Microsoft word - first_lithium_mda _dec_31_2011-final_april 26_2012

Form 51-102F1
FIRST LITHIUM RESOURCES INC.
Management’s Discussion & Analysis
Financial Statements for the
Year Ended December 31, 2011

The following discussion and analysis of the financial position and results of operations for FIRST
LITHIUM RESOURCES INC. (the “Company” or the “Corporation” or “FLR”) should be read in
conjunction with the audited financial statements for the years ended December 31, 2011 and
2010 which are prepared in Canadian dollars and using accounting policies consistent with
International Financial Reporting Standards (“IFRS”) and in accordance with International
Accounting Standard 34 (“IAS 34”).

The following information is prepared as at April 26, 2012.
Background

The Company was incorporated on September 1, 2005 by Certificate of Incorporation issued
pursuant to the provisions of the Business Corporations Act (British Columbia) under the name
"Mountain Capital Inc." The Company changed its name to First Lithium Resources Inc. effective
May 14, 2009. The Company’s trading symbol, “MCI” remains unchanged.
On February 21, 2006 the common shares of the Company commenced trading on the TSX Venture Exchange (the “Exchange”) under the trading symbol “MCI.P” as a Capital Pool Corporation (“CPC”). The sponsoring agent was Wolverton Securities Ltd., and the Company’s transfer agent is Computershare Trust Company of Canada. In order to effect a qualifying transaction, the Company entered into an option agreement dated November 23, 2007, as amended on January 21, 2008, April 22, 2008, December 8, 2008 and May 21, 2009 (the “Kalum Property Option Agreement”) with Eagle Plains Resources Ltd. (“EPR”) with respect to the Kalum Property in British Columbia, Canada. The Company prepared a Filing Statement dated April 30, 2008 in respect to the qualifying transaction, which was accepted for filing by the Exchange. As a result, effective as of May 28, 2008, the Company’s shares were re-instated for trading on the Exchange as a Tier 2 Issuer under the trading symbol “MCI”. The Company is no longer considered to be a CPC. The head office of the Company is located at Suite 3102, 788 Richards Street, Vancouver, British Columbia, V6B 0C7. Company Contact: Craig Naughty, Company Phone Number: (604) 669-0401, Company Fax Number: (604) 669-0414. The registered office of the Company is located at Suite 1600, 609 Granville Street, Vancouver, British Columbia, V7Y 1C3. Description of Business
The Company is engaged in the acquisition, exploration and if warranted, the development of mineral property interests. The Company is a reporting issuer in the Provinces of Alberta and British Columbia and files all public documents on www.sedar.com . For further information about the Company, please refer to the Company's Prospectus dated January 30, 2006 and Filing Statement dated April 30, 2008, both of which have been filed on www.sedar.com . FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


Selected Annual Information
Selected annual information from the audited financial statements for the years ended December 31, 2011, 2010, and 2009 is shown in the following table: December
31, December
31, December
* Gain/(loss) per common share in the above table is based on the number of shares outstanding at year end, and not
on the weighted average number of shares outstanding for the periods as shown in the audited Statements of Operations and Deficit for the years ended December 31, 2011, 2010, and 2009. The dilutive effect of options was not reflected in loss per share as the effect would have been anti-dilutive.
The information for the years ended December 31, 2011 and 2010 has been re-stated using
IFRS. The information shown above for the year ended December 31, 2009 is stated using
GAAP.

RESULTS OF OPERATIONS
All financial figures presented herein are expressed in Canadian Dollars (CDN$) unless otherwise
specified.
Year Ended December 31, 2011
During the year ended December 31, 2011, the Company’s net loss was $1,275,012, an increase of $419,156 from $855,856 during the year ended December 31, 2010. The Company’s loss included expenditures as follows: • accounting and audit fees of $68,790 (2010 - $35,720) is higher due to increased audit costs related to additional business activity and particularly, new IFRS compliance requirements in the industry, and; • advertising and promotion of $11,672 (2010 - $42,263) is lower due to less promotion in • consulting fees of $236,939 (2010 - $205,750) are higher due to increased business • legal fees of $18,827 (2010 - $6,835) are higher due to increased business activities in MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 2 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


