UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

~~_______________________~~---------------------------------

FORM 10-Q

(Mark One)


[X]		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended ~~August 31~~November 30, 2011


[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from _______ to ______

Commission file number: 0-29392

CALAIS RESOURCES INC.

(Exact name of registrant as specified in its charter)


British Columbia (State or other jurisdiction of incorporation or organization)		98-0434111 (IRS Employer Identification No.)

4415 Caribou Road P.O. Box 653 Nederland, Colorado (Address of principal executive offices)		80466-0653 (Zip Code)

Registrant’s telephone number, including area code: (303) 258-3806

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes[ X] No [ ] ~~(not required)~~

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [ ] No [X]

As of ~~October~~January 1413, ~~2011~~2012 the registrant had ~~157~~163,~~811~~446,422 shares of common stock outstanding.

TABLE OF CONTENTS

		Page
Part I – Financial Information
	Item 1. Financial Statements.	3
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	1213
	Item 3. Quantitative and Qualitative Disclosures About Market Risk.	1517
	Item 4. Controls and Procedures.	1517
Part II – Other Information
	Item 1. Legal Proceedings.	1819
	Item 1A. Risk Factors.	1819
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	18
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	19
	Item 3. Defaults Upon Senior Securities.	1920
	Item 4. (Removed and Reserved).	1920
	Item 5. Other Information.	1920
	Item 6. Exhibits.	20
	Signatures	21

PART I – FINANCIAL INFORMATION.

CALAIS RESOURCES, INC.

(A Mining Company in the Exploration Stage)

CONSOLIDATED BALANCE SHEETS

	As of
	August 31, 2011			May 31, 2011
	11/30/2011			5/31/2011
ASSETS	(unaudited)
Current Assets
Current assets
Cash and cash equivalents	$	9491,~~351~~869		$	913,182
Prepaid expenses and other assets		81,226			39,961
Inventories		18,894			-
Total current assets		175,577			953,143
Prepaid expenses and other assets		39,898			39,961
Total current assets		150,661			953,143
Restricted cash		15,400			15,400
Note receivable		60,000			60,000
Fixed assets, net		1528,~~213~~870			15,313
Total assets	$	~~266~~254,~~190~~931		$	1,043,856
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities	$	~~926~~1,~~458~~265,566		$	1,631,568
Convertible debenture		676,256			702,964
Convertible debentures, current portion		-			702,964
Notes payable		10,253,878			10,253,878
Notes payable and current portion of long-term debt		10,253,878			10,253,878
Total current liabilities		11,~~856~~519,~~592~~444			12,588,410
Royalty interest		150,000			150,000
Convertible debentures, long-term		724,399			-
Environmental remediation liabilities		50,000			50,000
Total liabilities		12,~~056~~443,~~592~~843			12,788,410
Shareholders' Deficit
Common stock, no par value, unlimited shares authorized, 153,844,986, and 149,184,986 shares issued and outstanding as of August 31, 2011 and May 31, 2011, respectively		36,645,229			35,866,729
Common stock, no par value, unlimited shares authorized, 162,196,422 and 149,184,986 shares issued and outstanding as of November 30, 2011 and May 31, 2011, respectively		37,503,729			35,866,729
Deficit accumulated in the exploration stage		(4849,~~194~~485,~~361~~477	)		(47,371,579	)
Accumulated other comprehensive loss		(~~241~~207,~~270~~164	)		(239,704	)
Total Shareholders' Deficit		(1112,~~790~~188,~~402~~912	)		(11,744,554	)
Total Liabilities and Shareholders' Deficit	$	~~266~~254,~~190~~931		$	1,043,856

See accompanying notes to the unaudited consolidated financial statements.

CALAIS RESOURCES, INC.

(A Mining Company in the Exploration Stage)

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended August 31,						December 30, 1986 (inception) through
													December 30, 1986
	2011			2010			August 31, 2011
	Three Months Ended November 30,						Six Months Ended November 30,						(inception) through
Sales	$	-		$	-		$	-
	2011			2010			2011			2010			November 30, 2011
Operating Costs and Expenses
Revenues	$	76,023		$	-		$	76,023		$	-		$	76,023
Costs applicable to sales		307,820			-			307,820
Operating Costs and Expenses
General and administrative expense		444,893			184,599			12,759,870
Costs applicable to sales		239,383			-			547,203			-			547,203
Exploration and business development expenses		18,937			15,937			12,400,890
General and administrative		789,598			449,430			1,234,491			634,027			13,549,468
Depreciation and amortization expense		100			-			202,802
Exploration and mine development		21,189			42,238			40,126			58,176			12,422,079
Total operating costs and expenses		771,750			200,536			25,671,382
Depreciation and amortization		2,478			99			2,578			99			205,280
Loss from Operations		(771,750	)		(200,536	)		(25,671,382	)
Total operating costs and expenses		1,052,648			491,767			1,824,398			692,302			26,724,030
Other (income) and expenses
Loss from Operations		(976,625	)		(491,767	)		(1,748,375	)		(692,302	)		(26,648,007	)
Loss on impairment		-			-			9,808,572
Other (income) and expenses
(Gain) loss on settlement of debts		-			(20,214	)		(3,388,742	)
Loss on impairment		-			-			-			-			9,808,572
Interest and financing fees		207,160			213,531			14,646,505
Loss (gain) on settlement of debts		107,685			(292,718	)		107,685			(312,932	)		(3,281,057	)
Foreign currency transaction loss		407			-			1,368,278
Interest and financing fees		203,738			209,891			410,898			423,423			14,850,243
Other (income) expense		(156,535	)		-			88,366
Foreign currency transaction loss		3,078			110			3,485			110			1,371,356
Total other (income) and expenses		51,032			193,317			22,522,979
Other (income) expense		(10	)		(156	)		(156,545	)		(155	)		88,356
Loss before income taxes		(822,782	)		(393,853	)		(48,194,361	)
Total other (income) and expenses		314,491			(82,873	)		365,523			110,446			22,837,470
Income tax expense (benefit)		-			-			-
Loss before income taxes		(1,291,116	)		(408,894	)		(2,113,898	)		(802,748	)		(49,485,477	)
Net loss	$	(822,782	)	$	(393,853	)	$	(48,194,361	)
Income tax expense (benefit)		-			-			-			-			-
Other comprehensive loss (income) - foreign currency translation adjustments		1,566			12,431			241,270
Net loss		(1,291,116	)		(408,894	)		(2,113,898	)		(802,748	)		(49,485,477	)
Comprehensive loss	$	(824,348	)	$	(406,284	)	$	(48,435,631	)
Other comprehensive income (loss) - foreign
Basic and diluted weighted-average number of common shares outstanding		151,608,139			85,410,751
currency translation adjustments		34,106			(153,850	)		32,540			(166,282	)		(207,164	)
Basic and diluted loss per common share	$	(0.01	)	$	(0.00	)
Comprehensive loss		(1,257,010	)		(562,744	)		(2,081,358	)		(969,030	)		(49,692,641	)
Basic and diluted weighted-average number of
common shares outstanding		155,926,235			100,618,432			154,801,699			92,973,040
Basic and diluted loss per common share	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)

See accompanying notes to the unaudited consolidated financial statements.

CALAIS RESOURCES, INC.

