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UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F

[   ]   REGISTRATION STATEMENT PURSUANT TO
  SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

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

For the fiscal year ended May 31, 2006

OR

[   ]   TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  n/a

OR

[   ]   SHELL COMPANY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934- n/a

Commission File Number 0**00-31076**

TERYL RESOURCES CORP.(Exact name of registrant as specified in its charter)

British Columbia, Canada(Jurisdiction
of incorporation or organization)

240 - 11780 Hammersmith WayRichmond, British
Columbia V7A 5E9, Canada(Address of principal executive
offices)

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value(Title of Class)

Indicate the number of outstanding shares of each of the
issuers classes of capital or common stock as of the close of the period
covered by the annual report. 39,468,188

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
[   ]   No [X]

Indicate 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 [ 
 ]   No [X]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act.): Yes [  
]   No [X]

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Indicate 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 in Rule 12b-2 of
the Exchange Act. (Check one):

Large accelerated filer [  
]      Accelerated filer [ 
 ]      Non-accelerated filer [X]

Indicate by check mark which financial statement item the
registrant has elected to follow: Item 17 [X]   Item 18
[   ]

Index to Exhibits on Page 79

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TABLE OF CONTENTS

|PART I   |                                                                  | 6 
|-------- | ---------------------------------------------------------------- | --
|ITEM 1.  | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
      AND ADVISORS      | 6 
|ITEM 2.  | OFFER STATISTICS AND EXPECTED
      TIMETABLE                    | 6 
|ITEM 3.  | KEY INFORMATION                                                  | 7 
|A.       | SELECTED FINANCIAL DATA                                          | 7 
|B.       | CAPITALIZATION AND INDEBTEDNESS                                  | 9 
|C.       | REASON FOR THE OFFER AND
      USE OF PROCEEDS                   | 9 
|D.       | RISK FACTORS                                                     | 9 
|ITEM 4.  | INFORMATION ON THE COMPANY                                       | 16
|A.       | HISTORY AND DEVELOPMENT OF THE COMPANY                           | 16
|B.       | BUSINESS OVERVIEW                                                | 17
|C.       | ORGANIZATIONAL STRUCTURE                                         | 28
|D.       | PROPERTY, PLANTS AND EQUIPMENT                                   | 28
|ITEM 4A. | UNRESOLVED STAFF COMMENTS                                        | 54
|ITEM 5.  | OPERATING AND FINANCIAL
      REVIEW AND PROSPECTS               | 54
|A.       | OPERATING RESULTS                                                | 54
|B.       | LIQUIDITY AND CAPITAL RESOURCES                                  | 55
|C.       | RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES,
      ETC        | 59
|D.       | TREND INFORMATION                                                | 59
|E.       | OFF-BALANCE SHEET ARRANGEMENTS                                   | 60
|F.       | TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS                    | 60
|G.       | SAFE HARBOUR                                                     | 61
|ITEM 6.  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                       | 61
|A.       | DIRECTORS AND SENIOR MANAGEMENT                                  | 61
|B.       | COMPENSATION                                                     | 62
|C.       | BOARD PRACTICES                                                  | 66
|D.       | EMPLOYEES                                                        | 66
|E.       | SHARE OWNERSHIP                                                  | 66
|ITEM 7.  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                | 67
|A.       | MAJOR SHAREHOLDERS                                               | 67
|B.       | RELATED PARTY TRANSACTIONS.                                      | 67
|C.       | INTERESTS OF EXPERTS AND COUNSEL.                                | 68
|ITEM 8.  | FINANCIAL INFORMATION                                            | 68
|A.       | CONSOLIDATED STATEMENTS AND OTHER FINANCIAL
      INFORMATION    | 68
|B.       | SIGNIFICANT CHANGES                                              | 69
|ITEM 9.  | THE OFFER AND LISTING                                            | 69
|A.       | OFFER AND LISTING DETAILS                                        | 69
|B.       | PLAN OF DISTRIBUTION                                             | 71
|C.       | MARKETS                                                          | 71
|D.       | SELLING SHAREHOLDERS                                             | 71
|E.       | DILUTION                                                         | 71
|F.       | EXPENSES OF THE ISSUE                                            | 71
|ITEM 10. | ADDITIONAL INFORMATION                                           | 71
|A.       | SHARE CAPITAL                                                    | 71
|B.       | MEMORANDUM AND ARTICLES OF ASSOCIATION                           | 71
|C.       | MATERIAL CONTRACTS                                               | 73
|D.       | EXCHANGE CONTROLS                                                | 73
|E.       | TAXATION                                                         | 74
|F.       | DIVIDENDS AND PAYING AGENTS                                      | 75
|G.       | STATEMENT BY EXPERTS.                                            | 75
|H.       | DOCUMENTS ON DISPLAY.                                            | 75
|I.       | SUBSIDIARY INFORMATION                                           | 76
|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES
      ABOUT MARKET RISK | 76
|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY
      SECURITIES     | 77
|PART II  |                                                                  | 77
|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                  | 77
|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF
      SECURITY           | 77

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|HOLDERS AND USE OF PROCEEDS.   | 77                                                                          
|------------------------------ | ----------------------------------------------------------------------------
|A.                             | MATERIAL MODIFICATIONS TO THE RIGHTS OF
      SECURITY HOLDERS              
|B.                             | USE OF PROCEEDS.                                                            
|ITEM 15.                       | CONTROLS AND PROCEDURES                                                     
|ITEM 16.                       | [Reserved]                                                                  
|ITEM 16A.                      | Audit Committee Financial Expert                                            
|ITEM 16B.                      | Code of Ethics                                                              
|ITEM 16C.                      | Principal Accountant Fees and Services                                      
|ITEM 16D.                      | Exemptions from the Listing
      Standards for Audit Committees            
|ITEM 16E.                      | Purchases of Equity Securities by the Issuer
      and Affiliated Purchasers
|PART III                       |                                                                             
|ITEM 17.                       | FINANCIAL STATEMENTS                                                        
|ITEM 18.                       | FINANCIAL STATEMENTS                                                        
|ITEM 19.                       | EXHIBITS                                                                    
|GLOSSARY OF
      MINING TERMS | 81                                                                          
|                               |                                                                             
|**SIGNATURE PAGE**             | 84                                                                          

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Unless the context otherwise requires, all references refer to
Teryl Resources Corp. All monetary figures are in terms of Canadian dollars
unless otherwise indicated.

INTRODUCTION

Teryl Resources Corp. (hereinafter referred to as the
Registrant or the Company or Teryl) was incorporated on May 23, 1980, as
Candy Mountain Gold Corporation under a perpetual charter pursuant to the
Company Act (British Columbia) by the registration of its Memorandum of
Association and Articles of Association. On January 20, 1984, a special
resolution was passed changing its name to Teryl Resources Corp.

In September 1985 we made a public offering of our Common
Shares to residents of British Columbia and, following the completion of the
offering, our shares were listed on the Vancouver Stock Exchange (now the TSX
Venture Exchange) on September 13, 1985.

On October 25, 1985 a special resolution was passed authorising
the creation of 5,000,000 preferred shares with a par value of $1.00.

On November 30, 1988, a special resolution was passed altering
our Memorandum and adopting new Articles which changed our authorized capital
from 10,000,000 Common Shares without par value to 30,000,000 Common Shares
without par value and 5,000,000 Preferred Shares of non-voting stock with a par
value of $1.00.

On November 20, 2000, a special resolution was passed altering
our Memorandum and adopting new Articles which changed our authorized capital
from 30,000,000 Common Shares without par value to 100,000,000 Common Shares
without par value, of these, 39,468,188 Common Shares were issued and
outstanding as of May 31, 2006, and 39,468,188 as at January 2, 2007 also as of
the date of this Form 20-F. 5,000,000 Preferred Shares of non-voting stock with
a par value of $1.00 have also been authorized. No Preferred Shares have ever
been issued.

At the annual general meeting held January 22, 2003, the board
of directors of the Company was granted approval to apply to have the Company's
named changed to Teryl Gold Inc. The name change was accepted by the Province of
British Columbia on February 4, 2003; however, the Company did not complete the
paperwork for informing regulatory authorities, and, therefore, continued to use
the name of Teryl Resources Corp. On November 25, 2004, the name was changed
back to Teryl Resources Corp. with the Province of British Columbia.

On March 29, 2004, the new British Columbia Business
Corporations Act (the "BCA") came into force in British Columbia and replaced
the former Company Act (Former Act), which is the statute under which we were
previously governed. Under the BCA, we have two years within which to transition
("Transition") under the new statute. In accordance with the BCA, we cannot
amend our Articles or Notice of Articles until the Transition to the BCA is
completed. We filed a transition application with the Registrar of Companies
British Columbia to transition to the BCA and completed the Transition on
September 13, 2004.

On November 15, 2004, at the Annual General Meeting of
shareholders, our shareholders passed a special resolution to delete and replace
our Articles as they applied to the Former Act in their entirety for new
articles under the BCA. Our Incorporation Number is BC0187279.

BUSINESS OF TERYL RESOURCES CORP.

We make expenditures on acquiring mineral properties and
carrying out exploration work. We also acquire oil and gas property interests
and participate in drilling wells. The recoverability of amounts shown for
investments, mineral properties, interest in oil and gas properties and the
related deferred expenditures are

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dependent upon the existence of economically recoverable
reserves, the ability to obtain the necessary financing to complete the
exploration, the profitability of future production or our ability to dispose of
those assets on a profitable basis. Our ongoing operation is dependent upon cash
flow from successful operations and equity financing. The Company has incurred a
loss of $430,646 in the year ended May 31, 2006 (2005 - $515,740; 2004 -
$791,776). These consolidated financial statements do not include adjustments
that would be necessary should it be determined that we may be unable to
continue as a going concern.

FINANCIAL AND OTHER INFORMATION

In this Registration Statement, unless otherwise specified, all
dollar amounts are expressed in Canadian Dollars (CDN$ or $). The Government
of Canada permits a floating exchange rate to determine the value of the
Canadian Dollar against the U.S. Dollar (US$).

FOREIGN PRIVATE ISSUER STATUS

Teryl Resources Corp. (the "Company), is a Canadian
corporation incorporated under the laws of the Province of British Columbia.
Over 50% of its common stock is held by non-United States citizens and
residents; our business is administered principally outside the United States;
and more than 50% of our assets are located outside the United States. As a
result, we believe that we qualify as a "foreign private issuer" for continuing
to report regarding the registration of our common stock using this Form 20-F
annual report format.

FORWARD-LOOKING STATEMENTS

Certain statements in this document constitute forward-looking
statements. Some, but not all, forward-looking statements can be identified by
the use of words such as anticipate, believe, plan, estimate, expect,
and intend, statements that an action or event may, might, could,
should, or will be taken or occur, or other similar expressions. Although we
have attempted to identify important factors that could cause actual results to
differ materially from expected results, such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause our
actual results, performance or achievements, or other future events, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following risks: the risks associated with outstanding
litigation, if any, risks associated with project development; the need for
additional financing; operational risks associated with mining and mineral
processing; fluctuations in metal prices; title matters; uncertainties and risks
related to carrying on business in foreign countries; environmental liability
claims and insurance; reliance on key personnel; the potential for conflicts of
interest among certain officers, directors or promoters with certain other
projects; the absence of dividends; currency fluctuations; competition;
dilution; the volatility of our common share price and volume; and tax
consequences to U.S. Shareholders. We are obligated to keep our information
current and revise any forward-looking statements because of new information,
future events or otherwise.

PART I

ITEM 1.        IDENTITY OF
DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in Item 1 is not
required. Please see Item 6  Directors, Senior Management and Employees 
Directors and Senior Management.

ITEM 2.        OFFER
STATISTICS AND EXPECTED TIMETABLE

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in Item 2 is not
required.

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ITEM 3.        KEY
INFORMATION

A.        SELECTED
FINANCIAL DATA

Our selected financial data for Fiscal 2006, 2005 and 2004
ended May 31st was derived from our financial statements that have been audited
by Morgan and Company Chartered Accountants, as indicated in their audit
reports. Our selected financial data for Fiscal 2003/2002 ended May 31st was
derived from our financial statements that have been audited by June Fitzmartyn,
Chartered Accountant, as indicated in her audit reports. Both Morgan and Company
and June Fitzmartyn are members of the Canadian Institute of Chartered
Accountants.