• management fees of $114,000 (2010- $102,000) are higher due to increased • rent of $34,897 (2010 - $27,227) is higher due to the Company becoming the lessee for the entire work space. The Company collects rent from two other Companies sharing the space and income derived from such subletting is not reflected in the above figure, giving the appearance of a large rent increase; • transfer agent and filing fees of $27,311 (2010 - $34,754) decreased due to fewer shares • stock based compensation of $nil (2010 - $378,536) is lower as no options were granted • impairment of mineral property of $749,194 (2010 - $nil) increased as the company terminated its interest in the Lewis Strike, Lewis Strike South, and Mollie River mineral property claims. The Company also incurred $155,789 in deferred exploration expenditures during the year ended December 31, 2011 (2010 - $745,742). Resource property costs consisted of: • property acquisitions of $53,461 in cash (2010 - $55,000) and $77,500 in shares (2010 -
Liquidity and Capital Resources

As of December 31, 2011 the Company had cash of $576,439 (2010 - $816,945); HST receivables
of $10,325 (2010 - $82,759); Prepaid expenses and deposits of $6,700 (2010 - $6,285); Equipment
of $3,672 (2010 - $4,610); and Exploration and evaluation assets of $1,404,082 (2010 -
$1,979,987).
As of December 31, 2011, the Company’s Accounts payable and accrued liabilities was $51,100
(2010 - $87,653); Due to related parties was $nil ($20,683); and Part XII.6 tax payable was $1,797
(2010 - $3,605).
The Company was required by the US Bureau of Land Management to make a cash payment of
$6,036 (2010 - $nil) towards the anticipated reclamation requirements with respect to the
Company’s Teels Marsh property located in Nevada (see Mineral Properties, page 8).
The Company’s working capital as at December 31, 2011 was $540,567 (2010 - $794,048).
Quarter ending December 31, 2011
During the three months ended December 31, 2011, the Company’s net loss was $885,528, an increase of $408,203 from $477,325 during the three months ended December 31, 2010. The Company’s loss included expenditures as follows: • accounting and audit fees of $31,500 (2010 - $17,500) is higher due to increased audit costs related to additional business activity and new IFRS compliance requirements in the industry, and; • advertising and promotion of $1,136 (2010 - $6,149) is lower due to less promotion in the • consulting fees of $56,904 (2010 - $52,453) are higher due to increased business MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 3 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


• legal fees of $18,827 (2010 - $6,835) are higher due to increased business activities in • rent recovery of $5,764 (2010 - $6,907 expense) is higher due to the Company becoming the lessee for the entire work space. The Company collects rent from two other Companies sharing the space and income derived from such subletting is reflected in the current quarter; • transfer agent and filing fees of $1,856 (2010 - $6,395) decreased due to fewer shares • impairment of mineral property of $749,194 (2010 - $nil) increased as the company terminated its interest in the Lewis Strike, Lewis Strike South, and Mollie River mineral property claims (see Mineral Properties, page 5). Summary of Quarterly Results

The following are the results for the eight most recent quarterly periods, starting with the nine
months ended September 30, 2011:
For the Quarterly
December 31,
September 30,
March 31,
Periods ended:
For the Quarterly
December 31,
September 30,
March 31,
Periods ended:

The information above for all quarters ending after the transition date of January 1, 2010 have
been re-stated and are now in accordance with IFRS

MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 4 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011



Mineral Properties
Vermilion 15 Property, Alberta
On August 29, 2008, the Company entered into a Mineral Property Acquisition Agreement with
Zimtu Capital Corp., Jody Dahrouge and Spectre Investments Inc. (collectively, the “Vendors”) to
purchase a 100% interest in the Vermilion 15 Potash Property located in Alberta approximately
30 kilometres west to southwest of Lloydminster, Saskatchewan.
On March 24, 2009, the Company signed an Amending Agreement with respect to the terms of
the purchase. In order to fulfill the terms of the Amending Agreement, the Company is required to
make the payments and issue shares as follows:Cash payment to the Vendors of $130,000 (paid)
within three business days of June 4, 2009 (the “Approval Date”).
Upon the Approval Date, issue to the Vendors an aggregate 1,683,334 Units (issued) of the
Company. Each Unit consists of one fully paid and non-assessable common share with a value
of $0.08 per share for a total value of $134,666 and one share purchase warrant with a fair value
of $0.0364 for a total value of $61,273. Each warrant is exercisable at $0.25 per share in the first
year and $0.35 per share in the second year expiring on June 3, 2011;
Upon the commencement of commercial production, the Company shall pay to the Vendors 2%
NSR, 50% of which (or 1%) can be purchased by the Company from the Vendors for $2,000,000.
On June 5, 2009, the Exchange approved a 7% finder’s fee comprising $16,600 cash and 207,500 shares valued at $0.08 per share for a total of $16,600 to an arm’s length third party (paid and issued). On September 27, 2010, the Company filed a work assessment report with the Alberta Government’s Coal & Mineral Development, Department of Energy with a detailed expenditure statement claiming $21,068.73 in work performed. On March 22, 2011, The Department accepted all expenditures claimed in the statement, and as a result, the Company’s Mineral Property interest is now 4,202 ha. Godslith Property, Manitoba On February 15, 2009 the Company entered into an option agreement (the “Agreement”) to acquire a 100% interest in the Godslith Property located near Thompson, Manitoba. The terms of the Agreement require that the Company make: • Cash payment of $10,000 upon execution of the Agreement (paid); Cash payment of $40,000 (paid) and issue 500,000 common shares (issued) with a total value of $62,500 on or before March 26, 2009 (Exchange approval) of the Agreement; Cash payment of $40,000 (paid) and issue 500,000 common shares (issued) with a total value of $62,500 (issued) on or before September 26, 2009; Issue an additional 250,000 common shares on or before March 26, 2010 (issued and valued at $31,250); Work expenditures of $300,000 to commence within 18 months of the government exploration permits being granted; Issue an additional 250,000 common shares on or before March 26, 2011 (issued and valued at $25,000); and MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 5 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