(A Mining Company in the Exploration Stage)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended August 31,			Three Months Ended August 31,			December 30, 1986 (inception) through
	Six Months Ended November 30,						December 30, 1986 (inception) through November 30,
	2011			2010			~~August 31,~~ 2011
Cash flows from operating activities:
Net loss	$	(~~822~~2,~~782~~113,898	)	$	(~~393~~802,~~853~~748	)	$	(4849,~~194~~485,~~361~~477	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion expense		-			-			105,655
Amortization of deferred financing costs		-			-			3,369,936
Depreciation and depletion		~~100~~2,578			-99			~~201~~203,~~135~~613
Non-cash interest expense		~~206~~209,~~763~~031			~~207~~411,~~073~~639			12,~~046~~048,~~663~~931
Loss on impairment of mineral properties		-			-			8,824,989
Loss on impairment of investment		-			-			983,583
Common shares issued in connection with trust deed modification		-			-			90,000
Common shares issued in connection with debt settlement		-			-			1,048,053
Common shares issued for services		-138,500			50,000			1,~~524~~662,~~441~~941
Warrants cancelled for services		-			-			(18,173	)
Warrants issued in connection with debt restructure		-			-			155,007
Losses (gains) recognized in connection with debt settlement		-			(20,214	)		(3,098,846	)
Loss (gain) recognized in connection with debt settlement		107,685			(314,877	)		(2,991,161	)
Gain on sale of property, plant and equipment		(156,500	)		-			(151,627	)
Loss on disposal of property, plant and equipment		-			-			8,040,143
Loss on abandonment of mineral properties		-			-			300,600
Loss on default of exploration development agreement		-			-			456,090
Loss on foreign exchange		~~407~~3,485			-110			1,~~687~~690,~~048~~126
Environmental remediation liability		-			-			50,000
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses		(41,265	)		(28,582	)		(122,568	)
Increase in inventories		(18,894	)		-			(18,894	)
Increase (decrease) in accounts payable and other current liabilities		(911,873	)		112,779			1,606,156
Decrease (increase) in prepaid expenses		63			(36,205	)		(81,240	)
(Increase) decrease in other operating assets and liabilities		-			10,321			(202,667	)
(Decrease) increase in accounts payable and other current liabilities		(575,035	)		94,122			1,942,994
Net cash (used in) operating activities		(1,725,150	)		(62,476	)		(11,298,742	)
Decrease (increase) in other operating assets and liabilities		-			11,082			(202,668	)
Net cash used in operating activities		(2,402,985	)		(586,778	)		(11,976,579	)
Cash flows from investing activities:
Purchase of mineral properties & equipment		-			-			(17,481,692	)
Dispositions of equipment		156,500			-			317,852
Net additions to equipment		-(16,135	)		-(5,464	)		(~~183~~199,~~542~~677	)
Deferred exploration expenditures		-			-			(143,071	)
Deposit on equipment		-			-			(17,880	)
Acquisition of shares of subsidiary		-			-			(715,932	)
Advance to subsidiary		-			-			(177,875	)
Payable under option agreement		-			-			716,481
Refundable deposit on purchase of shares of subsidiary		-			-			(73,847	)
Net cash provided by (used in) investing activities		156,500			-			(17,759,506	)
Net cash (used in) provided by investing activities		140,365			(5,464	)		(17,775,641	)

See accompanying notes to the unaudited consolidated financial statements.

CALAIS RESOURCES, INC.

(A Mining Company in the Exploration Stage)

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(UNAUDITED)

	Three Months Ended August 31,			Three Months Ended August 31,			December 30, 1986 (inception) through
	Six Months Ended November 30,						December 30, 1986 (inception) through November 30,
	2011			2010			~~August 31,~~ 2011
Cash flows from financing activities:
Proceeds from sale of common shares	$	~~778~~1,498,500		$	521,~~000~~806,300		$	2223,~~583~~303,579
Proceeds from sale of private equity		-			-			345,000
Proceeds from borrowings long term-debt		-			-			17,029,960
Proceeds from borrowing on shareholder note		-			-			282,000
Repayments of long term debt		-			-			(11,902,794	)
Repayments of debt - convertible debentures		(2857,~~681~~193	)		(545,~~000~~500	)		(~~501~~529,~~305~~817	)
Advances to affiliated companies, shareholders and directors		-			-			(106,730	)
Restricted cash		-			-			(31,789	)
Share subscriptions received in advance		-			-			518,415
Net cash provided by financing activities		~~749~~1,~~819~~441,307			471,~~000~~760,800			28,~~216~~907,~~336~~824
Effect of foreign exchange		-			-			936,263
Net change in cash and cash equivalents		(~~818~~821,~~831~~313	)		~~(15~~1,~~476~~168,558	)		9491,~~351~~869
Cash at beginning of period		913,182			27,919			-
Cash at end of period	$	9491,~~351~~869		$	121,~~443~~196,477		$	9491,~~351~~869
Supplemental Cash Flow Information
Interest expense paid in cash	$	~~397~~201,866		$	611,~~458~~783		$	1,~~203~~405,~~730~~199
Interest received	$	-		$	-		$	3,999
Non-cash financing and investing activity:
Debt restructuring - warrants issued	$	-		$	-		$	412,407
Common shares issued in connection with debt restructuring and settlement of accrued liabilities	$	-		$	~~836~~1,~~539~~216,049		$	4,987,140
Common shares issued in connection with accrued liabilities	$	-		$	760,000		$	1,175,651
Common shares issued for debt restructuring	$	-		$	-		$	556,321
Common shares issued for settlement	$	-		$	76,539		$	1,999,451
Common shares issued for debt restructuring and settlements	$	-		$	-		$	1,255,717
Common shares issued for acquisition of property	$	-		$	-		$	32,500
Shares issued for mineral property development	$	-		$	-		$	96,315
Shares issued for repayment of shareholder advances	$	-		$	-		$	9,240,146

See accompanying notes to the unaudited consolidated financial statements.

CALAIS RESOURCES, INC.

(A Mining Company in the Exploration Stage)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~August~~November 3130, 2011

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Calais Resources, Inc. was incorporated under the laws of the Province of British Columbia, Canada, on December 30, 1986. Calais Resources, Inc. and its subsidiaries (collectively with its subsidiaries, referred to herein as “Calais”, “we”, “us” or “our”) isare currently in the process of exploring various mineral interests, primarily gold and silver. We are headquartered in Colorado, and have mining interests in Colorado and Nevada.

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to the valuation of deferred tax assets accruals for liabilities and the fair value of financial instruments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.

Our activities to date have primarily consisted of raising capital and acquiring and exploring our mining interests. We have had no significant revenue in our history. Accordingly, we are considered to be in the exploration stage.

Our fiscal year end is May 31st. Through May 31, 2004, we reported our financial information using Canadian Generally Accepted Accounting Principles (“Canadian GAAP”) using the Canadian dollar as our functional and reporting currency. During the fiscal year ended May 31, 2005, we changed our reporting basis to the United States Generally Accepted Accounting Principles (“U.S. GAAP”) and our functional and reporting currency to the United States dollar (“U.S. dollar”). Accordingly, historical cumulative financial information included in this Quarterly Report on Form 10-Q has been restated using U.S. GAAP with a functional and reporting currency of the U.S. dollar, unless otherwise noted. All references herein to “$” and “US$” refer to U.S. dollars. Unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to Common Shares refer to shares of our common stock (without par value) unless otherwise indicated.