The selected financial data should be read in conjunction with
the financial statements and other financial information included elsewhere in
the Registration Statement.

We have not declared any dividends since incorporation and do
not anticipate that we will do so in the foreseeable future. Our present policy
is to retain all available funds for use in our operations and the expansion of
our business.

The information in the following table is derived from our
financial statements, which have been prepared in accordance with Canadian
Generally Accepted Accounting Principles (GAAP) and Canadian/USA Generally
Accepted Auditing Standards (GAAS). All material numerical differences between
Canadian GAAP and US GAAP, are described in footnotes to the financial
statements.

The selected financial data set forth in the following table is
expressed in Canadian dollars. 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 United States dollar. At May 31, 2006, US$1.00 was equal to
approximately C$1.1027.

The following represents our selected financial data for each
of the past five fiscal years, ending on May 31. The data presented is prepared
in accordance with Canadian generally accepted accounting principles:

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Fiscal Years Ended May 31

May 31, 2006
    May 31, 2005
    May 31, 2004
    May 31, 2003
    May 31, 2002CANADIAN GAAPRevenue
    27,154
    28,307
    21,037
    24,255
    19,510Income (Loss) for the Period
    (430,646)
    (515,740)
    (791,776)
    (323,812)
    (82,360)Basic Income (Loss) Per Share
    (0.01)
    (0.01)
    (0.03)
    (0.01)
    (0.00)Dividends Per Share
    Nil
    Nil
    Nil
    Nil
    NilWeighted Average. Shares
    36,889,399
    34,436,365
    28,295,934
    23,939,714
    23,033,238Period-end Shares (#)
    39,468,188
    36,777,688
    33,180,688
    25,238,088
    23,033,238Working Capital
    207,994
    138,460
    20,032
    (1,395,628)
    (1,023,465)Mineral Properties
    190,236
    219,397
    196,795
    176,150
    156,698Long-Term Debt
    Nil
    Nil
    Nil
    Nil
    NilCapital Stock
    10,624,107
    9,944,335
    9,018,122
    6,297,375
    6,020,427Shareholders Equity (Deficit)
    3,326,053
    3,083,461
    2,736,381
    638,054
    772,990Total Assets
    3,501,603
    3,409,709
    3,144,121
    2,117,591
    1,829,524U.S GAAPNet Loss (1)
    (555,426)
    (756,744)
    (1,444,266)
    (543,950)
    (169,321)Loss Per Share
    (0.02)
    (0.02)
    (0.05)
    (0.02)
    (0.01)Mineral Properties
    190,236
    219,397
    196,795
    176,150
    156,698Shareholders Equity
    428,460
    408,838
    234,842
    (1,214,996)
    (860,909)Total Assets
    534,038
    665,114
    642,583
    264,541
    195,625


(1) Cumulative Net Loss since incorporation through May 31,
2006 under US GAAP was $8,966,620 approximately.

(2) Under US GAAP, options granted to non-employees as
compensation for services provided are fair valued and an expense recorded.

(3) Under SEC interpretation of US GAAP, all costs related to
exploration-stage properties are expensed in the period incurred.

Reference is made to "Item 4. Information on the Company" and
"Item 5. Operating and Financial Review and Prospects for a description of the
initiation and progression of our activities since incorporation.

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Currencies and Exchange Rates:

We publish our financial statements in Canadian dollars. Unless
otherwise indicated, monetary amounts referred to in this annual report are in
Canadian dollars. Unless otherwise indicated, all translations from Canadian
dollars to US dollars have been made at a rate of CDN$ 1.1027 to US$ 1.00, the
noon buying rate as certified for customs purposes by the Federal Reserve Bank
of New York (the "Noon Buying Rate") on May 31, 2006. We do not represent that
Canadian dollar or US dollar amounts could be converted into US dollars or
Canadian dollars, as the case may be, at any particular rate, the rates below or
at all. The following table sets forth noon buying rate for US dollars in New
York City for cable transfers in Canadian dollars as certified for customs
purposes by the Federal Reserve Bank of New York for the periods indicated:

The following table lists the average exchange rate for US$1.00
to the Canadian dollar for the last five years based on the average month-end
exchange rates.

Year
    Average (CAD $)
    Low/High (CAD$)
    May 31 (CAD $)2006
    1.1738
    1.0989/1.2578
    1.10272005
    1.2602
    1.1775/1.3772
    1.25122004
    1.3435
    1.2690/1.4114
    1.36662003
    1.5257
    1.3446/1.5963
    1.37122002
    1.5679
    1.5102/1.6128
    1.5275


B.        CAPITALIZATION
AND INDEBTEDNESS

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in this Item 3.B is
not required

C.        REASON FOR
THE OFFER AND USE OF PROCEEDS

This Form 20-F is being filed as an annual report under the
Exchange Act, and accordingly, the information called for in Item 3.C is not
required.

D.        RISK FACTORS

The occurrence of any of the following risks could hurt our
business, financial condition or results of operations. In such case, the
trading price of our shares could decline and you could lose all or part of your
investment. Other risks and uncertainties not now known to us or that we think
are immaterial may also impair our business.

RISK FACTORS RELATED TO OUR BUSINESS

We have no current mining operations and if we ever
commence mining operations we face certain risks, any of which could result in
our ceasing operations.

We have no current mining operations and no revenue from mining
operations. If we ever commence actual mining operations, such operations would
face the risk of changing circumstances, including but not limited to:

- failure of production to achieve metal recovery levels indicated by
  pre-production testing of drill core and bulk samples;
- estimates of reserves being adversely affected by encountering unexpected
  or unusual geological formations;
- production costs being adversely affected by unforeseen factors such as
  substantial adverse changes in

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- the grade of ore actually mined being lower than that indicated by drilling
    results;
- persistently lower market prices of the products mined than those used
    to determine the feasibility of mining a mineral occurrence;
- adverse changes in interest rates that may apply to project development
    debt.

Any oil and gas we may discover or produce may not be
readily marketable at the time of production, delaying our ability to generate
meaningful revenue.

Crude oil, natural gas, condensate and other oil and gas
products are generally sold to other oil and gas companies, government agencies
and other industries. The availability of ready markets for oil and gas that we
might discover and the prices obtained for such oil and gas depend on many
factors beyond our control, including:

- the extent of local production and imports of oil and gas;
- the proximity and capacity of pipelines and other transportation
  facilities;
- fluctuating demand for oil and gas;
- the marketing of competitive fuels; and
- the effects of governmental regulation of oil and gas production and sales.

Natural gas associated with oil production is often not
marketable due to demand or transportation limitations and is often flared at
the producing well site. Pipeline facilities do not exist in certain areas of
exploration and, therefore, any actual sales of discovered oil and gas might be
delayed for extended periods until such facilities are constructed.

Financing Risks.

There is no assurance that we will be able to secure the
financing necessary to explore, develop and produce our mineral properties.

We do not presently have sufficient financial resources or
operating cash-flow to undertake solely all of our planned exploration and
development programs. The development of our properties may therefore depend on
obtaining a joint venture partners, and on our ability to obtain additional
required financing. There is no assurance we will be successful in obtaining the
required financing, the lack of which could result in the loss or substantial
dilution of our interests (as existing or as proposed to be acquired) in our
properties as disclosed herein. In addition, we have no experience in developing
mining properties into production and its ability to do so will be dependent
upon securing the services of appropriately experienced personnel or entering
into agreements with other major mining companies which can provide such
expertise.

As noted in our audited consolidated financial statements for
the year ended May 31, 2006 we have incurred significant operating losses and
have an accumulated deficit of $ 7,467,455 at May 31, 2006. Furthermore, we had
working capital surplus of $ 207,994 as at May 31, 2006, which is not sufficient
to achieve our planned business objectives. Our ability to continue as a going
concern is dependent on continued financial support from our shareholders and
other related parties, the ability of the Registrant to raise equity financing,
and the attainment of profitable operations, external financings and further
share issuances to meet our liabilities as they become payable.

- 10 -

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Our ability to continue as a going concern is dependent on
continued financial support from our shareholders and other related parties, our
ability to raise equity capital financing, and the attainment of profitable
operations, external financings and further share issuance to satisfy working
capital and operating needs.

Significant Losses for the Foreseeable
Future.

We expect to incur significant losses for the foreseeable
future and cannot be certain when or if we will achieve profitability. Failure
to become and remain profitable will adversely affect the value of our Common
Shares and our ability to raise capital and continue operations.

Volatility of the TSX Venture Exchange may adversely
affect the price of the Common Stock.

Certain stocks listed on the TSX Venture Exchange have
experienced significant price and volume fluctuations and decreases which have
adversely affected the market price of our and other stocks listed on the TSX
Venture Exchange without any regard to the underlying fundamentals of such
stocks. These broad market fluctuations, which may occur in the future, as well
as issues more specifically related to our business activities or prospects, our
financial performance, intellectual property, may continue to adversely affect
the market price of the Common Stock.

We do not expect to pay cash dividends.

We intend to retain any future earnings to finance our business
and operations and any future growth. Therefore, we do not anticipate paying any
cash dividends in the foreseeable future.

Potential lack of attractive investment
targets.

Continued volatility of stock prices on the TSX Venture
Exchange may have a material adverse effect on our ability to raise capital on
the TSX Venture Exchange or by private investment, and the price of our common
stock could fluctuate substantially.

Other Factors.

Our areas of business may be affected from time to time by such
matters as changes in general economic conditions, changes in laws and
regulations, taxes, tax laws, prices and costs, and other factors of a general
nature which may have an adverse effect on our business.

Conflict of Interest.

Some of our current officers and directors have other unrelated
full-time positions or part-time employment. Some officers and directors will be
available to participate in management decisions on a part-time or as-needed
basis only. Our management may devote its time to other companies or projects
which may compete directly or indirectly with us.

U.S. Investors May Not Be Able To Enforce Their Civil
Liabilities Against Us or Our Directors, Controlling Persons and
Officers.

We are organized under the laws of Canada. All of our directors,
  controlling persons and officers are residents of Canada and all or a substantial
  portion of their assets and substantially all of our assets are located outside
  of the United States. As a result, it may be difficult for U.S. holders of our
  common shares to effect service of process on these persons within the United
  States or to realize in the United States upon judgments rendered against them.
  In addition, you should not assume that the courts of Canada (i) would enforce
  judgments of U.S. courts obtained in actions against us or such persons predicated
  upon the civil liability provisions of the U.S. federal securities laws or other
  laws of the United States, or (ii) would enforce, in original actions, liabilities
  against us or such persons predicated upon the U.S. federal securities laws
  or other laws of the United States.

- 11 -

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However, U.S. laws would generally be enforced by a Canadian
court provided that those laws are not contrary to Canadian public policy, are
not foreign penal laws or laws that deal with taxation or the taking of property
by a foreign government and provided they are in compliance with applicable
Canadian legislation regarding the limitation of actions. Also, a judgment
obtained in a U.S. court would generally be recognized by a Canadian court
except, for example:

|- | where the U.S. court where the judgment was rendered had
      no jurisdiction according to applicable Canadian law;                                                                                                                                                                                       
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                            
|- | the judgment was subject to ordinary remedy (appeal,
      judicial review and any other judicial proceeding which renders the
      judgment not final, or enforceable under the laws of the applicable state)
      or not final, conclusive or enforceable under the laws of the applicable
      state;
|  |                                                                                                                                                                                                                                                                                                            
|- | the judgment was obtained by fraud or in any manner
      contrary to natural justice or rendered in contravention of fundamental
      principles of procedure;                                                                                                                                           
|  |                                                                                                                                                                                                                                                                                                            
|- | a dispute between the same parties, based on the same
      subject matter has given rise to a judgment rendered in a Canadian court
      or has been decided in a third country and the judgment meets the
      necessary conditions for recognition in a Canadian court;                               
|  |                                                                                                                                                                                                                                                                                                            
|- | the outcome of the judgment of the U.S. court was
      inconsistent with Canadian public policy;                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                                                                            
|- | the judgment enforces obligations arising from foreign
      penal laws or laws that deal with taxation or the taking of property by a
      foreign government; or                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                            
|- | there has not been compliance with applicable Canadian
      law dealing with the limitation of actions.                                                                                                                                                                                                   

Our competitors have greater financial and technical
measures and we may not be able to acquire additional attractive mineral
properties on acceptable terms.