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Cash payment of $250,000 to the vendors upon receipt of a feasibility study or on or before March 26, 2013. The vendors will retain a 2% royalty, which can be reduced to 1% by the Company paying $1,000,000. A 7% finder’s fee comprising $8,619 cash (paid) and 68,950 shares valued at $0.125 per share (issued) for a total of $8,619 has been approved by the Exchange as payment to a third party on March 26, 2009. The Company is currently awaiting permits from the government of Manitoba for its proposed drill program, which could be expanded if warranted. The goal would be to update and possibly expand on the historical (non NI-43-101 compliant) resource estimates based on Inco’s 25 hole drill program on the claim in the late 1950’s and early 1960’s. The pegmatite is open at depth along its entire strike length. Negotiations between the Company, the neighbouring Manto Sipi Cree Nation (on whose traditional territory the claim lies) and the Government of Manitoba have been ongoing in effort to facilitate the issuance of the permits. To date, the Company’s CEO has been twice invited to the reserve, where presentations to the Manto Sipi both on radio and in person were made. This, along with three trips to Winnipeg, meetings at the PDAC in Toronto and the hosting of Manto Sipi elders in Vancouver have been aimed at relationship building and education. Some informal agreements in principle have been negotiated, but a formal agreement has not yet been reached, Failure to reach such an agreement would impair the value of the property for exploration purposes, and there is no guarantee that such an agreement will be formalized. Valleyview Properties, Alberta On February 26, 2009, the Company entered into a property acquisition agreement (the “Agreement”) to acquire a 100% interest in 41 Metallic and Industrial Minerals Permits (“MAIM”) located west to northwest of Edmonton, Alberta. The terms of the Agreement require that the Company make: Cash payment of $45,000 upon execution of the Agreement (paid); and Cash payment of $45,000 (paid) and issue 1,200,000 common shares (issued) for a total value of $150,000 and 1,200,000 warrants (issued) with a fair value of $28,920, exercisable at $0.25 for two years, expiring on April 6, 2011. The vendors will retain a 3% royalty which can be reduced to 1% by the Company paying $1,000,000 and a 5% gross overriding royalty on the gross production of diamonds. A 7% finder’s fee comprising $8,400 cash and 67,200 shares for a total value of $8,400, has been paid on the transaction to an arm’s length third party on April 7, 2009, the day the Exchange accepted the Agreement. A number of samples were procured through energy companies with oil and/or gas wells on the Valleyview properties, with all assays revealing highly anomalous mineralization, including lithium levels. One of these wells was subsequently revisited to acquire a larger sample which has been shipped internationally to a private firm in order to test their proprietary technology for its effectiveness in the extraction of lithium and other elements from the brine. On October 6, 2010, the Company entered into an Option Agreement with Lithium Explorations VIII Ltd (the “Optionee”) whereby the Optionee has the option to acquire a 100% right, title and interest to five MAIM permits owned by the Company on the following basis: MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 6 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


