0.10 1,052,848December 30, 2011 15,785,332 0.10 726,125January 22, 2012 9,823,336 0.10 451,873January 22, 2012 23,310,000 0.10 885,780

140,217,328 $ 5,982,916

(d) CONTRIBUTED SURPLUS

The following is a continuity of contributed surplus:

Balance, January 1, 1995 to December 31, 2001 $ -Stock option compensation 28,000

Balance, December 31, 2002 28,000Stock option compensation 60,575


Balance, December 31, 2004 404,400Reversal of valuation on exercise of stock options (6,260)Stock option compensation 566,633


Balance, December 31, 2006 1,813,540Expiry of warrants 57,107Fair value of options exercised (48,004)

Balance, December 31, 2007 $ 1,822,643

- 19 -



(d) CONTRIBUTED SURPLUS (Continued)

Balance, December 31, 2007 $ 1,822,643Stock option compensation 457,800Expiry of warrants 99,919Fair value of options exercised (31,902)

Balance, December 31, 2008 2,348,460Stock option compensation 427,100Expiry of warrants 310,884Agents options 448,915

Balance, December 31, 2009 3,535,359Stock option compensation 47,917Agents options (Note 6(a)(i)) 298,448

Balance, March 31, 2010 $ 3,881,724

7. RELATED PARTY TRANSACTIONS NOT DISCLOSED ELSEWHERE

For the three months ended March 31, 2010, the Company paid $34,500 (three months ended March 31, 2009 -$24,000) to Nominex Ltd. ("Nominex") a company controlled by the President and director of the Company, forgeological and other services. Included in accounts payable and accrued liabilities is $12,075 (December 31, 2009 -$8,400) owing to Nominex for management services provided.

For the three months ended March 31, 2010, the Company paid the Vice President of the Company fees totaling$22,500 (three months ended March 31, 2009 - $18,000).

For the three months ended March 31, 2010, legal fees in the amount of $76,553 (three months ended March 31,2009 - $55,439) were charged by a law firm in which the Corporate Secretary is a partner. In addition, as at March 31,2010, this law firm was owed $76,553 (December 31, 2009 - $205,496) and this amount was included in accountspayable and accrued liabilities.

For the three months ended March 31, 2010, the Company paid $7,500 to Marrelli CFO Outsource Syndicate Inc.("Marrelli") for the services of Carmelo Marrelli to act as Chief Financial Officer of the Company (three months endedMarch 31, 2009 - $7,500). Carmelo Marrelli is the president of Marrelli. The Chief Financial Officer is also thepresident of a firm providing accounting services to Spider. During the three months ended March 31, 2010, Spiderexpensed $21,103, (three months ended March 31, 2009 - $14,173) for services rendered by this firm. In addition, asat March 31, 2010, this firm was owed $12,618 (December 31, 2009 - $15,860) and this amount was included inaccounts payable and accrued liabilities.

For the three months ended March 31, 2010, the Company paid consulting fees of $15,000 (three months endedMarch 31, 2009 - $nil) to an officer of the Company. As at March 31, 2010, this officer was owed $10,817 (December31, 2009 - $6,719), and this amount was included in accounts payable and accrued liabilities.

As at March 31, 2010, a company beneficially owned by a director of the Company was owed $nil (December 31,2009 - $24,780) for outstanding consulting fees and unreimbursed expenses. This amount was included in accountspayable and accrued liabilities.

- 20 -


7. RELATED PARTY TRANSACTIONS NOT DISCLOSED ELSEWHERE (Continued)

The Company expensed $7,250, (three months ended March 31, 2009 - $nil) as director fees. As at March 31, 2010,the directors were owed $7,250 (December 31, 2009 - $nil). In addition, as at March 31, 2010, $15,146 (December 31,2009 - $5,856) was owed to two of the directors as reimbursable expenses and it was included in accounts payableand accrued liabilities.

These transactions are in the normal course of operations and are measured at the exchange amount which is theamount of consideration established and agreed to by the related parties.

8. SEGMENTED INFORMATION

The Company's operations comprise a single reporting operating segment engaged in the business of mineralexploration. As the operations comprise a single reporting segment amounts disclosed in the statements of operationsand comprehensive loss for the period and loss per share also represent segment amounts.

All of the Company's operations and assets are located in Canada.

9. ADMINISTRATIVE EXPENSESThree months ended

March 31,2010 2009

Accounting, tax and corporate services $ 19,808 $ 18,721Shareholder relations 1,552 2,845Professional fees 75,743 47,870Management fees 34,500 24,000Transfer agent, listing and filing fees 35,086 6,690General and administration 22,418 12,622Travel 23,927 24,247Occupancy costs 3,750 3,750Interest and bank charges 8,449 372Advertising and promotion 79,719 48,838Consulting fees 45,000 47,083Insurance 9,990 7,560

$ 359,942 $ 244,598

10. COMMITMENT

The Company is committed to spending approximately $1,953,000 associated with the flow-through offerings thatwere completed in fiscal 2009 and January 22, 2010. The Company is in the process of complying with its flow-through contractual obligations with subscribers with respect to the requirements of the Income Tax Act (Canada).