Significant and increasing competition exists for mineral
opportunities in Canada and the United States. There are a number of large
established mineral companies with substantial capabilities and greater
financial and technical resources than us. We may be unable to acquire
additional attractive mineral properties on terms we consider acceptable.
Accordingly, there can be no assurance that our exploration programmes will
yield any new reserves or result in any commercial mineral operations.

We face strong competition from larger oil and gas
companies, which could harm our business and ability to operate
profitably.

The exploration and production business is highly competitive.
Many of our competitors have substantially larger financial resources, staffs
and facilities. Our competitors in the United States include numerous major oil
and gas exploration and production companies, especially major oil and gas
companies such as BP Amoco, Exxon/Mobil, Texaco/Shell and Conoco/Phillips. These
major oil and gas companies are often better positioned to obtain the rights to
exploratory acreage for which we may compete. If we are unable to adequately
address our competition, including, but not limited to, finding ways to secure
profitable oil and gas producing properties, our ability to earn revenues will
suffer.

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As a"foreign private issuer,we
are exempt from the Section 14 proxy rules and Section 16 of the Securities Act
may result in shareholders having less complete and timely data.

The submission of proxy and annual meeting of shareholder
information (prepared to Canadian standards) on Form 6-K may result in
shareholders having less complete and timely data. The exemption from Section 16
rules regarding sales of common shares by insiders may result in shareholders
having less data.

RISK FACTORS RELATED TO THE NATURAL RESOURCE INDUSTRY

Exploration and Development Risks.

There is no assurance given by the Company that our exploration
and development programs and properties will result in the discovery,
development or production of a commercially viable ore body. 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, none of the Registrants properties have defined ore bodies with
reserves and resources, and the proposed exploration programs are an exploratory
search for ore. There is no assurance that our mineral exploration and
development activities will result in any discoveries of bodies of commercial
ore. The probability of an individual prospect ever having reserves and being
commercially viable is extremely remote, and, in all probability, our properties
do not contain any reserves, and any funds spent on exploration will probably
not be recovered. Unusual or unexpected geological structures or formations,
fires, power outages, labour disruptions, floods, explosions, cave-ins, land
slides and the inability to obtain suitable or adequate machinery, equipment or
labour are other risks involved in the operation of mines and the conduct of
exploration programs. We have relied and may continue to rely upon consultants
and others for construction and operating expertise. The economics of developing
gold and other mineral properties are affected by many factors including capital
and operating costs, variations of the grade of ore mined, fluctuating mineral
markets, costs of processing equipment and such other factors as government
regulations, including regulations relating to royalties, allowable production,
importing and exporting of minerals and environmental protection. Depending on
the price of gold or other minerals produced, we may determine that it is
impractical to commence or continue commercial production. Substantial
expenditures are required to establish reserves through drilling, to develop
metallurgical processes to extract metal from ore and to develop the mining and
processing facilities and infrastructure at any site chosen for mining. No
assurance can be given that funds required for development can be obtained on a
timely basis. The marketability of any minerals acquired or discovered may be
affected by numerous factors which are beyond our control and which cannot be
accurately foreseen or predicted, such as market fluctuations, the global
marketing conditions for precious and base metals, the proximity and capacity of
milling facilities, mineral markets and processing equipment, and such other
factors as government regulations, including regulations relating to royalties,
allowable production, importing and exporting minerals and environmental
protection.

Estimates of Mineral Deposits.

There is no assurance that any estimates of mineral deposits
herein will not change. Although all figures with respect to the size and grade
of mineralized deposits included herein have been carefully prepared by the
Company, or, in some instances have been prepared, reviewed or verified by
independent mining experts, these amounts are estimates only and no assurance
can be given that any identified mineralized deposit will ever qualify as a
commercially viable mineable ore body that can be legally and economically
exploited.

Mineral Prices.

There is no assurance that mineral prices will not change. The
mining industry is competitive and mineral prices fluctuate so that there is no
assurance, even if commercial quantities of a mineral resource are discovered,
that a profitable market will exist for the sale of same.

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Title Opinions.

The existence of title opinions should not be construed to
suggest that we have good and marketable title to all of our properties. We
follow the usual industry practice in obtaining title opinions with respect to
our lands. No examination has been made of the ground to determine if any of our
mineral claims have been staked or assessment work carried out.

Regulatory Approvals.

Our operations require the procurement of numerous permits and
compliance with an extensive number of codes and regulations. Mining,
exploration and exploitation permits are required. While we believe that all
requirements in this regard have been met, failure to comply with regulatory
requirements could result in permits being withdrawn or suspended. Further,
changes in these regulations or in their application may adversely affect our
operations.

Oil and gas price fluctuations in the market may harm
results of our operations.

The results of our operations are highly dependent upon the
prices received for our anticipated oil and natural gas production. As of the
date of this 20-F, we do not own any interests in any properties which are
producing more than minimal levels of oil or natural gas. Should we acquire an
interest in an actual producing property, substantially all of our sales of oil
and natural gas would likely be made in the spot market, or pursuant to
contracts based on spot market prices, and not pursuant to long-term,
fixed-price contracts. Accordingly, the prices we might receive for any eventual
oil and natural gas production are dependent upon numerous factors beyond our
control. These factors include the level of consumer product demand,
governmental regulations and taxes, weather trends, the price and availability
of alternative fuels, the level of foreign imports of oil and natural gas and
the overall economic environment. Significant declines in prices for oil and
natural gas could harm our financial condition, results of operations and
quantities of reserves recoverable on an economic basis. Any significant decline
in demand for or prices of oil or gas could harm our financial condition and
results of operations.

Compliance with, or breach of, environmental laws can be
costly and could limit our operations or reduce profitability causing investors
to lose their investment.

Our operations are subject to numerous and frequently changing
laws and regulations governing the discharge of materials into the environment
or otherwise relating to environmental protection. We may now or in the future
own or lease properties that have been used for the exploration and production
of minerals and oil and gas and these properties and the wastes disposed on
these properties may be subject to the Comprehensive Environmental Response,
Compensation and Liability Act, the Oil Pollution Act of 1990, the Resource
Conservation and Recovery Act, the Federal Water Pollution Control Act and
analogous state laws. Under such laws, we could be required to remove or
remediate previously released wastes or property contamination. Laws and
regulations protecting the environment have generally become more stringent and,
may in some cases, impose strict liability for environmental damage. Strict
liability means that we may be held liable for damage without regard to whether
we were negligent or otherwise at fault. Environmental laws and regulations may
expose us to liability for the conduct of or conditions caused by others or for
acts that were in compliance with all applicable laws at the time they were
performed. Failure to comply with these laws and regulations may result in the
imposition of administrative, civil and criminal penalties.

Although we believe that any current operations are in substantial
  compliance with existing requirements of governmental bodies, our ability to
  conduct continued operations is subject to satisfying applicable regulatory
  and permitting controls. Our current permits and authorizations and ability
  to get future permits and authorizations, particularly in foreign countries,
  may be susceptible, on a going forward basis, to increased scrutiny, greater
  complexity resulting in increased costs, or delays in receiving appropriate
  authorizations. We are required to obtain an environmental permit or approval
  from Utah prior to conducting seismic operations, drilling a well or constructing
  a pipeline in that location.

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Compliance with these laws and regulations may increase our costs
  of operations, as well as further restrict our operations. If the costs of such
  compliance exceeds what we may have budgeted, our ability to earn revenues will
  be harmed.

Third Party Reliance.

Our rights to acquire interests in certain mineral properties
have been granted by third parties who themselves hold only an option to acquire
such properties. As a result, we may have no direct contractual relationship
with the underlying property holder.

UNCERTAINTIES AND RISKS RELATING TO COMMON SHARES

There is only a limited public market for our common
shares on the TSX Venture Exchange and that market is extremely
volatile.

There is only a limited public market for our common shares on
the TSX Venture Exchange, and there is a risk that that a broader or more active
public trading market for our common shares will never develop or be sustained,
or that current trading levels will not be sustained.

The market price for the common shares on the TSX Venture
Exchange has been and we anticipate will continue to be extremely volatile and
subject to significant price and volume fluctuations in response to a variety of
external and internal factors. This is especially true with respect to emerging
companies such as ours. Examples of external factors, which can generally be
described as factors that are unrelated to the operating performance or
financial condition of any particular company, include changes in interest rates
and worldwide economic and market conditions, as well as changes in industry
conditions, such as changes in oil and natural gas prices, oil and natural gas
inventory levels, regulatory and environment rules, and announcements of
technology innovations or new products by other companies. Examples of internal
factors, which can generally be described as factors that are directly related
to our consolidated financial condition or results of operations, would include
release of reports by securities analysts and announcements we may make from
time-to-time relative to our operating performance, drilling results, advances
in technology or other business developments.

Because we have a limited operating history and no profits to
date, the market price for the common shares is more volatile than that of a
seasoned issuer. Changes in the market price of the common shares, for example,
may have no connection with our operating results or prospects. No predictions
or projections can be made as to what the prevailing market price for the common
shares will be at any time, or as to what effect, if any, that the sale of
shares or the availability of common shares for sale at any time will have on
the prevailing market price.

You will be subject to the risks associated with penny
stock classification which could affect the marketability of our equity
securities and shareholders could find it difficult to sell their stock.

Our stock is subject to penny stock rules as defined
in Securities and Exchange Act rule 3a51-1. The Commission has adopted
rules that regulate broker-dealer practices in connection with transactions in
penny stocks. Our common shares are subject to these penny stock rules.
Transaction costs associated with purchases and sales of penny stocks are likely
to be higher than those for other securities. Penny stocks generally are equity
securities with a price of less than US $5.00 (other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system,
provided that current price and volume information with respect to transactions
in such securities is provided by the exchange or system).

The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer must also provide the

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customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customers account. The bid and offer quotations, and
the broker-dealer and salesperson compensation information, must be given to the
customer orally or in writing prior to effecting the transaction and must be
given to the customer in writing before or with the customers confirmation.

In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from such rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchasers written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for our equity
securities in the United States and shareholders may find it more difficult to
sell their shares.

A limited number of shareholders will collectively
continue to own a majority of our common shares.

A limited number of shareholders will collectively continue to
own a majority of our common shares after this offering and may act, or prevent
corporate actions, to the detriment of other shareholders. Our principal
shareholders, including entities affiliated with members of our management team,
will own more than 21% of our outstanding common shares. Accordingly, these
shareholders may, if they act together, exercise significant influence over all
matters requiring shareholder approval, including the election of a majority of
the directors and the determination of significant corporate actions after this
offering. This concentration could also have the effect of delaying or
preventing a change in control that could be otherwise beneficial to our
shareholders.

You should not expect to receive dividends.

We have never paid any cash dividends on shares of our capital
stock, and we do not anticipate that we will pay any dividends in the
foreseeable future. Our current business plan is to retain any future earnings
to finance the expansion of our business. Any future determination to pay cash
dividends will be at the discretion of our board of directors, and will be
dependent upon our consolidated financial condition, results of operations,
capital requirements and other factors as our board of directors may deem
relevant at that time.

Our right to issue additional capital stock at any time
could have an adverse effect on your proportionate ownership and voting
rights.

We are authorized under our Articles of Incorporation to issue
100,000,000 common shares. Subject to compliance with applicable corporate and
securities laws, we may issue these shares under such circumstances and in such
manner and at such times, prices, amounts and purposes as our board of directors
may, in their discretion, determine to be necessary and appropriate. Your
proportionate ownership and voting rights as a common shareholder could be
adversely affected by the issuance of additional common shares, including a
substantial dilution in your net tangible book value per share.

ITEM
4.        INFORMATION ON THE COMPANY

A.        HISTORY AND
  DEVELOPMENT OF THE COMPANY

Teryl Resources Corp. (the Issuer) was incorporated on May
23, 1980, as Candy Mountain Gold Corporation under a perpetual charter pursuant
to the Company Act (British Columbia) by the registration of its
Memorandum of Association and Articles of Association. On January 20, 1984, a
special resolution was passed changing its name to Teryl Resources Corp.

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On March 29, 2004, the new British Columbia Business
Corporations Act (the "BCA") came into force in British Columbia and replaced
the former Company Act (Former Act), which is the statute under which we were
previously governed. Under the BCA, every company incorporated under the Company
Act must complete a mandatory transition rollover under the BCA to substitute a
Notice of Articles for its Memorandum within two years of March 29, 2004. The
only information contained in the Notice of Articles is the authorized share
structure of the company, the name of the company, the address of the registered
and records office of the company, and the names and addresses of the directors
of the company. We filed a transition application with the Registrar of
Companies British Columbia to transition to the BCA and completed the Transition
on September 13, 2004.