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Pay to the Company $40,000 upon execution of the Agreement (received); Pay to the Company $60,000 on or before January 1, 2012 (received); Pay to the Company $100,000 on or before January 1, 2013; Pay to the Company $300,000 on or before January 1, 2014; Pay all such property payments as may be required to maintain the mineral permits in good standing; and Provide to the Company the refundable amount of $50,000 by November 2, 2010 (received) to be applied towards work assessment expenses acceptable to the Government of Alberta with any unused portion to be applied against payments required to maintain the most highly prospective permits underlying the Property in good standing (amounts have been applied and such permits are in good standing). On December 2, 2010, the Company filed two work assessment reports with the Alberta Government’s Coal & Mineral Development, Department of Energy with detailed expenditure statements claiming $38,067 for work performed on the northern “Fox Creek” block, and $52,489 for work performed on the central “Valleyview” block. On March 22, 2011, the Department accepted all expenditures claimed on the Valleyview block, and as a result, the Company’s mineral property interest there, which is under option to Lithium Exploration VIII, is now 82,304.2 ha. On December 21, 2011, the Department accepted all expenditures claimed on the “Fox Creek” block. On July 29, 2011, the Company announced that it had staked an additional 2 MAIM permits approximately 30 kilometres east of the Company’s existing Fox Creek claims in the region of the Valleyview Lithium Property. The applications were accepted by letter from the Government of Alberta, Department of Energy on December 16, 2010, increasing the Company’s land holding in the area by 18,432 ha. On August 19, 2011, the Company received notice that three more permit applications in the vicinity were approved and three more MAIM permits were issued (27,600 ha) to the Company by the Government of Alberta. At this time, the Company, in addition to other companies with neighbouring permits are seeking new technology, or attempting to apply existing technology for the purpose of extracting the mineralization in an economically viable fashion. To date, none of these said companies have reached the stage of commercial production, and there is no guarantee that this will be achieved using the processes currently being experimented with. Lewis Strike Property (formerly Yukon Gold Property), Yukon Territories On June 16, 2009, the Company entered into a property purchase agreement (the “Agreement”) with a former director of the Company to acquire a 100% interest in quartz mineral claims located in the Dawson Mining Division of the Yukon. The terms of the Agreement and amendment to the Agreement dated June 29, 2010 require that the Company make: • Cash payment of $37,500 upon execution of the Agreement (paid); Cash payment of $37,500 on or July 3, 2009 (Exchange approval) (paid); Issue 800,000 common shares (issued) for a total value of $84,000, within five days of receipt by the Company of a copy of the grant certificates issued by the Dawson Mining Recorder for all of the quartz mining claims comprising the Property (the “Certificates”); and MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 7 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


•
Expend in exploration expenditures on the Property $25,000 on or before June 1, 2010 and an additional 225,000 on or before September 30, 2010. The terms of the Agreement were amended effective June 29, 2010 and November 10, 2010 such that the Company’s original requirement to expend $250,000 in exploration expenditures on or before September 1, 2010 was extended to on or before December 31, 2011. The Property is subject to a 3% net proceeds royalty (the “Royalty”). The Company will have the right to purchase 1% (being one-third) of the Royalty for a payment of $1,000,000. Work performed in 2010 on this property, in addition to the Lewis Strike South Property, consisted of soil sampling and assaying, and a LiDAR (laser radar) survey. This, together with 2009’s aerial magnetic and radiometric surveys and subsequent interpretation in 2010, has resulted in the property now being prepared for more advanced exploration. The Company has submitted all of its acquired data to a contractor with extensive experience in the immediate region, and awaits his qualified geological opinion regarding the best direction in moving forward. The Board of Directors’ qualified persons opined that the preliminary exploration did not reveal definitive enough targets to warrant a subsequent drill program on the property. Therefore, on January 10, 2012, the Lewis Strike property option agreement was terminated by mutual consent and, as a result, no further expenditures will be incurred on this property and all costs were written off. Lewis Strike South Claims, Yukon Territories On July 6, 2010, the TSX Venture Exchange approved a purchase agreement between the Company and Newcastle Minerals Ltd (“NCM”), whereby the Company has purchased 25 additional claims located in the Yukon Territory, 95 km south of Dawson City. In consideration, the Company issued 1,200,000 common shares (issued) valued at $0.075 per share and has agreed to incur $100,000 on property exploration on or before December 31, 2010. The terms of the Agreement were amended on November 10, 2010 such that the Company’s original requirement to expend $100,000 in exploration expenditures on or before December 31, 2010 was extended to on or before December 31, 2011. There is a 3% NSR to a third party, 1% of which may be bought back for $1,000,000 by the Company. The Board of Directors’ qualified persons opined that the preliminary exploration did not reveal strong enough targets to warrant a subsequent drill program on the property. Therefore, on January 11, 2012, the Lewis Strike property option agreement was terminated by mutual consent and, as a result, all costs were written off. Teels Lithium Project, Nevada, USA The Company entered into an option agreement on February 24, 2010 with Ashburton Ventures Inc., (“Ashburton”) and received Exchange approval on March 5, 2010 to acquire an 80% interest in the Teels lithium prospect located in Teels Marsh, Mineral County, Nevada, USA. The terms of the option agreement require that the Company make: MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 8 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