These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly our financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

NOTE 2 – LIQUIDITY

As of ~~August~~November 3130, 2011, we had a working capital deficit of $11,~~681~~368,~~015~~783, and for the ~~three~~six months then ended cash used in operating activities amounted to $12,~~725~~402,~~150~~985. To date, we have ~~not~~ generated ~~any~~only nominal revenues from operations ($76,023) and have incurred losses since inception resulting in a deficit accumulated during the development stage of $4849,~~194~~485,~~361~~477 through ~~August~~November 3130, 2011. Further losses are anticipated as we continue to be in the exploration stage, as defined in ASC Topic 915, Development Stage Entities.

Our ability to continue as a going concern depends upon our ability to generate profitable operations in the future and/or to raise additional funds through equity or debt financing. Since inception, we have raised $2324,~~446~~166,994 through the issuance of equity securities and $17,311,960 through the issuance of debt instruments, which has been used primarily to provide operating funds, repay long -term debt, and acquire mineral interests. Subsequent to ~~August~~November 3130, 2011, we have acquired an additional $~~420~~100,000 through financing, as described more fully in Note 12. There is no assurance that we will be able to obtain additional funding when needed, or that such funding, if available, can be obtained on terms acceptable to us or at all. If we cannot obtain needed funds for implementing our mine plan after completion of the feasibility study, we may be forced to curtail or cease our activities. Equity financing, if available, may result in substantial dilution to existing stockholders. All of these factors cause substantial doubt about our ability to continue as a going concern. These financial statements do not include any

12. On December 1, 2011, the Brigus note (See Note 5) matured and we have not made payment as of the date of these financial statements. There is no assurance that we will be able to obtain additional funding when needed, or that such funding, if available, can be obtained on terms acceptable to us or at all. If we cannot obtain needed funds for implementing our mine plan after completion of the feasibility study, we may be forced to curtail or cease our activities. Equity financing, if available, may result in substantial dilution to existing stockholders. All of these factors cause substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event we cannot continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Inventories

Stockpiled ore inventories represent mineralized material that has been mined and hauled to the surface from our Cross Mine. This inventoried stockpile is ready for shipping for further processing by an outside source. Stockpiles are measured by estimating the number of tons added and removed from the stockpile, the number of contained metal ounces or pounds (based on assay data) and the estimated metallurgical recovery rates (based on the expected processing method).

Ore stockpile inventories are carried at the lower of average cost or net realizable value. Net realizable value represents the estimated future sales price of the product based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. Write-downs of stockpiled ore inventories, resulting from net realizable value impairments, are reported as a component of production costs applicable to sales. The current portion of ore stockpiles is determined based on the expected amounts to be processed within the next 12 months. Ore stockpile inventories not expected to be processed within the next 12 months, if any, are classified as long-term. At November 30, 2011, all ore stockpile inventories were classified as current.

Accrued Vacation

Our full-time employees are entitled to paid vacation, depending on job classification, length of service, and other factors. A liability has been recorded in the accompanying financial statements for accrued vacation leave.

Revenue Recognition

We have generated limited income from the sale of gold from our ores processed at an offsite third party mill facility. Revenues from the sale of minerals are recognized when the ores are processed by the third party.

Foreign Currency

We have recorded amounts payable related to a convertible debenture that is denominated in Canadian dollars. As of ~~August~~November 3130, 2011 and ~~2010~~May 31, 2011, adjustments resulting from liabilities denominated in a foreign currency have been reported as other comprehensive ~~loss~~ income in our financial statements.

Impairment of Long-Lived Assets

We review and evaluate long-lived assets for impairment at least once per year, or more often when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. During the ~~three~~six months ended ~~August~~November 3130, 2011 and 2010, we did not record any impairment expense.

Use of Estimates and Significant Estimates

Certain amounts in our financial statements are based upon significant estimates including environmental remediation obligations, accrued liabilities and a provision for income taxes. Actual results could materially differ from those estimates.

Reclassifications

Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the presentation in the current period financial statements.

Recent Accounting Pronouncements

The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the SEC, and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on U.S. GAAP and the impact on the Company.

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820), which requires reporting entities to make new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. ASU 2010-6 is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010. We do not have any assets or liabilities classified as Level 3. We have adopted the Level 1 and Level 2 amendments accordingly. As the update only pertained to disclosures, it had no impact on our financial position, results of operations, or cash flows upon adoption.

~~Use~~In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220) – Presentation of ~~Estimates~~Comprehensive Income (“ASU 2011-05”). ASU 2011-05 requires entities to present net income and ~~Significant~~other ~~Estimates~~comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (November 30, 2012 for the Company). We do not expect the adoption of ASU 2011-05 to have a material impact on our results of operations, financial condition, or cash flows.

~~Certain~~In ~~amounts~~December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220) – Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ~~our~~Accounting ~~financial~~Standards ~~statements~~Update ~~are~~No. ~~based~~2011-05 ~~upon~~(“ASU ~~significant~~2011-12”). ASU ~~estimates~~2011-12 ~~including~~defers ~~environmental~~changes ~~remediation~~in ~~obligations,~~Update ~~accrued~~2011-05 ~~liabilities~~that relate to the presentation of reclassification adjustments. ASU 2011-12 is effective for fiscal years, and ainterim ~~provision~~periods within those years, beginning after December 15, 2011 (November 30, 2012 for ~~income~~the ~~taxes~~Company). We ~~Actual~~do not expect the adoption of ASU 2011-12 to have a material impact on our results ~~could~~of ~~materially~~operations, ~~differ~~financial ~~from~~condition, ~~those~~or ~~estimates~~cash flows.

NOTE 4 – MINERAL INTERESTS

There were no material changes to our mineral properties from those disclosed in the audited annual consolidated financial statements for the year ended May 31, 2011.

During the ~~quarter~~six months ended ~~August~~November 3130, 2011, we began test mining operations at our Cross mine. We have begun test processing at an out of state facility. We have incurred $~~307~~547,~~820~~203 in costs associated with these operations, ~~while~~and we have ~~not~~ generated revenues ~~through~~of ~~August~~$76,203 31for the six months ended November 30, 2011.

8On August 11, 2011, we renewed a convertible debenture payable to Aardvark Agencies Inc. “AAI” which contained repurchase rights for interests in our Caribou properties, including the price payable for the reacquisition (a total of Cdn$747,728) and AAI’s right to convert that debenture before it is paid (Note 6).

On August 11, 2011 we renewed a convertible debenture payable to Aardvark Agencies Inc. “AAI” which contained repurchase rights for interests in our Caribou properties, including the price payable for the reacquisition (a total of Cdn$747,728) and AAI’s right to convert that debenture before it is paid (Note 6).

NOTE 5 – DEBT

As of ~~August~~November 3130, 2011 and May 31, 2011, we had one outstanding note payable (the “Brigus Note”) in the amount of $10,253,878 ~~(the “Brigus Note”)~~. The original maturity date for the note was February 1, 2011. On January 15, 2011, we received forbearance under the terms of an agreement effectively extending the maturity date of the debt ~~through~~to June 30, 2011. On June 8, 2011, we and the note holder extended the maturity of the note through October 31, 2011. In connection with this forbearance we paid the note holder $1,000,000 which was applied against interest due on the promissory notes. The note bears interest at 8% and is secured by a lien on our Caribou property.