As a pre-existing Corporation under the Company Act, we were
subject to provisions contained in the BCA known as the Pre-Existing Company
Provisions. The Pre-Existing Company Provisions are statutory provisions
intended to preserve certain provisions of the Company Act to companies
incorporated under the Company Act. Under the BCA, we have the option to replace
the Pre-Existing Company Provisions with a new form of Articles to take
advantage of the benefits of the BCBCA, provided the shareholders approve the
change.

Accordingly, at the annual meeting held on November 15, 2004,
  our shareholders approved a special resolution to alter the Notice of Articles
  to remove the application of the Pre-Existing Company Provisions.

In addition to deleting the Pre-Existing Company Provisions,
  the Board of Directors were also of the view that it would be in our best interest
  to adopt a new set of Articles to replace our Articles. The new Articles will
  reflect the flexibility and efficiency permitted under the BCA, while maintaining
  a significant portion of the existing governing provisions. As a result, most
  of the changes in the new Articles are minor in nature, and are not substantive
  changes. On November 15, 2004, the shareholders also approved a special resolution
  to replace the articles of the Company.

The Companys corporate offices and its registered and records
offices are located at Suite 240 - 11780 Hammersmith Way, Richmond, BC V7A 5E9,
Canada. Our telephone number is 604-278-5996.

Since our inception and during the three fiscal years ending in
May 2006, our principal business has been the acquisition, exploration and
development of natural resource properties, and the acquisition, drilling and
development of oil and gas property interests. We currently have mineral
property interests in Alaska, and Arizona. All of our mineral properties are in
the exploration stage.

We are currently in the exploration stage and equity financing
is required to continue exploration work on our mineral claims and oil and gas
interests. As a result of the uncertainty that is typical in an explorative
company there is doubt about our ability to continue as going concern as
ultimate success will be based on securing adequate equity financing and/or the
determination of economically recoverable mineral reserves on its mineral
property claims or recoveries on our oil and gas interests.

B.        BUSINESS
OVERVIEW

Nature of the Companys Operations

Cautionary Note to U.S. Investors concerning estimates of
Inferred Resources

This section uses the term inferred resources. We
  advise U.S. investors that while this term is recognized and required by Canadian
  regulations, the U.S. Securities and Exchange Commission does not recognize
  it. Inferred resources have a great amount of uncertainty as to
  their existence, and great uncertainty as to their economic and legal feasibility.
  It cannot be assumed that all or any part of an Inferred Mineral Resource will
  ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred
  Mineral Resources may not form the basis of feasibility or prefeasibility studies,
  except in rare cases. U.S. investors are cautioned not to assume that part
  or all of an inferred resource exists, or is economically or legally mineable.

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Mineral Properties

We are an exploration stage company and there is no assurance
that a commercially viable mineral deposit exists on any of our properties.
Further exploration will be required before a final evaluation as to the
economic and legal feasibility is determined.

If we complete our current exploration programs and if we are
successful in identifying a mineral deposit, we will have to spend substantial
funds on further drilling and engineering studies before we will know if we have
a commercially viable mineral deposit or reserve on any of our properties.

We will seek equity financing to provide working capital and to
meet exploration commitments on all our properties. During the fiscal year ended
May 31, 2006 we raised $666,996 through the sale of equity securities. We raised
$ 926,213 through the sale of equity securities during the fiscal year ended May
31, 2005.

Gil Mineral Claims

The Gil Gold Project is located in the Fairbanks Mining
District, Alaska. The Issuer owns a 20% interest in the Gil Mineral Claims with
its joint venture partner, Kinross Gold Corporation (Kinross) with Kinross
owning the other 80%. The Gil claims are adjacent to the producing Fort Knox
mine which is owned by Kinross, approximately five miles east of Kinross Fort
Knox deposit, Alaskas largest producing open-pit gold mine with an average gold
grade of just under 0.03 ounces of gold per ton (see Item 4.D. for complete
details of exploration and development of this property).

West Ridge Claims

The West Ridge Prospect is north of Fairbanks, Alaska, a
distance of 22 miles by road. It lies immediately north of the Fox Creek
Property. The West Ridge property adjoins Kinross Gold Corp.s True North gold
deposit and lies approximately eight miles northwest of the producing Fort Knox
gold mine. Fort Knox currently produces over 400,000 ounces of gold annually.
The West Ridge property consists of 48 state of Alaska mining claims covering
1750.5 acres, 440 acres of leased Mental Health Trust (MHT) land and 75 acres of
patented mining claims under lease purchase option in the Livengood quadrangle
Township 2 North, Range 1 East (Figure 2). The state claims are registered with
the Alaska Division of Mining, Land, and Water Management with Teryl Resources
Corp. as the 100% owner.

Black Dome

In July, 2003 we announced we had successfully negotiated a
lease of 440 acres in the Fairbanks Mining District, Alaska from the State of
Alaska, Mental Health Trust Land Office (TLO). The trust land is adjacent to the
western portion of the Companys 100% owned West Ridge claims and 40 acres is
strategically located within the West Ridge claims, which is on the edge of a
geochemical gold anomaly. The gold anomaly may possibly be on trend with the
4000-foot western gold anomaly, which is geochemically similar to the gold
mineralization at the True North deposit, according to AMAX Golds report
completed in 1999. The True North gold deposit was purchased by Kinross Gold for
CAD$94 million in shares and cash from La Teko Resources and Newmont Mining
Corporation. An exploration work program will be submitted for approval
immediately to the Trust Land Office to locate drill targets on the newly
acquired lease.

In consideration for the State of Alaska lease, a production
royalty on the lease land is granted to the State of Alaska, Trust Land Office
(TLO) as follows:

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Price of Gold (per ounce)
    Production RoyaltyBelow $300.00
    2.5%$300.01 - $350.00
    3.0%$350.01 - $400.00
    3.5%$400.01 - $450.00
    4.0%$450.01 - $500.00
    4.5%Above $500.00
    5.0%


Additionally, Teryl will grant a 1% Net Smelter Return (NSR) on
its 100% owned West Ridge property with first refusal to purchase the 1% NSR in
the event that TLO decides to sell.

An exploration program started in August 2003 and was conducted
by the Companys geological consultants, Avalon Development Corp., who are
focused on finding another True North-type gold discovery on the Black Dome area
of Teryls recently acquired trust land. The Eldorado Fault cuts through the
Black Dome, the same fault that bounds Kinross Golds True North gold deposit,
approximately three miles northeast.

Avalon field crews sampled a newly discovered old trench at
Black Dome, which contains rubble composed of black carbonaceous schist cut by
numerous quartz-carbonate veinlets. Most of the carbonate has been altered to a
soft brown-red oxide, similar to oxide ore at the True North. The trench will be
cleared of debris to sample bedrock and determine gold values to locate drill
targets.

Fish Creek Claims

The Fish Creek gold claims lie adjacent to the Gil Claims.

On March 5, 2002, the Company and Linux Gold Corp. entered into
an agreement whereby we may earn up to a 50% interest in the Fish Creek mineral
claims located in the Fairbanks district of Alaska, USA, by expending $550,750
($500,000 US) within three years and issuing 200,000 common shares (issued
December 16, 2002 at $0.08 per share). Linux will have a 5% net royalty interest
until we pay $2,203,000 ($2,000,000 US). The agreement was extended to expire on
March 5, 2007, subject to TSX approval. The Company authorized 100,000 common
shares for issuance to Linux as consideration for the extension. TSX approval of
the extension is dependent upon receipt of approval of disinterested
shareholders. Approval will be sought at the Annual General Meeting scheduled
for November 14, 2006.

The Fish Creek project is located 25 miles north of Fairbanks
in a road accessible mining district with excellent land status and
infrastructure. The project is located within host rocks that contain
commercially viable mineralization elsewhere in the Fairbanks Mining District
and is located on streams that were mined extensively for alluvial gold in the
past both upstream and downstream of the Fish Creek project. Limited exploration
conducted between 1992 and 2003 did not reveal significant bedrock exposures of
mineralization however a significant lode gold deposit has been outlined
immediately adjacent to the Fish Creek property on the south (the Gil deposit)
and the Fort Knox gold mine, a large-scale open pit gold mine 3 miles upstream
from the Fish Creek property has been in operation since 1996. Wide-spaced
placer gold drilling on a small area of the property conducted in 2003 did not
encounter significant placer gold mineralization however, more extensive and
closer spaced placer gold drilling conducted in 2004 indicated the presence of
significant concentrations of placer gold on the claims.

Two independent technical consultants are utilized by the Company
  for work on the Fish Creek property. Evaluations for alluvial (placer) gold
  are managed by Jeff Keener of NordWand Enterprize, P.O. Box 82811, Fairbanks,
  Alaska, 99708, USA. Mr. Keener is a graduate of the University of Alaska, with
  a B.S. degree in Geology (1991). Mr. Keener is a member of the Alaska Miners
  Association and has applied for membership with the American Institute of Professional
  Geologists. From 1986 to the present he has been actively employed in various
  capacities in the mining industry in numerous locations in Alaska, Nevada, Arizona,
  and California.

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For lode gold exploration we utilize Avalon Development Corp.
  of Fairbanks, Alaska, to conduct any proposed exploration work on the Fish Creek
  Property. Mr. Curt Freeman is the President of Avalon Development Corporation,
  P.O. Box 80268, Fairbanks, Alaska, 99708, USA. Mr. Freeman is a graduate of
  the College of Wooster, Ohio, with a B.A. degree in Geology (1978), and a graduate
  of the University of Alaska with an M.S. degree in Economic Geology (1980).
  Mr. Freeman is a licensed geologist in Alaska (AA#159) and is a member of the
  American Institute of Professional Geologists (CPG#6901), the Society of Economic
  Geologists, the Geological Society of Nevada, the Alaska Miners Assoc. and the
  Prospectors and Developers Assoc. of Canada. From 1980 to the present, he has
  been actively employed in various capacities in the mining industry in numerous
  locations in North America, Central America, South America, New Zealand and
  Africa.

The following map shows the location of and access to our
property.



A ground magnetic survey was completed on the Fish Creek property
  on November 20, 2003 on the right limit (southeast) side of Fish Creek Valley,
  approximately 600  700 feet down-valley from the toe of the Fort Knox
  mine fresh water supply dam. This program was an orientation survey to test
  the right limit bench of Fish Creek for a suspected buried placer gold-bearing
  channel. High grade gold placer accumulations were encountered in a narrow right-limit
  channel during excavation of the Fort Knox mine fresh water dam site but their
  extent and grade downstream on the Fish Creek property has never been explored.
  Magnetic surveys of this type have been successful in locating elevated magnetic
  field intensities associated with the heavy, magnetic mineral concentrations
  often associated with placer gold accumulations. The field survey consisted
  of two lines with 200-foot line spacing and 10-foot station spacing, which appears
  to provide sufficient detail to extrapolate magnetic data between lines. Total
  field and vertical gradient magnetic data have a good correlation, suggestive
  of adequate base station data. Signatures from the two traverses are interpreted
  to cross five features, of which three have the possibility of being associated
  with alluvial concentrations of various characteristics.

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The two anomalies recommended for physical testing are those
indicative of alluvial heavy magnetic mineral concentration encountered on the
west side of Lines 100N and 300N, just east of Fish Creek, and the strong
anomaly on the eastern extent of Line 300N. Depth estimates for these targets,
are generally 8 to 12 feet. A program of additional ground magnetics followed by
trenching and/or large-diameter auger drilling to evaluate the two most
promising alluvial gold targets was recommended for early 2004.

In March, 2003 our geologist consultant, Avalon Development
Corp., completed the Fish Creek reverse circulation drilling program. A total of
five holes were drilled to test several magnetic anomalies for potential placer
and lode gold mineralization. However, assays on the first phase of drilling on
the Fish Creek claims, Alaska, have not revealed economic values on four out of
the five hole reverse drilling program. Hole number five, however, intercepted 5
feet of 2.33 PPM gold between 45  50 feet from surface. The five-hole reverse
circulation drill program was completed to test several magnetic anomalies for
placer and lode gold values.