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Cash payment of $40,000 and issue 250,000 common shares in the capital of the Company within 3 days of Exchange acceptance (paid and issued); Cash payment of $50,000 (paid), issue 500,000 common shares (issued) and incur $100,000 in exploration expenditures on or before March 15, 2011 (waived), the first anniversary of the registration date of the claims; Cash payment of $85,000 ($20,000 paid - see below), issue 500,000 common shares (issued) and incur an additional $150,000 in exploration expenditures on or before March 15, 2012 (waived), the second anniversary of the registration date of the claims; and Incur an additional $200,000 in exploration expenditures on or before March 15, 2013, the third anniversary of the registration date. The parties amended the terms of the Agreement on March 15, 2011 whereby the requirement to expend $100,000 in exploration expenditures on or before March 15, 2011 was waived. The parties further amended the Agreement on February 21, 2012 whereby the requirement to expend $150,000 in exploration expenditures by the Company on or before March 15, 2012 was waived. Furthermore, the Company is only required to pay $20,000 (paid) by the second anniversary of the Registration Date (March 15, 2012) and pay the balance owing ($65,000) on or before September 1, 2012 provided that the Agreement has not been terminated by the Company prior to September 1, 2012. All other aspects of the Agreement remain unchanged.
On August 18th, 2011 First Lithium announced that it had applied for drill permits for the Teels
Marsh lithium project in Mineral County, Nevada. A notice of operations was submitted to the
Bureau of Land Management's Stillwater field office in Carson City, Nev., with a proposal to drill
up to 21 holes for the purpose of sampling groundwater for geochemical analyses. Permits were
applied for, issued on September 7, 2011 and are valid for a period of 2 years. A reclamation
guarantee of US$5901 (CDN $6,036) (see Liquidity & Capital Resources) was subsequently
remitted to the Bureau of Land Management by the Company to cover anticipated land
reclamation costs.
An agreement was reached between the company and Pediment Gold LLC for the latter to
conduct the proposed program at such time that the permits were received. Samples were to be
taken at 50-foot intervals to depths of up to 200 feet using a 6600 series Geoprobe.
It was determined upon attempted entry to the salar, that it was too wet to drill at that time due to
heavy rains that occurred in the time between the application for, and the eventual issuance of
the permits. The Company intends to revisit Teels in the summer of 2012, when the salar should
have sufficiently dried to carry out this exploration program.
Mollie River, Ontario

The Company entered into an Option Agreement with Newcastle Minerals Ltd. (NCM) on
November 18, 2010 to acquire up to a 75% interest in their Mollie River claims, approximately 4
kilometres from the eastern edge of Trelawney Mining and Exploration Inc.’s Chester Gold
Complex. The Exchange approved the transaction November 22, 2010.

To maintain the Option Agreement in good standing and to earn a 75% interest in the property,
the Company shall make cash payments, issue common shares to NCM and incur exploration
expenditures as follows:
MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 9 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


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Pay $15,000 and issue 500,000 common shares in the capital of the Company within five business days of the Company receiving Exchange approval of the transaction contemplated by the Agreement (paid and issued); Issue 500,000 common shares by the first anniversary of Exchange approval of the transaction; Issue 750,000 common shares by the second anniversary of Exchange approval of the transaction; and Incur exploration expenditures of an aggregate of $1,000,000 on the property as follows: • $250,000 by the first anniversary of Exchange approval; $250,000 by the second anniversary of Exchange approval; and $500,000 by the third anniversary of Exchange approval. After meeting the requirements of the first, second, and fourth first and second points above, the Company will have earned a 60% interest in the property. The property is subject to a 3% NSR to a third party, one-third of which can be bought back for $1,000,000. The Company drilled 10 holes at Mollie River for a total of 2000m in late 2010. One hole which indicated some promise was deepened by ~100m in early April, 2011. No significant intercepts were encountered. On August 3, 2011, the Company and NCM agreed that the Company abandon one of its three Mollie River Claims and that the abandoned claim was then no longer part of the option agreement dated November 18, 2010 between the Company and NCM. On November 17, 2011, the Mollie River property option agreement was terminated due to lack of valuable mineralization encountered in the drill core during the 2010 program, and, as a result, all costs were written off. Whitesides Property, Ontario The Company entered into an Option Agreement with Mhakari Gold Corp. (“Mhakari”) on December 13, 2010 whereby the Company can earn up to a 80% interest in Mhakari’s Whitesides Gold, Nickel, Copper property (the “Property”) by incurring $250,000 in exploration expenditures on the Property on or before December 13, 2011 (incurred), an additional $250,000 on or before December 13, 2012 and an additional $350,000 on or before December 13, 2013 (totaling $850,000 over three years). Per the Option Agreement, Mhakari has agreed to finance the Company in two non-brokered private placements for a total of $500,000. See Note 7(i) and 9(b) of the accompanying financial statements. A VTEM B geophysical survey was conducted in late 2010, covering the entirety of the property. Mhakari declined to participate in the second non-brokered private placement, resulting in the Company immediately earning an 80% interest in the property, and resulting in the commencement of a joint venture arrangement between Mhakari and the Company. The Company currently has a geologist reviewing historical work performed on the property and its surroundings, which will be used in conjunction with other data to select specific targets for further exploration, including a drill program in 2012 if deemed warranted. MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 10 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