~~We continue to explore financing opportunities related to the October 31, 2011 maturity date of the Brigus Note.~~9

Asconnection ofwith ~~August~~this 31forbearance we paid the note holder $1,000,000 ~~2011~~which ~~and~~was ~~May~~applied 31against interest due on the promissory notes. On October 24, 2011, we ~~have~~and ~~accrued~~the ~~interest~~note inholder further extended the ~~amount~~maturity of ~~$296~~the note through December 1,~~764~~ ~~and~~2011. In connection with this forbearance we paid the note holder $1200,~~090,001,~~000 ~~respectively~~which was applied against interest due on the notes. The note bears interest at 8% and is secured by a lien on our Caribou property.

We continue to explore financing opportunities related to the December 1, 2011 maturity date of the Brigus Note. As of November 30, 2011 and May 31, 2011, we have accrued interest in the amount of $299,033 and $1,090,001, respectively.

NOTE 6 – DEBENTURES

A summary of convertible debentures outstanding is as follows:

	August 31, 2011			May 31, 2011
	November 30, 2011			May 31, 2011
Debenture (a)	$	676,256		$	702,964
Debenture	$	724,399		$	702,964
Total debenture payable		676,256			702,964
Less: Current portion		-			(702,964	)
Less: Current portion		(676,256	)		(702,964	)
Long-term portion	$	724,399		$	-
Long-term portion	$	-		$	-

~~(a)~~ This debenture is unsecured, non-interest bearing, and initially matured in May 2011. This debenture is owned by Marlowe Harvey who was the President and a director of ours until he resigned as President in 2000 and as a director in November 2003. The debenture is convertible into common stock at $1.23 in Canadian Dollars at the holder’s discretion and contains no restrictive covenants.

This debenture matured in May 2011. On August 11, 2011 the convertible debenture was renewed for a period of ten years maturing on August 31, 2021. All terms contained in the debenture agreement remain consistent with the original note~~, as fully described in our annual report on Form 10-K for the period ended May 31, 2011~~.

NOTE 7 – SHAREHOLDERS’ DEFICIT

Common Stock - We have authorized an unlimited number of common shares of our no par value common stock. Common shares outstanding as of ~~August~~November 3130, 2011 and May 31, 2011 were ~~153~~162,~~844~~196,~~986~~422 and 149,184,986, respectively.

Transactions involving our common stock during the ~~three~~six months ended ~~August~~November 3130, 2011 were as follows:

· We raised $~~778~~1,498,500 in cash from accredited investors for the sale of units comprising 411,~~660~~626,~~000~~668 shares of restricted common stock and warrants to purchase 25,~~330~~813,~~000~~335 of common shares. The common stock prices ranged from $0.10 to $0.20 per share and the warrants ~~had~~have an exercise ~~prices~~price from $0.20 to $0.30 per share with expiration dates of June, ~~July~~2012 ~~and~~through ~~August~~September ~~2012~~2013.

9· In connection with the issuance of some of the shares mentioned above, as compensation for consulting services we issued 1,385,000 shares of restricted common stock at $0.10 and warrants to purchase 125,000 common shares at an exercise price of $0.30 which expire October 2012.

NOTE 8 – COMMON STOCK WARRANTS

The following table summarizes information about outstanding stock purchase warrants as of ~~August~~November 3130, 2011:

	Number of Warrants Outstanding	Exercise Price	~~Exercise Price~~
Outstanding as of May 31, 2011	31,498,196	~~31,498,196~~$0.12-$0.25		~~$0.12-$0.25~~
Issued	5,938,335	~~2,330,000~~$0.20-$0.30		~~$0.20-$0.30~~
Expirations	-	-
Balance at August 31, 2011		33,828,196		$0.12-$0.30
Balance at November 30, 2011	37,436,531	$0.12-$0.30

Exercise Price		Number of Shares		Remaining Contractual Life in Years		Exercise Price Times Number of Shares		Weighted Average Exercise Price
$	0.12		11,246,141		1.25		1,349,537
	$0.12		20,923,296		1.2	$	2,510,795
$	0.12		4,136,259		1.5		496,351
	$0.12		7,000,000		2.4		840,000
$	0.12		5,060,496		1.5		607,260
	$0.12		1,249,900		9.7		149,988
$	0.12		480,000		1.8		57,600
	$0.20		5,655,000		0.8		1,131,000
$	0.12		8,249,900		9.9		989,988
	$0.25		233,335		1.8		58,334
$	0.20		2,825,400		1.5		565,080
	$0.25		875,000		8.1		218,750
$	0.25		875,000		9.2		218,750
	$0.30		1,500,000		0.6		450,000
$	0.30		955,000		1.0		286,500
			37,436,531			$	5,358,867	$0.14
			33,828,196				4,571,066	$0.14

NOTE 9 – LOSS PER SHARE

Basic loss per share is computed by dividing income available to common stockholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential of securities that could share in our earnings. All of the common shares underlying warrants outstanding as of ~~August~~November 3130, 2011 and 2010 were excluded from diluted weighted average shares outstanding for each of the respective years because their effects were considered anti-dilutive.

NOTE 10 – RELATED PARTY TRANSACTIONS

We have frequent transactions with related parties, employees and shareholders holding more than 10% of our outstanding common stock. Transactions involving related parties during the ~~three~~six months ended ~~August~~November 3130, 2011 were as follows:

· Our notes payable balance as of ~~August~~November 3130, 2011 consisted of one note payable to Brigus Gold Corp. (“Brigus”). When this note was consummated in February 2010, the counterparty to this note was Apollo Gold Corp., a predecessor of Brigus. Our ~~now-~~current CEO, R. David Russell, was the CEO of Apollo Gold Corp. at that time.

· From time to time, our President and Vice President of Corporate Development incur expenses on behalf of the Company and are reimbursed by us. As of ~~August~~November 3130, 2011, included in accounts payable are amounts due to the officers as reimbursement. These amounts are not considered to be material.

·	The Canadian-dollar denominated convertible debenture (Note 6) is owned by a company related to a shareholder and former director.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

There have been no material changes to our obligations as described in our annual report on Form 10-K issued in connection with the fiscal year ended May 31, 2011. We may from time to time become subject to various claims and litigation. The Company vigorously defends its legal position when these matters arise. The Company is ~~neither a party to, nor the subject of, any material pending legal proceeding nor to the knowledge of the Company are there any such legal proceedings threatened against the Company.~~

neither a party to, nor the subject of, any material pending legal proceeding nor to the knowledge of the Company are there any such legal proceedings threatened against the Company.

The Company filed its brief in support of the petition by the September 16, 2011 due date. The SEC filed its brief in opposition by the October 17, 2011 due date and the Company filed its reply brief by the October 31, 2011 due date. Because the Petition for Review has been filed, the Initial Decision shall not become final until the Commission rules on the Petition.

The British Columbia Securities Commission (“BCSC”) has issued comment letters on the Application and the Company has responded to those comments. The latest comment letter is dated October 28, 2011 and the Company has filed a response to that letter.

NOTE 12 – SUBSEQUENT EVENTS

We have evaluated all of our activity and have concluded that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the unaudited consolidated financial statements, except as disclosed below.

