---

> United States
>  SECURITIES AND EXCHANGE COMMISSION
>  Washington, D.C. 20549
>  Form 20-F

(Mark One)REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF
    THE SECURITIES EXCHANGE ACT OF 1934ORX
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year
    ended_____________________________________________ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934ORSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company report
    __________________________________For the transition period from ________________ to
    ______________________Commission file number
    0-31172ALBERTA STAR DEVELOPMENT CORP.(Exact name of registrant as specified in this charter)Province of Alberta, Canada(Jurisdiction of incorporation or organization)506 - 675 West Hastings Street, Vancouver, British
    Columbia V6B 1N2 Canada(Address of principal executive offices)




i

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Securities registered or to be registered pursuant to section 12(b) of the
    Act:Title of each Class
    
    Name of each exchange on which registeredNone
    
    Not ApplicableSecurities registered or to be registered pursuant to
    Section 12(g) of the Act:Common Shares Without Par Value(Title of Class)Securities registered or to be registered pursuant to
    Section 15(D) of the Act:None(Title of Class)Indicate the number of outstanding shares of each of the
    issuer's classes of capital or common stock as of the closeOf the period covered by the annual report.
    96,901,357Indicate by check mark if the registrant is a well-known
    seasoned issuer, as defined in Rule 405 of the Securities Act.Yes
    
    
    No
    XIf this report is an annual or transitional report, indicate
    by check mark if the registrant is not required to file reports pursuant to
    Section 13 or 15(d) of the Securities Exchange Act of 1934.Yes
    
    
    No
    XIndicate by check mark 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
    
    NoIndicate by check mark whether the registrant is a large
    accelerated filer, an accelerated filer, or a non-accelerated filer. See
    definition of "accelerated filer and large accelerated filer" on Rule 12b-2
    of the Exchange Act. (Check One):Large accelerated filer
    
    
    Accelerated filer
    
    
    Non-accelerated filer
    XIndicate by check mark which financial statement item the
    registrant has elected to follow.Item 17
    X
    
    Item 18If this is an annual report, indicate by check mark whether
    the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
    Act).Yes
    
    
    No
    X


ii

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Table of Contents

PART I

ITEM 1
    - Identity of Directors, Senior Management and Advisers
    1ITEM 2
    - Offer Statistics and Expected Timetable
    1ITEM 3
    - Key Information
    1ITEM 4 - Information on the
    Company
    8ITEM
    4A - Unresolved Staff Comments
    74ITEM 5
    - Operating and Financial Review and Prospects
    75ITEM 6
    - Directors, Senior Management and Employees
    85ITEM 7
    - Major Shareholders and Related Party Transactions
    93ITEM 8 - Financial Information
    96ITEM 9 - The Offer and Listing
    98ITEM
    10 - Additional Information
    100ITEM
    11 - Quantitative and Qualitative Disclosures About Market Risk
    104ITEM 12 - Descriptions of Securities Other than Equity Securities
    105


PART II

ITEM 13
    - Defaults, Dividend Arrearages and Delinquencies
    105ITEM 14 - Material Modifications to the Rights of Security Holders and Use
    of Proceeds
    105ITEM 15 - Controls and Procedures
    106ITEM 16A - Audit Committee Financial Expert
    107ITEM 16B - Code of Ethics
    107ITEM 16C - Principal Accountant Fees and Services
    107ITEM 16D - Exemptions from the Listing Standards for
    Audit Committees
    108ITEM 16E - Purchases of Equity Securities by the Issuers
    and Affiliated Purchasers
    108


PART III

ITEM
    17 - Financial Statements
    108ITEM 18 - Financial
    Statements
    152ITEM 19 - Exhibits
    152SIGNATURE
    154


iii

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FORWARD-LOOKING STATEMENTS

We caution you that certain important factors (including
without limitation those set forth in this Form 20-F) may affect our actual
results and could cause such results to differ materially from any
forward-looking statements that may be deemed to have been made in this Form
20-F annual report, or that are otherwise made by or on our behalf. For this
purpose, any statements contained in this annual report that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the generality of the foregoing, words such as "may," "except,"
"believe," "anticipate," "intend," "could," estimate," or "continue," or the
negative or other variations of comparable terminology, are intended to identify
forward-looking statements.



PART I

ITEM 1 - Identity of Directors, Senior
Management and Advisers



All items in this section are not required, as this 20-F
filing is made as an annual report.



ITEM 2 - Offer Statistics and Expected
Timetable



All items in this section are not required, as this 20-F
filing is made as an annual report.



ITEM 3 - Key Information



A.  Selected Financial Data



The following tables set forth the data of our fiscal years
ended November 30, 2006, 2005, 2004, 2003, and 2002. We derived all figures from
our financial statements as prepared by our management, approved by our audit
committee and audited by our independent auditor. This information should be
read in conjunction with our financial statements included in this annual
report.



Our financial statements included in this annual report have
been prepared in accordance with accounting principles generally accepted ("GAAP")
in Canada. All amounts are expressed in Canadian dollars. The first table
presents this financial data in accordance with United States ("US") GAAP; the
second table presents the data in accordance with Canadian GAAP.



All amounts within this annual report are in Canadian funds (CDN),
unless otherwise indicated.

1

---

> US GAAP
>    Fiscal Year Ended November 302006
>    2005
>    2004
>    2003
>    2002
>    (Restated)Net operating revenue
>    Nil
>    Nil
>    Nil
>    Nil
>    NilLoss from operations
>    ($13,060,169)
>    ($2,832,810)
>    ($1,889,340)
>    ($2,043,936)
>    ($694,904)Loss from continuing operations
>    ($13,060,169)
>    ($2,832,810)
>    ($1,889,340)
>    ($2,043,936)
>    ($694,904)Net income (loss)
>    ($13,060,169)
>    ($2,832,810)
>    ($1,889,340)
>    ($2,043,936)
>    ($694,904)Loss from operations per share
>    ($0.16)
>    ($0.06)
>    ($0.07)
>    ($0.13)
>    ($ 0.12)Loss from continuing operations per share
>    ($0.16)
>    ($0.06)
>    ($0.07)
>    ($0.13)
>    ($ 0.12)Total assets
>    $30,798,020
>    $11,978,824
>    $2,155,878
>    $442,927
>    $184,409Net assets
>    $30,332,098
>    $11,899,236
>    $2,071,876
>    $157,242
>    $19,034Capital stock
>    $51,039,462
>    $20,976,391
>    $8,316,221
>    $4,512,247
>    $2,330,103Number of shares
>    96,251,717
>    70,914,983
>    37,527,290
>    20,735,499
>    9,826,169Dividends per common share
>    Nil
>    Nil
>    Nil
>    Nil
>    NilDiluted net income (loss) per share
>    ($0.16)
>    ($0.06)
>    ($0.07)
>    ($0.13)
>    ($ 0.12)
>  
>  
>  Canadian GAAP
>     Fiscal Year Ended November 302006
>     2005
>     2004
>     2003
>     2002
>     (Restated)Net operating revenue
>     Nil
>     Nil
>     Nil
>     Nil
>     NilLoss from operations
>     ($11,630,209)
>     ($2,832,810)
>     ($957,202)
>     ($1,941,606)
>     ($608,910)Loss from continuing operations
>     ($11,630,209)
>     ($2,832,810)
>     ($957,202)
>     ($1,941,606)
>     ($608,910)Net income (loss)
>     ($11,630,209)
>     ($2,832,810)
>     ($957,202)
>     ($1,941,606)
>     ($608,910)Loss from operations per share
>     ($0.14)
>     ($0.06)
>     ($0.03)
>     ($0.12)
>     ($0.10)Loss from continuing operations per share
>     ($0.14)
>     ($0.06)
>     ($0.03)
>     ($0.12)
>     ($0.10)Total assets
>     $30,798,020
>     $11,978,824
>     $2,155,878
>     $442,927
>     $184,409Net assets
>     $30,332,098
>     $11,899,236
>     $2,071,876
>     $224,842
>     $73,034Capital stock
>     $49,775,818
>     $19,712,747
>     $7,052,577
>     $4,248,341
>     $2,154,927Number of shares
>     96,251,717
>     70,914,983
>     37,527,290
>     20,735,499
>     9,826,169Dividends per share
>     Nil
>     Nil
>     Nil
>     Nil
>     NilDiluted net income (loss) per share
>     ($0.14)
>     ($0.06)
>     ($0.03)
>     ($0.12)
>     ($0.10)

Since June 1, 1970, the Government of Canada has permitted a
floating exchange rate to determine the value of the Canadian dollar as compared
to the US dollar. On February 12, 2007, the exchange rate in effect for Canadian
dollars exchanged for US dollars, expressed in terms of Canadian dollars was
$1.1746. This exchange rate is based on the noon buying rates of the Bank of
Canada, as obtained from the website www.bankofcanada.ca.



For the past five fiscal years ended November 30, 2006 and
for the six month period between August 31, 2006 and January 31, 2007, the
following exchange rates were in effect for Canadian dollars exchanged for US
dollars, calculated in the same manner as above:

> Period
>     
>     AverageYear ended Nov 30, 2002
>     $
>     1.5713Year ended Nov 30, 2003
>     $
>     1.4216Year ended Nov 30, 2004
>     $
>     1.3093Year ended Nov 30, 2005
>     $
>     1.2163Year ended Nov 30, 2006
>     $
>     1.1350
>  
>  2

---



Period
   
   Low
   
   HighMonth ended August 31, 2006
   $
   1.1157
   $
   1.1221Month ended September 30, 2006
   $
   1.1131
   $
   1.1191Month ended October 31, 2006
   $
   1.1260
   $
   1.1317Month ended Nov. 30, 2006
   $
   1.1337
   $
   1.1386Month ended Dec. 31, 2006
   $
   1.1494
   $
   1.1548Month ended Jan. 31, 2007
   $
   1.1732
   $
   1.1789


B.  Capitalization and Indebtedness



Not required, as this 20-F filing is made as an annual
report.



C.  Reasons for the Offer and Use of Proceeds



Not required, as this 20-F filing is made as an annual
report.

D.  Risk Factors



Any investment in our common shares involves a high degree of
risk. You should consider carefully the following information before you decide
to buy our common shares.



If any of the events discussed in the following risk factors
actually occurs, our business, financial condition or results of operations
would likely suffer. In this case, the market price of our common shares could
decline, and you could lose all or part of your investment in our shares. In
particular, you should consider carefully the following risk factors:



We have a history of losses.



We have incurred losses in our business operations since
inception, and we expect that we will continue to lose money for the foreseeable
future. Since our incorporation on September 6, 1996 to November 30, 2006, we
incurred losses determined under United States GAAP totalling $22,137,324. Very
few junior mining resource companies ever become profitable. Failure to achieve
and maintain profitability may adversely affect the market price of our common
stock.



We generally have limited financial resources and no source of
cash flow.



With the exception of funds recently raised through private
placements and the exercise of options and warrants, we generally have limited
financial resources, no source of operating cash flow and no assurance that
additional funding will be available to us for further exploration of our
projects or to fulfil our obligations under any applicable agreements. Failure
to obtain such additional financing could result in delay or indefinite
postponement of further exploration of our projects with the possible loss of
such properties. We have secured funds that will enable us to meet our current
obligations. Raising additional capital resources in the future can not be
depended upon.

3

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Very few mineral properties are ultimately developed into
producing mines.



The business of exploration for minerals and mining involves
a high degree of risk. Few properties that are explored are ultimately developed
into producing mines. At present, our mineral properties have no known
significant body of commercial ore. Most exploration projects do not result in
the discovery of commercially mineable deposits of ore. The occurrence of
unsuccessful exploration efforts may eventually lead to us needing to cease
operations.



Substantial expenditures are required for us to establish ore
reserves through drilling, to develop metallurgical processes, to extract the
metal from the ore and, in the case of new properties, to develop the mining and
processing facilities and infrastructure at any site chosen for mining.



Although substantial benefits may be derived from the
discovery of a major mineral deposit, no assurance can be given that we will
discover minerals in sufficient quantities to justify commercial operations or
that we can obtain the funds required for development on a timely basis.



The economics of developing precious and base metal mineral
properties is affected by many factors including the cost of operations,
variations in the grade of ore mined, fluctuations in metal markets, costs of
processing equipment and other factors such as government regulations, including
regulations relating to royalties, allowable production, importing and exporting
of minerals and environmental protection. We have no producing mines at this
time.



If we do not obtain additional financing, our business will
fail.



Our current operating funds are less than necessary to
complete exploration of our mineral claims, and therefore we will need to obtain
additional financing in order to complete our business plan. As at November 30,
2006, we had $30,149,153 in cash on hand. Subsequent to our fiscal year end, we
raised further capital through the exercise of warrants and options resulting in
an increase in our cash on hand to $30,438,340 as of the date of filing of this
annual report.



Our business plan calls for significant expenses in
connection with the exploration of our mineral claims. We will require
additional financing in order to complete these activities. In addition, we will
require additional financing to sustain our business operations if we are not
successful in earning revenues once exploration is complete. We do not currently
have any arrangements for financing and we can provide no assurance to investors
that we will be able to find such financing if required.



We believe the only realistic source of future funds
presently available to us is through the sale of equity capital. Any sale of
equity capital will result in dilution to existing shareholders. The only other
alternative for the financing of further exploration would be the offering by us
of an interest in our properties to be earned by another party or parties
carrying out further exploration thereof.

4

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Dilution through contractor, director and consultant options
could adversely affect our stockholders.



Because our success is highly dependant on our contractors,
we grant some or all of our key contractors, officers, directors and consultants
options to purchase common shares, as non-cash incentives. If significant
numbers of these options are granted and exercised, the interests of other
stockholders may be diluted.



There are currently options outstanding to purchase an
additional 5,917,500 common shares, which upon exercise would result in a total
of 102,818,857 common shares being issued and outstanding.



Because management has only limited experience in resource
exploration, the business has a higher risk of failure.



Our management, while experienced in business operations, has
only limited experience in resource exploration. While we try to hire and
maintain management with the proper expertise, as we have management with
diverse business backgrounds, none of our directors or officers have any
significant technical training or experience in resource exploration or mining.
Management may not fully be aware of the specific requirements related to
working in mineral exploration, whether technical or operational. Therefore, our
managerial decisions and choices may not always reflect standard engineering or
mineral exploration practices commonly used. We rely on the opinions of
consulting geologists and mining experts that we retain from time to time for
specific exploration projects or property reviews.



We cannot be certain that the measures we take will ensure
that we implement and maintain adequate financial resources or profitability.
Management's lack of experience may cause failure to implement appropriate
financial decisions, or cause difficulties in implementing proper decisions,
ultimately harming our operating results.

As a foreign private issuer, our shareholders may have less
complete and timely data.



The submission of proxy and annual meeting of shareholder
information (prepared to Canadian standards) in Form 6-K may result in
shareholders having less complete and timely information in connection with
shareholder actions. The exemption from Section 16 rules regarding reports of
beneficial ownership and purchases and sales of common shares by insiders and
restrictions on insider trading in our securities may result in shareholders
having less data and there being fewer restrictions on insiders' activities in
our securities.



Mineral exploration involves a high degree of risk against which
we are not currently insured.



Unusual or unexpected rock formations, formation pressures,
fires, power outages, labour disruptions, flooding, cave-ins, landslides and the
inability to obtain suitable or adequate machinery, equipment or labour are
risks involved in the operation of mines and the conduct of exploration
programs. We have relied on and will continue to rely upon consultants and
others for exploration expertise.

5

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It is not always possible to fully insure against such risks
and we may decide not to take out insurance against such risks as a result of
high premiums or other reasons. Should such liabilities arise, they could reduce
or eliminate any future profitability and result in increasing costs and a
decline in the value of our common shares. We do not currently maintain
insurance against environmental risks relating to our mineral property
interests, though we have obtained third party liability insurance, to counter
the effects of these risks.



There is no assurance of the title to or boundaries of our
resource properties.



Our mineral property interests may be subject to prior
unregistered agreements of transfers or native land claims and title may be
affected by undetected defects. We have not conducted surveys on the property
and there is a risk that the boundaries could be challenged.



We may require permits and licenses that we may not be able to
obtain.



Our operations may require licenses and permits from various
governmental authorities. There can be no assurance that we will be able to
obtain all of the necessary licenses and permits that may be required to conduct
exploration, development and mining operations at our projects on certain
properties in the Northwest Territories.



Metal prices fluctuate widely.



Factors beyond our control may affect the marketability of
any resource we discover. Metal prices have fluctuated widely, particularly in
recent years. The effect of these factors cannot accurately be predicted.



The resource industry is very competitive.



The resource industry is intensely competitive in all its
phases. We compete with many companies possessing greater financial resources
and technical facilities than us for the acquisition of mineral concessions,
claims, leases and other mineral interests as well as for the recruitment and
retention of qualified exploration personnel and independent contractors.



Our operations may be adversely affected by government and
environmental regulations.



Our operations may be subject to environmental regulations
promulgated by government agencies from time to time. Environmental legislation
provides for restrictions and prohibitions on spills, release or emissions of
various substances produced in association with certain mining industry
operations, such as seepage from tailings disposal areas, which would result in
environmental pollution. A breach of such legislation may result in the
imposition of fines and penalties. In addition, certain types of operations
require the submission and approval of environmental impact assessments.

6

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Environmental legislation is evolving in a manner which means
that standards, enforcements, fines and penalties for non-compliance are more
stringent. Environmental assessments of proposed projects carry a heightened
degree of responsibility for us and our directors, officers and consultants. The
cost of compliance with changes in governmental regulations has a potential to
reduce the profitability of our operations. We do not maintain environmental
liability insurance.



The trading market for our shares is not always liquid.



Although our shares trade on the TSX Venture Exchange ("TSX-V")
and the NASD Over the Counter Bulletin Board ("OTCBB"), the volume of shares
traded at any one time can be limited, and, as a result, there may not be a
liquid trading market for our shares.



Our securities may be subject to penny stock regulation in the
US.



Because the current market price of our common stock is below
US $5.00 per share, we are subject to "penny stock" regulation under US
securities laws. "Penny stock" rules impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together
with a spouse).



For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the transaction,
of a disclosure schedule prescribed by the Securities and Exchange Commission
("SEC") relating to the penny stock market. The broker-dealer also must disclose
the commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, monthly
statements must be sent disclosing recent price information on the limited
market in penny stocks. Consequently, the "penny stock" rules restrict the
ability of broker-dealers to sell our shares of common stock.



Certain directors may be in a position of conflicts of interest.



Certain members of our board also serve as directors of other
companies involved in natural resource exploration and development.
Consequently, there exists the possibility that those directors may be in a
position of conflict. Any decision made by those directors will be made in
accordance with their duties and obligations to deal fairly and in good faith of
our company and such other companies. In addition, such directors will declare,
and refrain from voting on, any matter in which such directors may have a
conflict of interest.



Enforcement of legal process may be difficult.



All members of our board of directors and management reside
in Canada. As well, our address for service is a Canadian address. Accordingly,
service of process upon us, or upon individuals related to us, may be difficult
or impossible to obtain within the US.

7

---



All of our assets are located outside of the US. Any judgment
obtained in the US against us may not be collectible within the US.



As we are incorporated pursuant to the laws of the Province
of Alberta, Canada, duties of our directors and officers, and the ability of
shareholders to initiate a lawsuit on our behalf, are governed by the Alberta Business Corporations Act.

ITEM 4 -
Information on the Company



A.  History and Development of the Company



We were incorporated under the name "Alberta Star Mining
Corp." pursuant to the Business Corporations Actin the Province of
Alberta, Canada by registration of our articles of incorporation and the
issuance by the Registrar of Corporations of a Certificate of Incorporation on
September 6, 1996. On September 20, 2001, we consolidated our share capital such
that every five common shares in our capital stock pre-consolidation were
exchanged for one post-consolidation common share. Concurrently, we changed our
name to "Alberta Star Development Corp."



Our head office is located at 506 - 675 West Hastings Street,
Vancouver, British Columbia, Canada, V6B 1N2. Our telephone number is (604) 488
0860.



We have not been involved in any bankruptcy, receivership or
similar proceedings, nor have we been a party to any material reclassification,
merger, consolidation or purchase or sale of a significant amount of assets.



We are engaged in the business of the acquisition,
exploration and development of resource properties. At present, our properties
are in the exploration stage and further exploration will be required before
final evaluations as to the economic and legal feasibility can be determined.



Our properties have no known significant body of commercial
ore, nor are any such properties at the commercial development or production
stage. No assurance can be given that commercially viable mineral deposits exist
on any of our properties. Further, our interest in joint ventures which own
properties will be subject to dilution if we fail to expend further funds on the
projects. We have not generated cash flows from operations. These facts increase
the uncertainty and risks faced by investors in our company. For more
information see Item 3D - Risk Factors.

8

---



Our principal mineral property assets are located in the
Northwest Territories and include an interest in:



> the Contact Lake Mineral Claims;
>   the Port Radium - Glacier Lake Mineral Claims;
>   the Port Radium - Crossfault Lake Mineral Claims;
>   the Port Radium - Eldorado Mineral Claims (Uranium Lease Claims);
>   the North Contact Lake Mineral Claims;
>   the Longtom Property;
>   the Longtom Property (Target 1); and
>   the MacInnis Lake Property.



As these projects are in the exploration stage, we have no
current operating income or cash flow.



B.  Business Overview



Background



All disclosure about our exploration properties in this
annual report conforms to the standards of US SEC Industry Guide 7, Description of Property by Issuers Engaged or to be Engaged in Significant
Mining Operations, other than disclosure of "Mineral Resource", "Measured
Mineral Resource", "Indicated Mineral Resource" and "Inferred Mineral Resource",
which are geological and mining terms as defined in accordance with Canadian
National Instrument 43-101 under the guidelines adopted by the Canadian
Institute of Mining, Metallurgy and Petroleum ("CIM"), as CIM Standards in
Mineral Resources and Reserve Definition and Guidelines adopted by the CIM. US
investors in particular are advised to read carefully the definitions of these
terms as well as the cautionary notes below, regarding use of these terms.



We are engaged in the exploration and acquisition of mineral
properties in Canada, and specifically, hold a majority of our interests in the
Northwest Territories. We are a junior mining company in the exploration stage
and none of our properties are currently beyond the initial exploration stage.
There is no assurance that a commercially viable mineral deposit exists on any
of our properties and further exploration work may be required before a final
evaluation as to the economic and legal feasibility is determined. For further
information, see Item 3D - Risk Factors.



We have conducted acquisitions and initial surveys for the
purpose of determining the viability of exploration work on properties located
in the Northwest Territories, Canada. We intend to develop our IOCG and uranium
exploration projects in Canada. The equity markets for junior mineral
exploration companies are unpredictable. We may also and have historically
entered into cost sharing arrangements through joint venture agreements and
interest agreements in the form of letters of intent. For detailed property
descriptions please refer to Item 4D - Property, Plants and Equipment.

9

---



At present we have no income from our operations and none of
our properties have significant reserves nor are in production. Our ability to
finance the future acquisition, exploration and development, if warranted, of
our mineral properties, to make concession payments and to fund general and
administrative expenses is therefore dependent upon our ability to secure
additional financing.



Competition



The mineral property exploration business, in general, is
intensively competitive and there is not any assurance that even if commercial
quantities of ore are discovered, a ready market will exist for sale of same.
Numerous factors beyond our control may affect the marketability of any
substances discovered. These factors include market fluctuations; the proximity
and capacity of natural resource markets and processing equipment; and
government regulations, including regulations relating to prices, taxes,
royalties, land tenure, land use, importing and exporting of mineral and
environmental protection. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may make it difficult for us to
receive an adequate return on investment.



We compete with many companies possessing greater financial
resources and technical facilities for the acquisition of mineral concessions,
claims, leases and other mineral interests as well as for the recruitment and
retention of qualified employees.



Management and Contractors



Our president and chief executive officer, Tim Coupland,
devotes 80% of his business time to our affairs. We have a management agreement
dated December 1, 2000 with a private company owned by Mr. Coupland whereby he
provides management services to us for $5,000 per month. The initial term of
this agreement was for one year. Thereafter, it continues in force on a
month-to-month basis until terminated by us or Mr. Coupland on 30 days written
notice. As of February 1, 2006, this fee has been increased to $12,500 per
month. On February 22, 2007 this amount was increased to $16,667 per month,
retroactive to January 1, 2007.



Office Space



We utilize about 1,467 square feet of office space in
Vancouver, British Columbia. Our rent and related office expenses total
approximately $3,575 per month. In May 2006, we negotiated with a property
management firm to expand our office facility, due to the growth of our company;
we moved office locations during September 2006.



Environmental Regulations



Mineral property exploration in the Northwest Territories is
governed by Indian and Northern Affairs Canada, a Federal Government office
which is responsible for negotiating the development of healthy and sustainable
communities on behalf of the Native and Inuit peoples. Applicable statutes are
the Canadian Environmental Assessment Act and the Canadian Environmental
Protection Act.

10

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In order to conduct exploration on any of our properties, we
obtain land use permits. When exploration ceases on a Northwest Territories
property, the land affected needs to be reclaimed in order to protect public
health and safety, to reduce or prevent environmental degradation and to allow
future productive land use of the property.



The reclamation plan for any property is site specific. In
general, the reclamation plan consists of ensuring that the physical structures
that remain do not impose a long-term hazard to public health and safety and the
environment, which includes ensuring that the land and watercourses are returned
to a safe and environmentally sound state. We do not anticipate incurring any
reclamation costs in connection with our other mineral property interests.



Organizational Structure



This item is not applicable, as we are not part of a group,
nor do we hold any subsidiary companies.



Property, Plants and Equipment



We are engaged in the acquisition and exploration of mineral
property interests in Canada, and specifically hold all of our current property
interests within the Northwest Territories, Canada (Figures A and B). What
follows is a description of our current and former properties, including
information on expenses for the years ended November 30, 2006 and, if
applicable, November 30, 2005. We have also included information on exploration
work completed and if applicable, planned for the upcoming fiscal year.

11

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12

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1.  Contact Lake Mineral Claims - Contact Lake, Northwest Territories
("NT")



During the year ended November 30, 2005, we acquired a 100%
undivided right, title and interest, subject to a 1% net smelter return royalty
("NSR"), in five mineral claims totalling 1,801.82 hectares ("ha") (4,450.50
acres) (figure 1) called the Contact Lake Mineral Claims, by making cash
payments of $60,000 (paid) and issuing 300,000 of our common shares (issued and
valued at $72,000). We may purchase the NSR for a one-time payment of
$1,000,000.



During the same period we staked on an additional 8,799.75 ha
(21,735.38 acres) and increased the size of Contact Lake Mineral Claims to
10,601.57 contiguous ha (26,185.88 acres). Our claims now consist of 16
contiguous claims located 5 km southeast of Port Radium on the east side of
Great Bear Lake and 680.75 km north of the city of Yellowknife, NT.



Our expenditures related to the Contact Lake Mineral Claims
can be summarized as follows:





|                        | Cumulative
  amounts from inception to
  30 November
  2006
  $ | For the year ended November 30
|----------------------- | --------------------------------------------------------------- | ------------------------------
|                        | 2006
  
  $                                                     | 2005
  
  $                   
|Operating expenses      |                                                                 |                               
|Assaying                |                                                                 | 175,970                       
|Camp and field costs    |                                                                 | 1,927,147                     
|Consulting fees         |                                                                 | 570,598                       
|Drilling                |                                                                 | 1,458,060                     
|Geology and engineering |                                                                 | 1,273,316                     
|Surveying               |                                                                 | 1,233,289                     
|Transportation          |                                                                 | 2,606,594                     
|Travel                  |                                                                 | 69,243                        
|                        |                                                                 |                               
|                        |                                                                 | 9,314,217                     
|                        |                                                                 |                               
|Acquisition costs       |                                                                 | 132,000                       
|                        |                                                                 |                               
|                        |                                                                 | 9,446,217                     
|                        |                                                                 |                               





Two former past-producing silver and radium mines, Echo Bay
(produced 23,779,178 ounces of silver) and Eldorado (produced 15 million pounds
of uranium and 8 million ounces of silver) are situated on claims, which the
Company owns. The claim is comprised of extensive alteration zones that include
intensely mineralized gossans, traceable for over one km in length and 200
meters in lateral extent.



The area has traditionally been underexplored, but
encompasses a mineral rich portion of the Great Bear Magmatic Zone, and includes
the Contact Lake Mineral Belt itself, approximately 15 km long and the same belt
whose northern extension hosts Fortune Minerals NICO Gold deposit.

13

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Accessibility, Local **Resources**and
Infrastructure



The best access to the area is from Yellowknife, NT, using
charter fixed wing aircraft which can land at the 900 meter long unmaintained
gravel airstrip at the western shore of Glacier Lake, which lies in the centre
of the project area. A road extends west from the airstrip to the area of the
Echo Bay and Eldorado Mines. Bulk freight has also previously been mobilized by
seasonal barge access along the Mackenzie River, from Waterways, Alberta to
Tulita (Fort Norman), NT, on the western shore of Great Bear Lake. When mining
was active in the area, a barge service also operated along the Bear River from
Tulita to Deline, and across Great Bear Lake to the various mining operations.
Lake barging service is in limited operation.



Currently, the Northwest Territories Department of Transport
maintains a winter road from Yellowknife to Rae-Edzo and beyond, to Rae Lakes
which is approximately 100 km south of the property. Recent records indicate
that local conditions have allowed this road to be open for a period of
approximately 6 weeks, from mid- February to late March/early April. During
operation of the silver mines at Camsell River and Echo Bay prior to 1984, the
winter road was extended to Port Radium, via Marian Lake and Camsell River.



Although there lacks major infrastructure in the immediate
area of the property, significant logistical support and supplies are available
from Yellowknife. Established fishing camps on the eastern side of Great Bear
Lake also provide some support. The town of Yellowknife has a long history of
mining, where the services of many experienced explorers can be obtained. As
well, personnel may be available from several smaller communities within the
Great Bear Lake area.



We planned for immediate airborne and radiometric surveying,
including the completion of a National Instrument NI 43-101 compliant report,
the results of which included the outline of five large anomalous zones with
secondary anomalies that can be viewed on www.sedar.com.



In June 2005, we appointed Dr. Hamid Mumin as senior
consulting geologist and qualified person on the project, to provide additional
strategic expertise in planning for the summer's ground exploration, mapping,
sampling, geophysics and locating of high-priority drilling targets.



Dr. Mumin graduated from the University of Toronto,
specializing in mineral exploration, went on to complete a MASc in economic
geology, then completed his doctorate and post-doctoral fellowship at the
University of Western Ontario. He has worked for Noranda at Sturgeon Lake,
Ontario; was Chief Geologist and site manager during the exploration and
feasibility stages if the Bogosu Gold mine in Ghana; as well, he has
participated in the discovery of iron oxide, copper, gold and poly-metallic
deposits in the Northwest Territories. He is a professional engineer, Manitoba
director to the Canadian Council of Professional Geoscientists, a member of the
Manitoba Exploration Liaison Committee, and a member of server Canadian and
International professional societies.



In a news release dated November 23, 2005, we announced our
formal submission and filing of the legal plan of survey and application for
lease, and notice of lease to the Government of Canada Mine Recorders office.
The survey to lease was completed in accordance with Canadian Mining Regulations
by Sub-Arctic Surveys Ltd. of Yellowknife, NT.

14

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In fiscal 2006, a five-year Cooperation and Benefits
Agreement was signed with the Deline Land Corporation, representing the Sahtu
Dene and Metis people of the Deline District, located at Great Bear Lake, NT.



In April 2006, we were granted a 15,000 meter five year Sahtu
Land & Water Board Class "A" Land Use Permit for diamond drilling on the Contact
Lake Project. The diamond drilling permit is valid until August 24, 2010. We are
the first mineral exploration company in over 10 years to receive a Class "A"-5
Year drill permit in the Great Bear Lake Sahtu Dene Land settlement area for
mineral exploration and diamond drilling. We are fully permitted for diamond
drilling in the Sahtu Dene Land Settlement Area at Contact Lake, NT.



In April 2006, we were granted permission to drill on the
Contact Lake property by the Chief Inspector of Mines for the Northwest
Territories. Dr. Hamid Mumin of Brandon University completed an interpretation
report which recommended the execution of a comprehensive exploration program.
The exploration program included additional ground and airborne geophysics such
as localized Induced Polarization/Resistivity (IP/Res) geophysics over selected
portions of the high-amplitude magnetic anomalies, mapping, line-cutting
followed by a comprehensive 15,000 meter drill program at Contact Lake,
targeting the high -priority areas.



In May 2006, we contracted the services of Mr. John Camier
B.Sc. (Specialist) M.Sc., a principal of South Bay Exploration Ltd., a
geological services company of Brandon, Manitoba, to supervise our Summer 2006
diamond drilling program at the Contact Lake and Eldorado IOCG and uranium
projects "(the Projects)".



Drilling commenced on the Projects in early June 2006. Our
drill contractor was Connor's Drilling Ltd., which operated three Boyles BBS-25A
drills. The scheduled holes were drilled to an average depth of 200-500 meters
per-hole.



In July 2006, Geotech Ltd. completed a helicopter-borne VTEM
geophysical survey at the Projects. The VTEM airborne survey covered an area
that included four former past producing high grade silver & uranium mines, the
Eldorado, Echo Bay, Bonanza and El Bonanza Mines. The survey area also included
the Thompson Lake-Mile Lake region south of the Bonanza and El Bonanza silver
and uranium mines.



A ground based study was also conducted over a three km by
one km block of the Contact Lake belt along 100 meters spaced cut lines with
12.5 meter spaced stations. The surveys successfully identified five large
anomalous zones with several secondary anomalies.



Detected were large, strongly anomalous zones that are
coincident with known showings of IOGC-type and related poly-metallic
mineralization, including uranium, and hosted within regionally extensive IOCG-type
hydrothermal alteration.



The company targeted five large strongly anomalous zones with
several secondary anomalies within the intensely altered target areas for
detailed follow-up exploration and diamond drilling. These geophysical anomalies
(figure 2) are coincident with large areas of exposed IOCG associated
hydrothermal alterations, as well as zones of poly-metallic mineralization that
include iron oxide, copper, gold, silver, uranium, cobalt and bismuth.

15

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In August 2006, we were advised by the Surveyor-General's
office of the Department of Natural Resources that the legal survey to lease at
Contact Lake was approved. The survey to lease was performed in accordance with
Canadian Mining Regulations by Sub-Arctic Surveys Ltd. of Yellowknife, NT on our
behalf. The total lease claim survey are completed consisted of 1,801.82 ha
(4,450.50 acres) and includes our Contact Lake Mine site.



In August 2006, Terraquest Ltd. completed a Regional High
Resolution Aeromagnetic Gradiometer-Radiometric Survey over the entire Eldorado
and Contact Lake uranium belt. This airborne geophysical survey consisted of
16,708 line-kilometres at 100 meter line spacing's and was completed under very
favorable weather conditions. Several of the larger anomalies show uranium
radiometric signatures of comparable or greater in strength, to the known zones
of uranium mineralization already identified on our properties. In addition, the
survey has also identified several secondary uranium anomalies. We also
completed a detailed regional reconnaissance scale sampling and mapping program
that has confirmed the uranium potential of the Eldorado & Contact Lake region.
The results of this recent 5 month program will be released when assays have
been received and compiled. This airborne survey will now allow us to properly
evaluate the mineral potential of our properties and assist in our drill
targeting of the Projects.



In October 2006, we completed Phase 1 & 2 drilling and field
exploration work program at our Eldorado-Glacier Lake permit area located on the
north side of Echo Bay and Contact Lake permit area located south of Echo Bay.
Our work program has confirmed widespread poly-metallic mineralization at the
various target areas in both drill core and exploration sampling. All drill core
and surface exploration samples were prepared, bagged and sealed by the
Company's supervised personnel and were transported by plane to ACME Analytical
Laboratories Ltd. ("ACME") in Yellowknife, NT where they were crushed and pulped
and then transported to ACME's main laboratories in Vancouver, British Columbia
for assaying. ACME is a fully registered lab for analysis by ICP-MS and ICP-FA
techniques. We have been reporting our drill results as we receive them.



In November 2006, we appointed Roger Watson P. Eng as our
Chief Geophysicist. He will assume this position as part of his consulting
activities in the Canadian Uranium Exploration industry. Mr. Watson is a leading
specialist in the collection and interpretation of airborne radiometric data
used for advanced uranium exploration purposes. Mr. Watson was a founding
partner of the firm Paterson, Grant and Watson Ltd., one of Canada's leading
providers of geophysical consulting services. The addition of Mr. Watson to our
experienced IOCG & Uranium technical team reinforces our commitment to retain
industry professionals who have advanced Uranium exploration expertise.



In November 2006, we reported that we discovered a new high
grade poly-metallic breccia that is rich in copper, molybdenum, lead, zinc,
silver and tungsten, known as the Mile Lake Breccia situated on our Contact Lake
property on the south side of Echo Bay (figure 3). Preliminary drilling of the
Mile Lake Breccia has yielded some significant poly-metallic drill results from
an 8 hole drill program. Drilling and field work has confirmed widespread
poly-metallic mineralization at several target areas at Mile Lake, in both
exploration rock sampling and in drill core.

16

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The Mile Lake Breccia is a new discovery in which
poly-metallic mineralization and alteration is intermittently exposed for over 2
kilometers in strike length, within a regionally extensive laminated
volcaniclastic tuff. The mineralization occurs within the same suite of
volcano-plutonic rocks that host other poly-metallic zones in the Eldorado &
Contact lake mineral belt, including the former El Bonanza Silver- Uranium
(U-Ag) and the Eldorado Uranium (U-Ag- Cu- Co- Ni- Bi) mines.