A ground magnetic survey was completed on the Fish Creek
property on November 20, 2003 on the right limit (east) side of Fish Creek
Valley, approximately 600  700 feet down-valley from the toe of the Fort Knox
mine fresh water supply dam. Extremely high grade gold placer accumulations were
encountered in a narrow right-limit channel during excavation of the Fort Knox
mine fresh water dam site but their extent and grade downstream on the Fish
Creek property has never been explored. A two-person crew, consisting of James
Munsell, from Avalon Development and equipment operator, Kerry Adler from
On-Line Exploration Services, Inc. conducted the survey. This was an orientation
survey to test the right limit bench for a suspected buried placer gold-bearing
channel east of Fish Creek. Surveys of this type have been successful in
locating elevated magnetic field intensities associated with the heavy, magnetic
mineral concentrations often associated with placer gold accumulations.

The field survey consisted of two lines with 200-foot line
spacing and 10-foot station spacing, which appears to provide sufficient detail
to extrapolate magnetic data between lines. Total field and vertical gradient
magnetic data have a good correlation, suggestive of adequate base station data.
Signatures from the two traverses are interpreted to cross five features, of
which three have the possibility of being associated with alluvial
concentrations of various characteristics.

The two anomalies recommended for physical testing are those
indicative of alluvial heavy magnetic mineral concentration encountered on the
west side of Lines 100N and 300N, just east of Fish Creek, and the strong
anomaly on the eastern extent of Line 300N. Depth estimates for these targets,
are generally 8 to 12 feet.

In May 2003, we received reports that assays on the first phase
of drilling on the Fish Creek claims, Alaska, have not revealed economic values
on four out of the five hole reverse drilling program. Hole number five,
however, intercepted 5 feet of 2.33 PPM gold between 45  50 feet from surface.
The five-hole reverse circulation drill program was completed to test several
magnetic anomalies for placer and lode gold values.

In July, 2004, the drilling permit was approved by the State
  of Alaska exploration division to drill up to 25 vertical eight inch diameter
  holes, on two lines, to explore the potential Fish Creek placer gold paystreak.
  Each line will be composed of 10 to 15 drill holes spaced 50 to 200 feet apart,
  and from 45 to 75 feet deep, to test two anomalies located last year by a magnetic
  survey. The survey located two anomalies indicative of a potential buried placer
  gold bearing channel, extremely high-grade placer gold was encountered during
  the excavation of the Fort Knox mine fresh water dam, immediately upstream of
  the Fish Creek property.

In May, 2004 we commenced a closely spaced magnetic survey over
the previous magnetic targets that were discovered in 2003 . The magnetic survey
located two anomalies indicative of a potential buried placer gold bearing
channel.

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In July 2004 a total of 20 soil samples were collected near
Odden Creek with a hand held power auger to depths from 2 to 7.5 feet. These
holes were placed on a grid pattern with hole spacings of 200 feet to test for
metal anomalies and to examine bedrock chips in proximity to intrusive colluvium
found on the surface. Several groupings of holes were weakly anomalous in gold
pathfinder elements and identified as prospective lode gold targets. Total cost
of this program was $1,800.

In September and October 2004 a 22 hole (1,506 feet) reverse
circulation drilling program was completed on the property. Twenty holes were
drilled on two widely spaced lines to test the placer gold potential while two
deeper holes were drilled to test an intrusive-related lode gold target (Keener,
2005b). Six of the twenty placer holes returned intervals with gold values in
excess of 0.01 ounces of gold per cubic yard. Values ranged from 0.0108 to
0.0629 ounces per cubic yard over widths of 5 to 8 feet. These values suggest
potential for commercially viable alluvial gold resources may exist on the Fish
Creek project. Total cost of the combined placer and lode drilling program was
approximately $54,000.

After completing the placer drilling, two lode gold exploration
holes totaling 405 feet of drilling were completed on the south side of Odden
Creek. Samples were collected every five feet, but did not result in any
significant concentrations of metals or other pathfinder elements. The best
values for gold were 0.038 ppm and 0.040 ppm, found in T04RC01 at 195 feet and
200 feet, respectively.

In December 2004, a total of twenty 8-inch diameter RC placer
holes  from 40 to 70 feet deep -- were completed and two 5.5 -inch diameter RC
lode holes 200 and 205 feet deep were drilled to test an intrusive target.
Alluvial placer gravels were generally sampled on intervals of five feet and
concentrated with a Denver Goldsaver. Drill cuttings were directed from the
drill string through the swivel-head into the Goldsaver via slurry hose for
immediate concentration. Placer concentrates were carefully panned and all
visible gold particles were extracted, dried, weighed, and saved for further
analysis. Other heavy minerals found in each sample interval were also dried,
weighed and saved for later analysis. The drill-concentrator system employed in
this program does not permit accurate measurements of the sample volumes,
therefore, sample grades are derived by dividing the recovered mass of placer
gold by the volume of an ideal cylinder. Sample grades also incorporate a purity
of 900 fine, which is based on historical production documented at placer mines
upstream from the 2004 drilling program.

Auger drilling near Odden Creek, conducted on July 13, 2004 to
test C soil geochemistry, resulted in several weak metal anomalies. One hole
(T04A001) which penetrated the intrusive target and several surrounding holes
(T04A002, -003, &-004) were elevated in silver, lead, arsenic and bismuth.
Another hole (T04A010) was anomalous in zinc, arsenic, copper, iron, sulphur and
tungsten, suggesting a potential sulphide deposit.

For 2005, to elevate the upper part of the paystreak, the
partners plan to drill four lines of closely spaced holes 50 to 100 feet apart
on lines spaced 500 to 1,000 feet apart. The lower part of the paystreak can be
developed to measured resource status by drilling two lines of closely spaced
holes on lines spaced 2,000 feet apart. After the results of the proposed
drilling are known a preliminary feasibility study may be performed to address
economic and mining factors that will affect the economic extraction of placer
gold.

Neither of the two lode holes drilled in 2004 on Odden Creek
intercepted economic grades of gold. Hole T04RC01 terminated in mineralized,
quartz-veined, graphitic schist assaying small amounts of gold.

In August 2005, we announced that an extensive auger drilling
program has commenced on the All Gold Creek geophysical anomaly, on the Fish
Creek property. The auger track rig can drill up to a depth of 80, several
auger drill holes are planned to test the aerial geophysical anomaly and the
coincident gravity low target for future R/C drilling, based on positive results
for the auger drilling program.

In October 2006, six new geophysical targets were located on
  the Fish Creek property. An interpretive report titled Proposed Drill
  Sites, Fish Creek Gold Property, Fairbanks Mining District, Alaska. Fugro
  Airborne Survey, Inc., under contract to Fairbanks Gold Mining, Inc./Kinross
  Gold, initiated an HEM Airborne geophysical area and identified six main targets
  on the Fish Creek property.

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The following interpreted targets are based on linear
resistivity features inferring regional structural trends. Conductive gradients
at depth or along a structure suggest areas of higher fracture density. The high
magnetic anomalies with good depth extent are interpreted as intrusives and the
linear magnetic highs may be calc-silicates.

Proposed Drill Site 01: Interpreted Target  Conductive Shear /
High Fracture Density Proposed Drill Site 02: Interpreted Target 
Conductive Shear / High Fracture Density Proposed Drill Site 03: Interpreted
Target  Calc-silicate / High Fracture Density Proposed Drill Site 04:
Interpreted Target  Calc-silicate / High Fracture Density Proposed Drill
Site 05: Interpreted Target  Intrusive Contact / High Fracture Density
Proposed Drill Site 06: Interpreted Target  Manto Type Magnetic Anomaly

Together with Linux Gold Corp., we plan to implement an
exploration program this winter (2006) on the Fish Creek gold property. Linux
Gold Corp. has received permits to conduct exploration drilling on the Fish
Creek property.

There currently are no resources or reserves on the Fish Creek
property that comply with the Canadian Institute of Mining and Metallurgy (CIM)
Standards on Mineral Resources and Reserves Definitions and Guidelines adopted
by CIM Council on August 20, 2000. While encouraging in its results, the drill
hole density of the 2004 placer drilling campaign at Fish Creek was not
sufficient to allow estimation of CIM compatible resources or reserves

Additional work on the Fish Creek property will be based on
results from the previous drilling programs. Each successive phase of
exploration is dependent on generation of encouraging results from the previous
programs and the increasing potential for delineation of commercially viable
resources on the project. A two phase program has been recommended as follows:

|1. | Infill Reverse
      Circulation Drilling: Infill drilling using large diameter reverse
      circulation methods is warranted on the property to better define the
      placer gold mineralization outlined in 2004. Previous experience by Keener
      and other operators within the Fish Creek drainage has shown that drilling
      is an effective method of sampling and valuating the placer deposit and
      provides predictable estimates of subsequent production. Previous work
      suggests that drilling to obtain samples with volumes of 0.05 cubic yards
      each are adequate to estimate the volume and value of the placer gold
      deposit. Sampling procedures similar to those utilized in 2004 should be
      followed except that the volume of each sample should be measured to
      provide a more accurate estimate of the gold grades and to evaluate the
      recovery of the drilling system. Additionally, all holes should be
      continued into bedrock for at least 25 feet to test for the presence of
      lode gold mineralization. The primary goal of this program would be to
      enable industry acceptable mineral resources to be calculated between the
      two lines of drilling completed in 2004. A secondary goal would be to
      determine if significant lode gold mineralization exists in the area
      drilled. Recommended future work on the Fish Creek property should include
      drilling 20 reverse circulation drill holes (8 diameter) for a total of
      1,600 feet of drilling. Construction of an all-weather creek crossing for
      off-road vehicles, near the mouth of Odden Creek, will facilitate this
      work. The estimated cost of such work is $50,000. Fieldwork will take
      about one to two weeks, whereas sample analysis and reporting will take an
      additional two to four weeks.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2. | Step-out
      Reverse Circulation Drilling: if results of the phase 1 infill drilling
      are encouraging, step-out drilling using large diameter reverse
      circulation methods is warranted on the property to expand on the placer
      gold mineralization outlined in 2004. Sampling procedures similar to those
      utilized in 2004 should be followed except that the volume of each sample
      should be measured to provide a more accurate estimate of the gold grades
      and to evaluate the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

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recovery of the drilling system.
Additionally, all holes should be continued into bedrock for at least 25 feet to
test for the presence of lode gold mineralization. The primary goal of this
program would be to enable industry compliant mineral resources to be calculated
for areas of the property that lie up and downstream from the 2004 drill lines.
A secondary goal would be to determine if significant lode gold mineralization
exists in the area drilled. Recommended future work on the Fish Creek property
should include drilling 55 reverse circulation drill holes (8 diameter) for a
total of 4,400 feet of drilling. Construction of an all-weather creek crossing
for off-road vehicles, near the mouth of Odden Creek, will facilitate this work.
The estimated cost of such work is $150,000. Fieldwork will take about two to
three weeks, whereas sample analysis and reporting will take an additional four
to six weeks.

Fox Creek

On June 23, 2004, the Company entered into a mineral property
lease to develop the property known as the Upper Fox Creek mining lease. The Fox
Creek Claims consist of eight contiguous unpatented state of Alaska mining
claims, which are located 3 miles north of Fox, Alaska. These claims are
adjacent to the Companys 100% owned West Ridge property to the northwest. Teryl
Resources Corp. recently completed a drill program on the West Ridge Claims.
Significant gold intervals were found in Hole #4, which returned 35 feet grading
1.68 grams of gold per tonne (0.049 opt) including a 20 foot section that
returned 2.2 grams gold per tonne (0.064 opt).

Regarding the Fox Creek Claims, one reverse circulation drill
hole was drilled by Cyprus-Amax in 1995 to a depth of 255 feet along the
schist-granite contact. A 30 foot zone from 65 to 95 feet averaged 0.03 opt AU
(gold) and was associated with elevated molybdenum and high arsenic values. The
bedrock geology exposed in outcrop and placer mining cuts reveal a gold
mineralization system that shares characteristics with other gold mines in the
Fairbanks Mining District, according to a brief report from Arne Bakke,
Geologist, located in Fairbanks, Alaska. Teryl Resources Corp. paid US$10,000
upon signing the agreement, and the same is due on each anniversary date. The
owner retains a three percent net smelter return. Teryl Resources Corp. has an
option to purchase the three percent net smelter return for US$1,000,000 prior
to the date of production, or US$1,500,000 after the production date.