Employment Agreements

Effective September 1, 2011, the Company entered into employment agreements with certain directors and officers of the Company, which supercede prior existing agreements. The employment agreements provide for increases in compensation, performance bonuses, stock grants, and other certain health and travel benefits. The agreements have no termination date; however, they provide for termination related to circumstances relative to: the employee’s voluntary termination; termination due either death or disability; the employee’s termination without cause; or termination resultant to the Company’s effective change of control, as defined in the employment agreements.

Debenture Settlements

Lynne Martin Settlement

On September 20, 2011, we paid the final installment on the Settlement Agreement with Lynne Martin, in the amount of $28,681.

Common Stock

Since ~~August~~November 3130, 2011, we ~~have~~ issued 31,~~966~~000,~~668~~000 shares of our restricted common stock and 1500,~~983,335~~000 warrants to purchase our common shares for net cash proceeds of $~~420~~100,000.

1112

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Statements

The following discussion and analysis should be read in conjunction with the accompanying financial statements and related notes included elsewhere in this report. It contains forward looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward looking statements.

In our effort to make the information in this report more meaningful, this Quarterly Report on Form 10-Q and documents incorporated by reference herein (or otherwise made by us or on our behalf) contain both historical and forward-looking statements. Such forward-looking statements are not based on historical facts, but rather reflect the current expectations of our management concerning future results and events. Forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “plan,” “goal” or other similar words or variations that convey the uncertainty of future events or outcomes. These statements are based on the beliefs anand assumptions of our management based on information currently available to us. These statements by their nature are subject to certain risks, uncertainties and assumptions and will be influenced by various factors, some of which are beyond our control. Actual results could vary materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, without limitation, the following risk factors:

·• our ability to execute against our plans; • our ability to continue as a going concern; • the possible loss of our interest in our Caribou properties if we do not meet our debt obligations; • the potential that we will not obtain good title to our Manhattan project; • the volatility and low trading volume of our common stock; • our ability to secure additional capital; • the possibility we may never achieve significant mineral production; • the future dilution to our shareholders from future capital-raising activities and payments to employees, directors and consultants; • the possibility our Board of Directors may issue authorized and unissued shares of common stock and preferred stock; • the effects the penny stock rules may have on the trading of our stock; • our dependence on a few key employees; • the influence of a few large shareholders on our business; • risks associated with our incorporation in Canada; • our lack of experience in mining and selling minerals; • operational and environmental risks associated with the mining industry; • the effect of government regulations on our business; • lack of clear title to our mineral prospects; • the fact our mineral interests are not yet proven; • fluctuation in the prices of gold and silver; and • the limited liquidity in our common stock due to a cease trade order issued by the British Columbia Securities Commission in February 2005 and an administrative action initiated by the Securities and Exchange Commission to revoke our registration as a reporting company under the Securities Exchange Act of 1934.

· our ability to continue as a going concern;

· the possible loss of our interest in our Caribou properties if we do not meet our debt obligations;

· the potential that we will not obtain good title to our Manhattan project;

· the volatility and low trading volume of our common stock;

· our ability to secure additional capital;

· the possibility we may never achieve any mineral production;

· the future dilution to our shareholders from future capital-raising activities and payments to employees, directors and consultants;

· the possibility our Board of Directors may issue authorized and unissued shares of common stock and preferred stock;

· the effects the penny stock rules may have on the trading of our stock;

· our dependence on a few key employees;

· the influence of a few large shareholders on our business;

· risks associated with our incorporation in Canada;

· our lack of experience in mining and selling minerals;

· operational and environmental risks associated with the mining industry;

· the effect of government regulations on our business;

· lack of clear title to our mineral prospects;

· the fact our mineral interests are not yet proven;

· fluctuation in the prices of gold and silver; and

· the limited liquidity in our common stock due to a cease trade order issued by the British Columbia Securities Commission in February 2005 and an administrative action initiated by the Securities and Exchange Commission to revoke our registration as a reporting company under the Securities Exchange Act of 1934.

All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

1213

Executive Summary

We are a mineral exploration company engaged directly and indirectly through subsidiaries, in the acquisition and exploration of minerals and metals, primarily gold and silver. Our business is currently in the exploratory or exploration stage as defined by Accounting Standards Codification (“ASC”) 915-10 and SEC Industry Guide 7 and, to date, our activities have not included development or significant mining operations. Our primary property is the Caribou project (advanced exploration stage) located in Nederland, Colorado; we also have properties in Nye County, Nevada.

Recent Events

Mining and Milling Operations

During the ~~quarter~~six months ended ~~August~~November 3130, 2011, we began test mining operations at our Cross mine. We have begun test processing at an out of state facility,. We inhave ~~connection therewith we~~ incurred $~~307~~547,~~820~~203 in costs associated with these operations~~. While~~, weand have ~~not~~ generated revenues as of ~~August 31~~$76,203 ~~2011,~~for ~~we expect to generate revenues beginning sometime during~~ the ~~last four~~six months ofended ~~calendar~~November 30, 2011.

Note Payable

On January 15, 2011, we received forbearance under the terms of an agreement effectively extending the maturity date of our 8% $10,253,878 note payable through June 30, 2011. This note was originally due on February 1, 2011 and is secured by a lien on our Caribou property. On June 8, 2011, we and Brigus Gold Corp. (“Brigus”) extended the maturity under the ~~forebearance~~forbearance to October 31, 2011, under the provision that we pay Brigus at least $1,000,000 on or before June 30, 2011, which would be applied against interest due on the promissory note covered by the ~~Forebearance~~Forbearance Agreement. We paid Brigus $1,000,000 on June 8, 2011 thereby extending the maturity date to October 31, 2011. We On ~~continue~~October 24, 2011, we and Brigus further extended the maturity to ~~explore~~December ~~financing~~1, ~~opportunities~~2011. In ~~related~~connection with this additional forbearance we paid Brigus $200,000 which was applied against interest due on the promissory notes. As of the date of this report, we had not repaid the Brigus note nor otherwise reached an agreement to extend the ~~pending~~note ~~maturity~~or otherwise settle it. We are in discussion with Brigus and others to negotiate the repayment of the Brigus note, however, we cannot guarantee that a satisfactory agreement will be reached between Calais and Brigus or any other parties.

Common Stock

During the quarter ended ~~August~~November 3130, 2011, we have issued 48,~~660~~351,~~000~~668 shares of our restricted common stock as follows:

· 46,~~660~~966,~~000~~668 for cash proceeds of $~~778~~720,~~500~~000

· ~~Since August 31, 2011, we have issued 3,966,668 shares of our restricted common stock and~~ 1,~~983~~385,~~335~~000 ~~warrants to purchase our common shares~~ for ~~net~~consulting ~~proceeds~~services ofvalued at $~~420~~138,~~000.~~500

~~The~~Since ~~financial~~November ~~information with respect to the three months ended August 31~~30, 2011 ~~and 2010~~, ~~discussed~~we ~~below,~~have isissued ~~unaudited. In the opinion of management~~1, ~~such information contains all adjustments~~000,000 ~~consisting~~shares ~~only~~ of ~~normal~~our ~~recurring~~restricted ~~accruals,~~common ~~necessary~~stock ~~for~~and a500,000 ~~fair~~warrants ~~presentation~~to ofpurchase ~~the~~our ~~results~~common ~~for~~shares ~~such periods. The results of operations~~ for ~~interim~~net ~~periods~~proceeds ~~are not necessarily indicative~~ of ~~the results of operations for the full fiscal years~~$100,000.