The accompanying table gives a summary of drilling highlights
and assay results from the initial 2 drill holes of an 8 hole program reporting
from Mile Lake, NT. As of November 15, 2006 the Company is awaiting assays of
six more drill holes at Mile Lake:



Mile Lake Drill Summary



DRILL HOLE RESULTSDrill Hole
   Length
   Copper
   (Cu)
   Lead
   (Pb)
   Zinc
   (Zn)
   Silver
   (Ag)
   Molybdenum
   (Mo)
   Tungsten
   (W)m (ft)
   wt %
   Wt %
   wt%
   g/t(Ounces/t)
   wt %
   wt %CLMB 06-01
   8.62 (28.3)
   1.81%
   0.64%
   1.19%
   29.1 (0.94)
   0.053%
   0.032%CLMB 06-02
   9.90 (32.48)
   1.64%
   1.00%
   2.30%
   42.0 (1.35)
   0.071%
   0.164%




The drill results confirm the poly-metallic nature of the
mineralization and demonstrate the widespread distribution of IOCG associated
mineralization in the Eldorado & Contact Lake district. The Mile Lake Breccia is
open for drilling along a strike length of greater than 2 kilometers within a
100 to 200 meter wide horizon. This is one of a number of large IOCG & uranium
targets that are emerging at Contact Lake, that are characterized by two to six
different metals within a target horizon.



We collected over 60 surface rock samples from the Mile Lake
property that were analyzed during the program which assayed values to a maximum
of 15.34% copper, 1.90% lead, 5.71% zinc, and 293.0 g/ton (9.43 oz/ton) silver.
In addition to grab sampling, chip sampling was carried out along an exposed
trench which produced the following average values over 3 meters (9.84 feet).
The samples returned values of 3.48% copper, 0.70% lead, 0.78% zinc, and 23.0
g/ton (0.74 oz/ton) silver and 0.12% molybdenum.

17

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Summary of high-grade grab samples from Mile Lake, NT are
listed below:



Mile Lake Breccia Surface Sample- Results





|         |              | Copper | Lead | Zinc | Silver | Silver  
|-------- | ------------ | ------ | ---- | ---- | ------ | --------
|         |              | (Cu)   | (Pb) | (Zn) | (Ag)   | (Ag)    
|Sample # | Location     | wt %   | wt % | wt%  | g/t    | Ounces/t
|158332   | Western area | 3.51   | 0.84 | 1.61 | 45.10  | 1.45    
|158333   | Western area | 0.35   | 0.04 | 0.2  | 26.30  | 0.85    
|158334   | Main showing | 0.07   | 0.03 | 0.04 | 0.70   | 0.02    
|158335   | Main showing | 0.14   | 0.04 | 0.07 | 10.20  | 0.33    
|160851   | Main showing | 0.4    | 0.1  | 0.26 | 4.20   | 0.14    
|160878   | Main showing | 11.72  | 0.98 | 0.11 | 84.30  | 2.71    
|160879   | Main showing | 15.34  | 0.99 | 0.06 | 95.50  | 3.07    
|160880   | Main showing | 1.28   | 0.8  | 0.38 | 12.50  | 0.40    
|160881   | Main showing | 5.64   | 1.74 | 5.71 | 126.90 | 4.08    
|160882   | Main showing | 11.5   | 1.90 | 4.07 | 293.00 | 9.42    
|160883   | Main showing | 1.28   | 1.20 | 2.37 | 23.00  | 0.74    
|368957   | Main showing | 0.64   | 0.22 | 1.32 | 13.00  | 0.42    
|368961   | Main showing | 0.69   | 0.72 | 0.34 | 9.00   | 0.29    
|368962   | Main showing | 1.38   | 0.26 | 0.72 | 10.90  | 0.35    
|368964   | Main showing | 0.21   | 0.02 | 0.03 | 1.20   | 0.04    
|368982   | Main showing | 0.45   | 0.42 | 0.06 | 11.50  | 0.37    
|368984   | Main showing | 0.27   | 0.03 | 0.21 | 43.80  | 1.41    
|368985   | Main showing | 0.71   | 0.21 | 0.21 | 12.40  | 0.40    
|368986   | Main showing | 0.56   | 0.26 | 0.31 | 5.50   | 0.18    
|368988   | Main showing | 0.86   | -    | -    | 2.20   | 0.07    
|368989   | Main showing | 0.11   | 0.01 | 0.06 | 3.00   | 0.10    
|368990   | Main showing | 0.12   | -    | 0.09 | 0.20   | 0.01    
|434618   | Main showing | 0.28   | 0.11 | 0.07 | 1.90   | 0.06    
|434619   | Main showing | 0.39   | 0.02 | 0.42 | 6.20   | 0.20    
|434965   | Mile Lake    | 0.08   | 0.14 | 0.11 | 23.40  | 0.75    
|434966   | Mile Lake    | 0.03   | 0.18 | 0.21 | 2.30   | 0.07    
|434970   | Main showing | 0.33   | 0.01 | 0.1  | 4.90   | 0.16    





18

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19

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20

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21

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A summary of our claims can be found below:



Name
   
   Tag Number
   
   Size (ha)CONTACT
   
   F59505
   
   100.33SC
   
   F59504
   
   376.24SC 1
   
   F54380
   
   582.75SC 2
   
   F54517
   
   501.65SC 3
   
   F59518
   
   240.85COBALT 1
   
   F91852
   
   1,045.10COBALT 2
   
   F91853
   
   1,045.10COBALT 3
   
   F91854
   
   250.82COBALT 4
   
   F91855
   
   418.04COBALT 5
   
   F91856
   
   752.47COBALT 6
   
   F91857
   
   522.55BEN 1
   
   F91861
   
   1,003.30BEN 2
   
   F91862
   
   752.47BON 1
   
   F91863
   
   1,003.30BON 2
   
   F91864
   
   1,003.30BON 3
   
   F91865
   
   1,003.3010,601.57




Subsequent to fiscal 2006, in December, we reported that we
discovered a new large zone of hydrothermal and structurally controlled
poly-metallic breccias. The breccias are enriched in copper, gold, silver and
cobalt situated on our K2 target site. The K2 target is located on the Contact
Lake property, on the south side of Echo Bay (figure 4). Preliminary drilling of
the K2 Target area has yielded significant poly-metallic drill results from a
recently completed eight hole drill program. Drilling and fieldwork has
confirmed widespread poly-metallic mineralization at several areas at the K2
target. All four drill holes reporting from a recently completed eight hole
summer 2006 drill program intersected multiple zones of altered and highly
mineralized breccias with disseminated and vein hosted copper, gold, silver,
cobalt sulphide mineralization. Assays are pending for an additional 4 holes
from the K2 target zone.



Highlights from significant mineralized down hole intervals
from the first four holes reporting, include 49.52 meters (162.47 feet) of .25%
copper (including 19.5 meters (63.98 feet) of .37% copper, 2.6 g/ton silver and
..03% cobalt), 21.45 meters (70.37 feet) of .49% copper and 2.3 g/ton silver,
24.0 meters (78.74 feet)of .40% copper, 3.3 g/ton silver and 0.4 g/ton gold, 2
meters (6.56 feet) of .29% copper, 5.15 g/ton silver and 0.21% cobalt, and 1
meter (3.28 feet) of 3.19% copper, 0.44% lead, 0.75% zinc and 164.8 g/ton
silver.



The K2 target area is a new discovery in which significant
poly-metallic copper, gold, silver and cobalt mineralization was encountered in
a preliminary drilling program along a 250 meter strike length to a vertical
depth of 300 meters. The mineralized zone remains un-delineated and open at
depth and along strike in both directions. The mineralized zone is part of a
regionally extensive linear zone of phyllic, potassic, hematite and magnetite,
magnetite-actinolite alteration zones, often appearing at surface as
phyllic-potassic gossans. The mineralization occurs within the same suite of
volcano-plutonic rocks that host other poly-metallic zones in the Eldorado &
Contact lake mineral belt, including the former El Bonanza Silver- Uranium
(U-Ag) and the Eldorado Uranium (U-Ag- Cu- Co- Ni- Bi) mines.

22

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The accompanying table gives a summary of drilling highlights
and assay results from the initial 4 drill holes of an 8 hole program reporting
from the K2 Target Zone, NT:



K2 Discovery Zone -Drill Summary



DRILL HOLE RESULTS




Interval
   Length
   Copper
   (Cu)
   Silver
   (Ag)
   Cobalt
   (Co)
   Gold
   (Au)From
   ToDrill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (g/ton)CLK2-06-01
   12.30
   13.20
   0.90
   0.18
   0.46
   0.00
   0.0021.18
   70.70
   49.52
   0.25
   1.86
   0.02
   0.0449.99
   69.52
   19.53
   0.37
   2.63
   0.03
   0.0677.42
   88.82
   11.40
   0.17
   1.09
   0.00
   0.0099.24
   108.82
   9.58
   0.34
   1.16
   0.02
   0.02136.90
   146.20
   9.30
   0.42
   0.83
   0.01
   0.00175.40
   203.10
   27.70
   0.20
   0.90
   0.01
   0.00245.00
   250.20
   5.20
   0.28
   3.06
   0.00
   0.00401.92
   402.32
   0.40
   0.02
   2.00
   0.27
   0.00












Interval
   Length
   Copper
   (Cu)
   Silver
   (Ag)
   Cobalt
   (Co)
   Gold
   (Au)From
   ToDrill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (g/ton)CLK2-06-02
   14.10
   17.10
   3.00
   0.24
   0.63
   0.00
   0.0057.90
   59.05
   1.15
   0.53
   0.50
   0.00
   0.00264.05
   277.00
   12.95
   0.29
   1.95
   0.00
   0.01272.00
   276.00
   4.00
   0.54
   3.48
   0.00
   0.03282.55
   304.00
   21.45
   0.49
   2.32
   0.01
   0.04310.00
   312.00
   2.00
   0.36
   1.33
   0.01
   0.53347.30
   347.60
   0.30
   2.29
   8.20
   0.02
   0.20410.50
   414.50
   4.00
   0.18
   2.60
   0.10
   0.08






Interval
   Length
   Copper
   (Cu)
   Silver
   (Ag)
   Cobalt
   (Co)
   Gold
   (Au)
   Zinc
   (Zn)
   Lead
   (Pb)From
   ToDrill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (g/ton)
   (%)
   (%)CLK2-06-03
   32.0
   40.0
   8.0
   0.36
   1.9
   0.03
   0.1
   0.01
   0.0068.5
   74.5
   6.0
   0.25
   2.3
   0.01
   0.1
   0.01
   0.0080.0
   81.0
   1.0
   0.53
   3.8
   0.04
   0.2
   0.01
   0.00151.6
   154.6
   3.0
   0.24
   6.3
   0.10
   0.2
   0.01
   0.00267.7
   271.8
   4.1
   0.84
   42.3
   0.00
   0.0
   0.20
   0.12270.2
   271.2
   1.0
   3.19
   164.8
   0.00
   0.0
   0.75
   0.44279.0
   295.5
   16.5
   0.15
   6.2
   0.01
   0.0
   0.04
   0.02300.0
   300.5
   0.5
   0.17
   7.6
   0.01
   0.0
   0.07
   0.05319.5
   320.3
   0.8
   0.45
   10.0
   0.08
   0.0
   0.08
   0.05421.0
   445.0
   24.0
   0.40
   3.3
   0.01
   0.4
   0.01
   0.00421.0
   434.0
   13.0
   0.45
   4.7
   0.01
   0.6
   0.01
   0.01427.5
   434.0
   6.5
   0.73
   3.6
   0.01
   0.9
   0.01
   0.00461.5
   469.5
   8.0
   0.38
   3.6
   0.01
   0.1
   0.01
   0.00




23

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Interval
   Length
   Copper
   (Cu)
   Silver
   (Ag)
   Cobalt
   (Co)
   Gold
   (Au)From
   ToDrill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (g/ton)CLK2-06-04
   13.00
   18.90
   5.90
   0.23
   1.60
   0.08
   0.1438.00
   42.50
   4.50
   0.44
   3.26
   0.03
   0.0345.80
   58.00
   12.20
   0.17
   0.87
   0.01
   0.0065.90
   68.50
   2.60
   0.67
   4.11
   0.04
   0.0895.80
   97.20
   1.40
   0.52
   3.16
   0.04
   0.09120.00
   122.00
   2.00
   0.29
   5.15
   0.21
   0.10128.65
   134.10
   5.45
   0.25
   4.20
   0.02
   0.05175.50
   178.80
   3.30
   0.26
   10.37
   0.01
   0.00205.90
   208.90
   3.00
   0.36
   3.35
   0.00
   0.00




Note: True thickness has not been calculated for these holes.



The K2 mineralized breccia is open for drilling along strike
for a presently undetermined length, and within a 200 to 300 meter wide horizon.
This is the second large poly-metallic IOCG target zone that has emerged within
the Eldorado & Contact Lake districts that are characterized by six or more
different metals within a target horizon. The K2 Zone will be drill tested in
2007, to determine its potential as a large bulk tonnage prospect.



In January 2007, we reported the results of our summer 2006
surface exploration sampling program at the Mag Hill target area. The Mag Hill
target area is located at the southern end of Echo Bay, approximately 15
kilometers from the Eldorado uranium mine and 3 kilometers east of the Contact
Lake silver & uranium mine (figure 5). The Eldorado uranium mine (1933-1960)
formerly mined and produced 15 million pounds of U3O8at
an average head grade of 0.75% U3O8 and 8 million ounces
of silver, plus copper, cobalt, nickel and lead. (Normin NTGO: SENES Report
2005). The Mag Hill target area is an IOCG plus uranium drill prospect now
emerging at Contact Lake.



The Mag Hill target is the site of the most extensive
hydrothermal magnetite-actinolite- feldspar-apatite plus sulphide alteration
along the Contact Lake Mineral Belt in the northern part of the Great Bear
Magmatic Zone. The host rocks are alkali (sodic or potassic) and or
actinolite-epidote altered andesites. The core zone comprises a pervasive alkali
feldspar-scapolite-magnetite-actinolite-apatite hydrothermal assemblage.



The alteration signature and zone at Mag Hill is similar to
that of the Port Radium- Eldorado uranium mine area situated on Labine Point,
NT. The Mag Hill discovery zone and target area is defined by predominately
pyrite mineralization, which is present intermittently throughout the Mag Hill
region and in an extensive gossan at the southeast end of Echo Bay, with minor
amounts of visible malachite. In addition, uranium, cobalt, nickel, copper,
silver, lead and zinc enrichments are present locally as veins, veinlets and
disseminations that extend outward in the southern and eastern extensions of the
Mag Hill area.

24

---



Mag Hill Target area -Contact Lake, NT- grab samples assayed



- 0.69% U3O8 and 30.9 g/ton silver and 0.32% lead (the
 maximum uranium values returned from the assayed samples)
- 0.38% U3O8 and 30.5 g/ton silver and 0.24 % lead
- 0.31% U3O8 and 7.8 g/ton silver



This region is being targeted for detailed uranium
exploration due to its notable similarities to the Port Radium-Eldorado mine
region with regard to hydrothermal alteration and mineralization and large size
of the associated hydrothermal system, 1-2 km2 core zone of
magnetite-actinolite-apatite alteration, kilometre-scale surface gossans and
distinct lenses of poly-metallic sulphide mineralization.



We analyzed over 121 surface grab samples from the Mag Hill
Grid over a 5 square kilometer area in the southern portion of the Contact Lake
belt. 25 samples collected were variably enriched in uranium, silver, copper,
lead, zinc, nickel and cobalt. The rock samples assayed to a maximum of 0.69%
uranium, 68.0 g/ton silver, 4.98% copper, 0.40% lead, 0.49% zinc, 0.23% nickel,
0.58% cobalt, 0.4 g/ton gold and 0.10% bismuth.



*(See table below for analytical results of surface grab
samples)



Assay highlights from the Mag Hill IOCG Target Area, Contact
Lake, NT



Uranium
   (U)
   Silver
   (Ag)
   Copper
   (Cu)
   Lead
   (Pb)
   Zinc
   (Zn)
   Nickel
   (Ni)
   Cobalt
   (Co)
   Gold
   (Au)
   Bismuth
   (Bi)Sample No.
   %
   g/ton
   %
   %
   %
   %
   %
   g/ton
   %158305
   0
   3.7
   0.03
   0.04
   0
   0.23
   0.06
   0
   0158359
   0
   0.8
   0.03
   0.02
   0.23
   0.01
   0.01
   0
   0158364
   0
   1.7
   0.81
   0
   0.01
   0
   0
   0
   0158368
   0
   0.8
   0.02
   0.06
   0.32
   0
   0
   0
   0368065
   0
   8.2
   3.82
   0
   0.02
   0.01
   0.03
   0.4
   0368067
   0.31
   7.8
   0.03
   0.06
   0.03
   0
   0.01
   0
   0368068
   0.69
   30.9
   0.02
   0.32
   0.08
   0.01
   0.01
   0
   0368069
   0.38
   30.5
   0.02
   0.24
   0.02
   0.01
   0.01
   0.2
   0368072
   0
   0.4
   0.26
   0
   0.01
   0
   0
   0
   0368208
   0
   1.6
   0.41
   0
   0.02
   0
   0
   0
   0368213
   0
   1.1
   0.04
   0.17
   0.36
   0
   0
   0
   0368219
   0
   0.8
   0.02
   0
   0.49
   0
   0
   0
   0368221
   0
   3.3
   0.5
   0
   0.02
   0
   0.04
   0.2
   0368222
   0
   44.5
   0.12
   0.4
   0.17
   0.02
   0.24
   0.4
   0.01368226
   0
   0.7
   0.18
   0
   0.02
   0.01
   0
   0
   0368228
   0
   0.2
   0.41
   0
   0.02
   0
   0
   0
   0368229
   0
   9.2
   1.21
   0
   0
   0
   0.01
   0
   0.02368230
   0.03
   24.9
   0.58
   0
   0.03
   0.12
   0.42
   0.1
   0.08368231
   0.01
   29.3
   1.33
   0.01
   0.08
   0.13
   0.58
   0
   0.09368232
   0
   10.8
   1.84
   0
   0.01
   0
   0.01
   0
   0.04368233
   0.03
   21.9
   4.98
   0
   0.05
   0
   0.03
   0
   0.1368237
   0
   8.1
   1.86
   0
   0
   0
   0.01
   0
   0.02










25

---



Uranium
   (U)
   Silver
   (Ag)
   Copper
   (Cu)
   Lead
   (Pb)
   Zinc
   (Zn)
   Nickel
   (Ni)
   Cobalt
   (Co)
   Gold
   (Au)
   Bismuth
   (Bi)%
   g/ton
   %
   %
   %
   %
   %
   g/ton
   %368244
   0
   68
   0.5
   0
   0.11
   0
   0
   0
   0368033
   0
   0.7
   0.03
   0.12
   0.24
   0
   0
   0
   0Maximum Values
   0.69
   68
   4.98
   0.4
   0.49
   0.23
   0.58
   0.4
   0.1


Also in January 2007, we reported that we received assays on
a further four holes completing our eight hole summer/fall 2006 preliminary
drill program at the K2 discovery at Contact Lake, NT (figure 6). Completion of
an additional four drill holes has confirmed and expanded the widespread
poly-metallic mineralization at the K2 target. All eight drill holes reporting
from a recently completed eight hole summer 2006 drill program intersected
multiple zones of altered and highly mineralized breccias with disseminated and
vein hosted copper, gold, silver, cobalt sulphide mineralization. All drill
cores were prepared, bagged and sealed by our supervised personnel and were
transported by plane to Acme Analytical Laboratories Ltd. ("ACME") in
Yellowknife, NT where they were crushed and pulped, and then transported to
ACME's main laboratories in Vancouver, British Columbia for assaying. Acme is a
fully registered analytical lab for analysis by ICP-MS and ICP-FA techniques.



Highlights from significant mineralized down hole intervals
from the four new holes reporting, include 14.5 meters (47.85 feet) of .28%
copper, 1.1 g/ton silver and .04% cobalt and 0.12 g/ton gold, 17.5 meters (57.75
feet) of .28% copper and 5.2 g/ton silver, 17.4 meters of .41% copper, 2.7 g/ton
silver, 0.01 % cobalt (including 0.5 meters 3.13 % copper, 16.8 g/ton silver)
46.5 meters (153.45 feet) of .22% copper, 0.94 g/ton silver and 0.01 g/ton gold,
3 meters (9.9 feet) of .73% copper, 1.8 g/ton silver and 0.01% cobalt, and 1
meter (3.28 feet) of 3.19% copper.



The K2 target area is a new discovery in which significant
IOCG style poly-metallic copper, gold, silver and cobalt mineralization was
encountered in all eight drill holes in a preliminary drilling program along a
250 meter strike length to a vertical depth of 300 meters. The mineralized zone
remains un-delineated and open at depth and along strike in both directions. The
mineralized zone is part of a regionally extensive linear zone of phyllic,
potassic, hematite and magnetite, magnetite-actinolite alteration zones, often
appearing at surface as phyllic-potassic gossans. The mineralization occurs
within the same suite of volcano-plutonic rocks that host other poly-metallic
zones in the Eldorado & Contact lake mineral belt, including the former El
Bonanza Silver- Uranium (U-Ag) and the Eldorado Uranium (U-Ag- Cu- Co- Ni- Bi)
mines.



The accompanying table gives a summary of drilling highlights
and assay results returned from the balance of holes from an 8 hole program
reporting from the K2 Target Discovery Zone at Contact Lake, NT.

26

---



K2 Discovery Zone -Drill Summary (Holes 5-6-7-8)



DRILL HOLE RESULTS




Interval
   Length
   Copper
   Silver
   Cobalt
   GoldFrom
   To
   (Cu)
   (Ag)
   (Co)
   (Au)Drill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (g/ton)CLK2-06-05
   2.5
   56.5
   54
   0.2
   1.08
   0.03
   0.082.5
   8.5
   6
   0.42
   1.32
   0.05
   0.232.5
   17
   14.5
   0.28
   1.1
   0.04
   0.1220
   31
   11
   0.23
   1.39
   0.05
   0.0827.5
   30
   2.5
   0.53
   3
   0.13
   0.2435.5
   56.5
   21
   0.17
   1.1
   0.02
   0.0743
   46
   3
   0.21
   1.65
   0.03
   0.559
   63
   4
   0.11
   0.58
   0.01
   0.03152
   153.7
   1.7
   0.14
   0.72
   0.06
   0156.2
   156.7
   0.5
   0.38
   1.4
   0.01
   0190.5
   191.5
   1
   0.04
   2.9
   0.05
   0222
   223.5
   1.5
   0.1
   2.1
   0
   0226
   227.5
   1.5
   0.21
   4.7
   0
   0






Interval
   Length
   Copper
   Silver
   Cobalt
   GoldFrom
   To
   (Cu)
   (Ag)
   (Co)
   (Au)Drill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (g/ton)CLK2-06-06
   20.5
   20.8
   0.3
   1.21
   1.2
   0.01
   0.188
   89
   1
   0.11
   0.3
   0
   090
   93.6
   3.6
   0.24
   0.57
   0
   0118.5
   121.5
   3
   0.29
   0.3
   0
   0123
   124.5
   1.5
   0.1
   0.2
   0
   0211
   212
   1
   1.04
   3.7
   0
   0269
   270.5
   1.5
   0.14
   0.4
   0.01
   0290
   299
   9
   0.11
   0.63
   0.01
   0304.4
   309
   4.6
   0.29
   1.46
   0.02
   0.02323.5
   331
   7.5
   0.15
   0.64
   0
   0338.5
   340
   1.5
   0.24
   2.8
   0.01
   0343
   349
   6
   0.24
   1.35
   0.01
   0356.5
   359.5
   3
   0.39
   1.45
   0.02
   0361
   362.5
   1.5
   0.1
   0.3
   0
   0368.5
   371.5
   3
   0.14
   0.6
   0.01
   0374.5
   377
   2.5
   0.17
   1.8
   0.02
   0397.2
   402.3
   5.1
   0.34
   0.68
   0.01
   0407.5
   425
   17.5
   0.28
   5.29
   0.01
   0.03407.5
   411.5
   4
   0.64
   5.89
   0.01
   0.05




27

---



Interval
   Length
   Copper
   Silver
   Cobalt
   Gold
   BismuthFrom
   To
   (Cu)
   (Ag)
   (Co)
   (Au)
   (Bi)Drill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (g/ton)
   (%)CLK2-06-07
   5
   12.5
   7.5
   0.13
   1
   0.01
   024.5
   25.5
   1
   1
   5.6
   0.04
   0.2
   0.1134
   45.3
   11.3
   0.2
   1.8
   0.01
   0.0151.5
   52.5
   1
   0.26
   0.9
   0.01
   069.5
   72.5
   3
   0.27
   1.5
   0
   086
   103.4
   17.4
   0.41
   2.7
   0.01
   0.0194.1
   94.6
   0.5
   3.13
   16.8
   0.01
   0.1
   0.19104.4
   108.9
   4.5
   0.15
   1.1
   0.02
   0.03138
   139
   1
   0.1
   0.9
   0.05
   0168.4
   170.9
   2.5
   0.18
   2.5
   0.03
   0191
   196.5
   5.5
   0.18
   4.8
   0.01
   0.05202
   203
   1
   0.11
   2.9
   0.02
   0242
   245
   3
   0.17
   7.7
   0
   0266
   267.5
   1.5
   0.11
   0.8
   0
   0323
   326
   3
   0.27
   1.9
   0.01
   0.1347
   348.5
   1.5
   0.12
   2.3
   0.03
   0377
   378.5
   1.5
   0.14
   2.9
   0
   0






Interval
   Length
   Copper
   Silver
   Cobalt
   GoldFrom
   To
   (Cu)
   (Ag)
   (Co)
   (Au)Drill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (g/ton)CLK2-06-10
   5.5
   6.5
   1
   0.14
   1.6
   0
   017
   54.5
   37.5
   0.2
   1.26
   0.01
   030.5
   33.5
   3
   0.73
   1.8
   0.01
   071
   83
   12
   0.18
   1.53
   0.03
   0.0671
   74
   3
   0.59
   2.85
   0.03
   0.2593.5
   140
   46.5
   0.22
   0.94
   0.03
   0.0193.5
   125
   31.5
   0.27
   1.15
   0.02
   099.5
   119
   19.5
   0.33
   1.28
   0.02
   0.01128
   140
   12
   0.12
   0.5
   0.02
   0.03150.5
   155
   4.5
   0.25
   0.47
   0
   0162.5
   182
   19.5
   0.22
   0.67
   0.01
   0162.5
   170
   7.5
   0.35
   0.98
   0.01
   0192.5
   195.5
   3
   0.16
   0.75
   0
   0203
   204.5
   1.5
   0.11
   0.7
   0.01
   0218
   219.5
   1.5
   0.21
   0.7
   0
   0287
   288
   1
   0.18
   2.2
   0.03
   0320
   324
   4
   0.02
   0.79
   0.03
   0381
   382.5
   1.5
   0.51
   8.9
   0.03
   0.1393
   394.5
   1.5
   0.09
   1
   0.02
   0465
   473.7
   8.7
   0.11
   3.09
   0.04
   0503
   506
   3
   0.12
   0.55
   0
   0.2510.5
   516.5
   6
   0.16
   1.23
   0
   0.1




Note: True thickness has not been calculated for these holes.

28

---



The K2 mineralized breccia is open for drilling along strike
for a presently undetermined length, and within a 200 to 300 meter wide horizon.
This is the second large poly-metallic IOCG target zone that has emerged within
the Eldorado & Contact Lake districts that are characterized by two to six
different metals within a target horizon. We intend to conduct further drilling
on the K2 Discovery Zone in 2007, to determine its potential as a significant
poly-metallic bulk tonnage prospect.



In March 2007, we reported that we received the assay results
from an additional seven drill holes from the summer/fall drill program at the
South Echo Bay gossan ("Echo Bay Program") and from the Mag Hill VTEM anomaly ("Mag
Hill Program") (figure 7). The Echo Bay and Mag Hill drill programs were
designed to evaluate the silver, uranium and poly-metallic potential of this
newly emerging mineralized region. The region is situated at the southern end of
the southeast arm of Echo Bay and is viewed by us as having the potential to
host bulk tonnage mineralization. The drill results were successful in
intercepting significant silver mineralization beneath a large pyretic gossan.
The silver is contained in pyrite, chalcopyrite veins and disseminations within
a kilometer scale phyllic and potassic alteration halo. The alteration zone is
peripheral to an extensive zone of intense magnetite-actinolite-apatite
alteration that was intersected in all holes drilled in the Mag Hill Program.
The South Echo Bay gossan silver-uranium target is located on our property, on
the southern end of Echo Bay and 3 km due east of the Contact Lake Silver &
Uranium mine.



We intersected 133 meters (439 feet) of 8.78 g/ton silver in
hole number six in the Echo Bay silver discovery in Canada's Northwest
Territories. This interval also includes 13.5 meters (44.6 feet) of 17.73 g/t
silver, 6.0 meters (19.8 feet) of 22.13 g/t silver, 7.5 meters (24.7 feet) of
20.54 g/t within this interval. Hole number four intersected 37.5 meters (123.7
feet) of 20.69 g/t silver including a 3.0 meter high grade zone of 195.7 g/ton
silver (6.29 oz/t). A further 1.5 meters (44.6 feet) of 51.1 g/t (1.64 oz/t)
silver were intersected in hole number five.



We believe that the results of the drill holes from the Echo
Bay Program and the drill holes from the Mag Hill Program confirms the extensive
nature of hydrothermal alteration and mineralization in the Port Radium-Echo
Bay-Contact Lake poly-metallic belt. All drill cores from the Echo Bay Program
and the Mag Hill Program were prepared, bagged and sealed by our supervised
personnel and were transported by plane to Acme Analytical Laboratories Ltd.
("ACME") in Yellowknife, NT where they were crushed and pulped, and then
transported to ACME's main laboratories in Vancouver, British Columbia for
assaying. ACME is a fully registered analytical lab compliant with the
International Standards Organization (ISO) for quality assurance.



Highlights from significant mineralized down-hole intervals
from the Echo Bay Program reporting significant high grade silver values,
include drill hole number:



- CLEBG-06-04

- Including 12 meters (39.6 feet) of 55.7 g/ton silver (1.79 oz/t).
- Including 3.0 meters (9.9 feet) of 195.7 g/ton silver.(6.29 oz/t).



29

---

- CLEBG-06-05

- Including 1.50 meters (4.95 feet) of 51.10 g/t silver (1.64 oz/t).
- Including 28.5 meters (94 feet) of 10.31 g/t silver.
- Including 10.5 meters (34.6 feet) of 17.14 g/t silver.



- CLEBG-06-06

- Including 9.0 meters of 21.32 g/ton silver (0.67 oz/t).
- Including 6.0 meters of 22.13 g/ton silver (0.69 oz/t).
- Including 7.5 meters of 20.54 g/ton silver (0.64 oz/t).



The Contact Lake & Eldorado district is being targeted by us
for silver and uranium and poly-metallic exploration. The mineralization occurs
within the same suite of volcano-plutonic rocks that host other poly-metallic
zones in the Eldorado & Contact lake mineral belt, including the former El
Bonanza Silver (Ag) and the Eldorado Uranium (U-Ag-Cu-Co-Ni-Bi) mines. Veins of
the former Eldorado and Echo Bay mines are situated in metasedimentary rocks,
near the margins and apices of porphyry stocks, between underlying batholiths
and overlying volcanic rocks. The cores and intermediate zones of the
hydrothermal systems that are responsible for these veins are possible loci for
larger, more typical, bulk-mineable IOCG-type deposits. Additional drill results
are pending and will be released when we receive them.

The accompanying table gives a summary of drilling highlights
and assay results returned from seven holes reporting from the south Echo Bay
Program at Contact Lake, NT.

30

---



SOUTH ECHO BAY GOSSAN DRILL SUMMARY (Holes 2, 4, 5, and 6)





|DRILL HOLE RESULTS
|------------------
|                  
|                  
|Drill Hole        
|CLEBG-06-02       
|CLEBG-06-04       
|81.00             
|90.00             
|CLEBG-06-05       
|18.0              
|49.5              
|55.5              
|93.0              
|135.0             
|173.0             
|CLEBG-06-06       
|19.5              
|28.0              
|34.0              
|37.0              
|47.5              
|90.5              
|90.5              
|126.5             
|144.5             
|204.5             
|298.0             





No significant interval in drill holes number CLEBG-06-01,
CLEBG-06-03, and CLEBG-06-07.



Note: True thickness has not been calculated for these holes.

31

---



32

---







33

---





34

---



35

---

2.  Port Radium - Glacier Lake Mineral Claims, NT



During the year ended November 30, 2005, we acquired a 100%
undivided right, title and interest, subject to a 2% NSR, in four mineral
claims, totalling 2,424.23 ha (5,987.85 acres) and located one half km southeast
of Port Radium on Great Bear Lake, NT (figure 8), for a cash payments of $30,000
(paid) and the issuance of 360,000 of our common shares (issued and valued at
$72,000). We may purchase one-half of the NSR for a one-time payment of
$1,000,000.



The property contains a fully operational all-seasons
airstrip and base camp, situated at Contact Lake. The Echo Bay claim (produced
23,779,178 ounces of silver) and the Port Radium - Eldorado claim (produced 15
million pounds of uranium and 8 million ounces of silver) are situated on our
property. The Port Radium uranium belt was formerly one of Canada's principal
producers of Pitchblende uranium in the 1930s and 1940s.



Our expenditures related to the Port Radium - Glacier Lake
Mineral Claims can be summarized as follows:





Cumulative 
   amounts from 
   inception to
   30 November 
   2006
   $
   For the year ended November 302006
   $
   2005
   $
   2004
   $Operating expensesCamp and field costs
   
   320,762
   
   320,762
   
   -
   
   -Consulting fees
   
   27,477
   
   27,477
   
   -
   
   -Geology and engineering
   
   22,896
   
   22,896
   
   -
   
   -Surveying
   
   17,309
   
   17,309
   
   -
   
   -Transportation
   
   866,963
   
   866,963
   
   -
   
   -Travel
   
   6,274
   
   6,274
   
   -
   
   -1,261,681
   
   1,261,681
   
   -
   
   -Acquisition costs
   
   102,000
   
   -
   
   102,000
   
   -Recoveries
   
   (417,099)
   
   (417,099)
   
   -
   
   -946,582
   
   844,582
   
   102,000
   
   -






In May 2006, we received formal approval from the Sahtu Land
and Water Board for a second 25,000 meter "Class A-5 year drill permit at the
Eldorado Iron oxide, copper, gold, silver, and uranium Project. We have
completed all of the requirements for our drill permitting which included the
finalization of a comprehensive First Nations Traditional Educational Knowledge
Report ("TEK"). The TEK report was completed in collaboration with the Deline
Land Corporation and was prepared with detailed input from many of the Sahtu
Dene Elders from the community of Deline, NT.

36

---

In August 2006, we successfully completed a formal legal and
land survey on our Glacier Lake silver and uranium properties. We formally
submitted our legal plan of survey and application for lease, and notice of
lease for the Glacier Lake mineral properties to the Government of Canada Mine
Recorders office. The survey to lease was performed in accordance with Canadian
Mining Regulations by Sub-Arctic Surveys Ltd. of Yellowknife, NT. The total
lease claim survey area consists of 2,424.23 hectares (5,987.85 acres) and
includes our Echo Bay Gossan and the Echo Bay Mine site.



In November 2006, we completed a preliminary sampling of the
uranium-silver tailings and waste dumps located at the Company's Eldorado IOCG
and uranium project. The tailings are from the former producing Eldorado uranium
mine (1933-1960) and Echo Bay Uranium, silver, copper mines (1962-1982). These
mines are located in our project area.



We completed a detailed sampling program of the
Uranium-silver mine tailings and waste dumps and as a result of the sampling
program we have begun preparation for a definition de-lineation drill program of
the un-mined areas and extensions of the Eldorado uranium-silver mine to
determine if there is a potential resource to support the recommencement of
commercial production at the mine sites. Assay results are pending for copper,
gold, silver, nickel, cobalt and uranium.



These mines are reported to have milled approximately 2.2
million tons of high grade uranium-silver ores leaving behind approximately 1.7
million tons of uranium-silver tailings. (Normin NTGO; SENES Report 2005). The
Eldorado Uranium Mine formerly mined and produced 15,000,000 pounds of uranium
at a head grade of 0.75% U308 and 8 million ounces of
silver, plus, copper, nickel, lead at Eldorado, Port Radium commencing in 1933.
The Echo Bay mine produced over 23,779,178 million ounces of silver at an
average head grade of approximately 66 ounces per ton up until its closure in
1982.



Approximately 910,000 tons of uranium-silver tailings are
currently contained in the Radium Lake and Cobalt Channel areas and additional
800,000 tons of silver tailings are stored in the McDonough Lake containment
area (SENES/CDUT Report 2005). An estimated 170,000 tons of uranium tailings
were placed in surface depressions and in the Silver Point area and the
remaining 740,000 tons were placed in the Cobalt Channel area of the Great Bear
Lake.