In October, 2004, two grab samples taken from the intrusive
contact at the Fox Creek claims returned values of 197 and 1,360 ppb (1.36 grams
per tonne) gold. These samples are only 450 feet south of the West Ridge
property, and a quarter of a mile from the recently reported hot gold samples on
the West Ridge. A $20,000 auger drilling program to sample the new gold zone
commenced between the West Ridge property, and the potential Fox Creek intrusive
discovery.

In June 2004 a significant drill intersection returned 35 feet
grading 1.68 grams per ton gold (0.049 opt), including a 20 foot section that
returned 2.2 grams gold per ton (0.064 opt). One reverse circulation drill hole
was drilled by Cyprus-Amax in 1995 to a depth of 255 feet along the
schist-granite contact. A 30 foot zone from 65 to 95 feet averaged 0.03 opt AU
(gold) and was associated with elevated molybdenum and high arsenic values.

In December, 2004, we announced initial drill results from the
  2004 exploration drilling at the Fox Creek prospect in the Fairbanks District,
  Alaska. Hole FC04-01 was terminated at 287 feet after passing through approximately
  50 feet of sulfide-bearing granite from surface to 50 feet. Sulfides observed
  include pyrite and molybdenite. The hole then passed into oxidized quartzite
  and quartz mica schist from 50 feet to termination depth. Assays from this hole
  returned gold (values up to 5 feet grading 216 ppb) but did contain anomalous
  arsenic maximum value of 785 ppm and sporadic anomalous molybdenum (maximum
  value of 79 ppm) and tungsten (maximum value 2,840 ppm). The highest tungsten
  and molybdenum values came from the bottom 50 feet of the hole suggesting possible
  intrusive-related mineralization at depth nearby.

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Hole FC04-02 was collared 20 feet northwest of hole FC04-01 and
  was directed to the northwest to test for subsurface extensions of granitic
  rocks mapped at surface in this part of the claim block. The hole encountered
  variably oxidized quartzite and quartz mica schist from surface to approximately
  230 feet and then passed into a mixed zone of hornfelsed sediments and granitic
  intrusives. The hole bottomed at 300 feet in hornfelsed sediments. Significant
  gold mineralization was encountered in two five-foot intervals: 1,300 ppb gold
  from 30 to 35 feet and 2,500 ppb gold from 180 to 185 feet. Both gold-bearing
  intervals were hosted in altered metasediments containing minor quartz veinlets.
  Elevated gold values were associated with anomalous arsenic (to 5,700 ppm),
  molybdenum (maximum value of 82 ppm) and tungsten (maximum value 40 ppm).

Combined with soil sampling results from the adjacent West
Ridge property, the Phase 1 Fox Creek drilling results suggest the presence of
intrusive related and/or intrusive hosted gold mineralization on the Fox Creek
property. Additional soil auger sampling and possible ground geophysics are
being planned prior to additional drilling in 2005.

All geochemical samples were analyzed by ALS Chemex for gold
via fire assay techniques plus a multi-element suite via ICP methods with
four-acid digestion. Blanks submitted with drill samples suggest no unusual or
spurious geochemical results.

Further to the mineral property lease entered into in June
2004, the Company made the first US$10,000 payment but did not make the 2005
year payment and the lease was cancelled. During the November 2005 quarter
$13,283 in property costs and $34,769 in exploration costs were written off.

Gold Hill Claims

On June 10, 2006, the Company and Frederic & John Rothermel
(the Vendors) entered into an agreement whereby the Company would purchase a
100% interest in the Gold Hill Patented Claim Group consisting of seven patented
claim blocks on 248 acres located in the Warren Mining District, Cochise County,
Arizona, USA, subject to a 10% Net Profits Royalty to the vendors, for the
following considerations:

|a) | $5,508 ($5,000 US) to complete a due diligence within 90
      days.                                         
|-- | -------------------------------------------------------------------------------------------------------------
|b) | $11,015 ($10,000 US) upon completion of the due diligence
      and $11,015 ($10,000 US) per year thereafter.
|c) | complete a $55,075 ($50,000 US) first phase exploration
      program conducted by the Vendors.              
|d) | $275,375 ($250,000 US) per year upon commencement of
      production.                                       

On August 1, 2006 the Company announced that six additional
unpatented lode mining claims have been officially filed with the Arizona State
office of the Bureau of Land Management on behalf of the Company.

On October 16, 2006, we announced that we had exercised our
option and have a 10 year option to purchase up to a 10% net profit interest
from the Vendors for US$1.5 million per 5% net profit interest, therefore,
having an option on a 100% interest in the Bisbee, Arizona patented claims.

The Gold Hill Project is located approximately 4.5 miles
southeast of Bisbee Arizona in the Warren Mining District of Cochise County
(Township 23 South, Range 25 East sections 25 30, 31, and 32). The project area
has a history of placer and lode mine production and is 4 miles from the Phelps
Dodge Corporations Lavender Pit, which produced 8 billion pounds of copper and
2.7 million ounces of gold. The Gold Hill Project consists of fourteen patented
claims comprising over 250 acres with an additional 7 claims being added.

The principle gold target in the exploration area is the Gold
  Hill Fault. This structure has been traced for two miles and has several adits
  and many test pits located along its course. The secondary target is the Glance
  Conglomerate located to the south of the Gold Hill Fault. In this area, the
  Glance Conglomerate is reported to have micron sized gold associated with copper
  in fine quartz-filled fractures. An initial examination of the property has
  been performed by Teryl Resources which consisted of a general reconnaissance
  of the area and the collection of 17 rock samples.

- 25 -

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Assay results showed trace amounts of gold in quartz veins
located within the Morita Quartzite east of the Paris Mine. Higher gold assay
results of 122 ppb Au and 4,590 ppb Au were generated from rocks taken from the
Paris Mine dump. Gold values from quartz veins in outcrops and test pits between
the Paris mine and the El Paso Mine ranged from 3 ppb Au to 635 ppb Au. Samples
from the vicinity of the El Paso adit returned assay values of 2 ppb, 9 ppb and
149 ppb Au. All rock and soil samples were analyzed at Alaska Assay Labs.

Field work in the Emerald & Saint Elmo claims tested gold
values within the conglomerate ranged from 19 ppb Au to 1,858 ppb Au while
copper assays ranged from 520 ppm to 13,820 ppm. Additional work is needed to
determine the extent of gold and copper mineralization in this area.

Oil and Gas Properties

Jancik, C-S and Herrmann Wells, Fayette County, TexasThe Company owns 6.5% working interest (4.680% net revenue interest) in
the Peters No. 1 Well, in Fayette County, Texas, and a 7.5% working interest
(5.79375% net revenue interest) in each of the C-S #1, Jancik #2 and Herrmann #4
wells, located in Burleson County, Texas.

Gas Wells, Knox County, KentuckyOn May 18, 2006,
the Company entered into an agreement with IAS Communications, Inc. to purchase
a 40% interest (subject to 40% net revenue interests to others) and drill up to
24 wells in the Ken Lee #1 natural gas well, located in Knox County, Kentucky,
USA, for $103,045 ($92,500 US). The Company will earn a 40% interest in each
well drilled by financing 50% of the total cost of drilling each well subject to
a 12.5% revenue interest to the landowner and a 27.5% interest to Energy Source,
Inc., the lessee and operator of the wells.

On June 6, 2006 the Company announced that the Ken Lee#1 well
had been successfully completed as a commercial gas well. On July 6, 2006 the
Company announced that drilling had commenced on the Elvis Farris #2 well and
has been reported to be in production.

Description of the Markets in Which the Company
Competes

This is no longer applicable due to the discontinuance of the
business operations of our wholly-owned subsidiary.

Competition

Significant and increasing competition exists for the limited
number of gold acquisition opportunities available in North, South and Central
America and elsewhere in the world. As a result of this competition, some of
which is with large established mining companies which have greater financial
and technical resources than the Registrant, the Registrant may be unable to
acquire additional attractive gold mining properties on terms it considers
acceptable. Accordingly, there can be no assurance that the Registrants
exploration and acquisition programs will yield any new reserves or result in
any commercial mining operation.

Oil and gas exploration and acquisition of undeveloped properties
  is a highly competitive and speculative business. We compete with a number of
  other companies, including major oil companies and other independent operators
  which are more experienced and which have greater financial resources. Such
  companies may be able to pay more for prospective oil and gas properties. Additionally,
  such companies may be able to evaluate, bid for and purchase a greater number
  of properties and prospects than our financial and human resources permit. We
  do not hold a significant competitive position in the oil and gas industry.

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Seasonality

We can only carry out exploration when weather is favourable.
Typically, we cannot carry out any work during the months of November to March
on our mineral properties.

Availability of Raw Materials

Not applicable.

Marketing Strategy

We do not have any plans for a marketing strategy at this time.

Dependency upon Patents/Licenses/Contracts/Processes

Not applicable. We do not have any material agreements upon
which we are dependent.

Material Effects of Government Regulation

Exploration and development activities require permits from
various foreign, federal, state and local governmental authorities. To the best
of our knowledge, we are operating in compliance with all applicable
environmental regulations.

Mineral Exploration

Exploration and development activities, require permits from
various foreign, federal, state and local governmental authorities. To the best
of our knowledge, we are operating in compliance with all applicable
environmental regulations.

Our current and anticipated future operations, including
further exploration activities, require permits from various state and other
governmental. Such operations are subject to various laws governing land use,
the protection of the environment, production, exports, taxes, labor standards,
occupational health, waste disposal, toxic substances, well safety and other
matters. Unfavorable amendments to current laws, regulations and permits
governing operations and activities of oil and gas and resource exploration
companies, or more stringent implementation thereof, could have a materially
adverse impact on us and cause increases in capital expenditures which could
result in our ceasing operations. We have had no material costs related to
compliance and/or permits in recent years, and anticipate no material costs in
the next year.

Oil and Gas Exploration

Our oil and gas operations are or will be subject to various
  types of regulation at the federal, state and local levels. Such regulation
  includes requiring permits for the drilling of wells; maintaining bonding requirements
  in order to drill or operate wells; implementing spill prevention plans; submitting
  notification and receiving permits relating to the presence, use and release
  of certain materials incidental to oil and gas operations; and regulating the
  location of wells, the method of drilling and casing wells, the use, transportation,
  storage and disposal of fluids and materials used in connection with drilling
  and production activities, surface usage and the restoration of properties upon
  which wells have been drilled, the plugging and abandoning of wells and the
  transporting of production. Our operations are or will be also subject to various
  conservation matters, including the regulation of the size of drilling and spacing
  units or pro-ration units, the number of wells which may be drilled in a unit,
  and the unitization or pooling of oil and gas properties.

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In this regard, some states allow the forced pooling or integration
  of tracts to facilitate exploration while other states rely on voluntary pooling
  of lands and leases, which may make it more difficult to develop oil and gas
  properties. In addition, state conservation laws establish maximum rates of
  production from oil and gas wells, generally limit the venting or flaring of
  gas, and impose certain requirements regarding the ratable purchase of production.
  The effect of these regulations is to limit the amounts of oil and gas we may
  be able to produce from our wells and to limit the number of wells or the locations
  at which we may be able to drill.

Our business is affected by numerous laws and regulations,
including energy, environmental, conservation, tax and other laws and
regulations relating to the oil and gas industry.

Failure to comply with any laws and regulations may result in
the assessment of administrative, civil and criminal penalties, the imposition
of injunctive relief or both. Moreover, changes in any of these laws and
regulations could have a material adverse effect on business. In view of the
many uncertainties with respect to current and future laws and regulations,
including their applicability to us, we cannot predict the overall effect of
such laws and regulations on our future operations.

We believe that our operations comply in all material respects
with applicable laws and regulations and that the existence and enforcement of
such laws and regulations have no more restrictive an effect on our operations
than on other similar companies in the energy industry. We do not anticipate any
material capital expenditures to comply with federal and state environmental
requirements.

C.        ORGANIZATIONAL
STRUCTURE

Teryl, Inc. was incorporated on November 17, 1988, in the State
of Delaware and registered to do business in the USA, to hold and operate the
Alaska mineral property interests and Texas oil and gas well interests. Teryl
Resources Corp. owns 6,500,100 shares of Teryl, Inc., which is 100% of the
issued shares at the date of filing this 20-F.