New Chief Financial Officer

On October 26, 2011, we appointed Brent E. Timmons as Vice President of Finance and Chief Financial Officer. Mr. Timmons is a Certified Public Accountant and has 16 years of professional experience, with six years in mining. Mr. Timmons had been with Brigus from April 2005 to September 2011, serving as Vice President and Controller from April 2007 to September 2011. He was an officer of Brigus when the notes payable due to Brigus were assumed from Elkhorn Goldfields LLC.

Interim Financial Statements

The financial information with respect to the three and six months ended November 30, 2011 and 2010, discussed below, is unaudited. In the opinion of management, such information contains all adjustments, consisting only of

normal recurring accruals, necessary for a fair presentation of the results for such periods. The results of operations for interim periods are not necessarily indicative of the results of operations for the full fiscal years.

Results of Operations

During the three months and six months ended ~~August~~November 3130, 2011, we generated a net ~~loss~~losses of $~~822~~1,~~782~~291,116 and $2,113,898, respectively, compared to a net ~~loss~~losses of $~~393~~408,~~853~~894 and $802,748 during the three ~~months~~and six month prior periods ended ~~August~~November 3130, 2010. ~~This~~The ~~increase~~increases in net losses of $~~428~~882,~~929~~222 or(216%) ~~109~~and $1,311,150 (163%) ~~results~~result from the start of test mining operations at our Cross mine, as well as higher wages and benefits expense and higher consulting and professional fees in 2011 as compared to 2010, as discussed further below. In addition, we recognized a gain on ~~the~~settlement ~~sale~~ of ~~assets~~debts in ~~the~~2010 ~~2011 quarter~~ compared to noa ~~gain or~~ loss ~~from~~on ~~sale~~such ofactivity ~~assets~~ in ~~the 2010 quarter~~2011.

Revenues

During the three and six months ended November 30, 2011, we recorded $76,023, our first mineral sales in our history. Revenues were from the sale of 48.2 ounces of payable gold at an offsite mill at an average price of $1,576 per ounce of gold. The 48.2 ounces were processed from 112 dry tons of ore at a grade of 0.448 ounces per ton at a 96% recovery rate.

Costs applicable to Sales

During the ~~three~~prior ~~months~~quarter ended August 31, 2011, we ~~began~~resumed test mining operations at our Cross mine. Consequently, wefor ~~incurred~~the ~~$307~~three and six months ended November 30,~~820~~ in2011, we incurred costs applicable to ~~future~~ sales of $239,383 and $547,203, respectively, as compared to $nil in the corresponding 2010 periods. The increase in costs applicable to sales increased during the 2011 period as we began ore extraction on our Cross property. Included ~~The~~in these costs are waste ore removal and mine development costs that must be expensed immediately under generally accepted accounting principles in the U.S. since we report no proven or probable reserves.

increase in costs applicable to sales increased during the 2011 period as we began ore extraction on our Cross property.

General and Administrative Expense

For the three and six months ended ~~August~~November 3130, 2011, general and administrative expense was $~~444~~789,~~893~~598 and $1,234,491, respectively, as compared to $~~184~~449,~~599~~430 and $634,027 in the corresponding 2010 ~~period~~periods. The ~~increase~~increases of $~~260~~340,~~294~~168 (~~141~~76%) and $600,464 (95%) was due to increased ~~wages~~consulting and ~~benefits~~professional ~~expense,~~fees and increased ~~consulting~~wages and ~~professional~~benefits ~~fees~~expense, as discussed below.

Consulting and professional fees. For the three and six months ended ~~August~~November 3130, 2011 ~~and 2010~~, consulting and professional fees were $~~239~~327,~~159~~151 and $84566,~~486~~309, respectively~~. The~~, ~~increase~~compared ofto $~~154~~309,~~673~~698 (and $394,183%) ~~during~~in the ~~three~~corresponding ~~months~~2010 ~~ended~~periods. The ~~August~~increases 31of $17,453 ~~2011~~(6%) and $172,126 (44%) is related primarily to accounting and legal services as we continued the process of attempting to regain compliance with our SEC and Canadian reporting requirements.

Wages and benefits expense. For the three and six months ended ~~August~~November 3130, 2011 ~~and 2010~~, wages and benefits expense amounted to $~~131~~393,~~963~~382 and $81525,~~117~~345, respectively., ~~The~~compared ~~increase~~to of$81,111 and $50162,~~846~~229 ~~(63%)~~in ~~results~~the ~~primarily~~corresponding ~~from~~2010 periods. The increases are a result of the addition of our CEO and Chairman of the Board in January 2011 and renegotiating certain officer’s contracts in September 2011, which included the recognition of a full calendar year of accrued vacation as of November 30, 2011 for those officers.

Other ~~general~~General and ~~administrative~~Administrative ~~expenses~~Expenses. Additional increases in general and administrative expenses during fiscal 2011 of $5469,~~775~~067 ~~during~~and $142,836 for the ~~fiscal~~three and six months ended November 30, 2011, ~~period~~respectively, related to increased expenses primarily attributable to the increase in day to day operations of the ~~Company~~company and insurance coverage.

Other Income and Expenses

Gain on sale of assets. During the ~~quarter~~six months ended ~~August~~November 3130, 2011, the Company sold fully depreciated and idle assets for $156,500 in cash proceeds. The Company recognized the full amount as a gain on sale of assets in its ~~current~~first quarter financial statements, due to the write-down and full depreciation of all assets to zero in prior periods.

Interest and financing fees. For the three and six months ended ~~August~~November 3130, 2011 ~~and 2010~~, interest and financing fees were $~~207~~203,~~160~~738 and $~~213~~410,~~531~~898, respectively~~. The~~, ~~decrease~~compared into ~~the~~$209,891 ~~2011~~and ~~period of~~ $6423,~~371~~423 ~~was~~in ~~due~~the ~~primarily~~corresponding to2010 ~~lower~~periods. The ~~finance~~interest ~~charges~~is onrelated ~~accounts~~to ~~payable~~the ~~paid~~Brigus ~~in cash~~notes.

Liquidity

Because we have not yet commenced our intended primary operations and are not yet generating ~~revenue~~significant revenues from any source, our liquidity is completely reliant on our ability to generate cash through capital-raising activities. During the ~~three~~six months ended ~~August~~November 3130, 2011, we issued 411,~~660~~626,~~000~~668 shares of our common stock for cash proceeds of $~~778~~1,498,500.

Net cash flows from operating, investing and financing activities for the ~~three~~six months ended ~~August~~November 3130, 2011 and 2010 were as follows:

As of August 31, 2011, we had a working capital deficit of $11,681,015 and cash of $94,351, while at May 31, 2011 we had a working capital deficit of $11,635,267 and cash of $913,182. The decrease in cash is primarily attributable to the fact that we have no revenues from operations and continue to incur expenses. We do not expect our working capital deficit to decrease or cash balance to increase in the near future.