Preliminary assay results were completed by us under the
supervision of Dr. H. Mumin Ph.D., P.Eng., our designated Qualified Person for
the Eldorado & Contact Lake IOCG & uranium projects. The uranium-silver mine
tailings samples were taken from 5 separate containment areas at 83 different
sample sites produced the following results:

37

---



Eldorado / Echo Bay Mine - Uranium & Silver Tailings





Summary of Tailings Assays from Summer 2006 Field WorkNumber of
   Copper (Cu)
   U3O8
   U3O8
   Silver (Ag)
   Cobalt (Co)
   Nickel (Ni)Location of Sampling
   Samples
   wt %
   wt %
   lb/t
   g/t(Ounces/t)
   wt %
   wt %Radium Lake Spill Zone
   8
   0.500
   0.257
   5.66
   12 ( 0.38)
   0.280
   0.090Radium Lake
   16
   0.254
   0.062
   1.37
   70 (2.24)
   0.060
   0.026McDonough Lake
   44
   0.143
   0.025
   0.55
   131 (4.22)
   0.035
   0.045Average of 68
   0.211%
   0.061%
   1.34
   130 (3.30)
   0.070%
   0.046%Labine Point Causeway
   11
   0.649
   0.207
   4.56
   210 (6.76)
   0.108
   0.075Great Bear Lake
   4
   0.295
   0.041
   0.90
   878 (28.23)
   0.031
   0.050Average of 15
   0.555%
   0.163%
   3.58
   388 (12.49)
   0.087%
   0.068%Labine Point Causeway
   2 oversize
   0.088
   0.015
   0.33
   75 (2.40)
   0.016
   0.022Radium Lake
   5 oversize
   0.240
   0.108
   2.38
   31 (0.99)
   0.126
   0.055Average of 7
   0.197%
   0.081%
   1.79
   43 (1.40)
   0.095%
   0.046%






Eldorado / Echo Bay Mine - Uranium & Silver Tailings Summary





|Average of 83 tailings sample sites at Port Radium
|--------------------------------------------------
|Copper (Cu)                                       
|Wt %                                              
|0.273%                                            





Notes:
*Sample spacing is irregular and taken where available 
*Assay results are preliminary and subject to natural metal leaching and/or
enrichment
*Tailings samples ranged in size from ~1 to 5 Kg
*Tailings from Radium Lake and Labine Point causeway are contaminated with waste
rock and were sieved to -20 mesh to remove most of the waste rock gangue
*The oversize material (assumed waste rock) carries metal values
*The results of this work are interpreted to indicate that full tailings
delineation and assaying is warranted



The sampling of tailings and drill core was prepared and
analyzed in accordance with industry standards. All uranium-silver mine tailings
samples were sent to ACME Analytical Laboratories located in Vancouver, BC for
analysis. ACME is a registered analytical lab for analysis of ICP-MS and ICP-FA
techniques.

38

---



We intend to quantify the precious metals situated in ground
and in the surrounding surface waste areas and to assess the re-processing of
the uranium-silver tailings and blending additional ore from the various project
areas. The Company intends to work closely with Canadian Federal Government,
Indian & Northern Affairs Canada, First Nations peoples and industry and the
Company will commence any and all environmental baseline studies that would
eliminate any environmental concerns and re-mediate any areas that would be
currently affected by proposed development.

39

---





40

---



A summary of our claims can be found below:



Name
   
   Tag Number
   
   Size (ha)GLAC 1
   
   F54373
   
   835.68GLAC 2
   
   F54374
   
   731.57ECHO
   
   F54519
   
   83.61WATT
   
   F59517
   
   773.372,424.23




Subsequent to fiscal 2006, in December 2006, we appointed SGS
Lakefield Research Ltd. ("SGS"), to conduct mineral processing and metallurgical
testing of silver & uranium tailings collected by us during the summer of 2006
from the Eldorado & Echo Bay silver and uranium mines. The SGS report is
expected to include an investigation of the mineralogical properties, physical
characterization, tailings composite, and an assessment of the leachability of
the tailings to determine the potential recovery of uranium, silver, cobalt,
nickel and copper. Uranium leaching will establish if the uranium values are
economically leachable using conventional oxidative atmospheric acid leaching at
ambient temperature. SGS is an ISO-accredited Canadian based research facility
in Lakefield, Ontario that has extensive experience in mineral processing and
metallurgical testing of base, precious metals and uranium.



In January 2007, we were advised by the Surveyor-General's
office of the Department of Natural Resources that the legal survey to lease at
the Glacier Lake uranium claims has been provisionally approved.



Also in January 2007, we reported that we intersected 5.0
meters (16.5 feet) of 0.22% U308 at Eldorado (figure 9).
The latest results are from a recent nine-hole preliminary drill program
completed in the fall of 2006. The program was designed to re-evaluate the
economic potential of the former Eldorado-Echo Bay silver and uranium mines. The
initial drill results from the first nine holes have discovered a new zone of
hydrothermal and structurally controlled polymetallic vein breccias that are
enriched in uranium, silver, gold, copper, nickel, cobalt, lead and zinc. The
Eldorado uranium target is located on the Company's property, on the north side
of Echo Bay. The completion of the drilling has confirmed additional widespread
polymetallic and uranium mineralization. Seven drill holes intersected multiple
zones of intensely altered and mineralized polymetallic breccias with
disseminated and vein hosted mineralization. All drill cores were prepared,
bagged and sealed by the our supervised personnel and were transported by plane
to Acme Analytical Laboratories Ltd. ("ACME") in Yellowknife, NT where they were
crushed and pulped, and then transported to ACME's main laboratories in
Vancouver, British Columbia for assaying. Acme is a fully registered analytical
lab for analysis by ICP-MS and ICP-FA techniques.



Highlights from significant mineralized down hole intervals
from the seven new holes reporting include hole number:



- PR-06-03

41

---

- PR-06-09



Other significant poly-metallic IOCG style mineralized down
hole intervals at Eldorado/Echo Bay district include:



- PR-06-01



- PR-06-02



Previous mining in the Eldorado-Echo Bay district (1933-1960)
exploited high-grade uranium, silver and copper mineralization that occurred
locally as complex polymetallic arsenide and sulfide assemblages in
quartz-carbonate veins. The arsenide-sulfide veins are also typically enriched
in one or more metals including silver, uranium, nickel, cobalt, bismuth, gold,
zinc, lead, and radium. Economic veins are hosted within
East-North-East-striking structures and an extensive IOCG style poly-metallic
hydrothermal alteration system.



The accompanying table gives a summary of drilling highlights
and assay results returned from seven of nine holes reporting from Eldorado, NT.
No significant intervals have been reported from holes PR-06-07 and PR-06-08.



ELDORADO Drill Summary (Holes 1,2,3,4,5,6,9)





|DRILL HOLE RESULTS
|------------------







|           | Interval | Length | Copper | Silver | Lead    | Zinc
|---------- | -------- | ------ | ------ | ------ | ------- | ----
|           | From     | To     | (Cu)   | (Ag)   | (Pb)    | (Zn)
|Drill Hole | (m)      | (m)    | (m)    | (%)    | (g/ton) | (%) 
|PR-06-01   | 53.77    | 55.27  | 1.50   | 0.26   | 0.7     | 0.01
|           | 68.77    | 70.27  | 1.50   | 0.03   | 1.6     | 0.25
|           | 70.27    | 71.77  | 1.50   | 0.05   | 1.6     | 0.07
|           | 110.45   | 132.45 | 22.00  | 0.07   | 1.9     | 0.16
|           | 151.95   | 153.95 | 2.00   | 0.06   | 6.4     | 1.06
|           | 152.95   | 153.95 | 1.00   | 0.09   | 9.4     | 1.95
|           | 159.95   | 161.45 | 1.50   | 0.05   | 3.6     | 1.75
|           | 151.95   | 167.32 | 15.37  | 0.06   | 2.3     | 0.61
|           | 159.95   | 163.95 | 4.00   | 0.04   | 2.7     | 1.28
|           | 162.95   | 163.95 | 1.00   | 0.07   | 3.8     | 2.07
|           | 180.32   | 182.32 | 2.00   | 0.08   | 1.4     | 0.08
|           | 184.32   | 186.32 | 2.00   | 0.09   | 3.7     | 0.17
|           | 200.82   | 205.32 | 4.50   | 0.06   | 1.0     | 0.11
|           | 250.00   | 255.00 | 5.00   | 0.03   | 4.2     | 0.13
|           | 258.00   | 264.00 | 6.00   | 0.03   | 0.5     | 0.11
|           | 261.00   | 262.50 | 1.50   | 0.04   | 0.8     | 0.18

42

---



Interval
   Length
   Copper
   Silver
   Lead
   ZincFrom
   To
   (Cu)
   (Ag)
   (Pb)
   (Zn)Drill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (%)PR-06-01
   267.00
   271.50
   4.50
   0.15
   2.0
   0.25
   0.60(continued)
   379.50
   382.50
   3.00
   0.04
   1.0
   0.03
   0.22395.50
   401.50
   6.00
   0.02
   0.7
   0.05
   0.19406.00
   409.00
   3.00
   0.04
   1.0
   0.11
   0.25413.50
   417.00
   3.50
   0.14
   1.3
   0.00
   0.01420.00
   421.50
   1.50
   0.05
   2.7
   0.20
   0.95445.50
   451.50
   6.00
   0.05
   12.7
   0.31
   0.75445.50
   448.50
   3.00
   0.04
   20.8
   0.50
   1.27459.00
   462.00
   3.00
   0.03
   4.1
   0.11
   0.81465.00
   466.50
   1.50
   0.81
   514.0
   0.01
   0.05493.50
   496.50
   3.00
   0.09
   17.9
   0.34
   1.34








|           | Interval | Length | Copper | Silver | Lead    | Zinc | Gold
|---------- | -------- | ------ | ------ | ------ | ------- | ---- | ----
|           | From     | To     | (Cu)   | (Ag)   | (Pb)    | (Zn) | (Au)
|Drill Hole | (m)      | (m)    | (m)    | (%)    | (g/ton) | (%)  | (%) 
|PR-06-02   | 54.0     | 57.0   | 3.00   | 0.05   | 1.9     | 0.09 | 0.21
|           | 82.5     | 85.5   | 3.00   | 0.05   | 1.4     | 0.10 | 0.14
|           | 100.5    | 105.0  | 4.50   | 0.04   | 0.4     | 0.00 | 0.01
|           | 111.0    | 118.5  | 7.50   | 0.07   | 1.0     | 0.13 | 0.16
|           | 111.0    | 112.5  | 1.50   | 0.10   | 1.9     | 0.47 | 0.47
|           | 112.5    | 118.5  | 6.00   | 0.06   | 0.8     | 0.04 | 0.08
|           | 121.5    | 139.5  | 18.00  | 0.04   | 1.4     | 0.18 | 0.37
|           | 121.5    | 135.0  | 13.50  | 0.04   | 1.5     | 0.21 | 0.42
|           | 127.5    | 129.0  | 1.50   | 0.19   | 4.5     | 1.08 | 0.77
|           | 148.5    | 150.0  | 1.50   | 0.04   | 2.6     | 0.08 | 0.19
|           | 151.5    | 156.0  | 4.50   | 0.05   | 4.4     | 0.32 | 1.37
|           | 171.0    | 174.0  | 3.00   | 0.07   | 6.2     | 0.36 | 0.46
|           | 172.5    | 174.0  | 1.50   | 0.08   | 11.7    | 0.65 | 0.70
|           | 177.0    | 190.5  | 13.50  | 0.07   | 3.7     | 0.18 | 0.67
|           | 180.0    | 183.0  | 3.00   | 0.10   | 7.5     | 0.37 | 1.50
|           | 208.5    | 211.5  | 3.00   | 0.01   | 2.1     | 0.32 | 0.22
|           | 208.5    | 210.0  | 1.50   | 0.01   | 3.4     | 0.56 | 0.27
|           | 219.0    | 220.5  | 1.50   | 0.08   | 2.6     | 0.13 | 0.50
|           | 237.0    | 238.5  | 1.50   | 0.09   | 1.2     | 0.16 | 0.26
|           | 249.0    | 250.5  | 1.50   | 0.13   | 5.5     | 0.58 | 1.47
|           | 244.5    | 252.0  | 7.50   | 0.12   | 2.7     | 0.18 | 0.45
|           | 247.5    | 252.0  | 4.50   | 0.11   | 3.3     | 0.28 | 0.71
|           | 267.0    | 268.5  | 1.50   | 0.20   | 1.7     | 0.04 | 0.35
|           | 295.5    | 298.5  | 3.00   | 0.11   | 1.4     | 0.09 | 0.02
|           | 363.0    | 364.5  | 1.50   | 0.36   | 14.1    | 0.02 | 0.03









|           | Interval | Length | Copper | Silver | Cobalt  | Uranium
|---------- | -------- | ------ | ------ | ------ | ------- | -------
|           | From     | To     | (Cu)   | (Ag)   | (Co)    | (U3O8) 
|Drill Hole | (m)      | (m)    | (m)    | (%)    | (g/ton) | (%)    
|PR-06-03   | 175.0    | 178.5  | 3.50   | 0.26   | 1.4     | 0.01   
|           | 228.0    | 229.5  | 1.50   | 0.68   | 1.0     | 0.00   
|           | 228.5    | 229.5  | 1.00   | 1.01   | 1.1     | 0.00   
|           | 324.5    | 326.0  | 1.50   | 0.57   | 1.0     | 0.00   
|           | 387.5    | 390.5  | 3.00   | 0.99   | 4.2     | 0.27   
|           | 387.5    | 388.5  | 1.00   | 0.09   | 4.0     | 0.79   
|           | 388.5    | 390.0  | 1.50   | 1.81   | 5.6     | 0.00   







43

---



|           | Interval | Length | Copper | Silver | Lead    | Zinc
|---------- | -------- | ------ | ------ | ------ | ------- | ----
|           | From     | To     | (Cu)   | (Ag)   | (Pb)    | (Zn)
|Drill Hole | (m)      | (m)    | (m)    | (%)    | (g/ton) | (%) 
|PR-06-04   | 71.5     | 73.0   | 1.50   | 0.04   | 0.6     | 0.02
|           | 86.5     | 88.0   | 1.50   | 0.02   | 0.5     | 0.03
|           | 92.5     | 95.5   | 3.00   | 0.02   | 1.1     | 0.21
|           | 101.5    | 103.0  | 1.50   | 0.02   | 1.8     | 0.04
|           | 175.0    | 176.5  | 1.50   | 0.03   | 0.5     | 0.01
|           | 187.0    | 188.5  | 1.50   | 0.04   | 1.0     | 0.02
|           | 226.0    | 227.5  | 1.50   | 0.03   | 0.5     | 0.02
|           | 236.5    | 239.5  | 3.00   | 0.03   | 1.9     | 0.08
|           | 241.0    | 242.5  | 1.50   | 0.06   | 0.8     | 0.01
|           | 301.0    | 304.0  | 3.00   | 0.10   | 0.2     | 0.00









|           | Interval | Length | Copper | Silver | Zinc   
|---------- | -------- | ------ | ------ | ------ | -------
|           | From     | To     | (Cu)   | (Ag)   | (Zn)   
|Drill Hole | (m)      | (m)    | (m)    | (%)    | (g/ton)
|PR-06-05   | 24.0     | 25.5   | 1.50   | 0.25   | 0.4    
|           | 115.5    | 120.0  | 4.50   | 0.03   | 0.6    
|           | 292.5    | 294.0  | 1.50   | 0.02   | 0.2    
|           | 356.5    | 359.5  | 3.00   | 0.36   | 0.4    
|           | 366.0    | 367.5  | 1.50   | 0.68   | 0.2    
|           | 370.5    | 385.5  | 15.00  | 0.11   | <.1    
|           | 374.5    | 376.0  | 1.50   | 0.32   | 0.5    
|           | 374.5    | 375.0  | 0.50   | 0.91   | 0.3    
|           | 375.5    | 376.0  | 0.50   | 0.04   | 1.0    
|           | 380.0    | 384.5  | 4.50   | 0.23   | 0.2    
|           | 380.0    | 380.5  | 0.50   | 0.60   | 0.3    
|           | 438.5    | 440.0  | 1.50   | 0.06   | 1.1    









|           | Interval | Length | Copper | Silver | Zinc   
|---------- | -------- | ------ | ------ | ------ | -------
|           | From     | To     | (Cu)   | (Ag)   | (Zn)   
|Drill Hole | (m)      | (m)    | (m)    | (%)    | (g/ton)
|PR-06-06   | 99.0     | 100.5  | 1.50   | 0.19   | 0.7    
|           | 232.5    | 234.0  | 1.50   | 0.02   | 0.8    
|           | 283.5    | 286.5  | 3.00   | 0.00   | 0.1    
|           | 288.0    | 291.0  | 3.00   | 0.01   | 0.4    
|           | 399.0    | 406.5  | 7.50   | 0.03   | 0.4    
|           | 403.5    | 406.5  | 3.00   | 0.02   | 0.4    
|           | 418.5    | 423.0  | 4.50   | 0.39   | 1.0    





44

---



Interval
   Length
   Copper
   Silver
   Cobalt
   Lead
   Zinc
   Nickel
   UraniumFrom
   To
   (Cu)
   (Ag)
   (Co)
   (Pb)
   (Zn)
   (Ni)
   (U3O8)Drill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (%)
   (%)
   (%)
   (%)PR-06-09
   105.5
   110.5
   5.00
   0.18
   0.5
   0.00
   0.03
   0.01
   0.00
   0.22105.5
   107.0
   1.50
   0.37
   0.9
   0.01
   0.10
   0.02
   0.01
   0.70106.0
   107.0
   1.00
   0.54
   1.3
   0.01
   0.15
   0.01
   0.00
   1.05106.0
   106.5
   0.50
   0.95
   2.0
   0.03
   0.29
   0.02
   0.01
   2.07108.5
   110.5
   2.00
   0.17
   0.4
   0.00
   0.00
   0.01
   0.00
   0.01128.5
   131.0
   2.50
   0.50
   0.2
   0.00
   0.00
   0.02
   0.00
   0.02129.5
   130.0
   0.50
   0.73
   0.3
   0.00
   0.00
   0.02
   0.00
   0.06378.5
   380.0
   1.50
   0.03
   0.1
   0.01
   0.01
   0.20
   0.01
   0.00387.5
   389.0
   1.50
   0.36
   1.5
   0.01
   0.07
   0.08
   0.01
   0.00419.0
   429.5
   10.50
   0.03
   0.4
   0.01
   0.02
   0.22
   0.01
   0.00428.0
   429.5
   1.50
   0.05
   0.8
   0.01
   0.02
   0.55
   0.01
   0.00450.5
   453.5
   3.00
   0.36
   3.1
   0.20
   0.02
   0.08
   0.04
   0.00450.5
   452.0
   1.50
   0.58
   4.7
   0.38
   0.02
   0.05
   0.06
   0.00




Note: True thickness has not been calculated for these holes.



In February 2007, we reported that we received the results
from a five-hole summer/fall2006preliminary drill program at
Echo Bay (figure 10). The program was designed to re-evaluate the economic
potential of the former Eldorado-Echo Bay silver and uranium mining district.
The initial drill results discovered a new zone of hydrothermal and structurally
controlled poly-metallic vein breccias that are enriched in silver, copper,
nickel, cobalt, lead and zinc. The Echo Bay silver-uranium target is located on
our property, on the north side of Echo Bay. The Company has intersected 10.5
meters (34.7 feet) of 117.1 g/ton silver (3.77 ounces per ton), 0.14% copper,
0.46% lead. 0.21% zinc and 0.18% nickel at Echo Bay in Canada's Northwest
Territories. This interval also included 5.0 meters (16.5 feet) of 237.9 g/ton
silver (7.65 ounces per ton), 0.24% copper, 0.45% lead, 0.20% zinc, 0.37% nickel
and 0.09% cobalt which includes 1.50 meters (4.95 feet) of 739.5 g/ton silver
(23.79 ounce/ton), 0.19% copper, 0.56% lead, 0.45% zinc, 1.20% nickel, 0.22%
cobalt. A half meter zone of high grade 2,186.0 g/ton silver (70.33 ounce
per/ton), 0.78% zinc, 3.57% nickel, 0.31% copper and 0.65% cobalt was also
intersected in this interval.



Completion of the five drill holes confirms additional
poly-metallic mineralization at Echo Bay. Three of five drill holes intersected
multiple zones of altered and highly mineralized poly-metallic breccias with
disseminated and vein hosted copper, silver, cobalt, nickel, lead and zinc
mineralization. One hole was abandoned and one did not return significant
results. All drill cores were prepared, bagged and sealed by our supervised
personnel and were transported by plane to Acme Analytical Laboratories Ltd.
("ACME") in Yellowknife, NT where they were crushed and pulped, and then
transported to ACME's main laboratories in Vancouver, British Columbia for
assaying. Acme is a fully registered analytical lab compliant with the
International Standards Organization (ISO) for quality assurance.



Highlights from significant mineralized down-hole intervals
from the three new holes reporting significant values, include hole number:



- EBM-06-02

45

---

- including 5.0 meters (16.5 Feet) of 237.9 g/ton silver (7.65 ounces per
  ton), 0.24% copper, 0.45% lead, 0.20% zinc, 0.37% nickel, 0.09% cobalt,
- including 1.50 meters (4.95 feet) of 739.5 g/ton silver (23.79 ounces per
  ton), 0.30% copper, 0.47% lead, 0.45% zinc, 1.20% nickel, 0.22% cobalt.
- including 0.50 meters (1.65 Feet) of 2186.0 g/ton silver (70.33 ounces per
  ton), 0.78% zinc, 3.57% nickel, 0.31% copper, 0.65% cobalt.
- EBM-06-03intersected 22.50 meters (73.8
  feet) of 2.7 g/ton silver, 0.21% lead, 0.72% zinc.



Other significant poly-metallic IOCG style mineralized
down-hole intervals at: EBM-06-02 included 3.0 meters (9.9 feet) of 1.26%
lead, 2.75% zinc and 8.2 g/ton silver.



The Echo Bay Mine district is being targeted for silver and
uranium exploration. The mineralization occurs within the same suite of
volcano-plutonic rocks that host other poly-metallic zones in the Eldorado &
Contact lake mineral belt, including the former El Bonanza Silver (Ag) and the
Eldorado Uranium (U-Ag- Cu- Co- Ni- Bi) mines. Veins of the former Eldorado and
Echo Bay mines are situated in metasedimentary rocks, near the margins and
apices of porphyry stocks, between underlying batholiths and overlying volcanic
rocks. The cores and intermediate zones of the hydrothermal systems that are
responsible for these veins are possible loci for larger, more typical, bulk-mineable
IOCG-type deposits. Additional drill results are pending and will be released
when they are received by us.

46

---



The accompanying table gives a summary of drilling highlights
and assay results returned from three out of five holes reporting from Echo Bay
at Eldorado, NT.



ECHO BAY Drill Summary (Holes 2-3-5)



DRILL HOLE RESULTS




Interval
   Length
   Copper
   Silver
   Zinc
   Nickel
   Cobalt
   LeadFrom
   To
   (Cu)
   (Ag)
   (Zn)
   (Ni)
   (Co)
   (Pb)Drill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (%)
   (%)
   (%)EBM-06-02
   92.0
   98.0
   6.00
   0.03
   2.8
   0.26
   0.00
   0.02
   0.13113.0
   114.5
   1.50
   0.05
   2.6
   0.24
   0.00
   0.01
   0.08116.0
   118.0
   2.00
   0.04
   12.4
   0.45
   0.01
   0.02
   1.20121.5
   123.0
   1.50
   0.19
   739.5
   0.45
   1.20
   0.22
   0.56123.5
   126.5
   3.00
   0.30
   26.8
   0.11
   0.01
   0.03
   0.47116.0
   126.5
   10.50
   0.14
   117.1
   0.21
   0.18
   0.05
   0.46122.5
   123.0
   0.50
   0.31
   2186.0
   0.78
   3.57
   0.65
   0.13121.5
   126.5
   5.00
   0.24
   237.9
   0.20
   0.37
   0.09
   0.45135.5
   137.0
   1.50
   0.16
   8.3
   2.33
   0.03
   0.03
   1.21143.0
   147.5
   4.50
   0.09
   2.1
   0.21
   0.01
   0.03
   0.07168.5
   181.5
   13.00
   0.17
   3.0
   0.57
   0.01
   0.02
   0.41229.0
   232.0
   3.00
   0.09
   8.2
   2.75
   0.01
   0.03
   1.26232.0
   241.5
   9.50
   0.05
   1.3
   0.09
   0.03
   0.02
   0.04239.5
   240.5
   1.00
   0.06
   1.4
   0.35
   0.03
   0.02
   0.13244.5
   250.5
   6.00
   0.06
   1.1
   0.37
   0.03
   0.02
   0.03244.5
   247.5
   3.00
   0.05
   1.5
   0.74
   0.02
   0.01
   0.06






Interval
   Length
   Copper
   Silver
   Zinc
   Nickel
   Cobalt
   LeadFrom
   To
   (Cu)
   (Ag)
   (Zn)
   (Ni)
   (Co)
   (Pb)Drill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (%)
   (%)
   (%)EBM-06-03
   136.5
   138.0
   1.50
   0.01
   0.8
   0.12
   0.00
   0.01
   0.01150.0
   151.5
   1.50
   0.24
   1.4
   0.13
   0.01
   0.01
   0.03163.0
   165.3
   2.25
   0.11
   2.8
   0.12
   0.02
   0.02
   0.04178.5
   181.1
   2.55
   0.01
   1.0
   0.02
   0.00
   0.01
   0.33211.5
   213.0
   1.50
   0.35
   2.2
   0.14
   0.02
   0.01
   0.02279.5
   285.5
   6.00
   0.06
   0.9
   0.05
   0.03
   0.01
   0.03288.5
   299.0
   10.50
   0.07
   1.8
   0.36
   0.03
   0.02
   0.12295.5
   297.5
   2.00
   0.07
   4.4
   0.98
   0.05
   0.06
   0.21314.0
   336.5
   22.50
   0.06
   2.7
   0.72
   0.02
   0.02
   0.21314.0
   324.5
   10.50
   0.07
   3.3
   0.73
   0.02
   0.02
   0.15330.5
   332.5
   2.00
   0.05
   1.8
   0.21
   0.05
   0.04
   0.08327.5
   336.5
   9.00
   0.05
   2.3
   0.91
   0.02
   0.02
   0.34354.7
   357.5
   2.80
   0.03
   1.0
   0.34
   0.02
   0.01
   0.17362.0
   372.0
   10.00
   0.06
   0.8
   0.02
   0.03
   0.01
   0.01430.0
   433.0
   3.00
   0.09
   1.3
   0.20
   0.02
   0.01
   0.01






Interval
   Length
   Copper
   Silver
   Zinc
   Nickel
   Cobalt
   LeadFrom
   To
   (Cu)
   (Ag)
   (Zn)
   (Ni)
   (Co)
   (Pb)Drill Hole
   (m)
   (m)
   (m)
   (%)
   (g/ton)
   (%)
   (%)
   (%)
   (%)EBM-06-05
   4.0
   8.0
   4.00
   0.32
   1.0
   0.04
   0.01
   0.01
   0.0110.5
   12.0
   1.50
   0.16
   0.6
   0.03
   0.00
   0.01
   0.01




Note: True thickness has not been calculated for these holes.

47

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48

---





49

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3.  Port Radium - Crossfault Lake Mineral Claims, NT



During the year ended November 30, 2005, we acquired a 100%
undivided right, title and interest in 1,447.26 ha (3,574.73 acres) called the
Port Radium - Crossfault Lake Mineral Claims (figure 11), subject to a 2% NSR
and by paying $60,000 (paid) and issuing 450,000 of our common shares (issued
and valued at $297,000). We may purchase one-half of the NSR for a one-time
payment of $1,000,000.



The Crossfault Lake claim block, located to the north of
Contact Lake Project, includes five contiguous claims located on the east side
of Great Bear Lake, which include over 40 different metallic minerals, as
identified by past geologists. The Port Radium uranium belt was formerly one of
Canada's principal producers of Pitchblende uranium in the 1930s and 1940s.



Total expenditures related to the Port Radium - Crossfault
Lake Mineral Claims consist of acquisition costs of $357,000, made during the
year ended November 30, 2005.



A summary of our claims can be found below:



Name
   
   Tag Number
   
   Size (ha)GOSSAN 1
   
   F91851
   
   418.04GOSSAN 2
   
   F91858
   
   418.04CROSS
   
   F91458
   
   33.44RAD 1
   
   F91859
   
   253.76RAD 2
   
   F91860
   
   323.981,447.26






50

---





51

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4.  Port Radium - Eldorado Mineral Claims, NT



During the year ended November 30, 2005, we entered into an
agreement with South Malartic Exploration Inc. ("South Malartic") to purchase a
50% undivided right, title and interest in three mineral leases, totalling in
106.53 ha (263.13 acres) called the Eldorado Uranium Mine Mineral Leases (figure
12), for a cash payment $20,000 (paid). Acquisition of the properties also
entitled us to all property and historical data in South Malartic's possession,
including reports, maps, historical uranium production records, and uranium
assay reports.



The property is located on Labine Point at Port Radium, NT.
Starting in 1933, the mine produced 15 million pounds of high grade uranium and
8 million ounces of silver, plus copper, nickel, radium, lead and polonium. The
mine currently has about 40 km of existing underground workings on 14 levels.



Total expenditures related to the Port Radium - Eldorado
Uranium Mineral Claims consist of acquisition costs of $20,000, made during the
year ended November 30, 2005.



J. Fingler, P.Geo., of Vancouver, British Columbia completed
a National Instrument 43-101 compliant technical report dated August 10, 2006
("Technical Report") on the Eldorado-Port Radium Property. The Technical Report
provides a comprehensive description of the Eldorado-Port Radium Property
including previous work, geology and mineralization and also makes
recommendations for further work on the Property.



A summary of our claims can be found below:



Name
   
   Tag Number
   
   Size (ha)ELDORADO
   
   Lease 3032
   
   30.32ELDORADO
   
   Lease 3033
   
   44.81ELDORADO
   
   Lease 3034
   
   31.40106.53


52

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53

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5. North Contact Lake Mineral Claims - Contact Lake, NT



During the year ended November 30, 2006, we acquired a 100%
interest in 11 contiguous claims, comprising 5,867.23 ha (14,492.06 acres),
called the North Contact Lake Mineral Claims, in the Port Uranium Belt located
on Contact Lake on the east side of Great Bear Lake, NT (figure 13). The
acquisition increases our Eldorado & Contact Lake Mineral IOCG & Uranium Project
to 20,446.82 ha (50,503.65 acres).



The purchase from three individuals is subject to a 2% NSR,
and includes our issuance of 250,000 shares (issued and valued at $182,500) and
payment of $75,000 (paid). We may also purchase one half of the NSR for a
one-time payment of $1,000,000.



The property is the northern extension of the Contact Lake
Project and includes the Contact Lake - Echo Bay Stato-volcanic complex, having
hundreds of known or recorded copper, gold, silver, nickel, cobalt, REE and high
grade uranium occurrences identified in Proterozoic rocks.



Total expenditures related to the North Contact Lake Mineral
Claims consist of acquisition costs of $257,500 made during the year ended
November 30, 2006.



A summary of our claims can be found below:



Name
   
   Tag Number
   
   Size (ha)EC 1
   
   F98661
   
   250.82EC 2
   
   F98662
   
   731.57EC 3
   
   F98663
   
   836.08EC 4
   
   F98664
   
   587.35EC 5
   
   F98665
   
   55.60EC 6
   
   F98666
   
   192.30EC 7
   
   F98667
   
   477.82EC 8
   
   F98668
   
   1,045.10EC 9
   
   F98669
   
   1,045.10EC 10
   
   F98670
   
   627.06EC 24
   
   F98369
   
   18.435,867.23




54

---



55

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6.  Longtom Property - Longtom Lake, NT



By way of an option agreement dated February 12, 1998,
Mongolia Gold Resources Ltd. ("Mongolia Gold"), now known as Tyhee Development
Corp. ("Tyhee"), granted us an option to acquire a 50% interest, subject to a 2%
NSR in favour of Tyhee, in a group of contiguous mining claims known as the
Longtom Property.



The interest covers an area of 361.38 ha (892.61 acres) which
is located about 350 km northwest of Yellowknife, NT (figure 14). At the time of
the transaction, we did not have any directors in common with Mongolia Gold.



We exercised this option by incurring expenditures on the
Longtom Property of $200,000, by issuing 4,000,000 common shares in our capital
stock to Mongolia Gold and by paying surveying, filing and camp maintenance
costs totalling $30,000. We have the option to acquire the remaining 50%
interest, subject to a 2% NSR, in the Longtom Property from Tyhee by paying
$315,000. We may exercise this option at any time, though we are compelled to
exercise the option within 90 days from the date that we have incurred
$5,000,000 in exploration expenditures on the Longtom Property ($1,403,164
incurred, as of November 30, 2006). At our option, we may pay half of the
exercise price in our common shares. The deemed price of our common shares would
be the average TSX-V closing market price of our shares on the five trading days
immediately preceding and the five trading days immediately following the date
that the option exercise is triggered. We have the right to joint venture the
entire 100% interest in the Longtom Property prior to the exercise of the
option.



During the year ended November 30, 2003, we entered into a
non-binding letter of intent with Fronteer Development Group Inc. ("Fronteer"),
which furnishes Fronteer with up to a 75% interest in the property, by paying
$15,000 in cash over 3 years ($15,000 received) and incurring exploration
expenditures of $500,000 ($500,000 incurred).

56

---



Our expenditures related to the Longtom Property are
summarized as follows:





Cumulative 
   amounts from 
   inception to 30 
   November
   2006
   $
   For the year ended November 302006
   $
   2005
   $
   2004
   $Operating expensesAssays
   
   335
   
   -
   
   335
   
   -Camp and Field costs
   
   147,024
   
   -
   
   -
   
   -Consulting fees
   
   190,273
   
   -
   
   10,359
   
   125,948Drilling
   
   210,057
   
   -
   
   -
   
   -Geology and engineering (recovery)
   
   419,891
   
   893
   
   2,194
   
   (11,624)Travel
   
   322,529
   
   -
   
   12
   
   20,4891,290,109
   
   893
   
   12,900
   
   134,813Recoveries
   
   (52,497)
   
   (4,000)
   
   (3,000)
   
   (8,000)Sales of mineral property interests
   
   (55,000)
   
   -
   
   -
   
   -Write-off of mineral properties and related costs
   
   220,552
   
   -
   
   -
   
   -1,403,164
   
   (3,107)
   
   9,900
   
   126,813






The Longtom Property is located 50 km southeast of Great Bear
Lake, NT.



The area comprising the property was not explored in detail
until 1985 when Central Electricity Generating Board Exploration (Canada) Ltd.
("CEGB") conducted a three-year intensive program.



This exploration led to the discovery of the Damp
polymetallic prospect and the Maia and DW uranium showings on the Longtom
Property. In 1986, CEGB mapped the Damp-Fog grid in detail and conducted
detailed radiometric, magnetic and VLF-EM surveys over the area. The mineralized
outcrops were sampled by chipping and coring with a hand drill. Soil samples
were taken in the overburden-covered part of the grid. The data was compiled on
1:1000 scale maps. Additional prospecting and geological mapping on scale
1:12500 were conducted in the surrounding area.



The 1988 exploration program on the Longtom Property included
drilling of 1,016 meters in 16 holes at the Damp-Fog grid. The drilling
comprised 12 holes totalling 808 meters on the exposed part of the Damp breccia
zone and its strike projection to the east, two holes totalling 104 m on a
conductor zone at the northwest end of Seahorse Lake and one hole of 52 meters
on the Fog and DW uranium showings.

57

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Surface working during 1988 on an island and west shore of
Devil's Lake resulted in the discovery of showings containing significant
amounts of copper, molybdenum, cobalt, gold, silver, arsenic and nickel. Most of
the showings were magnetite-bearing veins, but one occurrence of
copper/molybdenum appears to be granite-related or porphyry copper-type. The
results of the exploration were regarded as not sufficiently encouraging in view
of declining uranium prices at that time. Consequently, CEGB allowed the
prospecting permits to lapse, but retained the Damp claim.



In 1996, Mongolia Gold acquired the Longtom Property and
conducted a surface exploration program that included examination of old and new
showings, a resampling of the Damp breccia zone and an airborne multiparameter
geophysical survey of the property. Channel cut sampling of the Damp breccia
zone confirmed the polymetallic nature of the prospect, but gold assays were
somewhat lower than the corresponding ones reported by CEGB. Prospecting and
trenching in the Devil's Lake area revealed extensions of gold-bearing
arsenopyrite veins, adding to the exploration potential of the area.



Mongolia Gold drilled four holes totalling 944.6 meters on
the Damp breccia zone in early 1997; three of the holes intersected
mineralization. The drilling extended the
copper-cobalt-silver-uranium-gold-bismuth mineralization to 150 meters, deeper
than tested previously. The mineralized zone is open at depth. The drilling also
encountered several mineralized intersections in other previously unknown parts
of the breccia zone.



Upon optioning the Longtom Property in 1998, we conducted a
Phase I exploration program on the property consisting of 157 km of line cutting
on a control grid covering a 12 km long "target belt," originating at the Damp
showing. A follow-up ground magnetic survey was also completed which more
precisely defines the magnetic anomalies on the showing.



In October 2002, we conducted a gravity survey of the Longtom
Property to detect potential anomalies caused by the presence of iron oxide,
copper and gold mineralization. The ground-helicopter supported gravity survey
was conducted over selected portions of the 7,948.84 hectares claim-block. The
data obtained from the survey is complimented by gravity data collected for
Hudson's Bay Exploration and Development Co. Ltd. in 2000 along the shores of
Longtom Lake, and by a comprehensive regional 10 km by 10 km gravity survey
completed by the Geological Survey of Canada. The objective of the survey was to
map the distribution of large masses of variable density.



A total of 243 detailed gravity stations were recorded at 500
m and some detail infill stations at 250 m. The gravity survey confirmed the
extent of what may be economic mineralization along a large structurally
controlled faulting system. The results show two significant 2.5-3.0 milligal
gravity anomalies. These two gravity anomalies are coincident with the strong
magnetic anomalies. The gravity anomalies occur along a 7.5 km long trend and
are up to 1.5 km in width. Combined gravity, magnetic and radiometric anomalies
are a common targeting criterion for iron-oxide/copper/gold mineralization, a
necessary component used to identify an economic ore body.

58

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In 2003, we conducted a 12 hole, 2,634 m drill program on the
Longtom Property. Two hundred forty three drill core samples were analyzed for
36 elements by a registered analytical laboratory using standard assay
techniques. Drill testing confirmed the polymetallic nature of the property with
appreciable copper, gold, cobalt, silver, uranium and iron over considerable
areas. Additional drilling is recommended to determine whether or not the
Longtom Property hosts economic uranium mineralization.



On September 14, 2004, we announced that drilling had
intersected high-grade uranium mineralization. During July and early August
2004, Fronteer completed a nine hole NQ diamond drilling program, realizing
2,132 meters of drilling designed to target iron oxide copper gold ("IOCG")
style mineralization, during which high grade uranium mineralization was found.
Fronteer's drilling intersected 1.68% U3O8 over three
meters and 0.16% U3O8 over one meter at a depth of 51
meters in the same hole.