Note to Investors
The Company holds enough cash on account in order to continue as a going concern through the
year 2012, However, in order to meet both its work expenditure requirements and cash payment
obligations for all of its current mineral property interests, and to keep in good standing 100% of
the claims that comprise the totality of each of these interests, (whether they be contractual or
government mandated), additional financing will be required through the period. There is no
guarantee that these funds can be procured in whole or in part. The inability of the Company to
do so might require its divesting of one or more, or portions thereof, of its mineral property
interests. If so, this may impact negatively on the Company’s share price.
Annual losses are expected to continue until the Company has an interest in a mineral property
that produces revenues. The Company’s ability to continue its operations and to realize assets at
their carrying values is dependent upon the continued support of its shareholders, obtaining
additional financing and generating revenues sufficient to cover its operating costs. The
Company’s accompanying financial statements do not give effect to any adjustments which would
be necessary should the Company be unable to continue as a going concern and therefore be
required to realize its assets and discharge its liabilities in other than the normal course of
business and at amounts different from those reflected in the accompanying financial statements.
Any forward-looking information in this MD&A is based on the conclusions of management. The
Company cautions that due to risks and uncertainties, actual events may differ materially from
current expectations. With respect to the Company’s operations, actual events may differ from
current expectations due to economic conditions, new opportunities, changing budget priorities of
the company and other factors.
While primarily concentrating on lithium exploration, the Company continues to actively seek new
exploration opportunities for other commodities as well, with the goal of increasing shareholder
value through strategic acquisition and development.

Related Party Transactions

The Company incurred the following fees and expenses in the normal course of operations. 2011 2010
Rent charged to entities controlled by key Key Management
Compensation
MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 11 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


(a) During the year ended December 31, 2011, the Company paid $96,000 (2010 - $96,000) to a former director of the Company and a company controlled by the former director, for consulting services. On January 1, 2012, the consulting services agreement was renewed for an additional year at a reduced monthly rate of $6,000 per month and may be renewed for a second year by mutual consent. (b) The Company entered into a management services agreement dated May 1, 2009 with the President and CEO of the Company at a monthly rate of $7,500. On January 1, 2012, the management services agreement was renewed for an additional year and may be renewed for a second year by mutual consent. (c) The Company entered into a management services agreement dated July 1, 2010 for a period of one year with the Secretary and CFO of the Company at a monthly rate of $2,000. On January 1, 2012, the management services agreement was renewed for an additional year and may be renewed for a second year by mutual consent. (d) Touchdown Resources Inc. (“TDW”) Effective July 2010, the Company shares office space with TDW, a company related by common management, officers and directors. Effective June 2011, the Company shares office space with TAC, a company related by common management, officers and directors. The amounts payable to directors of the Company represent non-interest-bearing loans the Company borrowed from the directors. The loans are uncollateralized and are repayable on demand.
Capital Management
The Company considers its capital to be comprised of shareholders’ equity.
The Company’s objective when managing capital is to maintain adequate levels of funding to
support the acquisition of and development of the Company’s mineral exploration properties,
while maintaining the necessary corporate and administrative functions to facilitate these
activities. This is done primarily through equity financing. Future financings are dependent on
market conditions and there can be no assurance the Company will be able to raise funds on
acceptable terms in the future.
There were no changes to the Company’s approach to capital management during the year. The
Company is not subject to externally imposed capital requirements. The Company’s risk
management procedures and policies are detailed in note 5 of the accompanying audited
financial statements.