	2011			2010
Net cash used in operating activities	$	(2,402,985	)	$	(586,778	)
Net cash provided by (used in) investing activities	$	140,365		$	(5,464	)
Net cash provided by financing activities	$	1,441,307		$	1,760,800

	2011			2010
Net cash used in operating activities	$	(1,725,150	)	$	(62,476	)
Net cash provided by investing activities	$	156,500		$	-
Net cash provided by financing activities	$	749,819		$	47,000

As of November 30, 2011, we had a working capital deficit of $11,368,783 and cash of $91,869 while at May 31, 2011 we had a working capital deficit of $11,635,267 and cash of $913,182. The working capital deficits are primarily attributable to the fact that we have no significant revenues from operations and continue to incur expenses. We do not expect our working capital deficit to decrease significantly or cash balance to increase significantly in the near future.

Net cash used in operating activities. Net cash used in operating activities of $12,~~725~~402,~~150~~985 and $62586,~~476~~778 for the ~~three~~six month periods ended ~~August~~November 3130, 2011 and 2010, respectively, are attributable to our net income adjusted for non-cash charges as presented in the consolidated statements of cash flows and changes in working capital as discussed above.

14Net cash provided by investing activities. Net cash provided from investing activities of $140,365 and ($5,464) for the six month periods ended November 30, 2011 and 2010, respectively, resulted primarily from the 2011 sale of fully depreciated and idle equipment.

Net cash ~~charges~~provided asby ~~presented~~financing inactivities. Net ~~the~~cash ~~consolidated~~provided ~~statements~~by financing activities of ~~cash~~$1,441,307 ~~flows~~and $1,760,800 for the six month periods ended November 30, 2011 and ~~changes~~2010, inrespectively, ~~working~~was ~~capital~~primarily asrelated ~~discussed~~to ~~above~~proceeds received from the sale of common stock, partially offset by repayments on convertible debentures.

Net cash provided by investing activities. Net cash provided from investing activities of $156,500 and $nil for the three month periods ended August 31, 2011 and 2010, respectively, was due to proceeds received from the 2011 sale of fully depreciated and idle equipment.

Net cash provided by financing activities. Net cash provided by financing activities of $749,819 and $47,000 for the three month periods ended August 31, 2011 and 2010, respectively, was primarily attributable to proceeds received from the sale of common stock, partially offset by repayments on convertible debentures.

Going Concern

The report of our independent registered public accounting firm on the financial statements as of and for the year ended May 31, 2011, includes an explanatory paragraph relating to the significant doubts about our ability to continue as a going concern. As of ~~August~~November 3130, 2011, we had an accumulated deficit of $4849.25 million and have a working capital deficit of approximately $11.74 million. We require significant additional funding to commence our plan of operation. Our ability to establish ourselves as a going concern is dependent upon our ability to obtain additional funding in order to finance our planned operations. If we are unable to raise funds to repay or to otherwise settle the Brigus note, we may need to curtail current test mining activities at the Cross Mine.

Plan of Operation

For the remainder of our 2012 fiscal year and into 2013, our primary goals are to regain compliance with the SEC and British Columbia Securities Commission (“BCSC”) so that we can apply for a revocation of a 2004 Cease Trade Order from the BCSC. We intend to continue to raise capital so that we may further explore extraction from our properties which began in August 2011, thereby bringing us out of the exploration stage. We cannot anticipate our exact cash requirements for the remainder of the fiscal year. We currently have ~~maturing~~delinquent debt obligations of approximately $10.5 principal and interest that was due December 1, 2011 to Brigus and we require a significant amount of capital to continue test mining at our Cross mine. We are in discussions with Brigus and others to negotiate the repayment of the Brigus note, however, we cannot guarantee that a satisfactory agreement will be reached between Calais and Brigus or any other parties. In addition, we have ongoing lease payments on our mining properties and general and administrative expenses coupled with compliance related expenses. We will continue to need to raise capital to fund ~~to fund~~ our operations and to continue to exist.

Off-Balance Sheet Arrangements

We do not have off-balance sheet arrangements.

Critical Accounting Policies and Estimates

For a discussion of accounting policies that we consider critical to our business operations and understanding of our results of operations, and that affect the more significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” contained in our annual report on Form 10-K for the year ended May 31, 2011 and incorporated by reference herein.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not required by Form 10-Q for Smaller Reporting Companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

During the fiscal period covered by this report, our management, with the participation of the Principal Executive Officer and Principal Financial Officer of the Company, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that, as of November 30, 2011, our disclosure controls and procedures are effective to ensure that information require to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the required time periods and are designed to ensure that information required to be disclosed is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Rule 13a-15 under the Exchange Act, requires us to carry out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of August 31, 2011. This evaluation was conducted under the supervision and with the participation of David K. Young (our functioning principal executive officer and principal financial officer). Based on this evaluation, Mr. Young concluded that the design and operation of our disclosure controls and procedures were not effective because of the identification of the material weaknesses in internal control over financial reporting described below that existed at May 31, 2011 and August 31, 2011. In light of the material weaknesses described above, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in accordance with generally accepted accounting principles (“GAAP”). Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

· Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;

· Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

· Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our 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. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. 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.

Under the supervision and with the participation of our management, including David K. Young (our functioning principal executive officer and principal financial officer), we conducted an assessment of the effectiveness of our internal control over financial reporting based on criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), as of May 31, 2011, the end of our most recently completed fiscal year.

As a result of our material weaknesses described below, management concluded that, as of May 31, 2011, our internal control over financial reporting was not effective based on the criteria in “Internal Control-Integrated Framework” issued by COSO.

Material Weakness in Internal Control over Financial Reporting

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment, management identified the following control deficiencies that represent material weaknesses at May 31, 2011:

· We rely on external consultants for the preparation of our financial statements and reports. As a result, our management may not be able to identify errors and irregularities in the financial statements and reports.

· We relied on one of our officers for oversight of the financial reporting process and, therefore, there was an inherent lack of segregation of duties with certain aspects of the financial reporting process, and a limited independent governing board.

· We relied on an external consultant for the administration functions, some of which did not have standard procedures in place for formal review by the one officer who was providing financial oversight for us.

The internal control weaknesses identified above with regard to the failure to consistently record transactions and inadequate segregation of duties with certain aspects of the financial reporting process will only be completely corrected if the Company expands and has the capacity to perform necessary accounting functions and adequately segregate the duties to mitigate the risk in financial reporting. This expansion will depend mostly on the ability of management to fully execute its business operating strategy as outlined in this report and generate enough income to warrant growth in personnel. With regard to the internal control deficiency identified above related to preventative measures to properly and accurately account for the recording of the non-cash aspects of certain debt and equity issuances, management has already taken steps to mitigate such risk going forward by utilizing external financial consulting services prior to the review by our principal independent accounting firm to ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported accurately and within the time periods specified in the Commission’s rule and forms.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended August 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended November 30, 2011, we hired a Chief Financial Officer who is now our Principal Financial Officer, while previously, the Principal Executive Officer was also acting Principal Financial Officer. We also hired qualified accounting staff to maintain our books and records, while previously, we relied on outside consultants to perform these responsibilities. The changes to our internal control over financial reporting during the quarter ended November 30, 2011 increased our oversight of our books and records and increased the segregation of duties to better control our assets.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

There have been no changes to the disclosure contained in our annual report on Form 10-K for the fiscal year ended May 31, 2011, except as follows:

Securities and Exchange Commission Proceedings

The United States Securities and Exchange Commission (“SEC”) issued an order suspending trading in the common stock of Calais Resources Inc. (the “Company”) for the period from February 24, 2011 through March 9, 2011 because it had been delinquent in the filing of periodic reports since 2004. Also on February 24, 2011, the SEC issued an order instituting public administrative proceedings against the Company pursuant to Section 12(j) of the Securities Exchange Act of 1934 (the “Exchange Act”) to suspend for a period not exceeding twelve months or revoke the registration of the Company’s common stock under Section 12 of the Exchange Act.