Previous drill programs by other operators had previously
intersected high-grade uranium. Specifically, within a 300 meters radius of the
Fronteer drilling, eight past drilling holes had intersected uranium
mineralization. Based on these historical results, there is an implied
near-surface uranium system of size and high-grade potential.



In January 2005, Fronteer carried out a five-day
reconnaissance program to re-examine drill core from past operations. Fronteer
planned for no work on the Longtom Property in 2005 as of the publications of
their 2004 annual report, stipulating that any work done would be carried out by
Northwestern Mineral Ventures, with whom Fronteer had signed a letter of
agreement pertaining to an interest in the Longtom Property, on May 25, 2004.



During fiscal 2006, we let the following nine property claims
lapse:





|Claim Name |  | Tag Number |  | Size (ha)
|---------- |  | ---------- |  | ---------
|WET 1      |  | F59401     |  | 376.24   
|WET 2      |  | F59402     |  | 689.77   
|WET 3      |  | F59403     |  | 940.59   
|WET 4      |  | F59404     |  | 522.55   
|WET 5      |  | F59405     |  | 1,003.30 
|WET 6      |  | F59406     |  | 1,003.30 
|DEV 1      |  | F59422     |  | 1,024.20 
|DEV 2      |  | F48179     |  | 1,024.20 
|DEV 3      |  | F49139     |  | 1,003.30 
|           |  |            |  |          
|           |  |            |  | 7,587.45 





A summary of our Damp mineral lease claim can be found below:





|Claim Name |  | Tag Number |  | Size (ha)
|---------- |  | ---------- |  | ---------
|DAMP       |  | ML3759     |  | 361.38   
|           |  |            |  |          



59

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60

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7. Longtom Property (Target 1) - Longtom Lake, NT



In the year ended November 30, 2003, we acquired a 50%
interest in the Longtom Property (Target 1) for issuing 200,000 of our common
shares to the vendor and by paying $15,000. The claim is located on the east
side of Longtom Lake and covers 721.42 ha (1,781.90 acres). Figure 15 shows the
Target 1 claim boundaries. Figure 16 shows the geology of the Longtom
Properties.



This area is part of what is known as the Great Bear Magmatic
Zone (Figure 13), a north-trending belt 350 km long and 120 km wide, 350 km
southeast of Yellowknife that experiences long, cold winters and short, warm
summers.



Travel to the Target 1 claim can be accessed via aircraft. As
of December 31, 2004, it was known that no electricity was available at the site
and that surface water was plentiful within the boundaries of the property. No
known mineralization had been found in this target, nor were there any known
resources or reserves; sufficiency of surface rights and availability of power,
water, tailings storage and waste disposal areas, heap leach pad sites and
potential processing plant sites had not been addressed.



The potential of the Target 1 claim is based upon our
exploration results of the Longtom Property.



Total expenditures related to the Longtom Property (Target 1)
can be summarized as follows:





Cumulative amounts from inception to 30 November 2006
   $
   For the year ended November 302006
   $
   2005
   $
   2004
   $Operating expensesConsulting fees
   
   21,648
   
   -
   
   9,468
   
   12,180Geology and engineering
   
   2,103
   
   -
   
   2,103
   
   -23,751
   
   -
   
   11,571
   
   12,180Acquisition of mineral property interests
   
   71,000
   
   -
   
   -
   
   -Recoveries
   
   (3,530)
   
   -
   
   (3,530)
   
   -91,221
   
   -
   
   8,041
   
   12,180






A summary of our claim can be found below:





Claim Name
   
   Tag Number
   
   AcreageTARGET 1
   
   F71013
   
   1,781.90


















61

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62

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63

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8.  MacInnis Lake Property - MacInnis Lake, Northwest
Territories



During the year ended November 30, 2005, we acquired a 100%
interest in twelve mineral claims called the MacInnis Lake Uranium Claims for
cash payments of $60,000 (paid) and the issuance of 300,000 of our common shares
(issued and valued at $70,500). The claims, depicted in figure 17 are subject to
a 2% NSR. The claims are comprised of 7,670.07 ha (18,945.07 acres). We are able
to purchase one-half of the NSR for a one-time payment of $1,000,000.



We also acquired a 100% interest in three additional claims,
totalling 2,926.28 ha (7,227.91 acres) and adjacent to the MacInnis Lake
Property, subject to a 2% NSR, payment of $40,000 (paid) and issuing 350,000 of
our shares (issued and valued at $87,500). After completion of both of the
transactions, the MacInnis Lake Property covers 10,596.35 ha (26,172.98 acres).



In 2005, we also entered onto an option agreement with Max
Resource Corp. ("Max Resource"), whereby Max Resource may earn up to a 50%
undivided, right, title and interest in the MacInnis Lake Property by paying us
$30,000 cash ($15,000 paid), issuing us 200,000 common shares of their company
(received and valued at $82,000) and completing $2 million in exploration work
over five years according to the following schedule:

- Pay $15,000 on signing (received);
- Pay $15,000 and incur exploration expenditures of $750,000 ($319,748 to
 date) by April 1, 2006;
- Incur cumulative exploration expenditures of $1,000,000 by April 1, 2007;
- Incur cumulative exploration expenditures of $1,250,000 by April 1, 2008;
- Incur cumulative exploration expenditures of $1,500,000 by April 1, 2009;
 and
- Incur cumulative exploration expenditures of $2,000,000 by April 1, 2010.

In addition to the above, Max Resource is responsible for all
cash payments to the underlying property vendor during the option period. We are
the operator of the project and as such, incur all costs and recover the costs
from Max Resource until such time as Max Resource has earned into the project.



We have halted exploration activities on this property
pending resolution and governmental clarification of permit issues in this
region.

64

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Our expenditures related to the MacInnis Lake Property can be
summarized as follows:





Cumulative 
   amounts from 
   inception to 
   30 November
   2006
   $
   For the year ended November 302006
   $
   2005
   $
   2004
   $Operating expensesConsulting fees
   
   71,026
   
   1,500
   
   69,526
   
   -Geology and engineering
   
   12,176
   
   1,731
   
   10,445
   
   -Surveying
   
   213,025
   
   -
   
   213,025
   
   -Travel
   
   8,734
   
   -
   
   8,734
   
   -304,961
   
   3,231
   
   301,730
   
   -Acquisition costs
   
   258,000
   
   -
   
   258,000
   
   -Recoveries
   
   (349,748)
   
   (15,000)
   
   (334,748)
   
   -213,213
   
   (11,769)
   
   224,982
   
   -






The MacInnis Lake uranium block is located in the Nonacho
Basin, 150 km northeast of Fort Smith, which is 275 km southeast of Yellowknife,
NT. The area contains 28 known high-grade uranium showings, discovered between
1954 and 1988, by previous explorers Cominco, Shell, PNC and Uranerz. The basin
itself is a sandstone terrain of the Proterozoic age, geographically analogous
with the Athabasca Basin in Northwest Saskatchewan.



In June 2005, an airborne survey was completed of the area by
Fugro Airborne Surveys, with a focus on uranium deposits discovery and a
emphasis on unconformity related deposits. The surveys covered 950 line km along
east-west orientation, with 200 meters spacings, using a specially modified
Dash-7 aircraft. Max Resources also planned regional mapping, trenching, review
of archived drill data and follow up ground geophysics. Diamond drilling will
commence upon receipt of the necessary permits.



A summary of our claims can be found below:





Name
   
   Tag Number
   
   Size (ha)KULT 2
   
   F90257
   
   1,045.10KULT 3
   
   F90258
   
   1,045.10KULT 4
   
   F70809
   
   836.08KULT 5
   
   F90260
   
   1,045.10INN 2
   
   F79832
   
   167.22INN 3
   
   F79833
   
   250.74INN 4
   
   F79834
   
   940.59INN 5
   
   F67474
   
   940.59INN 6
   
   F79836
   
   652.98INN 7
   
   F79837
   
   1,024.20INN 8
   
   F79838
   
   1,003.30INN 9
   
   F79839
   
   42.20INN 10
   
   F79840
   
   235.43INN 11
   
   F79808
   
   1,024.00INN 12
   
   F79809
   
   343.7210,596.35




65

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66

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Contact Lake - Eldorado Area Geological Setting



1.  Regional Geology



Adapted from Hildebrand, 1981; Hildebrand et al.1987; and
Hoffman and Hall, 1993



The Port Radium-Echo Bay Project is located in the northern
portion of the Great Bear Magmatic Zone (GBMZ), part of the Bear Structural
Province of the Canadian Shield (Figure 18). The Bear province covers some
40,000 square kilometres (100 x 400 km) and consists of the gneissic Coronation
Geosyncline to the east, and the GBMZ to the west, with the long-lived,
polyphase Wopmay Deformation Zone (WDZ) separating the two terranes (Hildebrand,
1986) (Figure 19). This orogenic zone developed on the western side of the
Archean Slave craton between 2.1 and 1.8 Ga. Hoffman (1980a) divided the Wopmay
Deformation Zone into four distinct tectonic zones: (1) a thin autochthonous
cratonic cover and foreland basal sequence overlies the northwestern area of the
Slave Craton (2) the Asiak fold and thrust belt of of continental shelf and
carbonate sequences overthrust on the Craton (3) the Hepburn orthotectonic zone
of deformed rift sediment-volcanic sequences intruded by post tectonic S-type
plutons (4) the little deformed GBMZ, of subgreenschist facies
volcano-sedimentary sequences intruded by I-type plutons. The GBMZ is onlapped
by platformal Paleozoic cover sequences to the west. The Port Radium-Echo Bay
Property is situated in the western part of the GBMZ.



The Hottah Terrane is a basement continental calc-alkaline
volcano-plutonic arc and associated sedimentary rocks which formed above an
eastward subducting plate along the western margin of the Slave Province
(Hildebrand et al. 1987; Clowes, 1997). The volcano-sedimentary rocks of this
terrane were cut by calc-alkaline biotite-hornblende bearing plutons with ages
ranging from 1.914 Ga to 1.902 Ga.. A depositional prism of geosynclinal shelf
and slope sediments (Epworth, Snare and Akaitcho Groups) of the Coronation
Supergroup formed at the edge of the continental margin and at about 1.90 Ga,
arc magmatism stopped and a bimodal suite of submarine volcanic rocks erupted
onto the block faulted and subsided sediments of the margin. This
tectono-magmatic episode lasted only 5-10 Ma, related to intra-arc extension
which also generated a marginal basin originally to the east of the Hottah arc.
The basin filled with siliciclastic and carbonate rocks overlying the volcanic
succession and lapping on to the Slave craton to the east.



Within 5-10 Ma, the sedimentary basin was simultaneously
shortened and intruded by peraluminous to metalumious plutons of the Hepburn
intrusive suite (1.896-1.879 Ma). The shortening resulted in detachment and
eastward thrusting of the imbricated basinal sediments into the Calderian
accretionary wedge forming the Asiak Fold belt in the east and the Hepburn
plutonic and metamorphic zone (Turmoil Klippe) in the west part of the former
basin. As the hot plutons of the Hepburn suite were emplaced over the colder
authochton of the western Slave craton, inverted metamorphic isograds developed.



The 1.878 Ga closure of the marginal basin resulted in the
initiation and growth of the 1.876 -1.850 Ga continental, arc complex of the
GBMZ at the suture between the Hottah arc to the west and the Hepburn suite to
the east. The Great Bear Magmatic Zone is a 400 meter long x 100 meter wide
corridor which is the product of the final stages of continental volcanism and
related plutonic activity.

67

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68

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69

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It consists of low titanium/high aluminum calc-alkaline
volcano-plutonic rocks which have been intruded by a suite of hornblende and
biotite bearing plutons of similar age (Hoffman and Bowring, 1984; Hildebrand
and Bowring, 1084). The thick supracrustal sequences are referred to as the
McTavish Supergroup, and consist of sub-greenschist facies, calc-alkaline
andesitic to rhyolitic volcanic, volcaniclastic and sedimentary rocks, which
have been interpreted as remnants of ancient stratovolcanoes and the products of
caldera collapse (Hildebrand, 1984).



The occurrence of these sequences as isolated roof pendants
within larger batholiths of the GBMZ hinders regional stratigraphic correlations
between widely spaced regions. The northern part of the GBMZ is underlain by a
10 km thick section of supracrustal rocks of the MacTavish Supergroup, which
comprises three Groups: the Labine, Dumas and Sloan, in ascending order. The
southern part of the GBMZ is underlain by a 5 km thick section of the Faber
Group, which has been interpreted as broadly correlatable with the Sloan Group.
These units occupy the central core of the GBMZ, and are flanked to the west and
east, by rocks of the Labine and Dumas Groups, respectively. Cannuli (1989) also
suggested that the Labine and Dumas may be broadly correlative and that the
distribution of supracrustal sequences define a regional scale syncline within
the GBMZ volcano-plutonic complex. Ghandi (1994) noted that synvolcanic quartz
monzonitic plutons within the stratigraphy of both the Labine and Faber Groups
were closely coeval; however, the predominantly basaltic and less andesitic
strata of the Labine Group contrasts with the more felsic strata of the Faber
and Sloan Groups. The Faber Group volcanic sequences were suggested to be
texturally and chemically similar to products formed in anorogenic extensional
settings, such as in the Missouri granite-rhyolite terrane and the Gawler ranges
of South Australia, rather than a subduction setting (Ghandi, 1994).



The Labine Group, which represents the main magmatic arc in
the western part of the GBMZ, consists of a 7 km thick section of
volcanic-derived rocks which is exposed in the Port Radium-Echo Bay area. The
Labine Group consists of the lower Port Radium Formation and the overlying Echo
Bay and Cameron Bay Formations, which collectively define a minimum of two
caldera collapse sequences. The rocks of the Labine Group have been intruded
along a minimum of two stratigraphic levels, by intermediate plutons and largely
concordant sills of the Mystery Island Intrusive Complex. The lower sheet
includes the Bertrand and Mystery Island plutons and the upper sheet includes
the Contact Lake and Glacier/Tut plutons. These intrusive typically have
pronounced zoned alteration haloes within the intrusions and/or their flanking
host rocks. Large, felsic syn- to post-volcanic, granite to monzonite plutons of
the Great Bear batholith also intrude this sequence. These intrusions have
locally developed hornfels aureoles but lack the strong alteration associated
with the earlier intermediate sills.



The cessation of volcanism in the GBMZ may have been the
result of subduction of an oceanic spreading ridge or other high topographic
features such as remnant arcs. Gravity studies have suggested the presence of
another arc further to the west (Fort Simpson arc) existed on the western side
of the ocean, and now under Paleozoic cover. The cessation of arc magmatism due
to ridge subduction is common to Mesozoic-Cenozoic volcanic arcs worldwide, such
as in South America, where the Chile Rise and Nazca Ridge were subducted into
the Peru-Chile Trench and in California, where the East Pacific Rise was
subducted under North America (Hildebrand, et al. 1987). Such an event may also
have resulted in a change in plate motion in the GBMZ, to transpression (dextral
wrenching) and folding oblique to the original subduction direction (Bowring,
1984). As a result, the concordant plutons and their host rocks were folded
around NW trending axes at about 1.843 Ga (Bowring, 1984), exposing the plutons
and their altered waIlrocks in oblique cross-section.

70

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Post-dating the development of the northwest trending folds,
large, discordant, epizonal, biotite bearing granites and quartz diorites were
emplaced between about 1.858 and 1.843 Ga (Bowring and van Schmus, 1987), formed
as a result of melting due to crustal thickening from folding (Hildebrand et al,
1987). Bodies of this syenogranitic suite are also offset by continued movement
on a swarm of later transcurrent, predominantly north to northeast trending
faults. These structures were developed as a result of east-west shortening
which generated the northeast trending, dextral strike-slip structures (Hoffman,
1980; Hildebrand et al., 1987). Evidence of plutonism in this setting is noted
as swarms of related northeast trending dykes.



Movement on these northeast faults is related to displacement
on north-south, transcurrent fault zones, parallel to the Wopmay Deformation
Zone. Displacement along these structures continued after the development of the
igneous and sedimentary rock assemblages in the GBMZ, commonly resulting in
kilometre scale offset of units.



The northeast trending faults are also cut by Cleaver diabase
(Hoffman, 1984; Hildebrand, 1982), and both are unconformably overlain by the
sedimentary basin of the 1.663 Ga Hornby Bay Group (McGrath and Hildebrand,
1984; Bowring and Ross, 1985) . Hildebrand (1988) noted that many of the
northeasterly faults were reactivated during a period of normal faulting which
occurred during the late stages of, or after, the deposition of the Hornby Bay
Group (Hildebrand, 1988). Gabbro sills known as Western Channel diabase are
considered to be the youngest rocks in the area (Hildebrand, 1982).

2. Local Geology



Adapted from Hoffman & McGlynn, 1977;Hildebrand, 1981;
Reardon, 1992; Robinson & Ohmoto, 1971. The geology of the Port Radium-Echo Bay
area, as shown in Figure 15, has been compiled from mapping completed by
Hildebrand, 1981 and Reardon, 1992.

71

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72

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Stratigraphy



The Port Radium-Echo Bay area is underlain by
volcano-sedimentary rocks of the Labine Group, which is subdivided into 3 main
formations: Port Radium, Echo Bay, Cameron Bay (Table 2). These are further
subdivided into members which represent two main eruptive caldera phases: an
early phase characterized by relatively gas-poor eruptions of andesitic lavas
(Port Radium and Echo Bay Formations) and a younger, more gas-charged phase of
voluminous siliceous volcanics and volcaniclastics (within the Cameron Bay and
Feniak Formations) (Hildebrand, 1981). The stratigraphy can be locally isolated
into distinct calderas, 3 to 5 km in diameter. The two cycles of caldera
collapse, resurgence and intermediate plutonism are characterized by cone facies
andesite, marr diatreme breccias and caldera fill sediments.



Lithogeochemical studies indicate that the Labine sequence is
high in potassium (K), calc-alkaline belt of stratavolcanoes similar to Andean
continental arc sequences (Ewart and LeMaitre, 1980). The sequence has only been
subjected to low grade metamorphism (zeolite facies), with local contact
metamorphic effects (i.e. hornfels) noted in supracrustal rocks flanking large
plutons of the Great Bear Batholith series.



The Eldorado & Contact Lake IOCG & Uranium Projects 2007
Explorations Program



Proposed personnel requirements and budgets for the 2007
drilling and exploration programs are illustrated in the Tables below.

# Personnel
   
   DaysDiamond Drillers (three drills)
   
   12
   
   120Drill Foreman
   
   1
   
   120Geologists - Drill support
   
   4
   
   120Core samplers, splitters, sawers, geo-assistants
   
   6
   
   120Field Geologists - experienced
   
   4
   
   75Student geo-assistants
   
   3
   
   75Geophysics crew
   
   4
   
   60Line cutters
   
   4
   
   50Cook
   
   2
   
   120Camp, Logistics, Project Handyman
   
   1
   
   120Helicopter Pilot
   
   2
   
   120Miscellaneous Project Support (helicopter-mechanic,
   Government geologists, remote sensing mechanics, etc)
   
   2 - 4
   
   variableVisitors (Alberta-Star, investors, community leaders, etc)
   
   2 - 4
   
   variableProject Manager
   
   1
   
   120Total
   
   50


73

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The Eldorado & Contact Lake IOCG & Uranium Projects 2007 -
Budget



Field GeologyGeologists, line cutting
   
   2,000,000Reconnaissance mapping, sampling, ground I.P.Detailed mapping and sampling, geological supportGeophysicsIP and surveying
   
   300,000Camp and Logistics, Fixed-wing Air SupportDiamond Drilling30,000 meters (80-90 holes)Sampling and assayingHelicopter support
   
   5,800,000Program Total
   
   $15,000,000




Mineral Claim and Lease Claim Payments in the Northwest
Territories



In order to retain property title or mineral claims in the
Northwest Territories, the Company must file at least $4 per acre during the
two-year period immediately following the date the claim is recorded. In respect
to the representation of work, the types of undertakings on the claims are as
follows:



- Drilling
- Trenching
- Sinking shafts
- Geochemical and geophysical investigation made on the ground or by aircraft
- Surveyor claims must be proved by the surveyor general
- Work done in constructing roads and airstrips

The Company must pay annual payments to the federal
government in order to maintain lease claims.

ITEM 4A - Unresolved Staff Comments



This item is not applicable as we are not an accelerated
filer or a large accelerated filer or a well-seasoned issuer.

74

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ITEM 5 - Operating and Financial Review and
Prospects



Our company is engaged in the acquisition, exploration and
development of resource properties. As we are currently in the exploration
stage, we have had no operating revenue during the years ended November 30,
2006, 2005 and 2004. As of November 30, 2006, we have conducted exploration work
on several properties located in the Northwest Territories, Canada.



This discussion and analysis of the operating results and
financial position of our company for the three years ended November 30, 2006,
2005 and 2004 should be read in conjunction with the financial statements and
the related notes included in Item 17.



Exchange Rates



Transaction amounts denominated in foreign currencies are
translated into functional currency at exchange rates prevailing at transaction
dates.



Inflation



Based on prior history for at least the past two fiscal
years, we do not believe that inflation will have a materially adverse effect on
our financial condition. However, no assurance can be given that we will not
experience a substantial increase in inflation.

Financial Instruments and Other Instruments



> Fair Value
>  
>  The fair value of cash and cash equivalents, amounts
>  receivable, accounts payable and accrued liabilities approximates their
>  carrying value due to the short-term nature of these financial instruments. The
>  fair value of available for sale investments is equivalent to market value,
>  although available for sale investments are carried at the lower of cost or
>  market value.
>  Exchange Risk
>  
>  We operate in Canada and so are not subject to foreign
>  currency risk arising from changes in exchange rates with other currencies.
>  Interest Rate Risk
>  
>  We are exposed to interest rate risk on our short-term
>  investments, but this risk relates only to investments held to fund future
>  activities and does not affect our current operating activities.
>  Credit Risk
>  
>  We place our temporary investment funds with Government and
>  bank debt securities and are subject to minimal credit risk with regard to
>  temporary investments.

We do not have any risk associated with other instruments, as
in those that may be settled by the delivery of non-financial assets.

75

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A.  Operating Results

Year ended November 30, 2006 compared to year ended November 30,
2005



We incurred a net loss of $13,060,169 under United States
GAAP for the fiscal year ended November 30, 2006 as compared to a loss of
$2,832,810 for fiscal 2005. The increase in our net loss in the 2006 fiscal year
over 2005 can be attributed to the acceleration of our exploration costs,
relating to our mineral property interests in the Northwest Territories, and in
particular, to our Contact Lake Mineral Claims and Eldorado/Port Radium -
Glacier Lake Mineral Claims, on which we spent a total of $8,359,925 and
$844,582 respectively.



This increase in development activities incurred a
corresponding increase in general and administration expenses for the year ended
November 30, 2006 of $3,522,606; a total of $4,402,693 was spent in fiscal year
2006, as compared to $880,087 in the comparable period of 2005. This amount
includes advertising and promotion costs of $247,563, office and miscellaneous
costs of $181,523 and stock-based compensation, a non-cash expense, of
$3,237,869. These costs in the 2005 comparable period were $124,842, $57,321 and
$185,580, respectively, with notable increases in the areas of directors fees
(2006 - $30,950, 2005 - $Nil), filing and financing fees (2006 - $93,387, 2005 -
$56,587), legal and accounting expenses (2006 - $178,794, 2005 - $149,959),
management fees (2006 - $135,000, 2005 - $60,000), rent and utilities expenses
(2006 - $38,656, 2005 - $9,350) and transfer fees and shareholder information
(2006 - $102,543, 2005 - $79,438); notable decreases between fiscal year 2006
versus 2005 were found in consulting fees which decreased by $16,448.

Contact Lake Mineral Claims

In the year ended November 30, 2005, we acquired a 100%
undivided right, title and interest in five mineral claims totalling 1,801.02 ha
(4,450.50 acres) in the   Northwest Territories. During the year, we
staked an additional 8,799.75 ha (21,735.38 acres) in the area and the Contact
Lake Mineral Claims now consist of 16   contiguous claims.

In the year ended November 30, 2006, expenditures, net of
recoveries, comprised of assays, camp and field costs, consulting fees,
drilling, geology and engineering, surveying, transportation, travel and
acquisition costs increased by $7,273,633 from the comparable period of 2005, to
$8,359,925 from $1,086,292.

Port Radium - Glacier Lake Mineral
Claims

During the year ended November 30, 2005, we acquired a 100%
undivided right, title and interest in four mineral claims in the Northwest
Territories, for cash payments of $30,000 and the issuance of 360,000 of our
common shares.

In the year ended November 30, 2006, expenditures, net of
recoveries, comprised of camp and field costs, consulting fees, geology and
engineering, surveying, transportation, travel and acquisition costs increased
by $742,582 from the comparable period of 2005, to $844,582 from $102,000.

76

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Port Radium - Crossfault Lake Mineral Claims

During the year ended November 30, 2005, we acquired a 100%
undivided right, title and interest in five mineral claims in the Northwest
Territories for cash payments of $60,000 and the issuance of 450,000 of our
common shares.

Total expenditures related to this property consist solely of
acquisition costs of $357,000 from November 30, 2005.

Port Radium - Eldorado Mineral Claims (Uranium Lease Claims)

During the year ended November 30, 2005, we entered into a
lease agreement to purchase a 50% undivided right, title and interest in three
mineral claims in the Northwest Territories, for cash payment of $20,000.

Total expenditures related to this property consist solely of
acquisition costs of $20,000 from November 30, 2005.

North Contact Lake Mineral Claims

During the year ended November 30, 2006, we acquired a 100%
right, title and interest in eleven mineral claims in the Northwest Territories
for cash payments of $75,000 and the issuance of 250,000 of our common shares.

Total expenditures related to this property consist solely of
acquisition costs of $257,000 from November 30, 2005.

Longtom Property

During the year ended November 30, 2003, we acquired a 50%
undivided interest in the Longtom Property, located about 350 km northwest of
Yellowknife, in the NT.

During the year ended November 30, 2006, our operating costs
for the property decreased to $893 from $12,900 for the year ended November 30,
2005, pursuant to our entering into a letter of intent with Fronteer. Fronteer
will be the operator of the Longtom Property through its payment to us of
$15,000 cash (received) and by spending an aggregate of $500,000 (incurred) on
exploration expenditures over the three year period from October 27, 2004 to
October 27, 2006.

In the year ended November 30, 2006, expenditures, net of
recoveries, comprised of assays, consulting fees, geology and engineering and
travel declined by $13,007 from the comparable period of 2005, to a recovery of
$3,107 from an expenditure of $9,900.

Longtom Property (Target 1)

During the year ended November 30, 2003, we acquired a 50%
interest in a mineral property located in the Longtom Lake area of the Northwest
Territories, Canada.

In the year ended November 30, 2006, expenditures, net of
recoveries, comprised of consulting fees and geology and engineering expenses
declined by $8,041 from the comparable period of 2005, to $Nil.

77

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MacInnis Lake Property

During the year ended November 30, 2005, we acquired a 100%
interest in a total of 15 mineral claims southeast of Yellowknife, NT. During
the same period, we entered into an agreement with Max Resource, whereby Max
Resource may earn up to a 50% interest in all of the claims by paying us $30,000
in cash, issuing us 200,000 shares in their company and expending $2 million in
exploration work over a five year period, beginning April 1, 2006. In addition,
Max Resource is responsible for all cash payments the to the underlying property
vendor for the option period.

In the year ended November 30, 2006, expenditures, net of
recoveries, comprised of consulting fees, geology and engineering, surveying,
travel and acquisition costs declined by $236,751 from the comparable period of
2005, to a recovery of $11,769 from an expenditure of $224,982.

Abandoned Properties

During the year ended November 30, 2006, we abandoned our
interest in two additional properties: the Longtom Property Target 2 - Longtom
Lake, NT; and the Meridian Lake Property - Reliance, NT. Expenditures, net of
recoveries, for the year ended November 30, 2006 for these two properties were
$Nil and $Nil, respectively, as compared to $8,041 and $10,000, respectively,
for the year ended November 30, 2005.

During 2007 we plan to continue with acquiring and exploring
new and existing claims and disposing of claims that we find geologically
insignificant.



Year ended November 30, 2005 compared to year ended November 30,
2004



We incurred a net loss of $2,832,810 under United States GAAP
for the fiscal year ended November 30, 2005 as compared to a loss of $1,889,340
for fiscal 2004. The increase in our net loss in the 2005 fiscal year over 2004
can be attributed to the acceleration of our acquisition and exploration costs,
relating to our mineral property interests in the Northwest Territories, and in
particular, to our Contact Lake Property, on which we spent a total of
$1,086,292.



This increase in development activities incurred a
corresponding increase in general and administration expenses for the year ended
November 30, 2005 of $238,058; a total of $880,087 was spent in fiscal year
2005, as compared to $642,029 in the comparable period of 2004. This amount
includes advertising and promotion costs of $124,842, legal and accounting fees
of $149,959, transfer fees and shareholder information costs of $79,438, office
and miscellaneous costs of $57,321, consulting fees of $43,900 and management
fees of $60,000. These costs in the 2004 comparable period were $142,905,
$106,587, $78,332, $70,547, $66,528 and $60,000, respectively, with notable
increases in the areas of bank charges and interest (2005 - $8,146, 2004 -
$3,967), filing and financing fees (2005 - $56,587, 2004 - $28,280), legal and
accounting expenses (2005 - $149,959, 2004 - $106,587) and stock based
compensation expenses (2005 - $185,580, 2004 - $Nil); notable decreases between
fiscal year 2005 versus 2004 were found in office and miscellaneous expenses, a
decrease of $13,226.

78

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Year Ended November 30, 2004 Compared to Year Ended November 30,
2003



We incurred a net loss of $1,889,340 under United States GAAP
for the fiscal year ended November 30, 2004 as compared to a loss of $2,043,936
for fiscal 2003. The decrease in net loss is primarily a result of a deferred
tax recovery in 2004 of $141,100 relating to the issue of flow-through shares.
At November 30, 2004, we had working capital of $2,056,476 as opposed to
$209,163 at November 30, 2003.

B.  Liquidity and Capital Resources



General

Since our incorporation, we have financed our operations
almost exclusively through the sale of our common shares to investors. As we are
a mining exploration and development company with no producing resource
properties, we do not generate operating income or cash flow from our business
operations. Until a significant body of ore is found, our working capital
requirements are not significant, and we expect to continue to finance
operations through the sale of equity in fiscal 2007. There is no guarantee that
we will be successful in arranging financing on acceptable terms.



To a significant extent, our ability to raise capital is
affected by trends and uncertainties beyond our control. These include the
market prices for base and precious metals and results from our exploration
programs. Our ability to attain our business objectives may be significantly
impaired if prices for metals such as gold and uranium fall or if results from
our intended exploration programs on our properties are unsuccessful.



At November 30, 2006, we had cash on hand of $30,149,153,
available for sale investments of $72,000, amounts receivable of $358,427 and
prepaid expenses of $111,016; liabilities consisted of accounts payable and
accrued liabilities totalling $465,922. Amounts for the comparable period of
2005 were $11,841,868, $82,000, $40,843, $Nil and $79,588 representing cash on
hand, available for sale investments, amounts receivable, prepaid expenses and
liabilities consisting of accounts payable and accrued liabilities,
respectively.



At November 30, 2006, we had working capital of $30,224,674.
During fiscal 2006, we generated $6,987,056 through the exercise of outstanding
warrants and incentive stock options, though we spent $1,218,894 in relation to
share issuance costs. Management has estimated that we will have adequate funds
from existing working capital to meet our corporate, administrative and property
obligations for the coming year. If we are to advance or develop our mineral
properties further, it will be necessary to obtain additional financing and
while we have been successful in the past, there can be no assurance that we
will be able to do so in the future.



We do not have any loans outstanding at this time.



79

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Financing Activities

A total of $28,065,162 in equity was raised in fiscal 2006. A
summary of the components of the funds raised in 2006 and the two prior years is
as follows:

2006
   $
   2005
   $
   2004
   $Issuance of common shares
   --
   3,460,875
   --Issuance of flow-through shares
   16,556,290
   2,936,950
   2,695,560Issuance of Warrants
   5,740,710
   4,102,176
   544,720Warrants exercised
   6,467,056
   1,361,462
   784,492Options exercised
   520,000
   355,149
   40,600Share issuance costs
   (1,218,894)
   (341,022)
   (217,898)28,065,162
   11,875,590
   3,847,474




The particulars of all capital raising transactions for the
last two years are detailed below. Proceeds of these financings have been used
for exploration and for development expenditures (only when and if warranted) in
connection with our mineral projects, for working capital and for acquisition of
additional projects.

1. On April 25, 2006, we issued 5,500,000 units at a price of $1.85 per unit.
 Each unit consists of one common share and one half-share purchase warrant.
 Each share purchase entitles the holder to purchase an additional common share
 at a price of $2.10 up to October 25, 2007. At November 30, 2006, all of the
 related share purchase warrants remained outstanding. All of these common
 shares were issued as flow-through shares under the Income Tax Act (Canada) and
 were not yet renounced to the investors at November 30, 2006.
2. On October 18, 2006, we issued 6,380,000 units at a price of $1.90 per
 unit. Each unit consist of one common share and one half-share purchase
 warrant. Each share purchase entitles the holder to purchase an additional
 common share at a price of $2.15 up to April 17, 2008. At November 30, 2006,
 all of the related share purchase warrants remained outstanding. All of these
 common shares were issued as flow-through shares under the Income tax Act
 (Canada) and were not yet renounced to the investors at November 30, 2006.
3. During the year ended November 30, 2006, we issued 227,500 common shares
 valued at a price of $0.55 per share upon the exercise of previously
 outstanding share purchase warrants. As at November 30 2006, no share purchase
 warrants in this series remained outstanding.
4. During the year ended November 30, 2006, we issued 683,500 common shares
 valued at a price of $0.40 per share upon the exercise of previously
 outstanding share purchase warrants. During the year ended November 30, 2006, a
 total of 100,000 share purchase warrants expired. As at November 30, 2006, no
 share purchase warrants in this series remained outstanding.

80

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1. During the year ended November 30, 2006, we issued 1,853,000 common shares
 valued at a price of $0.40 per share upon the exercise of previously
 outstanding share purchase warrants. As at November 30, 2006, no share purchase
 warrants in this series remained outstanding.
2. During the year ended November 30, 2006, we issued 3,155,550 common shares
 valued at a price of $0.75 per share upon the exercise of previously
 outstanding share purchase warrants. As at November 30, 2006, 1,844,450 share
 purchase warrants in this series remained outstanding.
3. During the year ended November 30, 2006, we issued 1,228,750 common shares
 valued at a price of $0.65 per share upon the exercise of previously
 outstanding share purchase warrants. As at November 30, 2006, 6,271,250 share
 purchase warrants in this series remain outstanding.
4. During the year ended November 30, 2006, we issued 21,581 common shares
 valued at a price of $0.40 per share upon the exercise of previously
 outstanding agent compensation warrants. As at November 30, 2006, no agent
 compensation warrants in this series remained outstanding.
5. During the year ended November 30, 2006, we issued 51,622 common shares
 valued at a price of $0.40 per share upon the exercise of previously
 outstanding agent compensation warrants. As at November 30, 2006, no agent
 compensation warrants in this series remained outstanding.
6. During the year ended November 30, 2006, we issued 200,468 common shares
 valued at a price of $0.36 per share upon the exercise of previously
 outstanding agent compensation warrants. As at November 30, 2006, no agent
 compensation warrants in this series remained outstanding.
7. During the year ended November 30, 2006, we issued 106,396 common shares
 valued at a price of $0.36 per share upon the exercise of previously
 outstanding agent compensation warrants. As at November 30, 2006, no agent
 compensation warrants in this series remained outstanding.
8. During the year ended November 30, 2006, we issued 656,787 common shares
 valued at a price of $0.65 per share upon the exercise of previously
 outstanding agent compensation warrants. As at November 30, 2006, no agent
 compensation warrants in this series remained outstanding.
9. During the year ended November 30, 2006, we issued 1,985,664 units valued
 at a price of $0.45 per unit upon the exercise of previously outstanding agent
 compensation warrants. Each unit consists of one common share and one half
 purchase warrant (the "Additional Share Purchase Warrant"). Each whole
 Additional Share Purchase Warrant can be used to purchase an additional common
 share of the Company of $0.75 up to September 20, 2007. As at November 30,
 2006, 9,336 agent compensation warrants in this series remained outstanding.
10. During the year ended November 30, 2006, we issued 935,691
 common shares valued at a price of $0.75 per share upon the exercise of
 previously outstanding agent compensation warrants. As at November 30, 2006,
 57,142 agent compensation warrants in this series remained outstanding.