- 21 -


11. SUBSEQUENT EVENTS

(a) On April 6, 2010, a total of 166,666 warrants were exercised for 166,666 common shares of Spider at $0.10 pershare for gross proceeds of $16,666.

(b) On April 13, 2010, a total of 333,333 warrants were exercised for 333,333 common shares of Spider at $0.05 pershare for gross proceeds of $16,667.

(c) On April 20, 2010, a total of 1,000,000 warrants were exercised for 1,000,000 common shares of Spider at $0.05per share for gross proceeds of $50,000.

(d) On April 26, 2010, a total of 416,666 warrants were exercised for 416,666 common shares of Spider at $0.05 pershare for gross proceeds of $20,833. In addition, a total of 358,500 agent options were exercised for 358,500common shares of Spider at $0.06 per share for gross proceeds of $21,510 and 358,500 warrants with an exerciseprice of $0.10 and expiry date of December 24, 2011, were issued.

(e) On May 3, 2010, a total of 583,333 warrants were exercised for 583,333 common shares of Spider at $0.05 pershare for gross proceeds of $29,167.

(f) On May 3, 2010, a total of 416,666 warrants were exercised for 416,666 common shares of Spider at $0.05 pershare for gross proceeds of $20,833.

(g) On May 14, 2010, 912,299 agent options were exercised for 912,299 common shares of Spider at $0.06 per sharefor gross proceeds of $54,738 and 912,299 warrants with an exercise price of $0.10 and expiry date of December 24,2011, were issued.

(h) On May 14, 2010, 88,701 agent options were exercised for 88,701 common shares of Spider at $0.06 per sharefor gross proceeds of $5,322 and 88,701 warrants with an exercise price of $0.10 and expiry date of December 30,2011, were issued.

(i) On May 17, 2010, a total of 416,666 warrants were exercised for 416,666 common shares of Spider at $0.05 forgross proceeds of $20,833.

(j) On May 21, 2010, 449,202 agent options were exercised for 449,202 common shares of Spider at $0.06 per sharefor gross proceeds of $26,952 and 449,202 warrants with an exercise price of $0.10 and expiry date of December 30,2011, were issued.

(k) On May 25, 2010, Spider and KWG Resources Inc. (“KWG”) entered into a binding letter agreement (“LetterAgreement”) which sets out the principal terms upon which it is proposed that the two corporations will complete abusiness combination (the “Merger”), at the conclusion of which the shareholders of each corporation will hold 50% ofthe outstanding shares of the ongoing public corporation. The combined company will hold a current interest of 53% inthe Big Daddy deposit, with the option to earn a further 7% to achieve a 60% interest in the project. It is anticipatedthat the ongoing public corporation will continue to be named “KWG Resources Inc.” for a period of time after theMerger and will continue to be listed on the TSX Venture Exchange (“TSXV”) and on the Canadian National StockExchange (the “CNSX”). Following the Merger, it is proposed that the name of the ongoing public company will bechanged to “Spider-KWG Resources Inc.” subject to shareholder and regulatory approvals.

- 22 -


11. SUBSEQUENT EVENTS (Continued)

(k)(continued) It is anticipated that the Merger will be effected by way of a three cornered amalgamation under theCanada Business Corporations Act (the “CBCA”), pursuant to which Spider will amalgamate with a newly-incorporated, wholly-owned subsidiary of KWG, to become a wholly-owned subsidiary of KWG. Prior to the completionof the Merger, KWG will transfer its interest in the railway right of way, in its 1% net smelter returns royalty coveringthe Big Daddy Deposit, the Black Thor Deposit and the Black Label Deposit granted by Freewest Resources CanadaInc., and cash in an amount to be agreed upon between KWG and Spider to KWG’s wholly-owned subsidiary, DebutsDiamonds Inc. (“Debuts”), in exchange for Debut’s interest in various diamond exploration projects and a number ofcommon shares of Debuts to be specified, and will distribute all of the outstanding common shares of Debuts to theshareholders of record of KWG.