For a list of our significant subsidiaries, see Item 10 
Additional Information  Subsidiary Information.

D.        PROPERTY, PLANTS
  AND EQUIPMENT

Our properties are in the exploration stage and a substantial
amount of capital will have to be spent on each property before we will know if
they contain commercially viable mineral deposits. Our material properties are
located in Alaska and Arizona. Our properties are without known reserves and the
work being done by us is exploratory in nature.

Our executive offices are located in rented premises in a
commercial business park located in Richmond, British Columbia, Canada, a suburb
of Vancouver. The space is shared with several other companies which share
common management. The monthly rent for its portion of this 2,200 square foot
space is $1,014.00. We have occupied these facilities since November 1, 2006.
These facilities are believed to be adequate for meeting our needs for the
immediate future. If required in the future, we do not anticipate that we will
have any difficulty in obtaining additional space at favorable rates. There are
no current plans to purchase or otherwise acquire any properties in the near
future.

Mineral Properties

GIL PROPERTY

Project Description and Location

The Issuer owns a 20% interest in the Gil Mineral Claims, which
  consist of 237 unpatented contiguous state mineral claims encompassing slightly
  less than 3,836.4 hectares located 32 kilometers northeast of Fairbanks, Alaska.
  Kinross Gold Corporation (Kinross) owns the other 80% of the claims
  and acts as operator of the project.

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Kinross and the Issuer each contribute to annual exploration
  costs on an 80:20 ratio with net profits distributed in that same proportion
  in the event of production. The Issuer may opt to reduce its interest in the
  Gil Mineral Claims by choosing not to contribute its portion of the annual exploration
  expenditure. Its interest would then be reduced on a pro-rata basis utilizing
  the following formula:

$150,000($600,000
+ expenditure for the year)

At its sole option, Kinross may choose to carry the Issuers
portion of expenditures in the form of an interest-bearing demand note,
principal and interest to be added in the event of application of the reduction
formula. Should the Issuer fail to contribute its share of the exploration costs
or fail to honour the demand note within 30 days of formal request for payment,
it would be considered in default. In a default situation, the Issuers interest
would be reduced by double the amount normally applied by the reduction formula.
In the event its interest is reduced below 10%, the Issuers interest would be
converted to a 5% net profits interest with no further financial contributions
required.

State mining claims in Alaska require a minimum annual work
expenditure of $100 per claim prior to the first of September of each year.
Unused expenditures may be carried forward and subsequently utilized in
successive years to a total of five years from the year in which they were
incurred. The claims have been maintained annually by Kinross who have
sufficient expenditure reserve to apply for the next five years. Prior to
production, Kinross will likely convert the claims to a mining lease or apply
for a millsite permit, a procedure involving public hearings and an
environmental impact study. In anticipation, the Issuer has legally surveyed the
claims and has completed a series of six water wells for ground water monitoring
purposes, already underway.

Accessibility, Climate, Local Resources, Infrastructure
and Physiography

The Gil Mineral Claims may be accessed via Fairbanks, Alaska,
by a combination of paved highway, improved gravel roads and three seasons,
four-wheel drive dirt road. Road distance is 16 kilometers north of Fairbanks to
Fox along the Steese highway, east along the Steese highway and the Fort Knox
access road to the mine site (another 19 kilometers), east through the mine
property to the water retention dam (18 kilometers) and the start of the Gil
access road. An additional 9.6 kilometers along the Gil access road brings one
to the area of drill-indicated resources and the principal site of current
exploration activity. A number of four-wheeler trails provide additional access
to this portion of the property.

The claims lie along a moderate northwestern facing slope of a
northeastern ridge rising from the broad Fish Creek valley trending in the same
direction. Vegetation consists of black spruce, birch, poplar, alder and tussock
grass. The slope is broken by a number of short, northwestern flowing streams
which form a series of gullies. Elevations range from 300 to 600 metres.

Snow generally falls on the property in late September or early
October, remaining on the ground until mid to late May. The month of April is
particular productive for drilling and moving heavy equipment over normally soft
or swampy areas which remain frozen. Exploration work involving heavy equipment
is generally suspended during the break up period extending from mid-April
through the end of May and the freeze up interval through mid-October to early
November.

Fairbanks is the main population and service centre in the
area. The hamlet of Fox twenty kilometers west is residence to several dozen
locals and provides a few facilities for food and gas. While the claim area is
void of any buildings or other infrastructure, it does lie adjacent to the
Kinross Fort Knox open pit gold mine, a 40,000 ton per day operation with 250
permanent employees.

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History

In 1989, the Issuer acquired an option on the Gil Mineral
Claims from Nerco Exploration Company whose exploration work on the property had
consisted largely of surface magnetometer surveys. In 1991, the Issuer signed a
joint venture and option agreement respecting the property with Fairbanks Gold
Corp., which eventually became Kinross. Kinross earned an 80% interest in the
Gil Mineral Claims from the Issuer by incurring exploration expenditures on the
property of $600,000. During the past ten years, Kinross and its predecessors
have conducted an integrated exploration program on the claims incurring total
expenditures of between US$3,500,000 and US$4,000,000.

Geological Setting

Regional Geology

In regional terms, the Gil Mineral Claims are located within
the Yukon-Tanana terrane, popularly labelled the Tintina Gold Belt. The
lithologies are polymetamorphic and are approximately Precambrian to Upper
Paleozoic in age. The protoliths are believed to have been primarily
sedimentary, with lessor volcanic and plutonic origins. The rocks have undergone
dynamothermal metamorphism; an early prograde amphibolite facies event and a
later greenschist facies retrograde event. Using detailed fabric studies, four
phases of penetrative deformation have been described. Radiometric ages of the
Yukon-Tanana terrane indicated that a widespread regional metamorphic event
occurred both in early Jurassic (about 180 Ma) and most recently during
mid-Cretaceous time (105-125 Ma).

The Yukon-Tanana terrane is bound to the north by the Tintina
fault and to the south by the Denali fault. Both faults are large scale right
lateral strike-slip fault systems with numerous sympathetic northeast-southeast
faults. The northeast trending faults display both left lateral strike-slip and
dip-slip movements.

Intrusive rocks in the area are intermediate to felsic in
composition. The Gilmore Dome intrusive rocks and related calc-silicate
mineralization are dated at 86+/-3 Ma to 95+/-5 Ma. It is assumed that the other
intrusive rocks of similar composition in the district have similar age.
Tertiary tholeittic basaltic rocks are present in several localities in the
district. These basalts tend to occur along north-easterly faults.

The Fairbanks district has produced approximately 7,500,000
ounces of placer gold since 1902. Prior to exploitation of the Fort Knox
deposit, district lode production totalled only a few hundred thousand ounces,
primarily from vein deposits within metamorphosed strata. This huge disparity
between placer and lode production in terms of quantity suggests that sizeable
source lode deposits remain to be found. Alternatively, the placer lode sources
may have been largely eroded over the last 100 million years. Lode deposit types
in the area include volcanogenic stratabound sulphides, intrusive hosted gold
and silver, tungsten skarn, metamorphic-hosted gold-quartz-sulphide veins and
stibnite veins.

Local Geology

The Gil property lies within the Tintina Gold Belts or
Yukon-Tanana terrain, a region situated between Denali and Tintina faults,
extending through Central Alaska into the Yukon. Extensive exploration within
the belt over the past decade has increased gold resources by at least 23
million ounces from over ten different new deposits. In the Alaskan portion, an
additional eight million ounces of placer gold has been taken since 1902,
primarily from the Fairbanks district.

While Tintina gold deposits occur within a variety of rock hosts,
  form, alteration types, depth and temperature ranges, they feature many common
  characteristics as well as several unique differences. Though a plutonic association
  is common, deposits may be hosted within the plutons, within or exterior to
  the contact aureoles or within adjacent schists and sediments. Associated plutons
  fall within the 8 to 105 million-year range. They are granitic to granodioritic
  in composition, Associated plutons fall within the 85 to 105 million-year range.

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They are granitic to granodioritic in composition, I-type intrusives,
  with lithophile affinities and low magnetic signatures (absence of magnetite,
  minor ilmenite). The magnetic fluids emanating from the plutons are seen to
  be responsible for the gold mineralization. Prospective intrusives are small
  in size, generally less than four square kilometres in surface area. Termed
  the Tombstone-Tungsten Magmatic Belt within the Yukon, this same suite of prospective
  plutonics extends for a distance of over 700 km across the Yukon, Alaska and
  into British Columbia.

Significant deposits within the Tintina Gold Belt include the
Fort Knox (4 million ounces in sheeted veins within granodiorite), Brewery Creet
(970,000 ounce disseminations and veins within monzonite dykes and
metasiliciclastics), Dublin Gulch (1.5 million ounces in sheeted veins within
granodiorite), Pogo (5.6 million ounces in high temperature/low level ductile
sub-horizontal quartz veins within gneisses), Donlin Creek (13 million ounces in
high level hypabyssal sedimentary hosted dyke swarms), True North (1.3 million
ounces in a medasediment host, disseminated shear/replacement) and Shotgun
(979,000 ounces in rhyolite porphyry and adjacent sediments).

Property Geology

The Gil Mineral Claims are primarily underlain by the Fairbanks
Schist, a Proterozoic to Lower Cambrian formation derived largely from
sedimentary rocks that have been converted into muscovite-quartz schist and
macaceous quartzite. In certain areas the Fairbanks Schist contains a
metamorphic sub-unit of volcanic provenance called the Cleary Sequence. The
Cleary Sequence is present within the central portion of the claims trending
north-easterly in a narrow band to the Slippery Creek area where it becomes the
host formation for the Main Gil as well as the North Gil zones.

The south-western portion of the Gil Mineral Claims, about
three kilometres south of the Fort Knox pit, in underlain by part of the Gilmore
Dome, a quart monzonitic to granitic pluton which is probably the mother
intrusive to the small stock hosting gold mineralization within the production
pit. The location of additional intrusive rock has become a significant sub-goal
of the Fairbanks Gold exploration programme. Indications of a possible intrusive
rock in the headwater area of Slippery Creek are suggested by the presence of a
gravity high outlined in a previous survey as well as petrographic studies
indicating a causative heat source in that direction.

Within the area of the Gil zones, the Fairbanks Gold geological
staff have subdivided the mixed metamorphic, sedimentary and volcanic package
into at least ten separate units which is not an easy task given the scarcity of
outcrop and the highly faulted, segmented complex nature of the property.

Strata strikes N65E dipping to the northwest variably from 35
to 70 degrees. Faults and shears in the Gil claim block strike predominantly
northwest or northeast, as indicated by trenching, drilling, ground based
magnetometer surveys, and ground based radiometric surveys. A ground based
gravity survey in 1999 exposed east to west and northeast trending structures
that were previously unknown. Faults are often coincident with gold
mineralization and commonly contain duly clay gouge, crushed quartz, calcite
veining and/or quartz veining, and can be intensely limonitically stained.

Exploration and Development during the past 3 years

During fiscal 2004, 2005 and 2006, Fort Knox Venture through
its operator Kinross Gold USA, Inc., completed exploration and development work
on this property. This has resulted in Teryl, Inc. being required to pay its 20%
share of expenses, which amounted to $ 98,916US in 2006, $104,824US in 2005, and
$226,916US in the May 2004 year.

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The first phase of the 2003 drill program served two purposes.
Firstly it increased the geologic understanding of the Main Gil gold deposit to
provide a more accurate gold distribution deposit model, and secondly, it has
extended the strike length of the Main Gil zone to almost 3,000 feet.

Following is a summary of the 2003 Phase 2 Exploration Program
for the Gil Project including estimated costs:

- Additional core and reverse circulation drilling to more fully define the
  limits and magnitude of gold mineralization at the Main Gils deposit and other
  targets. This phase including assaying, geologic services, access road and
  drill pad construction, and reclamation of surface disturbance, is estimated
  at US750,000;
- A cultural resources survey to determine the presence (or absence) of
  historical artifacts in the project area. This phase of work is estimated to
  cost US$81,000;
- Wetlands delineation and a Threatened and Endangered Species surveys are
  estimated to cost US$26,000;
- Costs under a State of Alaska Reimbursable Services Agreement for
  project-related activities are estimated to be US$23,000;
- Detailed digital topography, suitable for engineering studies and design,
  for the area of the mineral deposits are estimated to be US$20,000;
- Access and haul road design activities and construction cost estimates,
  US$75,000;
- Preliminary hydrologic studies and construction of a piezometer network are
  estimated to cost US$50,000; and
- Drilling of a production (water) well to characterize the nature and volume
  of ground water in the vicinity of the Main Gil deposit, US$50,000.