81

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1. During the year ended November 30, 2006, we issued 1,550,000 common shares
 valued at a price of $0.20 per share upon the exercise of previously
 outstanding stock options. As at November 30, 2006, 300,000 stock options in
 this series remained outstanding.
2. During the year ended November 30, 2006, we issued 350,000 common shares
 valued at a price of $0.60 per share upon the exercise of previously
 outstanding stock options. As at November 30, 2006, 2,900,000 stock options in
 this series remained outstanding.
3. On December 5, 2005, we issued 250,000 common shares valued at a price of
 $0.73 per share for the acquisition of mineral property interests.
4. On April 25, 2006 we issued 200,225 units at a price of $1.85 per unit.
 Each unit consists of one common share and one half-purchase warrant. Each
 whole-share purchase warrant entitles the holder to purchase an additional
 common share at a price of $2.10 up to October 25, 2007. These units were
 issued for payment for services rendered by a private placement agent. As at
 November 30, 2006, all of the related share purchase warrants in this series
 remained outstanding.
5. On April 25, 2006, we issued 435,680 share purchase warrants. Each share
 purchase warrant entitles the holder to purchase an additional common share at
 a price of $2.15 up to October 25, 2007. These share purchase warrants were
 issued as consideration for payment for services rendered by a private
 placement agent. As at November 30, 2006, all of the related share purchase
 warrants in this series remained outstanding.
6. On October 18, 2006, we issued 508,296 share purchase warrants. Each share
 purchase warrant entitles the holder to purchase an additional common share at
 a price of $2.20 up to April 17, 2008. These share purchase warrants were
 issued as consideration for payment for services rendered by a private
 placement agent. As at November 30, 2006, all of the related share purchase
 warrants in this series remained outstanding.
7. During the year ended November 30, 2006, a total of 10,000 previously
 outstanding stock options expired.
8. On January 27, 2006, we issued 3,250,000 stock options. Each stock option
 entitles the holder to purchase a common share at a price of $0.60 up to
 January 27, 2009.
9. On September 27, 2006, we issued 3,250,000 stock options. Each stock option
 entitles the holder to purchase a common share at a price of $1.57 up to
 January 27, 2008. As at November 30, 2006, all of the related stock options in
 this series remained outstanding.
10. On September 20, 2005, we issued 10,000,000 units at a price of $0.45 per
 unit. Each unit consists of one common share and one half share purchase
 warrant. Each whole-share purchase warrant entitles the holder to purchase an
 additional common share at a price of $0.75 up to September 20, 2007. At
 November 30, 2005, all of the related share purchase warrants remained
 outstanding. All of these common shares were issued as flow-through shares
 under the Income Tax Act (Canada) and were not yet renounced to the investors
 at November 30, 2005.
11. On September 20, 2005, we issued 15,000,000 units at a price of $0.40 per
 unit, each consisting of one common share and one half-share purchase warrant.
 Each whole-share purchase warrant entitles the holder to purchase an additional
 common share at a price of $0.65 up to September 20, 2007. At November 30,
 2005, all of the related share purchase warrants remained outstanding.

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1. On September 20, 2005, we issued 1,313,574 units at a price of $0.40 per
 unit, each consisting of one common share and one half-purchase warrant. Each
 whole-share purchase warrant entitles the holder to purchase an additional
 common share at a price of $0.65 up to September 20, 2007. These units were
 issued for payment for services rendered by a private placement agent. At
 November 30, 2005, all of the related share purchase warrants remained
 outstanding.
2. On September 20, 2005, we issued 1,995,000 share purchase warrants, each
 entitling the holder to purchase an additional common share and one
 half-purchase warrant (the "Additional Share Purchase Warrant") at a price of
 $0.45 up to September 20, 2007. Each whole Additional Share Purchase Warrant
 entitles the holder to purchase an additional common share at a price of $0.75
 up to September 20, 2007. These share purchase warrants were issued as
 consideration for payment for services rendered by a private placement agent.
 At November 30, 2005, all of the related share purchase warrants remained
 outstanding.
3. On February 21, 2005, we issued 300,000 common shares valued at a price of
 $0.235 per share for the acquisition of mineral property interests.
4. On March 21, 2005, we issued 350,000 common shares valued at a price of
 $0.25 per share for the acquisition of mineral property interests.
5. On May 6, 2005, we issued 300,000 common shares valued at a price of $0.24
 per share for the acquisition of mineral property interests.
6. On July 13, 2005, we issued 360,000 common shares valued at a price of
 $0.20 per share for the acquisition of mineral property interests.
7. On October 20, 2005, we issued 450,000 common shares valued at a price of
 $0.66 per share for the acquisition of mineral property interests.
8. During the year ended November 30, 2005, we issued 937,667 common shares at
 a price of $0.20 per share upon the exercise of previously outstanding share
 purchase warrants. As at November 30, 2005, no share purchase warrants to
 acquire common shares at a price of $0.20 per share remained outstanding.
9. During the year ended November 30, 2005, we issued 745,963 common shares at
 a price of $0.40 per share upon the exercise of previously outstanding share
 purchase warrants. As at November 30, 2005, 2,636,500 share purchase warrants
 to acquire common shares at a price of $0.40 per share remained outstanding.
10. During the year ended November 30, 2005, we issued 1,130,000 common shares
 at a price of $0.55 per share upon the exercise of previously outstanding share
 purchase warrants. As at November 30, 2005, 227,500 share purchase warrants to
 acquire common shares at a price of $0.55 per share remained outstanding.
11. During the year ended November 30, 2005, we issued 677,875 common shares at
 a price of $0.36 per share upon the exercise of previously outstanding share
 purchase warrants. As at November 30, 2005, 306,864 share purchase warrants to
 acquire common shares at a price of $0.36 per share remained outstanding.

83

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1. During the year ended November 30, 2005, we issued 25,024 common shares at
 a price of $0.40 per share upon the exercise of previously outstanding share
 purchase warrants. As at November 30, 2005, 73,203 share purchase warrants
 remained outstanding.
2. During the year ended November 30, 2005, we issued 72,808 common shares at
 a price of $0.14 per share upon the exercise of previously outstanding options.
 As at November 30, 2005, a total of 10,000 options remained outstanding.
3. During the year ended November 30, 2005, we issued 1,724,782 common shares
 at a price of $0.20 per share upon the exercise of previously outstanding
 options. During the year ended November 30, 2005, a total of 150,000
 outstanding options expired; a total of 1,850,000 options were outstanding.
4. During the year ended November 30, 2005, we returned to treasury and
 cancelled 520,000 common shares issued in error.



Financial Instruments



All financial instruments we use are predominantly
denominated in Canadian dollars. We do not engage in any hedging operations with
respect to currency or in-situ minerals. Funds which are currently in excess of
our current expenditures are invested in low risk, highly liquid investments
with original maturations of three months or less.



Capital Expenditure Commitments



At November 30, 2006, we were not party to any capital
expenditure commitments, though we do anticipate expenses to subcontractors over
the eight-month period from April to October, 2007 of over $6.5 million, in
relation to drilling fees and further exploration costs.

C.  Research and Development, Patents and Licenses, etc.

This item is not applicable, as we do not conduct business
requiring research and development activities.

D.  Trend Information

As we are an exploration company with no producing
properties, information regarding trends in: production, sales and inventory,
and similar are not meaningful. We have recently acquired interests in
properties and it is likely that we will expand our exploration activities. As a
result, we expect that our company's operating losses will increase over the
next 12 months.

E.  Off-balance Sheet Arrangements

We have no off-balance sheet arrangements that would require
disclosure.

F.  Tabular Disclosure of Contractual Obligations

In the year ended November 30, 2006, we were not party to any
contractually obligated payments.

84

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G.  Safe Harbour

Certain statements contained in this annual report may be
viewed as "forward-looking statements" within the meaning of Section 27A of the
U.S. Securities Act of 1933, as amended, and Section 21E of the US Securities
Exchange Act of 1934, as amended. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors, which may cause actual
events, and/or the actual performance, financial condition or results of
operations of our company to be materially different from any future
performance, financial condition or results of operations implied by such
forward-looking statements. Further information regarding these risks,
uncertainties and other factors is included in this form 20-F under Item 3D and
such other documents that we may file with the US SEC from time to time.

ITEM 6 - Directors, Senior Management and
Employees

A.  Directors and Senior Management

Directors



Name of Director
   
   
   AgeTim Coupland
   
   48Michael Bogin
   
   61Tracy A. Moore
   
   53Robert Hall
   
   29Stuart Rogers
   
   50


Executive Officers and Management



|Name of Officer     |  | Age |  | Office                            
|------------------- |  | --- |  | ----------------------------------
|Tim Coupland        |  | 48  |  | President, Chief Executive Officer
|Michael Bogin       |  | 61  |  | Chief Financial Officer           
|Robert Hall         |  | 29  |  | Director                          
|Ann-Marie Cederholm |  | 31  |  | Corporate Secretary               
|                    |  |     |  |                                   



The following describes the business experience of our
directors and executive officers, including other directorships held in
reporting companies:



Tim Coupland, President and Chief Executive Officer



Tim Coupland has acted as our President and Chief Executive
Officer since September 14, 2000. Mr. Coupland has held numerous officer and
directorship positions with TSX-V listed companies and OTCBB listed junior
mining companies.



Since 1996, he has acted as President, Secretary and sole
director of T8X Capital Ltd., a private British Columbia company involved in
public company structuring and reorganization, preparing business plans,
sourcing public and private financing and completing due diligence reviews of
companies. Mr. Coupland acts as a director and officer of Dynamic Gold Corp.
which is a reporting issuer in the U.S.  He also acted as director of
Anglo-Sierra Resources Corp., a non-reporting junior resource company whose
shares were quoted on the OTCBB. Mr. Coupland was appointed director of Max
Resource Corp. (TSX-V-MXR) (OTCBB-MXROF) on September 5, 2006.

85

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Mr. Coupland has over 20 years of business experience with
both public and private companies and has been successfully involved in raising
both debt and equity financings of over $50 million dollars. He brings expertise
in raising equity capital and then assembling highly seasoned teams of
professionals, consultants, financial consultants and mineral exploration
advisors who have proven track records in financing, negotiation and promotion
required to secure and develop successful mineral exploration projects. Mr.
Coupland brings a wealth of technical and financial experience as well as
long-term business relationships with many First Nations and Metis groups
operating in Canada's Northwest Territories. Mr. Coupland has a Bachelor's
degree in Geography from Simon Fraser University.



Michael Bogin, Chief Financial Officer



Michael Bogin has over 25 years of diversified experience in
asset-based lending and raisings financings related to accounts receivable,
inventory, equipment and real estate assets, trade financing, special purpose
capital, mezzanine and equity transactions. Since November 2003, he has owned
and operated North Brooklyn Capital, an investment banking entity in Toronto,
which provides a range of financial solutions and consulting services for
commercial enterprises and entrepreneurs in the public and private sectors,
covering a variety of business segments.



From September 2002 to November 2003, he acted as vice
president of asset based lending and factoring for Kingsdale Capital
Corporation. From August 2000 to June 2002, he was employed as the business
development manager for TCE Capital Corporation, a financing company based in
Toronto, Ontario. Prior to this, Mr. Bogin acted as senior manager of Laurentian
Bank of Canada (January 2000 to May 2000), vice president of originations for
G.E. Capital Canada (August 1998 to January 2000) and vice president of Accord
Business Credit Inc. (February 1995 to August 1998).



Robert Hall, Director of Field Operations



In September of 2006, Mr Hall joined us as a director. Mr.
Hall holds a Bachelor's degree in Education from the University of British
Columbia. Mr. Hall has over 14 years of industry experience, nine of which were
in a senior management capacity, with the Keg Steakhouse Restaurants of Canada.
His accomplishments as a senior manager included receiving the "Top Keg
Restaurant Franchise Award" for all of Canada in 2005. Mr. Hall was the
recipient of "The Franchise of the Year" award exemplifying excellence in all
fields including sales, teamwork, leadership, human resources management,
administration, financial analysis and the ability to follow the Keg Restaurants
rigorous high standards of excellence.



Tracy A. Moore, Director



Tracy A. Moore is the president of MCSI Consulting Group, a
Vancouver, BC-based firm he founded in 1990, specializing in corporate finance
matters, strategic planning and business planning services. Between 1976 and
1990, Mr. Moore worked for three international accounting firms in
restructuring, consulting and audit positions. In addition to his consulting
practice, he has owned and operated a variety of businesses. He serves on boards
of directors and advises boards on corporate finance matters, business planning
issues, mergers, acquisitions and divestitures.

86

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In September of 2005, Mr. Moore joined us as a director. From
June to December of 2005, he served as COO and a director of Mexoro Minerals
Ltd. (OTCBB-MXOM), formerly known as Sunburst Acquisitions IV, Inc. (OTCBB);
since December 2005, he has served as CFO and director. Mr. Moore resigned from
his position as Chief Financial Officer on February 6, 2007 but still continues
as a director. Mr. Moore also acts as director and Chief Financial Officer of
New Legend Group Limited which came to trade on the TSX-Venture Exchange in
2006. (TSX-V-NLA. P) From January 2003 through February 2004, Mr. Moore served
as a director of Buffalo Gold Ltd. (TSX-V-BUF). From 2002 to 2004, Mr. Moore
acted as Chief Financial Officer and director of SHEP Technologies Inc. (OTCBB).
From September 2000 to October 2002, he was a director of Illusion Systems, Inc.
(TSX-V). From October 2000 to May 2002, he was a director of Avance Venture
Capital (TSX-V).



Mr. Moore received a Bachelor of Commerce in accounting and
management information systems from the University of British Columbia in May
1976 and was admitted as a member of the Institute of Chartered Accountants in
British Columbia in 1979.



Stuart Rogers, Director



In March 2007, Stuart Rogers joined us as a director. Mr.
Rogers  has been involved in the venture capital community since 1987. 
He is currently the President of West Oak Capital Group, Inc., a privately held
investment banking firm specializing in early stage finance of technology
projects through the junior capital markets in Canada and the United States, and
has served as a director of client companies listed on the TSX Venture Exchange,
the Toronto Stock Exchange, NASDAQ Small Capital Market and NASD OTC Bulletin
Board.  Currently Mr. Rogers acts as a director or officer of the following
companies which are reporting issuers in Canada: MAX Resources Corp.,
Consolidated Global Cable Systems, Inc., Randsburg International Gold Corp.,
Mexivada Mining Corp., Prophecy Resource Corp., and IGC Resource Corp.



Ann-Marie Cederholm, Corporate Secretary



Ann-Marie Cederholm, CGA, joined our company in 2004 and
currently serves as our Corporate Secretary. Ms. Cederholm graduated from the
University of British Columbia with a Bachelor's degree in Education in 2006.
Ms. Cederholm also received a Bachelor's degree in Commerce from Royal Roads
University in 1997. She was admitted as a member of the Certified General
Accountants of British Columbia in 2003. Ms. Cederholm has a combined ten years
of work experience in public practice and industry with a variety of companies.



Family Relationships



President and CEO Tim Coupland, and former Corporate
Secretary Tamiko Coupland are married, though no other familial or marital
relationships exist amongst our officers and directors.



87

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Arrangements



There are no arrangements or understandings between any of
our directors or executive officers, and with our major shareholders, customers,
suppliers or others, pursuant to which they were selected to be a director or
executive officers.

B.  Compensation

We are required, under applicable securities legislation in
Canada, to disclose to our shareholders details of compensation paid to our
directors. The following fairly reflects all material information regarding
compensation paid to our directors in our fiscal year ended November 30, 2006.



We have no formal plan for compensating our directors for
their services in their capacity as directors. The board of directors may award
special remuneration to any director undertaking any special services on our
behalf other than services ordinarily required of a director. Other than
indicated below, no director received any compensation for his or her services
as a director, including committee participation and/or special assignments.

2006 Summary Compensation Table





|NAME AND 
  PRINCIPAL 
  POSITION | ANNUAL COMPENSATION | LONG-TERM COMPENSATION                                                                                                                                                                                                     
|--------------------------------- | ------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                  | Management 
  Fees  | Bonus                                                                                                                                                                                                                      
|                                  |                     |                                                                                                                                                                                                                            
|Tim Coupland 
  President and CEO | $135,000(3)         | Nil                                                                                                                                                                                                                        
|Michael Bogin 
  Director         | Nil                 | Nil                                                                                                                                                                                                                        
|Tracy A. Moore
  Director         | Nil                 | Nil                                                                                                                                                                                                                        
|Robert Hall
  Director            | Nil                 | Nil                                                                                                                                                                                                                        
|Notes:                            |                    
|                                  | (1)                 | These amounts are accrued directors fees paid to entities
  controlled by the named director.                                                                                                                              
|                                  | (2)                 | "Securities Under Options/SARs Granted" are grants made
  under the stock option plan of the Corporation. "SAR" means stock appreciation
  rights.                                                                         
|                                  | (3)                 | This amount represents the annual management fee paid to a
  company controlled by Mr. Coupland.                                                                                                                           
|                                  | (4)                 | These options were granted on January 27, 2006 and
  September 27, 2006 and are vested and the options expire on January 27, 2009
  and September 27, 2008 and are exercisable at $0.60 and $1.57 per share
  respectively.
|                                  | (5)                 | Fee paid to a company controlled by Mr. Coupland for
  consulting and exploration services.                                                                                                                                



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In accordance with our stock option plan, summarized below,
we award the above members of the board of directors with the annual
compensation, in the form of employee incentive stock options, as is set forth
beside their names. Each option is exercisable from $0.60 to $1.57 per common
share, exercisable for a maximum period of up to five years, excepting those
terms, found below.



Stock Option Plan



Our stock option plan provides for equity participation by
eligible directors, officers, employees and consultants through the acquisition
of common shares pursuant to the grant of options. Our board of directors
administers the plan. Options may be granted to purchase common shares on terms
that the directors may determine, subject to the limitations of the stock option
plan and the requirements of the TSX-Venture Exchange.



The following is a summary of the terms of the stock option
plan and is qualified in its entirety by the full text of the stock option plan
which is available for review our offices:

1. The number of common shares to be reserved and authorized for issuance,
 pursuant to options granted under the stock option plan, is 10% of our issued
 and outstanding common shares from time to time;
2. Under the stock option plan, the aggregate number of optioned common shares
 granted to any one optionee in a 12-month period must not exceed 5% of the
 issued and outstanding common shares. The number of optioned common shares
 granted to any one consultant in a 12-month period must not exceed 2% of the
 issued and outstanding common shares. The aggregate number of optioned common
 shares granted to optionees who are employed to provide investor relations
 activities must not exceed 2% of our issued and outstanding common shares in
 any 12-month period;
3. The exercise price for options granted under the our stock option plan will
 not be less than the market price of the common shares less applicable
 discounts permitted by the TSX-V;
4. Options will be exercisable for a term of up to five years, subject to
 earlier termination in the event of death or the optionee's cessation of
 services to us; and
5. Options granted under the stock option plan are non-assignable, except by
 will or the laws of descent and distribution.

See Item 6.E. - "Share Ownership of Director and Officers" for
table setting out the stock options currently outstanding to our directors and
officers.

Pension or Retirement Benefits

We do not have a pension, retirement fund or similar benefits
plan or other arrangement for non-cash compensation to our directors or senior
officers, with the exception of incentive stock options.

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C.  Board Practices



General



Tim Coupland and Michael Bogin have acted as our directors
since September 14, 2000. Tracy A. Moore was appointed as our director on
September 2, 2005 and Robert Hall was appointed as our director on September 27,
2006. Stuart Rogers was appointed as our director on March 1, 2007. The
directors hold office until the next annual general meeting of the shareholders,
at which time they may stand for re-election. We are required to hold an annual
general meeting once in every calendar year and not longer than fifteen months
from the last annual general meeting.



Service Contracts



We are a party to a management contract with a private
company owned by Tim Coupland whereby we pay him $5,000 per month for his
management services, which effective February 1, 2006 was increased to $12,500
per month. . On February 22, 2007 this amount was increased to $16,667 per
month, retroactive to January 1, 2007. The employment agreement with Mr.
Coupland will contain provisions for stock options, benefits and entitlement of
bonuses, severance payments and indemnity by the Company. Tracy A. Moore
receives $1,000 per month for serving as a director paid to his private company.
Michael Bogin will also receive $1,000 per month for serving as a director and
Chief Financial Officer. No other directors have a service contract with us.



Committees



Our Board of Directors has one committee, an audit committee.
We do not have a compensation or remuneration committee.



Our audit committee is comprised of Tim Coupland, Michael
Bogin, Tracy A. Moore, Robert Hall and Stuart Rogers. The audit committee
performs the following functions, among others:



- Directly appoints, retains and compensates our independent auditor and
 pre-approves all auditing and non-auditing services of the independent auditor;
- Evaluates the independent auditor's qualifications, performance and
 independence;
- Discusses the scope of the independent auditors' examination;
- Reviews and discusses the annual audited financial statements and quarterly
 financial statements with management and the independent auditor and the report
 of the independent auditor thereon;
- Assesses our accounting practices and policies;
- Reviews and approves of all related-party transactions, including
 transactions between our company and our officers or directors or affiliates of
 officers or directors;
- Develops, and monitors compliance with, a code of ethics for senior
 financial officers;

90

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- Develops, and monitors compliance with, a code of conduct for all our
 employees, officers and directors;
- Establishes procedures for the receipt, retention and treatment of
 complaints regarding accounting, internal accounting controls or auditing
 matters; and
- Establishes procedures for the confidential, anonymous submission by
 employees of concerns regarding questionable accounting or auditing matters.



The specific functions and responsibilities of the audit
committee are set forth in our audit committee charter. We have determined that
Tracy A. Moore qualifies as an audit committee financial expert, pursuant to SEC
regulations and the other members of the audit committee satisfy the financial
literacy requirements for audit committee members under the SEC rules and
regulations.



In order to act in a forward-thinking manner, our board of
directors intends to elect in 2007 a compensation committee, whose members will
include members of the audit committee, to complete the following functions,
among others:



- Develops executive compensation philosophy and establishes and annually
 reviews and approves policies regarding executive compensation programs and
 practices;
- Reviews and approves corporate goals and objectives relevant to the Chief
 Executive Officer's compensation, evaluates the Chief Executive Officer's
 performance in light of those goals and objectives and sets the Chief Executive
 Officer's compensation based on this evaluation;
- Reviews the Chief Executive Officer's recommendations with respect to, and
 approves annual compensation for, our other executive officers;
- Establishes and administers annual and long-term incentive compensation
 plans for key executives;
- Recommends to the board for its approval and, where appropriate, submission
 to our stockholders, incentive compensation plans and equity-based plans;
- Recommends to the board for its approval changes to executive compensation
 policies and programs; and
- Reviews and approves all special executive employment, compensation and
 retirement arrangements.



D.  Employees



For each of the years ended November 30, 2006, 2005 and 2004,
our company did not hire or use the services of employees. However, we hire
contractors on an as-needed basis for geological services and other trades. We
historically have had two contractors who provide their services on a part-time
basis and continue to do so. One provides us with corporate secretarial services
and one fulfills controllership responsibilities. Our President receives
compensation through a consulting agreement with a company that he controls. All
are classified as independent contractors.

91

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When required, we have retained geological and other
consultants to conduct work programs on our mineral property interests.

E.  Share Ownership of Directors and Officers

Our directors and officers beneficially own the following
shares as of the date of this annual report:



Common Shares



|Director or Officer    | Number of Common 
  Shares Owned(1) | Percentage of 
  Outstanding
  (%)(1)(2)                                                                                                                                                                                                                                                                                                                                                               
|---------------------- | ----------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Tim Coupland(3)        | 6,836,788                           | 7.06                                                                                                                                                                                                                                                                                                                                                                                                   
|Michael Bogin(4)       | 82,500                              | 0.09                                                                                                                                                                                                                                                                                                                                                                                                   
|Tracy A. Moore(5)      | 284,300                             | 0.29                                                                                                                                                                                                                                                                                                                                                                                                   
|Robert Hall(6)         | 172,000                             | 0.18                                                                                                                                                                                                                                                                                                                                                                                                   
|Ann-Marie Cederholm(7) | 66,500                              | 0.07                                                                                                                                                                                                                                                                                                                                                                                                   
|Notes:                 |                                    
|                       | (1)                                 | Shares of common stock subject to options or warrants
  currently exercisable, or exercisable within 60 days of March 15, 2007, are
  deemed outstanding for purposes of computing the percentage ownership of the
  person holding such option or warrants, but are not deemed outstanding for
  purposes of computing the percentage ownership of any other person.                                  
|                      
|                       | (2)                                 | Percentages are based on 96,901,357 shares of common stock
  issued and outstanding as of March 15, 2007 unless otherwise noted.                                                                                                                                                                                                                                                                       
|                      
|                       | (3)                                 | Includes 3,550,000 common shares Tim Coupland has the right to
  acquire pursuant to outstanding stock options and 204,734 warrants which are
  exercisable within 60 days of March 15, 2007. Tim Coupland holds 2,542,394
  shares, 3,550,000 stock options, and 71,400 warrants directly and T8X Capital
  Ltd., of which Tim Coupland is a 100% owner, holds 539,660 shares and 133,334
  warrants..
|                      
|                       | (4)                                 | Includes 50,000 common shares Michale Bogin has the right to
  acquire pursuant to outstanding stock options which are exercisable within 60
  days of March 15, 2007.                                                                                                                                                                                                                                 
|                      
|                       | (5)                                 | Includes 250,000 common shares Tracy A. Moore has the right to
  acquire pursuant to outstanding stock options which are exercisable within 60
  days of March 15, 2007. Tracy A. Moore holds 22,500 shares and 250,000 stock
  options directly and MCSI Capital Corporation, of which Tracy A. Moore is a
  50% owner, holds 11,800 shares.                                                          
|                      
|                       | (6)                                 | Includes 150,000 common shares Robert Hall has the right to
  acquire pursuant to outstanding stock options which are exercisable within 60
  days of March 15, 2007.                                                                                                                                                                                                                                  
|                      
|                       | (7)                                 | Includes 50,000 common shares Ann-Marie Cederholm has the
  right to acquire pursuant to outstanding stock options which are exercisable
  within 60 days of March 15, 2007.                                                                                                                                                                                                                           













92

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Stock Options



The following incentive stock options are currently
outstanding to our directors and officers:

Shares that may be Purchased Upon Exercise of Stock Option





|Director or Officer | Number of 
  Common Shares | Exercise Price
  ($) | Expiry Date       
|------------------- | -------------------------- | -------------------- | ------------------
|Tim Coupland        | 2,050,000                  | 0.60                 | January 27, 2009  
|                    | 1,500,000                  | 1.57                 | September 27, 2008
|Michael Bogin       | 50,000                     | 1.57                 | September 27, 2008
|Tracy A. Moore      | 100,000                    | 0.20                 | July 7, 2008      
|                    | 25,000                     | 0.60                 | January 27, 2009  
|                    | 125,000                    | 1.57                 | September 27, 2008
|Robert Hall         | 150,000                    | 1.57                 | September 27, 2008
|Ann-Marie Cederholm | 50,000                     | 1.57                 | September 27, 2008



At the 2003 annual general meeting of our shareholders, held
on September 2, 2003, our company's stock option plan was proposed, and
approved, and subsequently filed with the TSX-V.



We grant share options in accordance with the policies of the
TSX Venture Exchange. Under the general guidelines of the TSX Venture Exchange,
we may reserve up to 10% of our issued and outstanding shares to our employees,
directors or consultants to purchase.



Our stock option plan provides for equity participation by
eligible directors, officers, employees and consultants through the acquisition
of common shares pursuant to the grant of options. Our board of directors
administers the plan. Options may be granted to purchase common shares on terms
that the directors may determine, subject to the limitations of the stock option
plan and the requirements of the TSX-V. For a summary of the terms of the stock
option plan, see Item 6B.

ITEM 7 - Major Shareholders and Related Party
Transactions

A.  Major Shareholders



Table of Major Shareholders



We are a publicly-held corporation, with our common shares
held by residents of Canada, the United States of America and other countries.
As of the date of filing this annual report, we are authorized to issued an
unlimited number of common shares without par value, of which 96,901,357 common
shares were issued and outstanding and unlimited number of preferred shares
without par value, of which no preferred share was issued and outstanding.



The following table sets forth certain information with
respect to beneficial ownership of the our common stock as of March 15, 2007, by
each shareholder known to be the beneficial owner of more than 5% of our common
shares.

93

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|Identity of Person or Group(1)                | Total shares owned | Percentage of total shares issued and outstanding(1)(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Citizenship
|--------------------------------------------- | ------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------
|Goodman & Company, Investment Counsel Ltd.(3) | 9,164,200          | 9.46%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Canadian   
|Notes:                                        |                   
|                                              | (1)                | Beneficial ownership is determined in accordance with the
  rules of the SEC and generally includes voting or investment power with
  respect to securities. Shares of common stock subject to options or warrants
  currently exercisable, or exercisable within 60 days of March 15, 2007, are
  deemed outstanding for purposes of computing the percentage ownership of the
  person holding such option or warrants, but are not deemed outstanding for
  purposes of computing the percentage ownership of any other person.
|                                             
|                                              | (2)                | Percentages are based on 96,901,357 shares of common stock
  issued and outstanding as of March 15, 2007 unless otherwise noted.                                                                                                                                                                                                                                                                                                                                                                                                  
|                                             
|                                              | (3)                | Includes 3,332,500 common shares Goodman & Company, Investment
  Counsel Ltd. has the right to acquire pursuant to outstanding warrants which
  are immediately exercisable.                                                                                                                                                                                                                                                                                                                                                      





Changes in Ownership Percentage



The following table shows changes over the last three years
in the percentage of the issued share capital for the Group held by major
shareholders, either directly or by virtue of ownership of our common shares.





|Identity of Person or Group(1)                |     | 2006(1)(2)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 2005(1)(2) |  | 2004(1)(2)
|--------------------------------------------- | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  | ----------
|Goodman & Company, Investment Counsel Ltd.(3) |     | 9.46%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | 10.53%     |  | 0%        
|Passport Master Fund LP.(4)                   |     | 4.59%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | 6.04%      |  | 0%        
|David W. Tice & Associates, LLC               |     | 3.3%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | 5.8%       |  | 0%        
|Notes:                                        |    
|                                              | (1) | Beneficial ownership is determined in accordance with the
  rules of the SEC and generally includes voting or investment power with
  respect to securities. Shares of common stock subject to options or warrants
  currently exercisable, or exercisable within 60 days, are deemed outstanding
  for purposes of computing the percentage ownership of the person holding such
  option or warrants, but are not deemed outstanding for purposes of computing
  the percentage ownership of any other person.
|                                             
|                                              | (2) | Percentages are based on in: (1) 2006: 96,901,357 shares of
  common stock issued and outstanding as of March 15, 2007; (2) 75,193,064
  shares issued and outstanding as of November 14, 2006; and 2004: 37,527,290
  shares of common stock issued and outstanding as of May 11, 2005; unless
  otherwise noted.                                                                                                                                                                                              
|                                             
|                                              | (3) | Includes 1,666,650 common shares Goodman & Company, Investment
  Counsel Ltd. has the right to acquire pursuant to outstanding warrants which
  are immediately exercisable.                                                                                                                                                                                                                                                                                                                                    
|                                             
|                                              | (4) | Based on 13G with date of event 12/31/05                                                                                                                                                                                                                                                                                                                                                                                                                                                                        





With the exception of the above-noted transactions, there has
not been a significant change in the ownership percentage held by any major
shareholders during the past three years.



Voting Rights



Our major shareholders do not have any different voting
rights than other shareholders.

94

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Corporate or Foreign Government Ownership



We are not controlled directly or indirectly by any other
corporation or any other foreign government or by any other natural or legal
person, severally or jointly.



Geographic Breakdown of Shareholders



The following lists the geographical distribution of
shareholders at March 15, 2007:





|              | Number of registered |                 
|------------- | -------------------- | ----------------
|Location      | shareholders         | Number of shares
|Canada        | 22                   | 95,271,107      
|United States | 11                   | 1,525,000       
|Other         | 2                    | 105,000         
|Total         | 35                   | 96,901,357      





Shares registered in intermediaries were assumed to be held
by residents of the same country in which the clearing-house was located.



Change of Control



There are no arrangements for which through their operation,
at a subsequent date, may result in a change in our control.

B.  Related Party Transactions



During fiscal year ended November 30, 2006, the following
amounts were incurred by us under related party transactions, none of which we
deem material to us or the related party:



- We paid or accrued office secretarial fees of $36,037 to Tamiko Coupland,
 the wife of our President, Tim Coupland;
- We paid or accrued consulting fees of $27,452 to a company controlled by
 Tim Coupland;
- We paid or accrued management fees of $135,000 to a company controlled by
 Tim Coupland;
- We paid or accrued director fees of $21,950 to a company controlled by
 Tracy A. Moore;
- We paid or accrued director fees of $7,500 to a partnership controlled by
 Michael Bogin;
- We paid or accrued director fees of $9,000 to a company controlled by
 Robert Hall; and
- We paid or accrued accounting fees of $38,375 to a proprietorship
 controlled by Ann-Marie Cederholm.

The amounts charged to us for the services provided have been
determined by negotiation among the parties, and in certain cases, are covered
by signed agreements. It is the position of management that these transactions
were in the normal course of operations and were measured at the exchange value
which represented the amount of consideration established and agreed to by the
related parties.

95

---



Other than disclosed herein, no director or senior officer,
and no associate or affiliate of the foregoing persons, and no insider has or
has had any material interest, direct or indirect, in any transactions, or in
any other proposed transaction, during the year ended November 30, 2006.

C.  Interests of Experts and Counsel

Not required, as this form 20-F filing is made as an annual
report.

ITEM 8 - Financial
Information

A.  Statements and Other Financial Information

Financial Statements



As required, we have included the following (see Item 17), as
audited by an independent auditor and accompanied by an audit report, as of
November 30, 2006:



- Balance sheets;
- Statement of operations and deficit;
- Statement of cash flows;
- Statement of changes in shareholders' equity; and
- Related notes and schedules.



Legal Proceedings



We are not involved in any litigation or legal proceedings and
to our knowledge, no material legal proceedings involving us are to be initiated
against us.



Dividends



We have never paid any dividends and do not intend to pay any
dividends in the near future.

B.  Significant Changes - Subsequent Events

Since the fiscal period ended November 30, 2006, the
following changes have taken place which may materially affect the
interpretation of our company's financial statements:



- We issued an additional 587,500 common shares, for total cash proceeds of
 $312,500 for options exercised.
- We issued an additional 25,000 common shares, for total cash proceeds of
 $16,250 for warrants exercised.
- We issued an additional 37,140 common shares, for total cash proceeds of
 $27,855 for agent compensation warrants exercised.

96

---

- On December 31, 2006, we renounced mineral property expenditures of
 $10,120,000, which resulted in the transfer of the income tax deductibility of
 such expenditures to the investors who purchased flow-through common shares on
 April 25, 2006.
- On December 31, 2006, we renounced mineral property expenditures of
 $12,058,200, which resulted in the transfer of the income tax deductibility of
 such expenditures to the investors who purchased flow-through common shares on
 October 18, 2006.
- The Company entered into a contract for director services with a
 partnership controlled by a director of the Company requiring the payment of
 $1,000 on a month to month basis.
- The Company terminated a contract for management services with a company
 controlled by a director of the Company which required the payment of $12,500
 per month. The Company entered into a contract for employment with the director
 of the Company requiring the remuneration of $16,667 per month, retroactive to
 January 1, 2007.
- The Company entered into a contract for employment with a director of the
 Company requiring the remuneration of $5,500 per month, retroactive to January
 1, 2007.
- The Company entered into a contract for employment with an officer of the
 Company requiring the remuneration of $5,500 per month, retroactive to January
 1, 2007.
- The Company entered into a contract for employment with an individual
 related to a director of the Company requiring the remuneration of $4,000 per
 month, retroactive to January 1, 2007.

97

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ITEM 9 - The Offer and
Listing

A.  Offer and Listing Details

Our common shares trade on the TSX-V under symbol "ASX" and
on the OTCBB under symbol "ASXSF". Our shares have traded on the TSX-V, and on
its predecessor, the Alberta Stock Exchange, since December 5, 1997. The
following table sets forth the high and low closing prices in Canadian funds of
our common shares traded on the TSX-V and its predecessor:



Period
   
   High
   
   LowDecember 1, 2001 to November 30, 2002
   $
   0.25
   $
   0.10December 1, 2002 to November 30, 2003
   $
   0.33
   $
   0.13December 1, 2003 to November 30, 2004
   $
   0.39
   $
   0.19December 1, 2004 to November 30, 2005
   $
   0.96
   $
   0.18December 1, 2005 to November 30, 2006
   $
   2.76
   $
   0.60






Period
   
   High
   
   LowDecember 2004 to February 2005
   $
   0.30
   $
   0.20March 2005 to May 2005
   $
   0.28
   $
   0.21June 2005 to August 2005
   $
   0.60
   $
   0.18September 2005 to November 2005
   $
   0.96
   $
   0.50December 2005 to February 2006
   $
   1.58
   $
   0.60March 2006 to May 2006
   $
   2.76
   $
   1.55June 2006 to August 2006
   $
   1.94
   $
   1.18September 2006 to November 2006
   $
   2.23
   $
   1.47December 2006 to February 2007
   $
   2.62
   
   1.68






Period
   
   High
   
   LowAugust 2006
   $
   1.69
   $
   1.50September 2006
   $
   2.23
   $
   1.59October 2006
   $
   2.10
   $
   1.47November 2006
   $
   2.13
   $
   1.76December 2006
   $
   2.16
   $
   1.68January 2007
   $
   2.25
   $
   1.78February 2007
   $
   2.62
   $
   1.81




Effective September 20, 2001, our common shares were
consolidated such that every five pre-consolidation common shares were exchanged
for one post-consolidation common share.

98

---



Concurrently, our name was changed from "Alberta Star Mining
Corp." to "Alberta Star Development Corp."



Our common shares have been quoted for trading on the OTCBB
since July 16, 2002; no trades in our common shares occurred on this quotation
system until January 29, 2003. The following sets forth the high and low closing
prices in United States funds of our common shares traded on the OTCBB since
this date:



Period
   
   High
   
   LowDecember 1, 2002 to November 30, 2003
   US$
   0.235
   US$
   0.09December 1, 2003 to November 30, 2004
   US$
   0.32
   US$
   0.13December 1, 2004 to November 30, 2005
   US$
   0.82
   US$
   0.12December 1, 2005 to November 30, 2006
   US$
   2.45
   US$
   0.516






Period
   
   High
   
   LowDecember 2004 to February 2005
   US$
   0.24
   US$
   0.12March 2005 to May 2005
   US$
   0.23
   US$
   0.16June 2005 to August 2005
   US$
   0.51
   US$
   0.15September 2005 to November 2005
   US$
   0.82
   US$
   0.43December 2005 to February 2006
   US$
   1.35
   US$
   0.516March 2006 to May 2006
   US$
   2.45
   US$
   1.32June 2006 to August 2006
   US$
   1.74
   US$
   1.06September 2006 to November 2006
   US$
   2.01
   US$
   1.30December 2006 to February 2007
   US$
   2.28
   US$
   1.45




99

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Period
   
   High
   
   LowAugust 2006
   US$
   1.74
   US$
   1.32September 2006
   US$
   2.01
   US$
   1.40October 2006
   US$
   1.88
   US$
   1.30November 2006
   US$
   1.89
   US$
   1.55December 2006
   US$
   1.87
   US$
   1.45January 2007
   US$
   1.73
   US$
   1.52February 2007
   US$
   2.30
   US$
   1.56


B.  Plan of Distribution

Not required, as this form 20-F filing is made as an annual
report.