Under the terms of the Merger:

(i) all of the common shares of Spider (the “Spider Shares”) outstanding will be exchanged for common shares ofKWG (the “KWG Shares”) at the ratio of one (1) Spider Share for that number of KWG Shares equal to:

(1) the number of outstanding KWG Shares, divided by(2) the number of outstanding Spider Shares,

In each case calculated as at the close of business on the date immediately preceding the effective date of theMerger (the “Exchange Ratio”);

(ii) each of the outstanding warrants to purchase one Spider Share (“Spider Warrant”) will, subject to regulatoryapproval, be exchanged for a warrant of KWG (“KWG Warrant”) exercisable to acquire that number of KWGShares equal to the Exchange Ratio. All other terms of such KWG Warrant, including the exercise price and theexpiry date thereof, shall be the same as the Spider Warrant;

(iii) each of the outstanding options (whether or not vested) to acquire one Spider Share will, subject to regulatoryapproval, be exchanged for an option of KWG exercisable to acquire that number of KWG Shares equal to theExchange Ratio at an exercise price per KWG Share and on other terms to be agreed upon and included in thedefinitive agreement in respect of the Merger (the “Definitive Agreement”);

(iv) each of the outstanding compensation options of Spider (“Spider Unit Compensation Option”) to acquire a unit ofSpider (“Spider Unit”), each Spider Unit consisting of one Spider Share and one common share purchase warrantof Spider, will, subject to regulatory approval, be exchanged for one compensation option of KWG (“KWG UnitCompensation Option”) exercisable to acquire a number of units of KWG equal to the Exchange Ratio (“KWGUnit”), each KWG Unit consisting of one KWG Share and one common share purchase warrant of KWG. All otherterms of the KWG Unit Compensation Options, including the expiry dates thereof, shall be the same as the SpiderUnit Compensation Options for which they are exchanged and all terms of the common share purchase warrantsof KWG comprising part of the KWG Unit, including the exercise price and expiry date thereof, shall be the sameas the common share purchase warrant of Spider comprising part of the Spider Unit; and

(v) KWG shall continue with its listing on the TSXV and the CNSX.

Completion of the Merger is subject to a number of conditions, including, but not limited to, confirmatory due diligence,the negotiation and execution of the Definitive Agreement, the receipt of all required regulatory approvals, includingthe approval of the TSXV, and approval of the shareholders of Spider.

- 23 -


11. SUBSEQUENT EVENTS (Continued)

(k)(continued) The Merger will be submitted to the shareholders of Spider for consideration and approval at a specialmeeting to be convened by Spider as soon as possible following the completion, to the satisfaction of Spider andKWG, as applicable, of their due diligence investigations and execution of definitive documentation.

Each party will pay its own costs and expenses (including all legal, accounting and financial advisory fees andexpenses) in connection with the Merger, including expenses related to the preparation, execution and delivery of theLetter Agreement, the Definitive Agreement and such other required documents.

In addition, the parties have agreed that each party will pay the other a break fee of CDN$2.3 million if, among otherthings, the Merger is not completed as a result of such party completing an alternative transaction, including but notlimited to a merger, amalgamation, share exchange, business combination, take-over bid, sale or other disposition ofmaterial assets, recapitalization, reorganization, liquidation, sale or issuance of a material number of treasurysecurities (except upon the due exercise of convertible securities outstanding on the date of this news release) orrights or interests therein or thereto or rights or options to acquire any material number of treasury securities or anytype of similar transaction involving it or any of its subsidiaries other than with the other party to the Letter Agreement,the board of directors of such party withdraws or modifies, in a manner materially adverse to the other party to theLetter Agreement, its approval or recommendation of the Merger or otherwise fails to make such approval orrecommendation, such party enters into a letter of intent or definitive written agreement with respect to a SuperiorProposal (as defined in the Letter Agreement), or if such party is subject to a take-over bid initiated by a third party.This break fee will also be payable by Spider to KWG if KWG terminates the Letter Agreement following the failure bySpider to mail a proxy circular and related documents in respect of the Merger to its shareholder on or before June 21,2010. The parties have further agreed that, in certain other circumstances, Spider will pay a break fee to KWG ofCDN$1.1 million or, KWG will pay a break fee to Spider of CDN$1.4 million.

Proposed Take-Over Bids for KWG and/or Spider by Cliffs Natural Resources Inc.

On May 24, 2010, Cliffs Natural Resources Inc. (“Cliffs”) announced that it intends to make take-over bids for all of theissued and outstanding common shares (not already owned by Cliffs or its affiliates) of KWG and/or Spider for cashconsideration of $0.13 per share. Cliffs advised that neither bid would be conditional upon the completion of the other.The board of directors of each of Spider and KWG has formed an independent special committee to consider the bidby Cliffs.

(l) On May 26, 2010, a total of 3,500,000 warrants were exercised for 3,500,000 common shares of Spider at $0.10 forgross proceeds of $350,000. On the same date, 2,500,000 agent options were exercised for 2,500,000 commonshares of Spider at $0.03 per share for gross proceeds of $75,000 and 1,250,000 warrants with an exercise price of$0.05 and expiry date of August 7, 2010, were issued and exercised for gross proceeds of $62,500.

- 24 -