Financial Instruments

Financial instruments are agreements between two parties that result in promises to pay or
receive cash or equity instruments. The Company classifies its financial instruments as follows:
cash and cash equivalents are classified as a financial asset at FVTPL; and accounts payable
and accrued liabilities, as other financial liabilities, which are measured at amortized cost. The
MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 12 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


carrying value of these instruments approximates their fair values due to their short term to
maturity.
The Company has exposure to the following risks from its use of financial instruments: Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s cash is held in a Canadian financial institution. The Company does not have any asset-backed commercial paper. The Company has minimal credit risk. Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquid funds to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The contractual financial liabilities of the Company as of December 31, 2011 equal $52,897 (December 31, 2010 - $111,941; January 1, 2010 - $73,242). All of the liabilities presented as accounts payable are due within 90 days of December 31, 2011. Market risk is the risk that changes in market prices, such as foreign exchange rates, and interest rates will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on capital. The Company is exposed to currency risk to the extent that expenditures incurred on certain mineral properties are denominated in US dollars. The Company does not manage currency risk through hedging or other currency management tools. As at December 31, 2011 and 2010, the Company’s net exposure to foreign currency risk is $nil. Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. Interest earned on cash is at nominal interest rates and therefore the Company does not consider interest rate risk to be significant. The Company has no interest-bearing financial liabilities. Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices, other than those arising from interest rate risk. The Company is not exposed to significant other price risk. MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 13 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


Forward-Looking Statements

This MD&A together with the Company's condensed interim financial statements and notes
thereto for the year ended December 31, 2011 and 2010 may contain certain statements that
may be deemed “forward-looking statements”. All statements in this MD&A, other than
statements of historical fact, that address exploration drilling, exploitation activities and events or
developments that the Company expects to occur, are forward looking statements and which are
presented as such. Forward looking statements in this document are statements that are not
historical facts and are generally, but not always, identified by the words “expects”, “plans”,
“anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or
that events or conditions “will”, “would”, “may”, “could” or “should” occur. (See ‘Outlook’ in this
MD&A)

Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.

Critical Accounting Estimates
The preparation of financial statements in conformity with IFRS requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results may differ from those estimates. Estimates are reviewed on an ongoing
basis based on historical experience and other factors that are considered to be relevant under
the circumstances. Revisions to estimates on the resulting effects of the carrying amounts of the
Company’s assets and liabilities are accounted for prospectively.
All of the Company’s significant accounting policies and estimates are included in Notes 3 and 4
of its audited financial statements for the year ended December 31, 2011.

Analysis of expenses

For a breakdown of general and administrative expenditures, please refer to the Company’s
audited Statement of Comprehensive Loss for the year ended December 31, 2011 and 2010.

Trends
Due to the current worldwide adverse market conditions, commodity prices have declined
significantly. Should market conditions not improve or should market conditions continue to
deteriorate, then commodity prices shall most likely decline further or remain stagnant. As a result,
companies such as First Lithium Resources Inc. shall experience difficulties in raising funds.

Risks related to our Business

The Company, and the securities of the Company, should be considered a highly speculative
investment. The following risk factors should be given special consideration when evaluating an
investment in any of the Company's securities:
There are a number of outstanding securities and agreements pursuant to which common shares
of the Company may be issued in the future. This will result in further dilution to the Company's
shareholders.
MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 14 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


The Company has a very limited history of operations, is in the early stage of development and
has received no revenues other than insignificant interest revenues. As such, the Company is
subject to many risks common to such enterprises. There can be no assurance that the
Company will be able to obtain adequate financing in the future or, if available, that the terms of
such financing will be favourable. The Company has no intentions of paying any dividends in the
future.
Although the Company has taken steps to verify the title to mineral properties in which it has
acquired an interest, no assurance whatsoever can be given that the Company’s interests may
not be challenged by third parties. If challenged, and if the challenge is sustained, it will have an
adverse effect on the business of the Company. Title to mineral properties may be subject to
unregistered prior agreements or transfers, and may also be affected by undetected defects or
the rights of indigenous peoples.
Environmental legislation is becoming increasingly stringent and costs and expenses of
regulatory compliance are increasing. The impact of new and future environmental legislation on
the Company’s operations may cause additional expenses and restrictions. If the restrictions
adversely affect the scope of exploration and development on the mineral properties, the potential
for production on the properties may be diminished or negated.
The exploration of mineral properties involves significant risks which even experience, knowledge
and careful evaluation may not be able to avoid. The price of metals has fluctuated widely,
particularly in recent years as it is affected by numerous factors which are beyond the Company’s
control including international economic and political trends, expectations of inflation or deflation,
currency exchange fluctuations, interest rate fluctuations, global or regional consumptive
patterns, speculative activities and increased production due to new extraction methods. The
effect of these factors on the price of metals, and therefore the economic viability of the
Company’s interests in the mineral properties cannot be accurately predicted. Furthermore,
changing conditions in the financial markets, and Canadian Income Tax legislation may have a
direct impact on the Company’s ability to raise funds for exploration expenditures. A drop in the
availability of equity financings will likely impede spending. As a result of all these significant
risks, it is quite possible that the Company may lose its investments in the Company’s mineral
property interests.