C.  Markets

Our common shares trade on the TSX-V under symbol "ASX" and
on the OTCBB under symbol "ASXSF". Our shares have traded on the TSX-V and on
its predecessor, the Alberta Stock Exchange, since December 5, 1997; the OTCBB
since July 16, 2002. However, no trades in our common shares occurred on the
OTCBB market until January 29, 2003.

D.  Selling Shareholders

Not required, as this form 20-F filing is made as an annual
report.

E.  Dilution

Not required, as this form 20-F filing is made as an annual
report.

F.  Expenses of the Issue

Not required, as this form 20-F filing is made as an annual
report.

ITEM 10 - Additional Information

A.  Share Capital

Not required, as this form 20-F filing is made as an annual
report.

B.  Bylaws and Articles of Association

Our Certificate of Incorporation, Certificate of Amendment,
Registration of Restated Articles, Bylaws and Articles of Association are
incorporated by reference to certain exhibits to our Form 20-F registration
statement filed with the Securities and Exchange Commission on June 8, 2001.

C.  Material Contracts

We are a party to the following material contracts for the
two years preceding publication of this annual report, all of which are referred
to in the exhibits section of this annual report:

100

---



- Service Agreement with Connors Drilling Ltd
- Investor Relations Agreement with Michael Baybak and Company, Inc
- Purchase and Sale Agreement with Kalac Holdings Ltd. Et Al
- Purchase and Sale Agreement with South Malartic
- Purchase and Sale Agreement with Messrs. Dewar, Teed and Burylo
- Purchase and Sale Agreement Messrs. Dewar, Teed, Dupras, and Burylo

101

---

- Purchase and Sale Agreement with Messrs. Dewar, Teed and Burylo
- Property Option Agreement with Max Resource Corp
- Property Option and Joint Venture Agreement with Fortunes Minerals Limited
- Purchase and Sale Agreement with Kalac Holdings Ltd. Et Al
- Purchase and Sale Agreement Messrs. Dewar, Teed, Dupras, and Burylo

D.  Exchange Controls and other Limitations Affecting Security Holders



There is no law or governmental decree or regulation in
Canada that restricts the export or import of capital, or affects the remittance
of dividends, interest or other payments to a non-resident holder of Common
Shares, other than withholding tax requirements. Any such remittances to United
States residents are generally subject to withholding tax, however no such
remittances are likely in the foreseeable future. See "Taxation", below.



There is no limitation imposed by the laws of Canada or by
our charter or other constituent documents on the right of a non-resident to
hold or vote the Common Shares, other than as provided in the Investment
Canada Act (Canada) (the "Investment Act"). The following discussion
summarizes the material features of the Investment Act for a non-resident who
proposes to acquire a controlling number of our Common Shares. It is general
only, it is not a substitute for independent advice from an investor's own
advisor, and it does not anticipate statutory or regulatory amendments.

102

---

We do not believe the Investment Act will have any affect on
us or on our non-Canadian shareholders due to a number of factors including the
nature of our operations and our relatively small capitalization.



The Investment Act generally prohibits implementation of a
"reviewable" investment by an individual, government or agency thereof,
corporation, partnership, trust or joint venture (each an "entity") that is not
a "Canadian" as defined in the Investment Act (a "non-Canadian"), unless after
review the Director of Investments appointed by the minister responsible for the
Investment Act is satisfied that the investment is likely to be of net benefit
to Canada. The size and nature of a proposed transaction may give rise to an
obligation to notify the Director to seek an advance ruling. An investment in
our Common Shares by a non-Canadian (other than a "WTO Investor" as that term is
defined in the Investment Act and which term includes entities which are
nationals of or are controlled by nationals of member states of the World Trade
Organization) when we are not controlled by a WTO Investor, would be reviewable
under the Investment Act if it was an investment to acquire control of us and
the value of our assets, as determined in accordance with the regulations
promulgated under the Investment Act, was over a certain figure, or if an order
for review was made by the federal cabinet on the grounds that the investment
related to Canada's cultural heritage or national identity, regardless of the
value of our assets. An investment in our Common Shares by a WTO Investor, or by
a non-Canadian when we are controlled by a WTO Investor, would be reviewable
under the Investment Act if it was an investment to acquire control of us and
the value of our assets, as determined in accordance with the regulations
promulgated under the Investment Act, was not less than a specified amount,
which for 2006 exceeds CAD$250 million. A non-Canadian would acquire control of
us for the purposes of the Investment Act if the non-Canadian acquired a
majority of our Common Shares. The acquisition of less than a majority but
one-third or more of our Common Shares would be presumed to be an acquisition of
control of us unless it could be established that, on the acquisition, we were
not controlled in fact by the acquiror through the ownership of our Common
Shares.

E.  Taxation

A brief description of certain provisions of the tax treaty
between Canada and the US is included below, together with a brief outline of
certain taxes, including withholding provisions to which US security holders are
subject under existing laws and regulations of Canada and US; the consequences,
if any, of state and local taxes are not considered. The following information
is general and security holders are urged to seek the advice of their own tax
advisors, tax counsel or accountants with respect to the applicability or effect
on their own individual circumstances of not only the matters referred to
herein, but also any state or local taxes.



Canadian federal tax legislation generally requires a 25%
withholding from dividends paid or deemed to be paid to our non-resident
shareholders. However, shareholders resident in the US will generally have this
rate reduced to 15% through the tax treaty between Canada and the US. The amount
of stock dividends paid to non-residents of Canada will be subject to
withholding tax at the same rate as cash dividends. The amount of stock dividend
(for tax purposes) would generally be equal to the amount by which our stated
capital has increased by reason of the payment of such dividend. We will furnish
additional tax information to shareholders in the event of such a dividend.

103

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Interest paid or deemed to be paid on our debt securities
held by non-Canadian residents may also be subject to Canadian withholding tax,
depending upon the terms and provisions of such securities and any applicable
tax treaty. Under present legislation in the US, we are generally not subject to
US back up withholding rules, which would require withholding at a rate of 20%
on dividends and interest paid to certain US persons who have not provided us
with a taxpayer identification number.



Gains derived from a disposition of shares of the company by
a non-resident shareholder will be subject to tax in Canada only if not less
than 25% of any class of our shares was owned by the non-resident shareholder
and/or persons with whom the non-resident did not deal at arm's length at any
time during the five-year period immediately preceding the disposition. In such
cases gains derived by a US shareholder from a disposition of our shares would
likely be exempt from tax in Canada by virtue of the Canada-US tax treaty.



ALL PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON
SHARES.

F.  Dividends and Paying Agents

Not required, as this 20-F filing is made as an annual
report.

G.  Statement by Experts

Not required, as this 20-F filing is made as an annual
report.

H.  Documents on Display

You may review a copy of our filings with the SEC, including
exhibits and schedules filed with it, in the SEC's Public Reference Room at 100
F Street NE, Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 or
the Conventional Reading Rooms' Headquarters Office at 212-551-8090 for further
information on the public reference rooms. The SEC maintains a web site (www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC.

I.  Subsidiary Information

Not applicable, as we do not own any subsidiary companies.



ITEM 11 - Quantitative and Qualitative
Disclosures About Market Risk

A.  Transaction Risk and Currency Risk Management



The Company's operations do not employ financial instruments
or derivatives and given that the Company keeps its excess funds in high-grade
short-term instruments it does not have significant or unusual financial market
risks.



104

---

B.  Exchange Rate Sensitivity



A significant portion of our administrative operations and
other operations are denominated in Canadian funds, there is little exposure to
foreign exchange movements between the Canadian and international currencies.



We typically hold most of our funds in Canadian dollars and
report the results of our operations in Canadian dollars and are therefore are
not subject to any material exchange rate risk.



We do not hedge foreign currency risk, and it does not
consider this exposure to be material in the context of its operations.



There has been virtually no difference in our operations due
to the affect of foreign exchange rate fluctuation in the period ended November
30, 2006.



C.  Interest Rate Risk and Equity Price Risk



We are primarily equity financed and do not have any long
term debt and, therefore, do not believe that the interest rate market's risk is
material.



D.  Commodity Price Risk



While the value of the Company's resource properties, if any,
can always be said to relate to the price of precious metals and the outlook for
same, the Company does not have any operating mines and hence does not have any
hedging or other commodity based operations risks respecting its business
activities. We are exposed to market risk, primarily related to fluctuating
prices in our common stock.



ITEM
12 - Descriptions of Securities Other than Equity Securities

Not required, as this 20-F filing is made as an annual
report.



PARTII

ITEM 13 -
Defaults, Dividend Arrearages and Delinquencies

Not applicable.



ITEM 14 - Material Modifications to the Rights of Security Holders and Use of
Proceeds



Not applicable.

105

---

ITEM 15 - Controls and Procedures

A.  Disclosure Controls and Procedures



Under the supervision and with the participation of our
management, including Tim Coupland, our President and Chief Executive Officer,
and Michael Bogin, our Chief Financial Officer, we have evaluated the
effectiveness of our disclosure controls and procedures pursuant to Exchange Act
Rule 13a-15(b) as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that these disclosure controls and procedures are effective. There
were no changes in our internal control over financial reporting during the year
ended November 30, 2006 that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.



B.  Management's Annual Report on Internal Control over
Financial Reporting



Our management is responsible for establishing and
maintaining adequate internal control over financial reporting for the company.
Internal control over financial reporting is a process to provide reasonable
assurance regarding the reliability of our financial reporting for external
purposes in accordance with accounting principles generally accepted in the
United States of America. Internal control over financial reporting includes
maintaining records that in reasonable detail accurately and fairly reflect our
transactions; providing reasonable assurance that transactions are recorded as
necessary for preparation of our financial statements; providing reasonable
assurance that receipts and expenditures of company assets are made in
accordance with management authorization; and providing reasonable assurance
that unauthorized acquisition, use or disposition of company assets that could
have a material effect on our financial statements would be prevented or
detected on a timely basis. Because of its inherent limitations, internal
control over financial reporting is not intended to provide absolute assurance
that a misstatement of our financial statements would be prevented or detected.



Management conducted an evaluation of the effectiveness of
our internal control over financial reporting based on the framework in Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, management
concluded that the company's internal control over financial reporting was
effective as of November 30, 2006.



This annual report does not include an attestation report of
the company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
company's registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the company to provide only
management's report in this annual report.



There was no change during the fiscal year ended November 30,
2006 that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.

106

---

ITEM 16A - Audit Committee Financial Expert

Our Board of Directors has determined that Tracy A. Moore, a
member of our audit committee, is the audit committee financial expert and an
independent director as defined in the Nasdaq Marketplace Rules.

ITEM 16B - Code of Ethics

We have adopted a written Code of Ethics that applies to all
employees and executive officers, including our Chief Executive Officer and
Chief Financial Officer. A copy of the Code of Ethics is attached as Exhibit No.
11.1 "Code of Ethics".



During the most recently completed fiscal year, the Company
has neither: (a) amended its Code of Ethics; nor (b) granted any waiver
(including any implicit waiver) form any provision of its Code of Ethics.

ITEM 16C - Principal Accountant Fees and
Services

Fees and Services



James Stafford, Chartered Accountants, audited our financial
statements for fiscal 2006 and 2005, as well as the quarterly statements for
fiscal 2006. The following is an aggregate of fees billed for each of the last
two fiscal years for professional services rendered by our principal
accountants:





|                                                                                                | 2006     | 2005   
|----------------------------------------------------------------------------------------------- | -------- | -------
|Audit fees - auditing of our annual financial statements and
  preparation of auditors' report. | $59,762  | $56,660
|Audit-related fees - review of each of the quarterly financial
  statements.                    | 34,954   | 17,822 
|Tax fees - preparation and filing of three major tax-related
  forms.                           | 31,406   | 18,851 
|All other fees - other services provided by our principal
  accountants.                        | -        | -      
|Total fees paid or accrued to our principal accountants                                         | $126,122 | $93,333
|                                                                                                |         



Pre-Approval Polices and Procedures

We understand the need for our principal accountants to
maintain objectivity and independence in their audit of our financial
statements. To minimize relationships that could appear to impair the
objectivity of our principal accountants, our audit committee has restricted the
non-audit services that our principal accountants may provide to us primarily to
tax services and review assurance services.



We are only to obtain non-audit services from our principal
accountants when the services offered by our principal accountants are more
effective or economical than services available from other service providers,
and, to the extent possible, only after competitive bidding. These
determinations are among the key practices adopted by the audit committee
effective during fiscal 2006. The board has adopted policies and procedures for
pre-approving work performed by our principal accountants.

107

---



After careful consideration, the audit committee of the board
of directors has determined that payment of the above audit fees is in
conformance with the independent status of our company's principal independent
accountants. Before engaging the auditors in additional services, the audit
committee considers how these services will impact the entire engagement and
independence factors.



The Audit Committee has pre-approved specifically identified
non-audit related services, including tax compliance, review of tax returns,
documentation of processes and controls as submitted to the Audited Committee
from time to time.

ITEM 16D - Exemptions from the Listing
Standards for Audit Committees

Not applicable.

ITEM 16E - Purchases of Equity Securities by
the Issuers and Affiliated Purchasers

Not applicable.





ITEM 17 - Financial Statements

Our audited financial statements as prepared by our
management and approved by the audit committee include:



- our balance sheets as at November 30, 2006 and 2005;
- the following statements for the fiscal years ended November 30, 2006,
 2005, and 2004, as well as information from our inception to November 30, 2006:

- statements of operations and deficit
- statements of cash flows; and
- statements of changes in shareholders' equity.



All of these were audited by our auditor, James Stafford,
Chartered Accountants.



The financial statements are prepared in accordance with
Canadian GAAP and are reconciled to US GAAP in note 18 to the financial
statements. All figures are expressed in Canadian dollars.

108

---









Alberta Star Development Corp.
(An Exploration Stage Company)









109

---



JAMESSTAFFORDJames Stafford
   Chartered Accountants*
   Suite 350 - 1111 Melville Street
   Vancouver, British Columbia
   Canada V6E 3V6
   Telephone +1 604 669 0711
   Facsimile +1 604 669 0754
   *Incorporated professional




Report of Independent Registered Public Accounting Firm





To the Board of Directors and Shareholders of
Alberta Star Development Corp.
(An Exploration Stage Company)



We have audited the balance sheets of Alberta Star
Development Corp. (the "Company") (an exploration stage company) as at 30
November 2006 and 2005 and the related statements of operations and deficit,
cash flows and changes in shareholders' equity for the period from 6 September
1996 (Date of Inception) to 30 November 2006 and for each of the years in the
three-year period ended 30 November 2006. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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



In our opinion, these financial statements present fairly, in
all material respects, the financial position of the Company as at 30 November
2006 and 2005 and the results of its operations, its cash flows, and its changes
in shareholders' equity for the period from 6 September 1996 (Date of Inception)
to 30 November 2006 and for each of the years in the three-year period ended 30
November 2006 in accordance with Canadian generally accepted accounting
principles.

/s/ James StaffordVancouver, British Columbia, Canada
   Chartered Accountants27 January 2007






Comments by Independent Registered Chartered Accountants for
United States of America Readers on Canada - United States of America Reporting
Differences



The standards of the Public Company Accounting Oversight Board
(United States of America) require the addition of an explanatory paragraph
(following the opinion paragraph) when the financial statements are affected by
conditions and events that cast substantial doubt on the Company's ability to
continue as a going concern, such as those described in Note 1 to the financial
statements. Although we conducted our audits in accordance with both Canadian
generally accepted auditing standards and the standards of the Public Company
Accounting Oversight Board (United States of America), our report to the
Shareholders and Board of Directors dated 29 January 2006 is expressed in
accordance with Canadian reporting standards, which do not permit a reference to
such conditions and events in the report when these are adequately disclosed in
the financial statements.



|                                    | /s/ James Stafford   
|----------------------------------- | ---------------------
|Vancouver, British Columbia, Canada | Chartered Accountants
|                                    |                      
|27 January 2006                     |                      

110

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---

2006
   
   2005$
   
   $AssetsCurrentCash and cash equivalents (Note 4)
   
   30,149,153
   
   11,841,868Available for sale investments (Note 5)
   
   72,000
   
   82,000Amounts receivable (Note 6)
   
   358,427
   
   40,843Prepaid expenses
   
   111,016
   
   -30,690,596
   
   11,964,711Property, plant and equipment (Note 7)
   
   107,424
   
   14,11330,798,020
   
   11,978,824LiabilitiesCurrentAccounts payable and accrued liabilities (Note 9)
   
   465,922
   
   79,588Shareholders' equityCapital stock (Note 11)AuthorizedUnlimited number of preferred
   sharesUnlimited number of voting
   common sharesIssued and outstanding2006 - 96,251,717 common
   shares2005 - 70,914,983 common
   shares
   
   36,879,416
   
   13,776,121Contributed surplus(Note 11)
   
   3,429,508
   
   464,003Share subscriptions received in advance
   (Note 11)
   
   7,500
   
   -Warrants(Note 11)
   
   9,459,394
   
   5,472,623Deficit, accumulated during the exploration stage
   
   (19,443,720)
   
   (7,813,511)30,332,098
   
   11,899,23630,798,020
   
   11,978,824






Nature and Continuance of Operations (Note 1), Commitments(Note 13), and Subsequent Events(Note 17)



Reconciliation of Canadian and United States Generally Accepted
Accounting Principles (Note 18)



On behalf of the Board:





"/s/ Tim Coupland"                    
Director                                                                                           
"/s/ Michael Bogin"Director 
Tim Coupland                                                                                                                                          
Michael Bogin

The accompany notes are an integral part of these financial
statements.

111

---



Alberta Star Development Corp.
(An Exploration Stage Company)

---

Cumulative
   amounts from 
   inception to
   30 November 
   2006
   For the year 
   ended 30 
   November 
   2006
   For the year 
   ended 30 
   November 
   2005
   For the year 
   ended 30 
   November 
   2004$
   
   $
   
   $
   
   $ExpensesMineral properties (Schedule 1)
   
   14,557,622
   
   9,447,131
   
   1,950,187
   
   1,387,282General and administrative (Schedule 2)
   
   7,716,359
   
   4,402,693
   
   880,087
   
   642,029Net loss before other items and income taxes
   
   (22,273,981)
   
   (13,849,824)
   
   (2,830,274)
   
   (2,029,311)Other itemsInterest income
   
   802,010
   
   802,010
   
   -
   
   -Loss on sale of property, plant and equipment
   
   (428)
   
   -
   
   (428)
   
   -Write-down of available for sale investments
   
   (10,000)
   
   (10,000)
   
   -
   
   -Write-off of property, plant and equipment
   
   (5,592)
   
   (2,355)
   
   (2,108)
   
   (1,129)Net loss before income taxes
   
   (21,487,991)
   
   (13,060,169)
   
   (2,832,810)
   
   (2,030,440)Future income tax recovery
   
   2,605,528
   
   1,429,960
   
   -
   
   1,073,238Net loss for the year
   
   (18,882,463)
   
   (11,630,209)
   
   (2,832,810)
   
   (957,202)Deficit, accumulated during the exploration stage,
   beginning of year
   
   -
   
   (7,813,511)
   
   (4,980,701)
   
   (4,023,499)Adjustment for change in accounting policy
   (Note 2)
   
   (561,257)
   
   -
   
   -
   
   -Deficit, accumulated during the exploration stage, end of
   year
   
   (19,443,720)
   
   (19,443,720)
   
   (7,813,511)
   
   (4,980,701)Basic and diluted loss per share(Note 3)
   
   
   
   (0.14)
   
   (0.06)
   
   (0.03)Weighted average number of common shares outstanding
   
   
   
   83,573,546
   
   44,249,632
   
   27,557,850








The accompany notes are an integral part of these financial
statements.

112

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



Cumulative 
   amounts from 
   inception to 
   30 November 
   2006
   For the year 
   ended 30 
   November 
   2006
   For the year 
   ended 30 
   November
   2005
   For the year
    ended 30 
   November 
   2004$
   
   $
   
   $
   
   $Cash flows from operating activitiesNet loss for the year
   
   (19,443,720)
   
   (11,630,209)
   
   (2,832,810)
   
   (957,202)Adjustments to
   reconcile loss to net cash used by 
    operating activitiesAcquisition of
   mineral property interests (Notes 8, 11 and 15)
   
   1,241,000
   
   182,500
   
   599,000
   
   30,000Accrued
   interest income
   
   (159,551)
   
   (159,551)
   
   -
   
   -Amortization of property,
   plant and equipment
   
   43,064
   
   15,838
   
   6,684
   
   8,796Financing fee
   
   38,000
   
   -
   
   -
   
   -Future income tax
   recovery (Note 14)
   
   (2,605,528)
   
   (1,429,960)
   
   -
   
   (1,073,238)Loss on sales of
   property, plant and equipment
   
   428
   
   -
   
   428
   
   -Recovery of mineral
   property costs
    (Notes 5, 8 and 15)
   
   (82,000)
   
   -
   
   (82,000)
   
   -Stock-based
   compensation (Note 12)
   
   3,645,114
   
   3,237,869
   
   185,580
   
   -Write-down of
   available for sale investments
   
   10,000
   
   10,000
   
   -
   
   -Write-off of plant,
   property and equipment
   
   5,592
   
   2,355
   
   2,108
   
   1,129Gain on sale
   of mineral property interests (Note 15)
   
   (16,565)
   
   -
   
   -
   
   -(17,324,166)
   
   (9,771,158)
   
   (2,121,010)
   
   (1,990,515)Changes in operating assets and liabilities(Increase) decrease in amounts receivable
   
   (198,876)
   
   (158,033)
   
   65,341
   
   (21,753)(Increase) decrease in prepaid expenses
   
   (111,016)
   
   (111,016)
   
   92,735
   
   (92,735)Increase (decrease) in accounts payable and
   accrued liabilities
   
   532,840
   
   386,334
   
   (4,414)
   
   (134,083)(17,101,218)
   
   (9,653,873)
   
   (1,967,348)
   
   (2,239,086)Cash flows from investing activitiesPurchase of property, plant and equipment
   
   (156,936)
   
   (111,504)
   
   (8,361)
   
   (9,646)Proceeds on sale of property, plant and equipment
   
   428
   
   -
   
   428
   
   -Proceeds on sale of marketable securities
   
   16,565
   
   -
   
   -
   
   -(139,943)
   
   (111,504)
   
   (7,933)
   
   (9,646)Cash flows from financing activitiesIssuance of common shares for cash
   
   5,612,822
   
   -
   
   3,460,875
   
   -Issuance of flow-through shares for cash
   
   22,334,064
   
   16,556,290
   
   2,936,950
   
   2,695,560Issuance of warrants for cash
   
   11,099,845
   
   5,740,710
   
   4,102,176
   
   544,720Warrants exercised
   
   9,260,185
   
   6,467,056
   
   1,361,462
   
   784,492Options exercised
   
   1,082,442
   
   520,000
   
   355,149
   
   40,600Share issuance costs
   
   (2,006,544)
   
   (1,218,894)
   
   (341,022)
   
   (217,898)Share subscriptions received in advance
   
   7,500
   
   7,500
   
   -
   
   -47,390,314
   
   28,072,662
   
   11,875,590
   
   3,847,474Increase in cash and cash equivalents
   (Note 4)
   
   30,149,153
   
   18,307,285
   
   9,900,309
   
   1,598,742Cash and cash equivalents, beginning of year
   
   -
   
   11,841,868
   
   1,941,559
   
   342,817Cash and cash equivalents, end of year
   
   30,149,153
   
   30,149,153
   
   11,841,868
   
   1,941,559






Restricted Cash and Cash Equivalents



The accompany notes are an integral part of these financial
statements.

113

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---

Number of 
   shares issued
   
   Share capital
   
   Contributed surplus
   
   Warrants
   
   Deficit 
   accumulated 
   during the
    exploration 
   stage
   
   Total Shareholders' equity$
   
   $
   
   $
   
   $
   
   $Balance at 6 September 1996
   
   -
   
   -
   
   -
   
   -
   
   -
   
   -Shares issued - cash ($0.05 per share)
   
   5,800,000
   
   290,000
   
   -
   
   -
   
   -
   
   290,000Shares issued - cash ($0.10 per share)
   
   2,000,000
   
   200,000
   
   -
   
   -
   
   -
   
   200,000Share issue costs - cash paid
   
   -
   
   (59,613)
   
   -
   
   -
   
   -
   
   (59,613)Net loss for the year
   
   -
   
   -
   
   -
   
   -
   
   -
   
   -Balance at 30 November 1997
   
   7,800,000
   
   430,387
   
   -
   
   -
   
   -
   
   430,387Shares issued - cash ($0.20 per share)
   
   150,000
   
   30,000
   
   -
   
   -
   
   -
   
   30,000Shares issued - mineral property ($0.07925
   per share)
   
   4,000,000
   
   317,000
   
   -
   
   -
   
   -
   
   317,000Stock options exercised ($0.10 per share)
   
   80,000
   
   8,000
   
   -
   
   -
   
   -
   
   8,000Share issue costs - cash paid
   
   -
   
   (19,870)
   
   -
   
   -
   
   -
   
   (19,870)Net loss for the year
   
   -
   
   -
   
   -
   
   -
   
   (72,773)
   
   (72,773)Balance at 30 November 1998
   
   12,030,000
   
   765,517
   
   -
   
   -
   
   (72,773)
   
   692,744Shares issued - cash ($0.10 per share)
   
   345,000
   
   34,500
   
   -
   
   -
   
   -
   
   34,500Stock options exercised ($0.10 per share)
   
   70,000
   
   7,000
   
   -
   
   -
   
   -
   
   7,000Share issue costs - cash paid
   
   -
   
   (150)
   
   -
   
   -
   
   -
   
   (150)Net loss for the year
   
   -
   
   -
   
   -
   
   -
   
   (291,216)
   
   (291,216)Balance at 30 November 1999
   
   12,445,000
   
   806,867
   
   -
   
   -
   
   (363,989)
   
   442,878Shares issued - cash ($0.10 per share)
   
   2,000,000
   
   200,000
   
   -
   
   -
   
   -
   
   200,000Shares issued for settlement of debt ($0.10
   per share) (Note 15)
   
   669,180
   
   66,918
   
   -
   
   -
   
   -
   
   66,918Share issue costs - cash paid
   
   -
   
   (3,977)
   
   -
   
   -
   
   -
   
   (3,977)Net loss for the year
   
   -
   
   -
   
   -
   
   -
   
   (143,787)
   
   (143,787)Balance at 30 November 2000
   
   15,114,180
   
   1,069,808
   
   -
   
   -
   
   (507,776)
   
   562,032Shares issued - cash ($0.10 per unit)
   
   2,450,000
   
   245,000
   
   -
   
   -
   
   -
   
   245,000Stock options exercised ($0.10 per share)
   
   550,000
   
   55,000
   
   -
   
   -
   
   -
   
   55,000Share consolidation 5:1
   
   (14,491,344)
   
   -
   
   -
   
   -
   
   -
   
   -Shares issued - cash ($0.15 per unit)
   
   633,333
   
   81,902
   
   -
   
   -
   
   -
   
   81,902Warrants granted
   
   -
   
   -
   
   -
   
   13,098
   
   -
   
   13,098Share issue costs - cash paid
   
   -
   
   (2,306)
   
   -
   
   -
   
   -
   
   (2,306)Adjustment for change in accounting policy
   (Note 2)
   
   -
   
   -
   
   -
   
   -
   
   (561,257)
   
   (561,257)Net loss for the year
   
   -
   
   -
   
   -
   
   -
   
   (403,950)
   
   (403,950)Balance at 30 November 2001
   
   4,256,169
   
   1,449,404
   
   -
   
   13,098
   
   (1,472,983)
   
   (10,481)






The accompany notes are an integral part of these financial
statements.

114

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---

Number of 
   shares issued
   Share capital
   Contributed 
   surplus
   Warrants
   Deficit 
   accumulated 
   during the 
   exploration 
   stage
   Total 
   Shareholders' 
   equity$
   
   $
   
   $
   
   $
   
   $Balance forward
   at 30 November 2001
   
   4,256,169
   
   1,449,404
   
   -
   
   13,098
   
   (1,472,983)
   
   (10,481)Shares issued - cash
   ($0.10 per unit)
   
   1,750,000
   
   41,700
   
   -
   
   -
   
   -
   
   41,700Shares issued - cash
   ($0.15 per unit)
   
   3,500,000
   
   417,900
   
   -
   
   -
   
   -
   
   417,900Stock options
   exercised ($0.14 per share)
   
   220,000
   
   30,800
   
   -
   
   -
   
   -
   
   30,800Shares issued for
   service ($0.15 per share)
   
   100,000
   
   15,000
   
   -
   
   -
   
   -
   
   15,000Warrants granted
   
   -
   
   -
   
   -
   
   240,400
   
   -
   
   240,400Share issue costs -
   cash paid
   
   -
   
   (53,375)
   
   -
   
   -
   
   -
   
   (53,375)Net loss for the
   year
   
   -
   
   -
   
   -
   
   -
   
   (608,910)
   
   (608,910)Balance at 30
   November 2002
   
   9,826,169
   
   1,901,429
   
   -
   
   253,498
   
   (2,081,893)
   
   73,034Flow-through shares
   issued - cash ($0.15 per unit)
   
   666,667
   
   26,747
   
   -
   
   -
   
   -
   
   26,747Flow-through shares
   issued - cash ($0.25 per unit)
   
   680,000
   
   118,517
   
   -
   
   -
   
   -
   
   118,517Shares issued - cash
   ($0.15 per unit)
   
   666,333
   
   26,733
   
   -
   
   -
   
   -
   
   26,733Shares issued - cash
   ($0.23 per unit)
   
   3,500,000
   
   556,325
   
   -
   
   -
   
   -
   
   556,325Shares issued - cash
   ($0.25 per unit)
   
   160,000
   
   27,887
   
   -
   
   -
   
   -
   
   27,887Warrants exercised
   ($0.10 per share)
   
   250,000
   
   34,010
   
   -
   
   (9,010)
   
   -
   
   25,000Warrants exercised
   ($0.14 per share)
   
   425,000
   
   94,715
   
   -
   
   (35,215)
   
   -
   
   59,500Warrants exercised
   ($0.15 per share)
   
   3,500,000
   
   632,100
   
   -
   
   (107,100)
   
   -
   
   525,000Warrants exercised
   ($0.19 per share)
   
   50,000
   
   9,893
   
   -
   
   (393)
   
   -
   
   9,500Warrants exercised
   ($0.20 per share)
   
   100,000
   
   21,629
   
   -
   
   (1,629)
   
   -
   
   20,000Stock options
   exercised ($0.14 per share)
   
   82,808
   
   11,593
   
   -
   
   -
   
   -
   
   11,593Stock options
   exercised ($0.15 per share)
   
   362,000
   
   54,300
   
   -
   
   -
   
   -
   
   54,300Agent compensation
   warrants exercised ($0.15 per share)
   
   54,500
   
   8,175
   
   -
   
   -
   
   -
   
   8,175Shares issued for
   mineral property ($0.17 per share) (Notes 8 and 15)
   
   50,000
   
   8,500
   
   -
   
   -
   
   -
   
   8,500Shares issued for
   mineral property ($0.24 per share) (Notes 8 and 15)
   
   200,000
   
   48,000
   
   -
   
   -
   
   -
   
   48,000Shares issued for
   mineral property ($0.28 per share) (Notes 8 and 15)
   
   200,000
   
   56,000
   
   -
   
   -
   
   -
   
   56,000Shares issued for
   agent services rendered ($0.23 per share) (Note 15)
   
   100,000
   
   23,000
   
   -
   
   -
   
   -
   
   23,000Warrants granted
   
   -
   
   -
   
   -
   
   517,219
   
   -
   
   517,219Warrants expired
   
   -
   
   -
   
   11,076
   
   (11,076)
   
   -
   
   -Share issue costs -
   cash paid
   
   -
   
   (89,439)
   
   -
   
   -
   
   -
   
   (89,439)Share issue costs -
   warrants
   
   -
   
   (58,478)
   
   -
   
   -
   
   -
   
   (58,478)Stock-based compensation
   
   -
   
   -
   
   221,665
   
   -
   
   -
   
   221,665Tax benefits
   renounced to flow-through share subscribers
   
   -
   
   (102,330)
   
   -
   
   -
   
   -
   
   (102,330)Escrow shares
   cancelled
   
   (137,978)
   
   -
   
   -
   
   -
   
   -
   
   -Net loss for the
   year
   
   -
   
   -
   
   -
   
   -
   
   (1,941,606)
   
   (1,941,606)Balance at 30
   November 2003
   
   20,735,499
   
   3,409,306
   
   232,741
   
   606,294
   
   (4,023,499)
   
   224,842






The accompany notes are an integral part of these financial
statements.

115

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



Number of 
   shares issued
   Share capital
   Contributed 
   surplus
   Warrants
   Deficit 
   accumulated 
   during the 
   exploration 
   stage
   Total 
   Shareholders'
    equity$
   
   $
   
   $
   
   $
   
   $Balance forward at 30 November 2003
   
   20,735,499
   
   3,409,306
   
   232,741
   
   606,294
   
   (4,023,499)
   
   224,842Flow-through shares issued - 
  cash ($0.25 per unit)
   
   5,655,000
   
   1,211,456
   
   -
   
   -
   
   -
   
   1,211,456Flow-through shares issued - 
  cash ($0.27 per unit)
   
   6,764,926
   
   1,484,104
   
   -
   
   -
   
   -
   
   1,484,104Warrants exercised ($0.14 per share)
   
   1,075,000
   
   239,574
   
   -
   
   (89,074)
   
   -
   
   150,500Warrants exercised ($0.20 per share)
   
   395,333
   
   122,506
   
   -
   
   (43,439)
   
   -
   
   79,067Warrants exercised ($0.28 per share)
   
   400,000
   
   142,284
   
   -
   
   (30,284)
   
   -
   
   112,000Warrants exercised ($0.30 per share)
   
   571,000
   
   211,870
   
   -
   
   (40,570)
   
   -
   
   171,300Agent compensation warrants 
  exercised ($0.15 per share)
   
   645,500
   
   96,825
   
   -
   
   -
   
   -
   
   96,825Agent compensation warrants 
  exercised ($0.25 per share)
   
   699,200
   
   233,211
   
   -
   
   (58,411)
   
   -
   
   174,800Stock options exercised ($0.14 per share)
   
   40,000
   
   5,600
   
   -
   
   -
   
   -
   
   5,600Stock options exercised ($0.20 per share)
   
   175,000
   
   35,000
   
   -
   
   -
   
   -
   
   35,000Shares issued for mineral 
  property ($0.17 per share) (Notes 8 and 15)
   
   100,000
   
   17,000
   
   -
   
   -
   
   -
   
   17,000Shares issued for mineral property 
  ($0.26 per  share) (Notes 8 and 15)
   
   50,000
   
   13,000
   
   -
   
   -
   
   -
   
   13,000Shares issued for agent services 
  rendered ($0.25 per share) (Note 15)
   
   24,376
   
   6,094
   
   -
   
   -
   
   -
   
   6,094Shares issued for agent services 
  rendered ($0.27 per unit) (Note 15)
   
   196,456
   
   43,059
   
   -
   
   -
   
   -
   
   43,059Warrants granted
   
   -
   
   -
   
   -
   
   684,934
   
   -
   
   684,934Warrants expired
   
   -
   
   -
   
   241,418
   
   (241,418)
   
   -
   
   -Agent compensation warrants expired
   
   -
   
   -
   
   67
   
   (67)
   
   -
   
   -Share issue costs - cash paid
   
   -
   
   (217,898)
   
   -
   
   -
   
   -
   
   (217,898)Share issue costs - shares
   
   -
   
   (49,153)
   
   -
   
   -
   
   -
   
   (49,153)Share issue costs - warrants
   
   -
   
   (140,214)
   
   -
   
   -
   
   -
   
   (140,214)Tax benefits renounced to flow-
  through share subscribers (Note 14)
   
   -
   
   (1,073,238)
   
   -
   
   -
   
   -
   
   (1,073,238)Net loss for the year
   
   -
   
   -
   
   -
   
   -
   
   (957,202)
   
   (957,202)Balance at 30 November 2004
   
   37,527,290
   
   5,790,386
   
   474,226
   
   787,965
   
   (4,980,701)
   
   2,071,876




The accompany notes are an integral part of these financial
statements.