On July 25, 2011, the Administrative Law Judge issued an Initial Decision ordering revocation of the registration of the Company’s common stock under the Exchange Act.

On August 12, 2011, the Company filed a Petition for Review of the Initial Decision with the SEC. On August 17, 2011, the SEC granted the Company’s petition for review and the Company filed its brief in support of the petition by the September 16, 2011 due date. The SEC’s filed its brief in opposition isby ~~due~~ the October 17, 2011 due date and ~~any~~the Company filed its reply brief ~~from~~by the ~~Company~~October ~~would~~31, ~~need~~2011 todue bedate. Because ~~filed~~the byPetition ~~October~~for 31Review has been filed, ~~2011~~the Initial Decision shall not become final until the Commission rules on the Petition.

Because the Petition for Review has been filed, the Initial Decision shall not become final until the Commission rules on the Petition.

British Columbia Securities Commission Proceedings

The Company filed a Revocation Application under National Policy 12-202 with the British Columbia Securities Commission (“BCSC”), seeking to revoke the cease trade order that has been in place since February 2005. The BCSC has issued comment letters on the Application and the Company has responded to those comments. The latest comment letter is dated ~~September~~October 2128, 2011 and the Company has filed a response to that letter.

ITEM 1A. RISK FACTORS.

An investment in our common stock involves a number of significant risks. There have been no material changes to the risk factors contained in our Annual Report on Form 10-K for the year ended May 31, 2011. We caution the reader to carefully consider such risk factors, which are more thoroughly described in the section entitled “Risk Factors” under Item 1A of our Annual Report on Form 10-K for the year ended May 31, 2011 as well as any other Risk Factors described in subsequent filings with the Securities and Exchange Commission.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

				Warrants
Date of Sale	Name of Purchaser	Title of Securities	Shares of Stock	Number of Warrants	Exercise ~~Price~~Prices	Expiration Date	Consideration ($)
06/11	3 accredited investors	Common Stock	1,700,000	850,000	$0.30	06/12	340,000	(a)
09/11	6 accredited investors	Common Stock	3,966,668	1,983,335	$0.20-$0.25	09/12-09/13	420,000	(a)
07/11	2 accredited investors	Common Stock	1,050,000	525,000	$0.30	07/12	210,000	(a)
10/11	4 accredited investors	Common Stock	2,000,000	1,000,000	$0.20	10/12	200,000	(a)
08/11	4 accredited investors	Common Stock	1,910,000	955,000	$0.20	08/12	228,500	(a)
11/11	1 accredited investor	Common Stock	1,000,000	500,000	$0.20	11/12	100,000	(a)
10/11	1 consultant	Common Stock	250,000	125,000	$0.30	10/12	25,000	(b)
11/11	2 consultants	Common Stock	1,135,000	-	n/a	n/a	113,500	(b)

(a) Issued for cash consideration.

18(b) Issued as compensation for consulting services.

We relied upon the exemption from registration contained in Section 4(2) of the Securities Act, as these persons were deemed to be sophisticated with respect to the investment in the securities due to their financial condition and involvement in our business and had access to the kind of information which registration would disclose.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. (REMOVED AND RESERVED)

None.

ITEM 5. OTHER INFORMATION.

~~As of September 1, 2011, we entered into employment agreements with our executive officers: R~~None. ~~David Russell, David K. Young and Thomas S. Hendricks.~~

The employment agreement for Mr. Russell, our Chairman of the Board of Directors and Chief Executive Officer, provides for the following:

· a minimum annual base salary of $380,000 and an annual performance bonus of no less than 60% of his annual base salary;

· a restricted stock grant of 2,500,000 shares of our common stock if he successfully completes a debt restructuring between the Company and Brigus;

· a restricted stock grant of 1,500,000 shares of our common stock if he completes a recapitalization or financing for the Company in the minimum amount of $5,000,000 within the first 18 months of employment;

· a cash payment of $100,000 if either restricted stock event described above occurs;

· an indefinite term;

· automobile, aircraft, athletic and sport club allowances;

· in the event of Mr. Russell’s death, a payment to his heirs equal to one year of salary and a one year bonus at 100% of salary and the vesting of all stock options and warrants;

· in the event of Mr. Russell’s disability, a two-year salary payment and 100% bonus, the vesting of all stock options and health benefits for 36 months; and

· in the event of a change of control or termination without cause, the vesting of all stock grants, a payment equal to three times the sum of his base salary and a 100% bonus, and cash payment equal to three years of the cost of COBRA health coverage and his automobile/sports club dues.

The employment agreement for Mr. Young, our President and Chief Operating Officer, provides for the following:

· a minimum annual base salary of $380,000 and an annual performance bonus of no less than 60% of his annual base salary;

· a restricted stock grant of 2,500,000 shares of our common stock if he successfully completes a debt restructuring between the Company and Brigus;

· a cash payment of $100,000 if either restricted stock event described above occurs;

· an indefinite term;

· automobile, athletic and sport club allowances;

· in the event of Mr. Young’s death, a payment to his heirs equal to one year of salary and a one year bonus at 100% of salary and the vesting of all stock options and warrants;

· in the event of Mr. Young’s disability, a two-year salary payment and 100% bonus, the vesting of all stock options and health benefits for 36 months; and

The employment agreement for Mr. Hendricks, our Vice President and General Manager, provides for the following:

· a minimum annual base salary of $175,000;

· an indefinite term;

· an automobile allowance;

· in the event of Mr. Hendricks’ death, the vesting of all stock options; and

· in the event of a change of control or termination without cause, the vesting of all stock options, a payment equal to three times the sum of his base salary and a 50% bonus, and health coverage for 36 months.

ITEM 6. EXHIBITS.

Exhibit Number		Description
10.1		~~Employment~~Extension Agreement with R.Brigus ~~David~~Gold ~~Russell~~Corp. dated ~~September~~October 124, 2011 (1)
10.2		Employment Agreement with ~~David~~Brent KE. ~~Young~~Timmons dated ~~September~~October 126, 2011 (1)
10.3		Employment Agreement with Thomas S. Hendricks dated September 1, 2011
31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.
31		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.
32		Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act.
101*		Financial statements from the Quarterly Report on Form 10-Q of Calais Resources Inc. for the quarter ended November 30, 2011, formatted in XBRL: (i) the Consolidated Balance Sheet; (ii) the Consolidated Statement of Operations; (iii) the Consolidated Statement of Cash Flows; and (iv) the Notes to Unaudited Consolidated Financial Statements tagged as blocks of text.
(1) Incorporated by reference to the exhibits filed with the registrant’s current report on Form 8-K dated October 24, 2011, filed October 28, 2011.

* In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

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.

	CALAIS RESOURCES INC.
October 14, 2011	By:	/s/ David K. Young
January 19, 2012	By:	/s/ David K. Young
		David K. Young
		President, Chief Operating Officer and
		President, Chief Operating Officer
		Acting Chief Financial Officer
January 19, 2012	By:	/s/ Brent E. Timmons
		Brent E. Timmons
		Vice President of Finance and Chief Financial Officer

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