Disclosure over Internal Controls & Internal Controls over Financial Reporting

There have been no significant changes to the Company’s internal control environment during the
year ended December 31, 2011 that would have materially affected the Company’s internal
controls over financial reporting.
The Company’s certifying Officers concluded that the Company’s internal disclosure controls and
procedures are effective and sufficient to execute its business plan.

Changes in Accounting Policy

Adoption of International Financial Reporting Standards (IFRS)
The Company prepared its December 31, 2011 Annual Financial Statements using accounting
policies consistent with International Financial Reporting Standards (“IFRS”) and in accordance
with International Accounting Standard 34 (“IAS 34”). Previously, the Company prepared its
Interim and Annual Financial Statements in accordance with Canadian generally accepted
accounting principles (“GAAP”).
MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 15 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


See Note 4 of the audited financial statements for the year ended December 31, 2011 for a
detailed listing of the Company’s new accounting policies in accordance with IAS 34. In addition,
see Note 19 of the audited financial statements for reconciliations between the Company’s
previous GAAP results and IFRS results. The adoption of IFRS has had no significant impact on
the Company’s operations or financial results.

Future Accounting Standards
The following amendments are not expected to have any impact on the financial results of the
Company:
• Amendments to IFRS 7, Financial Instruments: Disclosures
• Amendments to IAS 1, Presentation of Financial Statements • Amendments to IAS 24, Related Party Disclosures • Amendments to IAS 34, Interim Financial Reporting • IFRS 10, Consolidated Financial Statements • IFRS 12, Disclosure of Interests in Other Entities • Amendments to IAS 27, Separate Financial Statements • Amendments to IAS 28, Investments in Associates and Joint Ventures Directors and Officers
As at December 31, 2011, the Company had the following directors and officers: Craig Naughty – Director, President and CEO Carmen Angilletta – Director, Secretary and CFO Andrew Cosby* – Director Murray Lytle* – Director J. Wayne Murton* - Director * Member of the Company’s Audit Committee At the Company’s Annual General Meeting of Shareholders held on June 15, 2011, all the Company’s directors were re-elected for the ensuing year. On March 20, 2012, the Company’s Board of Directors appointed Mr. L. David Michaud to the Board and Audit Committee filling the vacancy created by the resignation of Mr. Murray Lytle as a Director and Member of the Company’s Audit Committee. The Company is dependent on a small number of key directors and officers. The loss of any one of those persons could have an adverse affect on the Company. The Company has purchased Directors and Officers Liability Insurance effective March 23, 2012. The Company does not maintain “key-man” insurance with respect to any of its management. MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 16 of 17 FIRST LITHIUM RESOURCES INC.
Form 51-102F1 – Management’s Discussion & Analysis
For the Year ended December 31, 2011


Capital Stock
Capitalization: Unlimited number of common shares without nominal or par value
Exercise Price
No. of Common
No. of Preferred
Outstanding Share Data
per common
Expiry Dates
share ($)
Issued and Outstanding
*59,435,502 Nil
as at April 26, 2012
June 16, 2013 –
Stock Options
6,987,500
$0.10 - $0.17
March 19, 2017
December 30,
Warrants 2,085,185
2012 – January 3,
December 30,
Agent’s Warrants
$0.20 - $0.35
Fully Diluted as at April
68,554,853 Nil
* As of the date of this MD&A, all shares have been released from escrow.

Outlook
Management is looking forward to the exploration and, if warranted, to the development of the
Company’s mineral property interests. Although the Company believes the expectations
expressed in the foregoing statement is based on reasonable assumptions, such a statement is
not a guarantee of future performance and actual results may differ materially from those in this
forward-looking statement.
Subsequent to the Year Ended December 31, 2011:
a) On March 15, 2012, the Company issued 500,000 common shares in the capital of the
Company valued at $0.045 per share in accordance with the Teels Lithium Agreement. b) On March 20, 2012, the Company issued 1,250,000 incentive share purchase options pursuant to the Company’s stock option plan. Each option is exercisable at $0.10 per common share to March 19, 2017. MD&A Form 51-102F1 December 31, 2011 and up to April 26, 2012 Page 17 of 17

Source: http://firstlithiumresources.com/pdf/financials/MDAFirstLithiumDec312011FINALApril262012.pdf