116

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



































































Number of
    shares issued
   Share capital
   Contributed 
   surplus
   Warrants
   Deficit 
   accumulated 
   during the 
   exploration 
   stage
   Total 
   Shareholders' 
   equity$
   
   $
   
   $
   
   $
   
   $Balance forward
   at 30 November 2004
   
   37,527,290
   
   5,790,386
   
   474,226
   
   787,965
   
   (4,980,701)
   
   2,071,876Flow-through
   shares issued - cash ($0.45 per unit)
   
   10,000,000
   
   2,936,950
   
   -
   
   -
   
   -
   
   2,936,950Shares issued -
   cash ($0.40 per unit)
   
   15,000,000
   
   3,460,875
   
   -
   
   -
   
   -
   
   3,460,875Warrants exercised
   ($0.20 per share)
   
   937,667
   
   290,564
   
   -
   
   (103,031)
   
   -
   
   187,533Warrants exercised
   ($0.40 per share)
   
   745,963
   
   372,743
   
   -
   
   (74,358)
   
   -
   
   298,385Warrants exercised
   ($0.55 per share)
   
   1,130,000
   
   789,893
   
   -
   
   (168,393)
   
   -
   
   621,500Agent compensation
   warrants exercised ($0.36 per share)
   
   677,875
   
   318,273
   
   -
   
   (74,238)
   
   -
   
   244,035Agent compensation
   warrants exercised ($0.40 per share)
   
   25,024
   
   12,550
   
   -
   
   (2,541)
   
   -
   
   10,009Stock options
   exercised ($0.14 per share)
   
   72,808
   
   10,193
   
   -
   
   -
   
   -
   
   10,193Stock options
   exercised ($0.20 per share)
   
   1,724,782
   
   563,034
   
   (218,078)
   
   -
   
   -
   
   344,956Shares issued for
   mineral property ($0.20 per share) (Notes 8 and 15)
   
   360,000
   
   72,000
   
   -
   
   -
   
   -
   
   72,000Shares issued for
   mineral property ($0.235 per share) (Notes 8 and 15)
   
   300,000
   
   70,500
   
   -
   
   -
   
   -
   
   70,500Shares issued for
   mineral property ($0.24 per share) (Notes 8 and 15)
   
   300,000
   
   72,000
   
   -
   
   -
   
   -
   
   72,000Shares issued for
   mineral property ($0.25 per share) (Notes 8 and 15)
   
   350,000
   
   87,500
   
   -
   
   -
   
   -
   
   87,500Shares issued for
   mineral property ($0.66 per share) (Notes 8 and 15)
   
   450,000
   
   297,000
   
   -
   
   -
   
   -
   
   297,000Shares issued for
   agent services rendered ($0.40 per share) (Note 15)
   
   1,313,574
   
   303,074
   
   -
   
   -
   
   -
   
   303,074Warrants granted
   
   -
   
   -
   
   -
   
   5,129,494
   
   -
   
   5,129,494Agent compensation
   warrants expired
   
   -
   
   -
   
   22,275
   
   (22,275)
   
   -
   
   -Share issue cost -
   cash paid
   
   -
   
   (341,022)
   
   -
   
   -
   
   -
   
   (341,022)Share issue cost -
   shares
   
   -
   
   (303,074)
   
   -
   
   -
   
   -
   
   (303,074)Share issue cost -
   warrants
   
   -
   
   (1,027,318)
   
   -
   
   -
   
   -
   
   (1,027,318)Stock
   based-compensation (Note 12)
   
   -
   
   -
   
   185,580
   
   -
   
   -
   
   185,580Net loss for the
   year
   
   -
   
   -
   
   -
   
   -
   
   (2,832,810)
   
   (2,832,810)Balance at 30
   November 2005
   
   70,914,983
   
   13,776,121
   
   464,003
   
   5,472,623
   
   (7,813,511)
   
   11,899,236






The accompany notes are an integral part of these financial
statements.

117

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



Number of 
   shares issued
   Share capital
   Contributed 
   surplus and 
   share 
   subscriptions 
   received in 
   advance
   Warrants
   Deficit 
   accumulated 
   during the 
   exploration 
   stage
   Total 
   Shareholders' 
   equity$
   
   $
   
   $
   
   $
   
   $Balance at 30
   November 2005
   
   70,914,983
   
   13,776,121
   
   464,003
   
   5,472,623
   
   (7,813,511)
   
   11,899,236Flow-through
   shares issued - cash ($1.85 per unit) (Note 11)
   
   5,500,000
   
   6,942,843
   
   -
   
   -
   
   -
   
   6,942,843Flow-through
   shares issued - cash ($1.90 per unit) (Note 11)
   
   6,380,000
   
   9,613,448
   
   -
   
   -
   
   -
   
   9,613,448Warrants exercised
   ($0.55 per share)
   
   227,500
   
   159,027
   
   -
   
   (33,902)
   
   -
   
   125,125Warrants exercised
   ($0.40 per share)
   
   683,500
   
   341,401
   
   -
   
   (68,001)
   
   -
   
   273,400Warrants exercised
   ($0.40 per share)
   
   1,853,000
   
   931,318
   
   -
   
   (190,118)
   
   -
   
   741,200Warrants exercised
   ($0.75 per share)
   
   3,155,550
   
   3,353,119
   
   -
   
   (986,456)
   
   -
   
   2,366,663Warrants exercised
   ($0.65 per share)
   
   1,228,750
   
   1,214,681
   
   -
   
   (415,994)
   
   -
   
   798,687Agents
   compensation warrants exercised ($0.40 per share)
   
   21,581
   
   10,780
   
   -
   
   (2,147)
   
   -
   
   8,633Agents
   compensation warrants exercised ($0.40 per share)
   
   51,622
   
   25,945
   
   -
   
   (5,296)
   
   
   
   20,649Agents
   compensation warrants exercised ($0.36 per share)
   
   200,468
   
   94,422
   
   -
   
   (22,254)
   
   -
   
   72,168Agents
   compensation warrants exercised ($0.36 per share)
   
   106,396
   
   49,765
   
   -
   
   (11,462)
   
   -
   
   38,303Agents
   compensation warrants exercised ($0.65 per unit)
   
   656,787
   
   649,266
   
   -
   
   (222,355)
   
   -
   
   426,911Agents
   compensation warrants exercised ($0.45 per unit)
   
   1,985,664
   
   1,694,744
   
   -
   
   (801,196)
   
   -
   
   893,548Agents
   compensation warrants exercised ($0.75 per share)
   
   935,691
   
   701,768
   
   -
   
   -
   
   -
   
   701,768Stock options
   exercised ($0.20 per share)
   
   1,550,000
   
   453,825
   
   (143,825)
   
   -
   
   -
   
   310,000Stock options
   exercised ($0.60 per share)
   
   350,000
   
   348,488
   
   (138,488)
   
   -
   
   -
   
   210,000Shares issued for
   mineral property ($0.73 per share) (Notes 8 and 15)
   
   250,000
   
   182,500
   
   -
   
   -
   
   -
   
   182,500Shares issued for
   agent services rendered ($1.85 per share) (Note 15)
   
   200,225
   
   252,751
   
   -
   
   -
   
   -
   
   252,751Warrants granted
   
   -
   
   -
   
   -
   
   6,755,901
   
   -
   
   6,755,901Warrants expired
   
   -
   
   -
   
   9,949
   
   (9,949)
   
   -
   
   -Share issuance
   cost - cash
   
   -
   
   (1,218,894)
   
   -
   
   -
   
   -
   
   (1,218,894)Share issuance
   cost - share
   
   -
   
   (252,751)
   
   -
   
   -
   
   -
   
   (252,751)Share issuance
   cost - warrant
   
   -
   
   (1,015,191)
   
   -
   
   -
   
   -
   
   (1,015,191)Stock based
   compensation (Note 12)
   
   -
   
   -
   
   3,237,869
   
   -
   
   -
   
   3,237,869Subscriptions
   received in advance
   (Note 11)
   
   -
   
   -
   
   7,500
   
   -
   
   -
   
   7,500Tax benefits
   renounced to flow-through share subscribers (Note 14)
   
   -
   
   (1,429,960)
   
   -
   
   -
   
   -
   
   (1,429,960)Net loss for the
   year
   
   -
   
   -
   
   -
   
   -
   
   (11,630,209)
   
   (11,630,209)Balance at 30
   November  2006
   
   96,251,717
   
   36,879,416
   
   3,437,008
   
   9,459,394
   
   (19,443,720)
   
   30,332,098






The accompany notes are an integral part of these financial
statements.

118

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---

Cumulative
    amounts from
    inception to 30
    November
    2006
   For the year 
   ended 30 
   November 
   2006
   For the year 
   ended 30 
   November 
   2005
   For the year 
   ended 30 
   November 
   2004$
   
   $
   
   $
   
   $Exploration operating
   expensesAssays
   
   176,305
   
   165,073
   
   11,232
   
   -Camp and field costs
   
   2,420,327
   
   2,130,533
   
   117,376
   
   980Consulting fees (Note 10)
   
   1,024,299
   
   391,125
   
   336,331
   
   240,309Drilling
   
   1,668,117
   
   1,458,060
   
   -
   
   -Geology and engineering
   
   1,757,147
   
   1,114,370
   
   210,549
   
   (10,085)Surveying
   
   1,463,623
   
   1,022,300
   
   441,323
   
   -Transportation
   
   3,473,557
   
   3,287,482
   
   186,075
   
   -Travel
   
   423,070
   
   56,787
   
   27,476
   
   21,23112,406,445
   
   9,625,730
   
   1,330,362
   
   252,435Acquisition of mineral
   property interests(Notes 8 and 15)
   
   2,831,197
   
   257,500
   
   967,236
   
   1,142,847Recovery of mineral
   property costs(Notes 8 and 15)
   
   (829,007)
   
   (436,099)
   
   (347,411)
   
   (8,000)Sales of mineral
   property interests(Notes 8 and 15)
   
   (71,565)
   
   -
   
   -
   
   -Write-off of mineral
   properties and related costs
   
   220,552
   
   -
   
   -
   
   -14,557,622
   
   9,447,131
   
   1,950,187
   
   1,387,282








Details on Mineral Properties Expenditures (Note 8)

The accompany notes are an integral part of these financial
statements.

119

---



Alberta Star Development Corp.
(An Exploration Stage Company)

---

Cumulative
    amounts from
    inception to 30
    November 
   2006
   For the year 
   ended 30 
   November 
   2006
   For the year 
   ended 30 
   November 
   2005
   For the year 
   ended 30 
   November 
   2004$
   
   $
   
   $
   
   $Advertising and promotion
   
   594,016
   
   247,563
   
   124,842
   
   142,905Amortization
   
   43,064
   
   15,838
   
   6,684
   
   8,796Automotive
   
   39,370
   
   4,245
   
   3,809
   
   3,823Bank charges and interest
   (Note 15)
   
   20,572
   
   4,665
   
   8,146
   
   3,967Consulting fees (Note 10)
   
   488,526
   
   27,452
   
   43,900
   
   66,528Directors fees (Note 10)
   
   30,950
   
   30,950
   
   -
   
   -Filing and financing fees
   (Note 15)
   
   251,735
   
   93,387
   
   56,587
   
   28,280Legal and accounting (Note
   10)
   
   741,795
   
   178,794
   
   149,959
   
   106,587Management fees (Note 10)
   
   543,387
   
   135,000
   
   60,000
   
   60,000Meals and entertainment
   
   119,166
   
   22,857
   
   27,439
   
   25,561Office and miscellaneous
   
   379,981
   
   181,523
   
   57,321
   
   70,547Rent and utilities
   
   100,311
   
   38,656
   
   9,350
   
   8,564Secretarial fees (Note 10)
   
   226,471
   
   36,037
   
   38,304
   
   32,019Stock-based compensation
   (Note 12)
   
   3,645,114
   
   3,237,869
   
   185,580
   
   -Telephone and internet
   
   38,057
   
   10,808
   
   6,274
   
   6,120Transfer fees and
   shareholder information
   
   382,668
   
   102,543
   
   79,438
   
   78,332Travel
   
   71,176
   
   34,506
   
   22,454
   
   -7,716,359
   
   4,402,693
   
   880,087
   
   642,029










The accompany notes are an integral part of these financial
statements.

120

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



1. Nature and Continuance of Operations
 Alberta Star Development Corp. (the "Company") was
 incorporated under the laws of the province of Alberta on 6 September 1996 and
 is in the exploration stage.
 
 The Company is in the business of acquiring and exploring
 mineral properties. The recoverability of the amounts expended by the Company
 on acquiring and exploring mineral properties is dependent upon the existence
 of economically recoverable reserves, the ability of the Company to complete
 the acquisition and/or development of the properties and upon future profitable
 production.
 
 The Company's financial statements as at 30 November 2006
 and for the year then ended have been prepared on a going concern basis, which
 contemplates the realization of assets and the settlement of liabilities and
 commitments in the normal course of business. The Company has a loss of
 $11,630,209 for the year ended 30 November 2006 (2005 - $2,832,810, 2004 -
 $957,202) and has working capital of $30,224,674 at 30 November 2006 (2005 -
 $11,885,123).
 The Company had cash and cash equivalents of $30,149,153 at
 30 November 2006 (2005 - $11,841,868), but management cannot provide assurance
 that the Company will ultimately achieve profitable operations or become cash
 flow positive, or raise additional debt and/or equity capital. However, based
 on its prior demonstrated ability to raise capital, management believes that
 the Company's capital resources should be adequate to continue operating and
 maintain its business strategy during fiscal 2007. However, if the Company is
 unable to raise additional capital in the near future, due to the Company's
 liquidity problems, management expects that the Company will need to curtail
 operations, liquidate assets, seek additional capital on less favourable terms
 and/or pursue other remedial measures. These financial statements do not
 include any adjustments related to the recoverability and classification of
 assets or the amounts and classification of liabilities that might be necessary
 should the Company be unable to continue as a going concern.
2. Changes in Accounting Policies
 
 In 2001, the CICA issued Accounting Guideline No. 11, which
 covers the Company's exploration activities. In the past, the Company has
 capitalized certain exploration costs on mineral properties that were not
 covered by feasibility studies, whereas under the new guideline, the Company
 was required to expense these amounts in the year incurred. Effective 1 January
 2001, the Company adopted these new recommendations on a retroactive basis. The
 impact as at 1 January 2001 of the adoption of these new recommendations was to
 reduce mineral properties by $561,257 and to increase deficit, accumulated
 during the exploration stage by $561,257.
3. Significant Accounting Policies
 
 The accounting policies of the Company are in accordance
 with Canadian generally accepted accounting principles ("Canadian GAAP"). These
 policies conform, in all material respects, with accounting principles
 generally accepted in the United States of America ("United States GAAP"),
 except as discussed in Note 18. Outlined below are those policies considered
 particularly significant.
 121Alberta Star Development Corp.
 (An Exploration Stage Company)Notes to Financial Statements
 (Expressed in Canadian Dollars)30 November 2006
 
 Cash and cash equivalents
 
 
 Cash and cash equivalents include highly liquid investments
 with original maturities of three months or less.
 
 Available for sale investments
 
 
 The available for sale investments consist of shares of a
 public company that the Company expects to sell in the near future. The
 investments are recorded at the lower of cost and fair market value.
 
 Property, plant and equipment
 
 
 Property, plant and equipment are recorded at cost and are
 amortized over their estimated useful lives at the following annual rates, with
 half the rate being applied in the year of acquisition:
 
 Computer equipment
    30%
    declining balanceEquipment
    20%
    declining balanceFurniture and fixtures
    20 %
    declining balance
 
 Mineral properties and deferred exploration costs
 
 
 Mineral exploration costs are expensed as incurred. When it
 has been determined that a mineral property can be economically developed as a
 result of establishing proven and probable reserves, costs incurred
 prospectively to develop the property are capitalized as incurred and are
 depreciated using the unit-of-production depreciation method over the estimated
 life of the ore body based on proven and probable reserves.
 
 Major development costs incurred after the commencement of
 production, are capitalized as incurred and are depreciated using the
 unit-of-production depreciation method based on proven and probable reserves.
 
 Ongoing development expenditures to maintain production are
 charged to operations as incurred.
 Mineral property and deferred exploration costs are
 currently charged to operations as incurred since the Company has not met the
 criteria for deferral of acquisition and development costs under Canadian GAAP.
 
 Although the Company has taken steps to verify title to
 mineral properties in which it has an interest, according to the usual industry
 standards for the stage of exploration of such properties, these procedures do
 not guarantee the Company's title. Such properties may be subject to prior
 agreements or transfers and title may be affected by undetected defects.122Alberta Star Development Corp.
 (An Exploration Stage Company)Notes to Financial Statements
 (Expressed in Canadian Dollars)30 November 2006
 Reclamation costs
 
 
 The Company's policy for recording reclamation costs is to
 record a liability for the estimated costs to reclaim mined land by recording
 charges to production costs for each tonne of ore mined over the life of the
 mine. The amount charged is based on management's estimation of reclamation
 costs to be incurred. The accrued liability is reduced as reclamation
 expenditures are made. Certain reclamation work is performed concurrently with
 mining and these expenditures are charged to operations at that time.
 
 Stock-based compensation
 
 
 Effective 1 December 2002, the Company adopted, on a
 prospective basis, the provisions of Section 3870, "Stock-Based Compensation
 and Other Stock Based Payments", of the Canadian Institute of Chartered
 Accountants' ("CICA") Handbook ("Section 3870"). Section 3870 establishes
 standards for the recognition, measurement and disclosure of stock-based
 compensation and other stock-based payments to both employees and
 non-employees. Section 3870 recommends that certain stock-based transactions,
 such as the grant of stock options, be accounted for at fair value. The Company
 uses the Black-Scholes option pricing model to estimate the fair value of each
 stock option at the granted date. Any consideration received from the exercise
 of stock options is credited to share capital. This section is only applicable
 to transactions that occurred on or after 1 December 2002.
 
 Loss per share
 
 
 Basic loss per share is calculated based on the weighted
 average number of shares outstanding during the period. The treasury stock
 method is used for determining the dilutive effect of options and warrants
 issued in calculating diluted earnings per share. Under this method, the
 dilutive effect on loss per share is recognized on the use of the proceeds that
 could be obtained upon exercise of options, warrants and similar instruments.
 It assumes that the proceeds would be used to purchase common shares at the
 average market price during the year. For the periods presented, this
 calculation proved to be anti-dilutive.
 
 Impairment of long-lived assets
 
 
 Long-lived assets are reviewed for impairment whenever
 events or changes in circumstances indicate that the carrying amount of an
 asset may not be recoverable. An impairment loss would be recognized when the
 carrying amount of an asset exceeds the estimated undiscounted future cash
 flows expected to result from the use of the asset and its eventual
 disposition. The amount of the impairment loss to be recorded is calculated by
 the excess of the assets carrying value over its fair value. Fair value is
 determined using a discounted cash flow analysis.123
 Alberta Star Development Corp.
 (An Exploration Stage Company)Notes to Financial Statements
 (Expressed in Canadian Dollars)30 November 2006
 Asset retirement obligation
 
 
 Effective 1 December 2004, the Company adopted the
 recommendations of CICA Handbook Section 3110, "Asset Retirement
 Obligations". This new section requires recognition of a legal liability
 for obligations relating to retirement of property, plant and equipment, and
 arising from the acquisition, construction, development or normal operation of
 those assets. Such asset retirement cost must be recognized at fair value in
 the period in which it is incurred, added to the carrying value of the asset,
 and amortized into income on a systematic basis over its useful life. Adoption
 of this standard has not affected the Company's financial statements.
 
 Flow-through common shares
 
 
 The Company has financed a portion of its exploration
 activities through the issue of flow-through shares, which transfers the income
 tax deductibility of exploration expenditures to the investor. Proceeds
 received on the issue of such shares have been credited to share capital and
 the related exploration costs have been charged to exploration properties and
 deferred exploration expenditures. A future income tax liability is recognized,
 and shareholders' equity reduced on the date the Company renounces the
 expenditures, provided there is reasonable assurance that the expenditures will
 be made.
 
 Income taxes
 
 
 Future income tax assets and liabilities are determined
 based on temporary differences between the accounting and the tax bases of the
 assets and liabilities and for loss carry forwards and are measured using the
 tax rates expected to apply when these differences reverse. A valuation
 allowance is recorded against any future income tax asset if it is not more
 likely than not that the asset will be realized. As at 30 November 2006, the
 Company's net future income tax assets are fully offset by a valuation
 allowance.
 
 Foreign currency translation
 
 
 Revenue and expenses are translated at the exchange rates
 prevailing at the transactions dates. Transaction amounts denominated in
 foreign currencies are translated into functional currency at exchange rates
 prevailing at transaction dates.
 
 Use of estimates
 
 
 The preparation of financial statements in conformity with
 Canadian GAAP requires management to make estimates and assumptions that affect
 the amounts of assets and liabilities and disclosures of contingent assets and
 liabilities at the date of the financial statements and the reported amounts of
 revenues and expenditures during the reported period. Actual results could
 differ from these estimates.124Alberta Star Development Corp.
 (An Exploration Stage Company)Notes to Financial Statements
 (Expressed in Canadian Dollars)30 November 2006
 Financial instruments
 
 
 The Company's financial instruments consist of cash and cash
 equivalents, available for sale investments, amounts receivable, prepaid
 expenses and accounts payable and accrued liabilities. The carrying value of
 the financial instruments is approximate fair value due to their short term to
 maturity. Unless otherwise noted, it is management's opinion that the Company
 is not exposed to significant interest, currency or credit risk arising from
 these financial instruments.
 
 Values
 
 
 The amounts shown for mineral properties and for deferred
 exploration costs represent costs to date, and do not necessarily represent
 present or future values, as they are entirely dependent upon the economic
 recovery of future reserves.
 
 Comparative figures
 
 
 Certain comparative figures have been adjusted to conform to
 the current period's presentation.
4. Restricted cash and cash equivalents
 
 A total of $19,822,747 of the Company's cash and cash
 equivalents at 30 November 2006 relates to proceeds from the issuance of
 flow-through shares and is restricted to future expenditures on Canadian
 mineral property operating expenditures.
5. Available for Sale Investments
 
 
 
 2006
    2005Carrying value
    
    Fair 
    market
     value
    
    Carrying
     value
    
    Fair
     market
     value$
    
    $
    
    $
    
    $Max Resource Corp. - 200,000 shares
    
    72,000
    
    110,000
    
    82,000
    
    120,000
 
 Pursuant to an exploration property option agreement
 referred to in Note 8, the Company received 200,000 common shares of Max
 Resource Corp. valued at $82,000 (Note 15). During the period ended 31 August
 2006, the carrying value of the shares was written down to the fair market
 value of $72,000 ($0.36 per share). This value represents the lower of cost and
 fair market value. As at 30 November 2006 the fair value of the shares was
 $110,000.125Alberta Star Development Corp.
 (An Exploration Stage Company)
 Notes to Financial Statements
 (Expressed in Canadian Dollars)30 November 2006
6. Amounts Receivable
 Amounts receivable are non-interest bearing, unsecured and have
 settlement dates within one year.
 2006
    
    2005$
    
    $Goods and Services Tax
    receivable
    
    
    
    198,876
    
    32,056Interest receivable
    
    
    
    159,551
    
    -Mineral property
    expenditures recovery
    
    
    
    -
    
    8,787358,427
    
    40,843



1. Property, Plant and Equipment
2. Mineral Properties

> Contact Lake Property - Contact Lake, Northwest Territories

> 

> During the year ended 30 November 2005, the Company acquired
>  a 100% undivided right, title and interest, subject to a 1% net smelter return
>  royalty ("NSR"), in five mineral claims, totalling 1,801.82 hectares ("ha")
>  (4,450.50 acres) (the "Contact Lake Mineral Claims") located five miles
>  southeast of Port Radium on Great Bear Lake, Northwest Territories ("NT"),
>  Canada, for cash payments of $60,000 (paid) and 300,000 common shares (issued
>  and valued at $72,000) of the Company (Note 15). The Company may purchase the
>  NSR for a one-time payment of $1,000,000.

> 

> During the year ended 30 November 2005, the Company staked
>  an additional 8,799.95 ha (21,735.38 acres) and increased the size of the
>  Contact Lake Mineral Claims to 10,601.57 ha (26,185.88 acres). The Contact Lake
>  Mineral Claims now consists of sixteen contiguous claims located 5 kilometers
>  ("km") southeast of Port Radium on the east side of Great Bear Lake and 423
>  miles north of the city of Yellowknife, NT.

126

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



Expenditures related to the Contact Lake Mineral Claims can be
  summarized as follows:

Cumulative 
     amounts from 
     inception to 30 
     November 2006
     For the year 
     ended 30
     November 
     2006
     For the year
      ended 30 
     November 
     2005
     For the year 
     ended 30 
     November 
     2004$
     
     $
     
     $
     
     $Operating expensesAssays
     
     175,970
     
     165,073
     
     10,897
     
     -Camp and field costs
     
     1,927,147
     
     1,809,771
     
     117,376
     
     -Consulting fees
     
     570,598
     
     362,148
     
     208,450
     
     -Drilling
     
     1,458,060
     
     1,458,060
     
     -
     
     -Geology and engineering
     
     1,273,316
     
     1,088,850
     
     184,466
     
     -Surveying
     
     1,233,289
     
     1,004,991
     
     228,298
     
     -Transportation
     
     2,606,594
     
     2,420,519
     
     186,075
     
     -Travel
     
     69,243
     
     50,513
     
     18,730
     
     -9,314,217
     
     8,359,925
     
     954,292
     
     -Acquisition costs
     
     132,000
     
     -
     
     132,000
     
     -9,446,217
     
     8,359,925
     
     1,086,292
     
     -










> Port Radium - Glacier Lake Property, Northwest Territories



During the year ended 30 November 2005, the Company
  acquired a 100% undivided right, title and interest, subject to a 2% NSR, in
  four mineral claims, totalling 2,424.23 ha (5,987.85 acres) (the "Glacier Lake
  Mineral Claims") located one mile east of Port Radium on Great Bear Lake, NT,
  for cash payments of $30,000 (paid) and 360,000 common shares (issued and
  valued at $72,000) of the Company (Note 15). The Company may purchase one-half
  of the NSR for a one-time payment of $1,000,000.

127

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



Expenditures related to the Glacier Lake Mineral Claims can be
  summarized as follows:

Cumulative
      amounts from
      inception to 30
      November
      2006
     For the year 
     ended 30 
     November 
     2006
     For the year 
     ended 30 
     November 
     2005
     For the year 
     ended 30 
     November 
     2004$
     
     $
     
     $
     
     $Operating expensesCamp and field costs
     
     320,762
     
     320,762
     
     -
     
     -Consulting fees
     
     27,477
     
     27,477
     
     -
     
     -Geology and engineering
     
     22,896
     
     22,896
     
     -
     
     -Surveying
     
     17,309
     
     17,309
     
     -
     
     -Transportation
     
     866,963
     
     866,963
     
     -
     
     -Travel
     
     6,274
     
     6,274
     
     -
     
     -1,261,681
     
     1,261,681
     
     -
     
     -Acquisition costs
     
     102,000
     
     -
     
     102,000
     
     -Recoveries
     
     (417,099)
     
     (417,099)
     
     -
     
     -946,582
     
     844,582
     
     102,000
     
     -




Port Radium - Crossfault Lake Property, Northwest Territories



During the year ended 30 November 2005, the Company
  acquired a 100% undivided right, title and interest, subject to a 2% NSR, in
  five mineral claims, totalling 1,447.26 ha (3,574.73 acres) (the "Port Radium
  - Crossfault Lake Mineral Claims") located north of Port Radium on Great Bear
  Lake, NT, for cash payments of $60,000 (paid) and 450,000 common shares
  (issued and valued at $297,000) of the Company (Note 15). The Company may
  purchase one-half of the NSR for a one-time payment of $1,000,000.



Total expenditures related to the Port Radium - Crossfault
  Lake Mineral Claims consist of acquisition costs of $357,000 made during the
  year ended 30 November 2005.



Port Radium - Eldorado Property, Northwest Territories



During the year ended 30 November 2005, the Company entered
  into a lease agreement with South Malartic Exploration Inc. ("South Malartic"),
  to purchase a 50% undivided right, title and interest in three mineral claims,
  totalling 106.53 ha (263.13 acres) (the "Eldorado Uranium Mineral Claims")
  located at Port Radium on Great Bear Lake, NT, for a cash payment of $20,000
  (paid).



Total expenditures related to the Eldorado Uranium Mineral
  Claims consist of acquisition costs of $20,000 made during the year ended 30
  November 2005.

128

---



Alberta Star Development Corp.
(An Exploration Stage Company)Notes to Financial Statements
(Expressed in Canadian Dollars)30 November 2006

---



North Contact Lake Mineral Claims - Great Bear Lake, Northwest
  Territories



During the year ended 30 November 2006, the Company
  acquired a 100% right, interest and title, subject to a 2% NSR, in eleven
  mineral claims (the "North Contact Lake Mineral Claims"), for cash payments of
  $75,000 and the issue of 250,000 common shares of the Company valued at
  $182,500 (Notes 11 and 15). The Company may purchase one-half of the NSR for a
  one-time payment of $1,000,000. The North Contact Lake Mineral Claims are
  situated north of Contact Lake on Great Bear Lake approximately 263 miles
  north of Yellowknife, NT, totalling 5,867.23 ha (14,492.06 acres).



Total expenditures related to the North Contact Lake
  Mineral Claims consist of acquisition costs of $257,500 made during the year
  ended 30 November 2006.



> Longtom Property - Longtom Lake, Northwest Territories



The Company holds a 50% undivided interest subject to a 2%
  NSR, totalling 361.38 ha (892.61 acres), in the Longtom Property (the "Longtom
  Property") located about 350 km northwest of Yellowknife, NT. The Longtom
  Property is registered 100% in the name of the Company and the Company is the
  operator of the Longtom Property.



The Company has the right to acquire the remaining 50%
  interest in the Longtom Property (the "Longtom Option") for $315,000 payable
  either in cash or50% ($157,500) in cash and 50% in common shares of
  the Company. The deemed price of the Company's shares issued on the exercise
  of the Longtom Option would be the average TSX Venture Exchange closing market
  price of its common shares on the five trading days immediately preceding and
  the five trading days immediately following the date that the option is
  exercised. The Company is compelled to exercise the Longtom Option: 1) within
  90 days from the date it has incurred $5,000,000 in exploration expenditures
  on the Longtom Property; or 2) at the date the Company advises the optionor in
  writing that it will complete the Longtom Option to purchase the remaining 50%
  interest in the Longtom Property (Note 13).



The Company has the right to enter into joint venture or
  option agreements related to the Longtom Property with third parties prior to
  the exercise of the Longtom Option.



During the year ended 30 November 2003, the Company entered
  into a non-binding letter of intent (the "Letter of Intent") with Fronteer
  Development Group Inc. ("Fronteer"). Under the Letter of Intent, Fronteer may
  earn up to a 75% interest in the Longtom Property by paying the Company
  $15,000 cash and spending an aggregate of $500,000 on exploration expenditures
  over three years according to the following schedule:



- Pay $5,000 cash on signing (received);
- Pay $3,000 cash (received) and incur cumulative exploration expenditures
   of $50,000 by 27 October 2004 (incurred);
- Pay $3,000 cash (received) and incur cumulative exploration expenditures
   of $200,000 (incurred) by 27 October 2005; and
- Pay $4,000 cash (received) and incur cumulative exploration expenditures
   of $500,000 (incurred) by 27 October 2006.

129

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



Fronteer will be the operator of the program during the
  earn-in period. In the event that Fronteer fails to meet its obligations,
  Fronteer shall forfeit all interest in the Longtom Property.



This Letter of Intent was finalized during the year ended
  30 November 2004 and was approved by TSX Venture Exchange.



Expenditures related to the Longtom Property can be summarized
  as follows:

Cumulative
      amounts from
      inception to 30
      November 
     2006
     For the year
     ended 30 
     November 
     2006
     For the year 
     ended 30 
     November 
     2005
     For the year 
     ended 30 
     November 
     2004$
     
     $
     
     $
     
     $Operating expensesAssays
     
     335
     
     -
     
     335
     
     -Camp and field costs
     
     147,024
     
     -
     
     -
     
     -Consulting fees
     
     190,273
     
     -
     
     10,359
     
     125,948Drilling
     
     210,057
     
     -
     
     -
     
     -Geology and engineering
     (recovery)
     
     419,891
     
     893
     
     2,194
     
     (11,624)Travel
     
     322,529
     
     -
     
     12
     
     20,4891,290,109
     
     893
     
     12,900
     
     134,813Recoveries
     
     (52,497)
     
     (4,000)
     
     (3,000)
     
     (8,000)Sales of mineral
     property interests
     
     (55,000)
     
     -
     
     -
     
     -Write-off of mineral
     properties and related costs(Note
     2)
     
     220,552
     
     -
     
     -
     
     -1,403,164
     
     (3,107)
     
     9,900
     
     126,813












130

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



Longtom Property (Target 1) - Longtom Lake, Northwest
  Territories



During the year ended 30 November 2003, the Company
  acquired a 50% interest in a 721.42 ha (1,781.90 acres) mineral property
  located in the Longtom Lake area of the NT, Canada, for cash proceeds of
  $15,000 and 200,000 common shares of the Company valued at $56,000 (Note 15).



Expenditures related to the Longtom Property Target 1 can be
  summarized as follows:

Cumulative 
     amounts from 
     inception to 
     30 November 
     2006
     For the year 
     ended 30
      November 
     2006
     For the year 
     ended 30
     November 
     2005
     For the year
      ended 30 
     November 
     2004$
     
     $
     
     $
     
     $Operating expensesConsulting fees
     
     21,648
     
     -
     
     9,468
     
     12,180Geology and engineering
     
     2,103
     
     -
     
     2,103
     
     -23,751
     
     -
     
     11,571
     
     12,180Acquisition of mineral
     property interests
     
     71,000
     
     -
     
     -
     
     -Recoveries
     
     (3,530)
     
     -
     
     (3,530)
     
     -91,221
     
     -
     
     8,041
     
     12,180












Longtom Property (Target 2) - Longtom Lake, Northwest
  Territories



During the year ended 30 November 2006, the Company
  abandoned its interest in Longtom Property (Target 2).



MacInnis Lake Property - MacInnis Lake, Northwest Territories



During the year ended 30 November 2005, the Company
  acquired a 100% interest, subject to a 2% NSR, in 12 mineral claims (the "MacInnis
  Lake Uranium Claims") located in the Nonacho Basin, 275 km southeast of
  Yellowknife, NT, for cash proceeds of $60,000 (paid) and 300,000 common shares
  (issued and valued at $70,500) of the Company (Note 15).



During the year ended 30 November 2005, the Company
  acquired a 100% interest, subject to a 2% NSR, in three additional mineral
  claims (the "Kult Claims") for cash payments of $40,000 (paid) and 350,000
  common shares (issued and valued at $87,500) of the Company (Note 15). The
  MacInnis Lake Property now consists of 15 mineral claims totaling 10,596.35 ha
  (26,172.98 acres).

131

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



During the year ended 30 November 2005, the Company entered
  into an option agreement with Max Resource Corp. ("Max Resource"), wherein Max
  Resource may earn up to a 50% undivided, right, title and interest in the
  MacInnis Lake Uranium Claims and the Kult Claims (together called "MacInnis
  Lake Property") by paying the Company $30,000 cash (received), issuing 200,000
  common shares of Max Resource (received and now valued at $72,000 (Note 5))
  and completing $2 million in exploration work over five years according to the
  following schedule:



> Pay $15,000 cash (received) on signing;
>    Pay $15,000 cash (received) and incur cumulative exploration expenditures
>    of $750,000 by 1 April 2006;
>    Incur cumulative exploration expenditures of $1,000,000 by 1 April 2007;
>    Incur cumulative exploration expenditures of $1,250,000 by 1 April 2008;
>    Incur cumulative exploration expenditures of $1,500,000 by 1 April 2009;
>    and
>    Incur cumulative exploration expenditures of $2,000,000 by 1 April 2010.



In addition to the above, Max Resource is responsible for
  all cash payments to the underlying property vendor, during the option period.
  The Company is the operator of the project. The Company incurs all costs and
  recovers the costs from Max Resource until Max Resource has earned its option
  in the project.



> The Company has halted exploration activities on this
>   property pending resolution of permit issues.



Expenditures related to the MacInnis Lake Property can be
  summarized as follows:

Cumulative 
     amounts from 
     inception to 
     30 November
      2006
     For the year 
     ended 30 
     November 
     2006
     For the year 
     ended 30 
     November 
     2005
     For the year
      ended 30
      November 
     2004$
     
     $
     
     $
     
     $Operating expensesConsulting fees
     
     71,026
     
     1,500
     
     69,526
     
     -Geology and engineering
     
     12,176
     
     1,731
     
     10,445
     
     -Surveying
     
     213,025
     
     -
     
     213,025
     
     -Travel
     
     8,734
     
     -
     
     8,734
     
     -304,961
     
     3,231
     
     301,730
     
     -Acquisition costs
     
     258,000
     
     -
     
     258,000
     
     -Recoveries
     
     (
     349,748)
     
     (15,000)
     
     (334,748)
     
     -213,213
     
     (11,769)
     
     224,982
     
     -












132

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



Meridian Lake Property - Reliance, Northwest Territories



During the year ended 30 November 2006, the Company
  abandoned its interest in Meridian Lake Property.



Recovery of Mineral Property Costs



Recovery of Mineral Property Costs consists mainly of
  amounts paid to the Company under existing option agreements and camp rental
  fees paid to the Company:

Cumulative 
     amounts 
     from inception 
     to 30 
     November 
     2006
     For the year 
     ended 30 
     November 
     2006
     For the year 
     ended 30 
     November 
     2005
     For the year
      ended 30 
     November 
     2004$
     
     $
     
     $
     
     $General cash payments
     related to mineral property option agreements
     
     45,000
     
     19,000
     
     18,000
     
     8,000Cash reimbursements of
     mineral property expenditures related to mineral properties
     
     702,007
     
     417,099
     
     247,411
     
     -Shares received -
     200,000 common shares of
     Max Resource Corp. (Note 15)
     
     82,000
     
     -
     
     82,000
     
     -829,007
     
     436,099
     
     347,411
     
     8,000










1. Accounts Payable and Accrued Liabilities
 
 Accounts payable and accrued liabilities are non-interest
 bearing, unsecured and have settlement dates within one year.
 
 Included in the accounts payable and accrued liabilities at
 30 November 2006 is $10,013 (2005 - $489) payable to directors and officers of
 the Company.

133

---

Alberta Star Development Corp.
 (An Exploration Stage Company)

---





During the year ended 30 November 2006, the Company entered
 into the following transactions with related parties:



1. Paid or accrued office secretarial fees of $36,037 (2005 - $38,304, 2004
   - $32,019) to an individual related to a director of the Company.
2. Paid or accrued accounting fees of $38,375 (2005 - $Nil, 2004 - $Nil) to
   a proprietorship controlled by a corporate secretary of the Company.
3. Paid or accrued consulting fees of $27,452 (2005 - $43,900, 2004 -
   $66,528) to a company controlled by a director of the Company.
4. Paid accrued management fees of $135,000 (2005 - $60,000, 2004 - $60,000)
   to a company controlled by a director of the Company.
5. Paid or accrued directors fees of $7,500 (2005 - $Nil, 2004 - $Nil) to a
   partnership controlled by a director of the Company.
6. Paid or accrued directors fees of $21,950 (2005 - $Nil, 2004 - $Nil) to a
   company controlled by a director of the Company.
7. Paid or accrued directors fees of $9,000 (2005 - $Nil, 2004 - $Nil) to a
   company controlled by a director of the Company.



The amounts charged to the Company for the services provided
 have been determined by negotiation among the parties and in certain cases, are
 covered by signed agreements. It is the position of the management of the
 Company that these transactions were in the normal course of operations and
 were measured at the exchange value which represented the amount of
 consideration established and agreed to by the related parties.



1. Capital Stock



Authorized capital stock consists of an unlimited number of
 voting common shares. Authorized capital stock also consists of an unlimited
 number of preferred shares, to be issued in series, with the directors being
 authorized to determine the designation, rights, privileges, restrictions and
 conditions attached to all of the preferred shares.



134

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



Capital stock transactions of the Company during the year
  ended 30 November 2006 are summarized as follows:



1. On 25 April 2006, the Company issued 5,500,000 units at a price of $1.85
   per unit. Each unit consists of one common share and one half-share purchase
   warrant. Each whole share purchase warrant entitles the holder to purchase an
   additional common share at a price of $2.10 up to 25 October 2007. At 30
   November 2006, all of the related share purchase warrants remain outstanding.
   All of these common shares are flow-through shares for which the Company had
   not yet renounced the associated expenditures to the investors at 30 November
   2006 (Note 17).
2. On 18 October 2006, the Company issued 6,380,000 units at a price of
   $1.90 per unit. Each unit consists of one common share and one half-share
   purchase warrant. Each whole share purchase warrant entitles the holder to
   purchase an additional common share at a price of $2.15 up to 17 April 2008.
   At 30 November 2006, all of the related share purchase warrants remain
   outstanding. All of these common shares are flow-through shares for which the
   Company had not yet renounced the associated expenditures to the investors at
   30 November 2006 (Note 17).
3. During the year ended 30 November 2006, the Company issued 227,500 common
   shares valued at a price of $0.55 per share upon the exercise of previously
   outstanding share purchase warrants. As at 30 November 2006, no share
   purchase warrants in this series remain outstanding.
4. During the year ended 30 November 2006, the Company issued 683,500 common
   shares valued at a price of $0.40 per share upon the exercise of previously
   outstanding share purchase warrants. During the year ended 30 November 2006,
   a total of 100,000 share purchase warrants expired. As at 30 November 2006,
   no share purchase warrants in this series remain outstanding.
5. During the year ended 30 November 2006, the Company issued 1,853,000
   common shares valued at a price of $0.40 per share upon the exercise of
   previously outstanding share purchase warrants. As at 30 November 2006, no
   share purchase warrants in this series remain outstanding.
6. During the year ended 30 November 2006, the Company issued 3,155,550
   common shares valued at a price of $0.75 per share upon the exercise of
   previously outstanding share purchase warrants. As at 30 November 2006,
   1,844,450 share purchase warrants in this series remain outstanding.
7. During the year ended 30 November 2006, the Company issued 1,228,750
   common shares valued at a price of $0.65 per share upon the exercise of
   previously outstanding share purchase warrants. As at 30 November 2006,
   6,271,250 share purchase warrants in this series remain outstanding.



---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



1. During the year ended 30 November 2006, the Company issued 21,581 common
   shares valued at a price of $0.40 per share upon the exercise of previously
   outstanding agent compensation warrants. As at 30 November 2006, no agent
   compensation warrants in this series remain outstanding.
2. During the year ended 30 November 2006, the Company issued 51,622 common
   shares valued at a price of $0.40 per share upon the exercise of previously
   outstanding agent compensation warrants. As at 30 November 2006, no agent
   compensation warrants in this series remain outstanding.
3. During the year ended 30 November 2006, the Company issued 200,468 common
   shares valued at a price of $0.36 per share upon the exercise of previously
   outstanding agent compensation warrants. As at 30 November 2006, no agent
   compensation warrants in this series remain outstanding.
4. During the year ended 30 November 2006, the Company issued 106,396 common
   shares valued at a price of $0.36 per share upon the exercise of previously
   outstanding agent compensation warrants. As at 30 November 2006, no agent
   compensation warrants in this series remain outstanding.
5. During the year ended 30 November 2006, the Company issued 656,787 common
   shares valued at a price of $0.65 per share upon the exercise of previously
   outstanding agent compensation warrants. As at 30 November 2006, no agent
   compensation warrants in this series remain outstanding.
6. During the year ended 30 November 2006, the Company issued 1,985,664
   units valued at a price of $0.45 per unit upon the exercise of previously
   outstanding agent compensation warrants. Each unit consists of one common
   share and one half purchase warrant (the "Additional Share Purchase
   Warrant"). Each whole Additional Share Purchase Warrant can be used to
   purchase an additional common share of the Company of $0.75 up to 20
   September 2007 (Note 11xiv). As at 30 November 2006, 9,336 agent compensation
   warrants in this series remain outstanding.
7. During the year ended 30 November 2006, the Company issued 935,691 common
   shares valued at a price of $0.75 per share upon the exercise of previously
   outstanding agent compensation warrants. As at 30 November 2006, 57,142 agent
   compensation warrants in this series remain outstanding. (Note 11 xiii).
8. During the year ended 30 November 2006, the Company issued 1,550,000
   common shares valued at a price of $0.20 per share upon exercise of
   previously outstanding stock options. As at 30 November 2006, 300,000 stock
   options in this series remain outstanding.
9. During the year ended 30 November 2006, the Company issued 350,000 common
   shares valued at a price of $0.60 per share upon the exercise of previously
   outstanding stock options. As at 30 November 2006, 2,900,000 stock options in
   this series remain outstanding (Note 11xxii).

136

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---

> 

1. On 5 December 2005, the Company issued 250,000 common shares valued at a
   price of $0.73 per share for the acquisition of mineral property interests
   (Note 8).
2. On 25 April 2006, the Company issued 200,225 units at a price of $1.85
   per unit. Each unit consists of one common share and one half-share purchase
   warrant. Each whole share purchase warrant entitles the holder to purchase an
   additional common share at a price of $2.10 up to 25 October 2007. These
   units were issued for payment for services rendered by a private placement
   agent. As at 30 November 2006, all of the related warrants in this series
   remain outstanding.
3. On 25 April 2006, the Company issued 435,680 share purchase warrants.
   Each share purchase warrant entitles the holder to purchase an additional
   common share at a price of $2.15 up to 25 October 2007. These share purchase
   warrants were issued as consideration for payment for services rendered by a
   private placement agent. As at 30 November 2006, all of the related warrants
   in this series remain outstanding.
4. On 18 October 2006, the Company issued 508,296 share purchase warrants.
   Each share purchase warrant entitles the holder to purchase an additional
   common share at a price of $2.20 up to 17 April 2008. These share purchase
   warrants were issued as consideration for payment for services rendered by a
   private placement agent. As at 30 November 2006, all of the related warrants
   in this series remain outstanding.
5. During the year ended 30 November 2006, a total of 10,000 previously
   outstanding stock options expired.
6. On 27 January 2006, the Company issued 3,250,000 stock options. Each
   stock option entitles the holder to purchase a common share at a price of
   $0.60 up to 27 January 2009 (Note 11xvi.).
7. On 27 September 2006, the Company issued 3,250,000 stock options. Each
   stock option entitles the holder to purchase a common share at a price of
   $1.57 up to 27 January 2008. As at 30 November 2006, all of the related stock
   options in this series remain outstanding.



Share subscriptions received in advance



Share subscriptions received in advance consists of $7,500
  cash received by the Company for 12,500 common shares that were not yet issued
  at 30 November 2006. These shares were issued subsequent to 30 November 2006.



Stock options



The Company grants share options in accordance with the
  policies of the TSX Venture Exchange. Under the general guidelines of the TSX
  Venture Exchange, the Company may reserve up to 10% of its issued and
  outstanding shares for its employees, directors or consultants to purchase
  shares of the Company.

137

---



Alberta Star Development Corp.
(An Exploration Stage Company)

---



The following incentive stock options were outstanding at
  30 November 2006:

Exercise price
     
     Number
     of options
     
     Remaining
     contractual life (years)$Options
     
     0.15
     
     55,000
     
     0.590.20
     
     300,000
     
     1.600.60
     
     2,900,000
     
     2.171.57
     
     3,250,000
     
     1.836,505,000












The following is a summary of stock based compensation
  activities during the years ended 30 November 2006 and 2005:











Number of shares
   
   Weighted 
   average 
   exercise price$Outstanding and exercisable
   at 1 December 2004
   
   1,862,590
   
   0.20Granted
   
   2,000,000
   
   0.20Exercised
   
   (1,797,590)
   
   0.20Expired
   
   (150,000)
   
   0.20Outstanding and exercisable
   at 30 November 2005
   
   1,915,000
   
   0.20Weighted average fair value
   of options granted during the year
   
   
   
   0.09




Number of shares
   
   Weighted 
   average 
   exercise price$Outstanding and exercisable
   at 1 December 2005
   
   1,915,000
   
   0.20Granted
   
   6,500,000
   
   1.09Exercised
   
   (1,900,000)
   
   0.27Expired
   
   (10,000)
   
   0.14Outstanding and exercisable
   at 30 November 2006
   
   6,505,000
   
   1.06Weighted average fair value
   of options granted during the year
   
   
   
   0.63






138

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



> Warrants and agent compensation warrants



The following share purchase warrants and agent
  compensation warrants were outstanding at 30 November 2006:



Exercise price
   
   Number
   of warrants
   
   Remaining
   contractual life (years)$Warrants
   
   0.75
   
   1,844,450
   
   0.81Warrants
   
   0.65
   
   6,271,250
   
   0.81Agent compensation warrants
   
   0.45
   
   9,336
   
   0.81Agent compensation warrants
   
   0.75
   
   57,142
   
   0.81Agent compensation warrants
   
   2.15
   
   435,680
   
   0.90Agent compensation warrants
   
   2.10
   
   100,112
   
   0.90Warrants
   
   2.10
   
   2,750,000
   
   0.90Agent compensation warrants
   
   2.20
   
   508,296
   
   1.38Warrants
   
   2.15
   
   3,190,000
   
   1.3815,166,266










The following is a summary of warrant activities during the
  years ended 30 November 2006 and 2005:



Number of warrants
   
   Weighted average exercise
   price$Outstanding and exercisable
   at 1 December 2004
   
   7,186,596
   
   0.39Granted
   
   15,151,787
   
   0.66Exercised
   
   (3,516,529)
   
   0.39Expired
   
   (426,000)
   
   0.30Outstanding and exercisable
   at 30 November 2005
   
   18,395,854
   
   0.61Weighted average fair value
   of warrants granted during the year
   
   
   
   0.34










139

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---







Outstanding and
   exercisable at 1 December 2005
   
   18,395,854
   
   0.61Granted
   
   7,976,921
   
   1.96Exercised
   
   (11,106,509)
   
   0.58Expired
   
   (100,000)
   
   0.40Outstanding and exercisable
   at 30 November 2006
   
   15,166,266
   
   1.35Weighted average fair value
   of warrants granted during the year
   
   
   
   0.85




> The weighted average grant date fair value of warrants
>  issued during the year ended 30 November 2006, amounted to $0.85 per warrant
>  (2005 - $0.34 per warrant). The fair value of each warrant granted was
>  determined using the Black-Scholes option pricing model and the following
>  weighted average assumptions:





2006
   
   2005
   
   2004Risk free interest rate
   
   4.61%
   
   3.73%
   
   2.07%Expected life
   
   1.5 years
   
   2.00 years
   
   1.57 yearsAnnualized volatility
   
   88.42%
   
   87.89%
   
   93.00%Expected dividends
   
   -
   
   -
   
   -






1. Stock-Based Compensation
 During the year ended 30 November 2006, the Company granted
 6,500,000 stock options (2005 - 2,000,000, 2004 - Nil). The estimated fair
 value of these options was $0.63 per share (2005 - $0.09, 2004 - $Nil) for a
 total of $4,088,532 (2005 - $185,580, 2004 - $Nil). The fair value of the
 portion of these options which vested in the year, estimated using the Black
 Scholes model, was $3,237,869 (2005 - $185,580, 2004 - $Nil). This amount has
 been expensed as stock-based compensation in the statement of operations with a
 corresponding amount recorded as contributed surplus in shareholder's equity.
 
 The following assumptions were used for the Black-Scholes
 valuation of stock options granted during the year:



2006
    
    2005
    
    2004Risk free interest rate
    
    4.36%
    
    3.22%
    
    -Expected life
    
    1.75 
    years
    
    2.00 
    years
    
    -Annualized volatility
    
    94.98%
    
    83.75%
    
    -Expected dividends
    
    -
    
    -
    
    -




140

---



Alberta Star Development Corp.
 (An Exploration Stage Company)

---







> On 1 December 2000, the Company entered into a contract for management
>   services with a company controlled by a director of the Company requiring the
>   payment of $5,000 per month. This amount was increased to $12,500 per month
>   effective 1 February 2006 (Note 10).
>   On 14 July 2003, the Company entered into a contract for investor
>   relations services with an individual requiring the payment of $4,000 per
>   month. This amount was increased to $6,000 per month effective 1 February 2006
>   (Note 10).
>   On 10 January 2006, the Company entered into a contract for media and
>   investor relations services with a company requiring the payment of US$3,000
>   per month and the issue of 200,000 stock options exercisable at $0.60 per
>   common share. The options were issued during the year ended 30 November 2006
>   (Notes 11 and 12).
>   The Company has outstanding and future commitments under mineral property
>   option agreements to pay cash and issue common shares of the Company (Note 8).
>   The Company must incur mineral property operating expenditures equal to
>   the proceeds of all flow-through shares issued by the Company. These mineral
>   property operating expenditures must be incurred within a period of two years
>   from the date of issue of the flow-through shares (Note 14).
>   The Company entered into a five year lease for premise with minimum lease
>   commitments of approximately $3,575 per month.



1. Income TaxesProvision for income taxes
 
 The provision for (recovery of) income taxes differs from the
 amount that would have resulted by applying Canadian federal and provincial
 statutory tax rates of 32.49% (2005 - 33.6%, 2004 - 34.12%).

2006
   
   2005
   
   2004$
   
   $
   
   $Net loss before income
   taxes
   
   (13,060,169)
   
   (2,832,810)
   
   (2,030,440)Income tax recovery at
   statutory rates
   
   3,778,655
   
   951,824
   
   692,786Adjustments to benefits
   resulting from:Amortization
   
   (5,145)
   
   (2,246)
   
   (3,001)Resource expenses
   
   (3,069,372)
   
   (655,263)
   
   (473,341)Stock-based compensation not deductible for income tax purposes
   
   (1,051,983)
   
   (63,320)
   
   -Share issue costs
   
   123,827
   
   46,149
   
   (19,228)(Unrecognized) benefits of non-capital losses
   
   1,653,978
   
   (277,144)
   
   876,022Future income tax recovery
   
   1,429,960
   
   -
   
   1,073,238






141

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---

Future tax balances



> The tax effects of temporary differences that give rise to
>  future income tax assets and liabilities are as follows:

2006
   
   2005
   
   2004$
   
   $
   
   $Future tax assets:Non-capital
   loss carryforwards
   
   1,207,190
   
   1,022,422
   
   702,714Plant,
   property and equipment
   
   15,130
   
   10,486
   
   6,931Resource
   expenses
   
   2,365,376
   
   761,961
   
   96,530Share issue
   costs
   
   417,423
   
   152,518
   
   63,5254,005,119
   
   1,947,387
   
   869,700Less: valuation allowance
   
   (4,005,119)
   
   (1,947,387)
   
   (869,700)Actual income taxes
   
   -
   
   -
   
   -


> 







As at 30 November 2006, the Company had available for deduction
 against future taxable income, non-capital losses of approximately $3,715,575.
 The potential income tax benefit of these losses has been offset by a full
 valuation allowance. These losses, if unutilized will expire as follows:





Year
    
    Amount$2006
    
    77,6372007
    
    140,5572008
    
    237,2222009
    
    433,2742010
    
    614,2322011
    
    689,5952012
    
    804,0302013
    
    719,028






Additionally, the Company has approximately $7,280,319 of
 Canadian development expenses and Canadian Exploration expenditures as at 30
 November 2006 which, under certain circumstances, may be utilized to reduce
 taxable income of future years. The potential income tax benefits of these
 losses have been offset by a full valuation allowance.



During the year ended 30 November 2006, the Company renounced
 the tax benefits of a total of 10,000,000 flow-through common shares issued
 prior to 30 November 2005 resulting in an income tax recovery of $1,429,960
 (2005 - $Nil).



142

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



> During the year ended 30 November 2006, the Company issued
>  11,880,000 common shares (30 November 2005 - 10,000,000) on a flow-through
>  basis for gross proceeds of $22,297,000 (30 November 2005 - $4,500,000). The
>  flow-through agreements require the Company to renounce certain tax deductions
>  for Canadian exploration expenditures incurred on the Company's mineral
>  properties to the flow-through participants.



1. Supplemental Disclosures with Respect to Cash Flows

143

---



---



> On 21 January 2003, the Company sold its interest in the
>  Harrison Lake Property to Candorado for proceeds of 200,000 shares of Candorado
>  valued at $16,565. These shares were sold for proceeds of $16,565 on the same
>  date.
>  
>  During the year ended 30 November 2000, the Company issued
>  669,180 common shares valued at $66,918 for the settlement of debt.



1. Segmented Information
 
 The Company operates solely in Canada in one reporting
 segment, mineral production and related activities.
2. Subsequent Events

> The following events occurred subsequent to 30 November 2006:



> The Company issued an additional 587,500 common shares for total cash
>   proceeds of $312,500 for options exercised.
>   The Company issued an additional 25,000 common shares for total cash
>   proceeds of $16,250 for warrants exercised.
>   The Company issued an additional 37,140 common shares for total cash
>   proceeds of $27,855 for agent compensation warrants exercised.
>   The Company renounced mineral property expenditures of $10,120,000 which
>   resulted in the transfer of the income tax deductibility of such expenditures
>   to the investors who purchased flow-through common shares of the Company on 25
>   April 2006.
>   The Company renounced mineral property expenditures of $12,058,200 which
>   resulted in the transfer of the income tax deductibility of such expenditures
>   to the investors who purchased flow-through common shares of the Company on 18
>   October 2006.

144

---

















Alberta Star Development Corp.
(An Exploration Stage Company)

---



1. Reconciliation of Canadian and United States Generally Accepted
 Accounting Principles

> The financial statements of the Company have been prepared
>  in accordance with Canadian GAAP, which differ in certain material respects
>  from US GAAP. Had the Company prepared the financial statements in accordance
>  with US GAAP, certain items on the balance sheets and statements of operations,
>  deficit and cash flows would have been reported as follows:

2006
   
   2005
   
   2004$
   
   $
   
   $Statement of lossNet loss for the year based
   on Canadian GAAP
   
   (11,630,209)
   
   (2,832,810)
   
   (957,202)Stock based compensation
   (Note 18(ii))
   
   -
   
   -
   
   -Income tax expense on
   current year United States GAAP adjustments - Flow-through shares (Note
   18(i))
   
   (1,429,960)
   
   -
   
   (932,138)Net loss for the year based
   on United States GAAP
   
   (13,060,169)
   
   (2,832,810)
   
   (1,889,340)Other comprehensive income
   (Note 18(iv))
   
   38,000
   
   48,000
   
   -Comprehensive loss for the
   year based on United States GAAP
   
   (13,022,169)
   
   (2,784,810)
   
   (1,889,340)
















2006
   
   2005
   
   2004$
   
   $
   
   $Loss per share, basic and
   diluted
   
   (0.16)
   
   (0.06)
   
   (0.07)Comprehensive loss per
   share, basic and diluted
   
   (0.16)
   
   (0.06)
   
   (0.07)Shareholders' equityCanadian GAAP
   
   30,332,098
   
   11,899,236
   
   2,071,876Flow-through shares (Note
   18(i))
   
   -
   
   -
   
   -Other comprehensive income
   (Note 18(iv))
   
   38,000
   
   48,000
   
   -United States GAAP
   
   30,370,098
   
   11,947,236
   
   2,071,876








145

---

Alberta Star Development Corp.
(An Exploration Stage Company)

---



Balance sheet difference

2006
   
   2005$
   
   $Share capitalCanadian GAAP
   
   
   
   49,775,818
   
   19,712,747Flow-through shares (Note
   18(i))
   
   
   
   2,504,428
   
   1,074,468Stock-based compensation
   (Note 18(ii))
   
   
   
   189,176
   
   189,176Other comprehensive income
   (Note 18(iv))
   
   
   
   38,000
   
   48,000United States GAAP
   
   
   
   52,507,422
   
   21,024,391DeficitCanadian GAAP
   
   
   
   (19,443,720)
   
   (7,813,511)Flow-through shares (Note
   18(i))
   
   
   
   (2,504,428)
   
   (1,074,468)Stock-based compensation
   (Note 18(ii))
   
   
   
   (189,176)
   
   (189,176)United States GAAP
   
   
   
   (22,137,324)
   
   (9,077,155)






> Statement of cash flow difference
>  
>  
>  Under United States GAAP, separate subtotals within cash
>  flow from operating activities are not presented.
>  Flow-through shares
>   
>   Flow-through shares are typically issued by Canadian
>   Exploration Stage Companies. The flow-through shares permit the investor to
>   claim deductions for tax purposes related to expenditures incurred by the
>   issuer. The issuer explicitly renounces the right to claim these deductions.
>   The investor's tax base is reduced by the amount of deductions taken.
>   
>   Under Canadian GAAP, when the flow-through shares are
>   issued they are recorded at their face value. When the entity acquires assets
>   the carrying value may exceed the tax basis as a result of the enterprise
>   renouncing the deductions to the investors. The tax effect of the temporary
>   difference is recorded as a reduction in share capital.
>   
>   United States GAAP directs that when flow-through shares
>   are issued, the proceeds should be allocated between the offering of shares
>   and the sale of tax benefits. The allocation is made based on the difference
>   between the quoted price of the existing shares and the amount the investor
>   pays for the flow-through shares. A liability is recognized for this
>   difference. The liability is reversed when tax benefits are renounced and a
>   deferred tax liability is recognized at that time. Income tax expense is the
>   difference between the amount of the deferred tax liability and the liability
>   recognized on issuance.

146

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Alberta Star Development Corp.
(An Exploration Stage Company)

---



> During the years ended 30 November 2004 and 2003, the
>   Company issued 12,419,926 and 1,346,667 flow-through common shares for total
>   proceeds of $3,240,280 and $270,000 respectively. All of these amounts were
>   renounced to the respective investors during the year ended 30 November 2004.
>   
>   During the year ended 30 November 2005, the Company issued
>   10,000,000 flow-through common shares for total proceeds of $4,500,000. All of
>   these amounts were renounced to the respective investors during the year ended
>   30 November 2006.
>   
>   During the year ended 30 November 2006, the Company issued
>   5,500,000 and 6,380,000 flow-through common shares for total proceeds of
>   $10,175,000 and $12,122,000 respectively. All of these amounts were renounced
>   to the respective investors subsequent to the year ended 30 November 2006
>   (Note 17).
>   
>   Proceeds from the sale of flow-through shares would be
>   classified as restricted cash until the expenditure actually occurs. As at 30
>   November 2006, for United States GAAP purposes, cash of approximately
>   $19,822,747 would be classified as restricted (Note 4).

1. Stock based compensation
  
  The Company records compensation expense for United States
  GAAP purposes following the fair value method of accounting for stock options
  as prescribed under FSAS No. 123 "Accounting for Stock-Based Compensation".
  The Company uses the Black-Scholes option pricing model to value its stock
  options as described in Notes 3 and 12.
  
  Prior to 1 December 2002, the Company accounted for stock
  options under Canadian GAAP as capital transactions when the options were
  recognized. Effective 1 December 2002, the Company began accounting for stock
  option expense on a prospective basis under Canadian GAAP following the fair
  value method of accounting for stock options. The Company's reported increase
  of $186,176 in both share capital and deficit as at 30 November 2006 and 2005
  is the result of the difference in accounting for stock options under Canadian
  GAAP and United States GAAP prior to 1 December 2002.
2. Earnings (loss) per share
  
  Under both Canadian and United States GAAP, basic earnings
  (loss) per share is computed by dividing the earnings (loss) to common
  shareholders by the weighted average number of shares outstanding during the
  year. For Canadian reporting purposes, fully diluted earnings per share is
  calculated under the assumption that any convertible notes are converted at
  the date issued, and stock options and warrants are exercised at the date of
  grant.
  
  Under United States GAAP, diluted earnings per share takes
  into consideration the weighted average number of shares outstanding during
  the year and the potentially dilutive common shares. For the years ended 30
  November 2006, 2005 and 2004, this calculation proved to be anti-dilutive.

147

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> Alberta Star Development Corp.
>  (An Exploration Stage Company)Notes to Financial Statements
>  (Expressed in Canadian Dollars)30 November 2006

---

> Under United States GAAP, the weighted average number of
>   common shares outstanding excludes any shares that remain in escrow, but may
>   be earned out based on the Company incurring a certain amount of exploration
>   and development expenditures.
>   
>   The weighted average number of common shares outstanding
>   for calculating basic earnings (loss) per share under United States GAAP for
>   the years ended 30 November 2006, 2005 and 2004 were 83,573,546, 44,249,632
>   and 27,557,850, respectively. The calculation of diluted earnings per share
>   for the years ended 30 November 2006, 2005 and 2004 proved to be
>   anti-dilutive.
>  Comprehensive income 
>   SFAS No. 130, "Reporting Comprehensive Income", establishes standards
>   for the reporting and display of comprehensive income and its components
>   (revenues, expenses, gains, and losses). SFAS No. 130 requires that all items
>   that are required to be recognized under accounting standards as components of
>   comprehensive income be reported in the financial statements for the Company.
>   At 30 November 2006 the Company would have recognized an unrealized gain of
>   $38,000 on available for sale investments in comprehensive income (2005 -
>   $48,000, 2004 - $Nil) (Note 5).
>   Mineral property expenditures 
>   Mineral properties are accounted for in accordance with Canadian GAAP as
>   discussed in Note 3. For US GAAP purposes, exploration costs related to
>   unproven mineral properties, leases and permits as well as acquisition costs
>   for properties, leases and permits that do not provide for unrestricted
>   exploration, are expensed as incurred. The Company tracks expenditures on its
>   mineral properties as exploration or development and under US GAAP capitalizes
>   costs relating to the development of proven reserves. Capitalized exploration
>   costs are then assessed to determine if a write down in the carrying value is
>   necessary and any write down would be considered an operating expense and
>   included in the determination of operating loss for the period in which the
>   write down occurred.
>   Accounting for impairment of long-lived assets and for long-lived assets
>   to be disposed of 
>   For United States reporting purposes, the Company has adopted SFAS No. 144, "Accounting
>   for the Impairment or Disposal of Long-Lived Assets". In the event that
>   facts and circumstances indicate that the carrying amount of an asset may not
>   be recoverable and an estimate of future and undiscounted cash flows is less
>   than the carrying amount of the asset, an impairment loss will be recognized.
>   Concentration of credit risk
>   
>   The Company is exposed to credit losses in the event of
>   non-performance by the counter-parties to the financial instruments but does
>   not expect any counter-parties to fail to meet their obligations. The Company
>   generally does not obtain collateral or other security to support financial
>   instruments subject to credit risk, but monitors the credit standing of
>   counter-parties.

148

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Alberta Star Development Corp.
(An Exploration Stage Company)

---



> Asset retirement obligations
>   
>   In June 2001, the FASB issued SFAS No. 143 - "Accounting
>   for Asset Retirement Obligations." SFAS No. 143, effective for financial
>   statements issued for fiscal years beginning after 15 June 2002, is
>   substantially consistent with CICA Handbook Section 3110, "Asset Retirement
>   Obligations,"which is effective for fiscal years beginning on or after 1
>   January 2004. The Company adopted CICA 3110 for Canadian GAAP purposes
>   effective 1 December 2004, and SFAS No. 143 for US GAAP purposes effective 1
>   December 2004.
>   Costs associated with exit or disposal activities
>   
>   On 1 December 2003, the Company adopted SFAS No. 146, "Accounting
>   for Costs Associated with Exit or Disposal Activities". This standard
>   requires that a liability associated with an exit or disposal activity be
>   recognized when the liability is incurred rather than at the date of the
>   Company's commitment to an exit plan.
>   Accounting for certain financial instruments with characteristics of both
>   liabilities and equity
>   
>   On 1 December 2003, the Company adopted SFAS No. 150, "Accounting
>   for Certain Financial Instruments with Characteristics of Both Liabilities and
>   Equity". This standard requires that certain financial instruments
>   embodying an obligation to transfer assets or to issue equity securities be
>   classified as liabilities. This standard has no impact on the Company's
>   financial statements.
>   Income taxes
>   
>   Under United States GAAP, deferred income tax assets and
>   liabilities are revalued for all enacted changes in tax rates. Under Canadian
>   GAAP, deferred income tax assets and liabilities are revalued for all enacted
>   or substantially enacted changes in tax rates.
>   Recent pronouncements
>  In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB
>   Statements No. 133 and 140", to simplify and make more consistent the
>   accounting for certain financial instruments. SFAS No. 155 amends SFAS No.
>   133, "Accounting for Derivative Instruments and Hedging Activities", to
>   permit fair value remeasurement for any hybrid financial instrument with an
>   embedded derivative that otherwise would require bifurcation, provided that
>   the whole instrument is accounted for on a fair value basis. SFAS No. 155
>   amends SFAS No. 140, "Accounting for the Impairment or Disposal of
>   Long-Lived Assets", to allow a qualifying special-purpose entity to hold a
>   derivative financial instrument that pertains to a beneficial interest other
>   than another derivative financial instrument. SFAS No. 155 applies to all
>   financial instruments acquired or issued after the beginning of an entity's
>   first fiscal year that begins after September 14, 2006, with earlier
>   application allowed. This standard is not expected to have a significant
>   effect on the Company's future reported financial position or results of
>   operations.

149

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Alberta Star Development Corp.
(An Exploration Stage Company)

---



> In March 2006, the FASB issued SFAS No. 156, "Accounting
>   for Servicing of Financial Assets, an amendment of FASB Statement No. 140,
>   Accounting for Transfers and Servicing of Financial Assets and Extinguishments
>   of Liabilities". This statement requires all separately recognized
>   servicing assets and servicing liabilities be initially measured at fair
>   value, if practicable, and permits for subsequent measurement using either
>   fair value measurement with changes in fair value reflected in earnings or the
>   amortization and impairment requirements of Statement No. 140. The subsequent
>   measurement of separately recognized servicing assets and servicing
>   liabilities at fair value eliminates the necessity for entities that manage
>   the risks inherent in servicing assets and servicing liabilities with
>   derivatives to qualify for hedge accounting treatment and eliminates the
>   characterization of declines in fair value as impairments or direct
>   write-downs. SFAS No. 156 is effective for an entity's first fiscal year
>   beginning after September 15, 2006. This adoption of this statement is not
>   expected to have a significant effect on the Company's future reported
>   financial position or results of operations.
>   
>   In September 2006, the FASB issued SFAS No. 157, "Fair
>   Value Measures". This Statement defines fair value, establishes a
>   framework for measuring fair value in generally accepted accounting principles
>   (GAAP), expands disclosures about fair value measurements, and applies under
>   other accounting pronouncements that require or permit fair value
>   measurements. SFAS No. 157 does not require any new fair value measurements.
>   However, the FASB anticipates that for some entities, the application of SFAS
>   No. 157 will change current practice. SFAS No. 157 is effective for financial
>   statements issued for fiscal years beginning after November 15, 2007, which
>   for the Company would be the first fiscal year beginning January 1, 2008. The
>   Company is currently evaluating the impact of SFAS No. 157 but does not expect
>   that it will have a material impact on its financial statements.
>   
>   In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement
>   Plans." This Statement requires an employer to recognize the over funded
>   or under funded status of a defined benefit post retirement plan (other than a
>   multiemployer plan) as an asset or liability in its statement of financial
>   position, and to recognize changes in that funded status in the year in which
>   the changes occur through comprehensive income. SFAS No. 158 is effective for
>   fiscal years ending after December 15, 2006. The Company does not expect that
>   the implementation of SFAS No. 158 will have any material impact on its
>   financial position and results of operations.



> In September 2006, the SEC issued Staff Accounting Bulletin
>   ("SAB") No. 108, "Considering the Effects of Prior Year Misstatements when
>   Quantifying Misstatements in Current Year Financial Statements." SAB No.
>   108 addresses how the effects of prior year uncorrected misstatements should
>   be considered when quantifying misstatement in current year financial
>   statements. SAB No. 108 requires companies to quantify misstatement using a
>   balance sheet and income statement approach and to evaluate whether either
>   approach results in quantifying an error that is material in light of relevant
>   quantitative and qualitative factors. SAB No. 108 is effective for periods
>   ending after November 15, 2006. The Company is currently evaluating the impact
>   of adopting SAB No. 108 but does not expect that it will have a material
>   effect on its financial statements.



150

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Alberta Star Development Corp.
(An Exploration Stage Company)



> In February 2007, the FASB issued SFAS No. 159, "Fair
>   Value Option for Financial Assets and Financial Liabilities". This
>   Statement permits entities to choose to measure many financial assets and
>   financial liabilities at fair value. Unrealized gains and losses on items for
>   which the fair value option has been elected are reported in earnings. SFAS
>   No. 159 is effective for fiscal years beginning after November 15, 2007. The
>   Company is currently assessing the impact of SFAS No. 159 on its financial
>   position and results of operations.



151

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ITEM 18 - Financial Statements



See "Item 17 - Financial Statements."

ITEM 19 - Exhibits

The following exhibits are included herein, except for the
exhibits marked with an asterisk, which are incorporated herein by reference.





|Exhibit No. | Exhibit Title                                                                                                                               
|----------- | --------------------------------------------------------------------------------------------------------------------------------------------
|1.1         | Certificate of Incorporation and Certificate of Amendment and
  Registration of Restated Articles*                                          
|1.2         | Bylaws*                                                                                                                                     
|1.3         | Articles of Association*                                                                                                                    
|4.1         | Purchase and Sale Agreement dated February 8, 2005 between
  Alberta Star Development Corp. and Lane Dewar, Trevor Teed and Ted Burylo.**** 
|4.2         | Mineral Property Option Agreement - Dent Claims dated May 5,
  2004 between Alberta Star Development Corp. and 130485 Ontario Inc.****      
|4.3         | Mineral Property Option Agreement - Shabu Lake Claims dated
  May 5, 2004 between Alberta Star Development Corp. and 130485 Ontario Inc.****
|4.4         | Option and Joint Venture Agreement dated March 18, 2005
  between Alberta Star Development Corp. and Fortune Minerals Limited.****          
|4.5         | Purchase and Sale Agreement dated March 15, 2005 between
  Alberta Star Development Corp. and Kalac Holdings Ltd. and David G. Lorne.****   
|4.6         | Purchase and Sale Agreement dated April 22, 2005 between
  Alberta Star Development Corp. and Lane Dewar, Trevor Teed and Ted Burylo.****   
|4.7         | Investor Relations Agreement dated February 17, 2003 between
  Alberta Star Development Corp. and National Media Associates.**              
|4.8         | Investor Relations Agreement dated June 9, 2003 between
  Alberta Star Development Corp. and Mr. Allan Feldman.***                          
|4.9         | Management Agreement dated December 1, 2000 between Alberta
  Star Mining Corp. and Tim Coupland.*                                          
|4.10        | Property Option Agreement dated July 2, 2004 between Alberta
  Star and Fronteer Development Group Inc.                                     
|4.11        | Mineral Property Option Agreement dated April 1, 2005 between
  Alberta Star and Max Resource Corp.                                         
|4.12        | Purchase and Sales agreement dated November 14, 2005 between
  Alberta Star and South Malartic Exploration Inc.                             
|4.13        | Purchase and Sale agreement dated November 21, 2005 between
  Alberta Star and Kalac Holdings Ltd., Trevor Teed and David Lorne.            





152

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|Exhibit No. | Exhibit Title (continued)                                                                                                                                                                 
|----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.14        | Service agreement dated January 1, 2006 between Alberta Star
  and Michael Baybak and Company in relation to media and investor relations
  services.                                     
|4.15        | Service agreement dated January 10, 2006 between Alberta Star
  and Connors Drilling Ltd. in relation to the drilling of Contact Lake and Port
  Radium properties.                       
|4.16        | Purchase and Sale agreement dated October 2, 2005 between
  Alberta Star and Lane Delwar, Trevor Teed and Ted Burylo.                                                                     
|4.17        | Purchase and Sale Agreement dated July 6, 2005 between Alberta
  Star and Lane Dewar, Trevor Teed, Andy Dupras and Ted Burylo.                                                            
|11.1        | Code of Ethics                                                                                                                                                                            
|12.1        | Certification of Principal Executive
  Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
  of the Sarbanes-Oxley Act of 2002.                                
|12.2        | Certification of Principal Financial
  Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
  of the Sarbanes-Oxley Act of 2002.                                
|13.1        | Certification of 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 of 2002.
|15.1        | Management's Discussion and Analysis for
  the Year Ended November 30, 2006                                                                                                               
|15.2        | Consent of Independent Registered Public
  Accounting Firm                                                                                                                                
|Notes:      |                                                                                                                                                                                           
|            | *                                                                                                                                                                                         
|            | **                                                                                                                                                                                        
|            | ***                                                                                                                                                                                       
|            | ****                                                                                                                                                                                      



153

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SIGNATURE

The registrant hereby certifies that it meets all of the
requirements for annual report filing on Form 20-F and that it has duly caused
and authorized the undersigned to sign this annual report on its behalf.



ALBERTA STAR DEVELOPMENT CORP.



Dated: March 15, 2007



By: /s/ Tim Coupland 
Tim Coupland, President

154

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