Phase 2 drilling was completed bringing 2003 drilling totals to
27,590 feet of reverse circulation drilling in 127 holes and 8,917 feet of
diamond core drilling in 31 holes. The best gold results were on Hole #
GVR03-398, which intersected 135 feet of 0.087 opt gold including 85 feet of
0.121 opt gold.

In January 2005, we received a preliminary exploration summary
for the Kinross/Teryl Gil Joint Venture program. The Gil Joint Venture
exploration program consisted of geologic mapping, the excavating of four
trenches totaling 1,020 feet, the drilling of 18 reverse circulation drill holes
totaling 4,175 feet, and collecting of over 1,000 rock and soil samples for
assays.

In April 2005, we received the Gil joint venture progress
report for the 2004 exploration program. The goal of the 2004 Gil Exploration
Program was to identify gold targets that could significantly increase the
potential resource of the claim block. Field work began on June 21, 2004 and
took place in the central and eastern portions of the claim area. This included
the Main Gil Area, Sourdough Ridge, Intrusive Ridge, All Gold Ridge and Too Much
Gold Ridge. Exploration activities consisted of geologic mapping, 1,020 feet of
trenching, 18 reverse circulation drill holes totaling 4,175 feet, and the
collection of over 1000 rock and soil samples for gold assay. Initial fieldwork
outlined eight gold targets that warranted further exploration. Drilling in the
final portion of the exploration season tested five of the eight targets.

Also in April, 2005, a program and budget was approved by
Kinross Gold Corp. to move the Gil Joint Venture from the exploration to the
development stage. The approved budget is US$793,800.

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Budget Summary -Estimated Cost $USD Permitting 520,000,
Engineering 160,000, Data Folio 75,000, Airborne Geophysics 28,800, Reclamation
10,000, Total 793,800.

Permitting - The Joint Venture plans to initiate the process of
permitting the Gil deposit once sufficient baseline data has been collected.
Several state permits and approvals are required which will likely include a
Plan of Operations, Solid Waste Disposal Permit, Storm Water Discharge
Multi-Sector General Permit for Industrial Activities or a NPDES Discharge
Permit, 404 Wetlands Permit, a Reclamation and Closure Plan and a Monitoring
Plan. The U.S. Army Corps of Engineers will complete an Environmental Assessment
as required by NEPA. Baseline studies needed include fugitive emissions,
geochemistry, surface and groundwater hydrology, aquatic biota, wetlands
delineation, cultural resource survey, socioeconomic analysis, and noise and
visual impact studies. The cultural resources survey and wetland delineation
were completed in 2004. Surface and ground water hydrology was initiated in
2000. The Environmental Assessment required under NEPA will drive the timeline,
but permitting could be completed in 2006 provided there is no significant
public opposition.

Engineering - Engineering projects include deposit model, pit
design, mine plan, access road design, geotechnical review for pit slope angles,
and dewatering review of related test work.

Data Folio - Baseline studies for permitting Gil have been
initiated in 2005 and will continue in 2006 as will the development of mine
plans for the Gil property. Permitting and engineering activities are
significant budgetary items this year. A properly cleaned, compiled, and
interpreted digital database will be used to identify new targets and develop
new target concepts, and will also have obvious value as Gil transitions from
exploration to development.

Airborne Geophysics - A high resolution aeromagnetic and EM
resistivity survey, the draped helicopter survey will be flown along 100 m
spaced lines and at a 30 m ground clearance. Approximately 300 line kms of the
2,310 kms survey will be flown over the Gil Venture property. The purpose of the
survey is to provide resolution of subtle magnetic texture like that associated
with the Fort Knox deposit and to add resistivity as a complimentary data set.
The objective is to produce a more detailed structural and lithologic base map
of the Fort Knox Trend. This base will help focus other targeting activities and
may identify targets for an immediate drill test on the Gil Joint Venture.

In October 2005, we completed a reverse drilling program. The
Gil/Sourdough drilling consisted of 1,560 feet of RC drilling for a total of 9
holes. Additional drilling is planned following seasonal freeze-up to extend the
Sourdough mineralized zone.

On January 26, 2006, an exploration update for the Gil Joint
Venture was released. Two target areas were identified and recommended for
further geologic and geophysical investigation within the Gil Joint Venture
area.

The objective of the 2005 Gil Venture exploration program was
to generate new gold targets by integrating geologic and geochemical information
with newly acquired geophysical data. Work by Fairbanks Gold Mining Inc./Kinross
Gold consisted of an update of the geologic database and a high-resolution
electromagnetic (HEM) airborne geophysical survey.

The database update began in January and continued
intermittently throughout the year. Work focused on revising soil sample
locations using updated GPS coordinates, compiling data for geologic map
production and revising the resource model. Additional database work is planned
for the first quarter of 2006.

In July, Fugro Airborne Surveys Inc., under contract to Fairbanks
  Gold Mining Inc./Kinross Gold, initiated an HEM airborne geophysical survey
  of the area. HydroGeophysics Inc. interpreted the geophysical data and identified
  several targets within the Gil Joint Venture claim block. Additional geophysical
  analysis is scheduled for 2006.

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In July of 2005, Hydrogeophysics Inc. (HGI) delivered an
interpretation map with recommendations for geological and geophysical follow-up
based on the low resolution geophysical data. Two target areas were identified
and recommended for further geologic and geophysical investigation within the
Gil Joint Venture area. These targets are as follows:

1) Last Chance Creek This target occurs on a shear zone
approximately 3.1 miles east and 1.2 miles south of the Fort Knox Mine in close
proximity to the south end of an interpreted intrusive. The claims in this area
are part of the Gil Joint Venture or are held by Fairbanks Gold Mining Inc.

2) Too Much Gold Creek The Too Much Gold Creek target lies
on a shear located on the west edge of an intrusive approximately 6.2 miles east
and 1.8 miles north of the Fort Knox Mine. This target is largely located within
the Gil Joint Venture, although a portion lies in the Fish Creek Claims. The
Fish Creek claims are 50% owned by Linux Gold Corp. and optioned to Teryl
Resources Corp., but are not part of the Joint Venture.

The final interpretation was completed on December 16th, 2005
and outlined six areas of interest within or partially within the Gil Joint
Venture. Drill holes for three of these target areas were proposed within the
Gil Joint Venture.

The goal of the 2006 Gil Joint Venture exploration program
should initially focus on completing an overall update of the database. This
would include the production of new geologic and geochemical maps. Fieldwork
should consist of mapping and sampling across interpreted geophysical and
geochemical anomalies. This updated information could then be integrated with
the geophysical data to further define existing exploration targets or generate
new targets in the Gil Joint Venture claim block.

On July 10, 2006 the Company announced that drilling is to
commence this summer on a new gold target on the Gil joint venture. A total of
three drill holes is initially planned to test the most favorable geophysical
target on the Gil Joint Venture. Drilling has commences as of September 12,
2006.

In September, 2006, the necessary permits were approved, and
drilling commenced on the new gold target on the Gil joint venture. The initial
drill program will consist of three drill holes, and approximately 2000 of
drilling, with a potential for additional drilling pending the results of the
first phase.

The new gold target was located by integrating geologic and
geochemical information with the recent geophysical data. Drilling initially is
planned to test the most favorable geophysical target on the Gil joint venture.
As of the date of this 20-F, we have not received data from the drilling
program.

Mineralization

Gold mineralization is contained within two distinct zones
designated the Main Gil and the North Gil, the latter situated 366 metres north
of the former. A third zone showing potential, the Sourdough Ridge zone, occurs
some 790 metres further east and is in the early stages of exploration.

To date, the Main Gil zone has been extensively drill tested
over a minimal strike distance of 1,006 metres to 152 metre depths. Gold values
occurs within a calc-silicate horizon approximately 21 metres thick striking
N60E, dipping between 45 and 70 degrees NW. Indicated resource is calculated to
be 10,700,000 tons at 0.04 opt gold.

The host calc-silicate horizon is described as a biotite-pyroxenite-actinolite-quartz-calcite
  schist derived from finely laminated mafic volcanic tuff or impure marl of amphibolite
  metamorphic grade. While favourable as a gold-bearing host, the presence of
  secondary quartz stockworking, veining and/or faulting/fracturing is vital for
  elevated gold values.

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Veining varies in character but falls into two broad gold bearing
  categories: a) discrete white quartz veins up to 1 inch in width; and b) later
  discrete thinner quartz-carbonate veins with or without actinolite/pyroxenite.
  Both sets dip steeply and both are preceded by apparently barren quartz-feldspar
  veins and are cut by later calcite veins.

The presence of abundant pyroxenite and secondary iron rich
actinolite are necessary for high gold values. The latter minerals form as dark
green fibrous mats sub-parallel to foliation and are seen as retrograde
replacement products of hornblende and pyroxene. Fine-grained biotite is also
found in close association. The characteristic dark green colour of the
assemblage is frequently used as an exploration guide for elevated gold values.
Gold deposition is not only caused by system cooling of the aqueous siliceous
solutions but also the replacement of pyroxene by Fe-rich ilmenite and ilmenite
by rutile. This process liberates ferrous iron, the oxidation of which
destabilized the Au(HS)2complex. The released iron is then free to
form pyrite or pyrrhotite, thus lowering the fugacity of sulphur in the fluid,
which also destabilizes the gold complex. Sulphides include pyrrhotite and
pyrite while oxides are ilmenite and rutile. Magnetic, molybdenite and
chalcopyrite are rarely seen.

The North Gil zone exhibits a slightly different character in
that elevated gold values are entirely associated with quartz veining. A lesser
preference is seen for host units as the veins occur within quartz-mica schists,
the felsic schists (slightly favoured) and/or calcareous biotite-chlorite-quartz
schist. Sulphide contents of less than 1% consist of pyrite and/or calcite
veins. Veins are generally less than two inches wide, dip from 45 degrees to
vertically and consist primarily of white quartz or quartz-calcite with or
without actinolite/pyroxenite. Overall zone dimensions are in order of 1,000 by
500 feet and have been tested to 1,000-foot depths where grades remain strong.
The zone remains open along strike, both to the east and the west.

More persistent gold values are found a) when quartz veining
occurs within the felsic schist or the interlayered felsic schist; b) when
quartz veins occur in or near contacts between lithologies; c) in and around the
margins of shear zones; and d) among areas of increased carbonate rock (calcite
veins and/or marble).

A third area receiving increased exploration attention is the
Sourdough Ridge Zone. Four reverse circulation drill holes have returned values
of potentially mineable grade material while an additional two contain
significant values. Two types of gold bearing veins occur within the
calc-silicate units and mica schists, namely quartz-carbonate-amphibole and
quartz veins. They tend to be narrow, striking in an east-westerly direction
with near vertical dips. Positive exploration results in this zone imply a
doubling of the previously known mineralized strike length.

Drilling

Kinross had initially utilized an auger drill in its
exploration on the Gil Mineral Claims. Auger drill depths generally range from
two to 60 feet with the average in the eight to 20 foot range. Cuttings are
assayed using a one assay ton fire assay and a 34 element ICP package.

The core from diamond drilling is generally HQ sized with
occasional NQ where reduction is dictated by faulted ground. The core is logged,
photographed and a sample taken for reference approximately every ten feet. The
remaining core is submitted in five-foot intervals for gold assay using a one
assay ton fire assay with AA finish.

As reverse circulation drilling is used for grade evaluation in
a low-grade gold environment, great care is employed in the sampling procedure.
Holes are sampled on continuous intervals of five feet with a quarter split
retained as a sample. A Jones splitter mounted directly below the cyclone is
used when drilling dry while a rotary wet splitter is used when drilling
wet.

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Sampling, Analysis and Security of Samples

Samples are analysed by one assay ton with an AA finish.
Duplicates of each 10th, 30th, 50th,
70th, 90th sample, and so on, are sent to the primary lab
under different numbers while duplicates of each 20th,
40th, 60th,80th, 100th, etc.,
sample are sent to another lab. On every 40th sample, the primary lab
does a recheck at their own facility while every 80th is sent to an
outside lab. A duplicate sample at the end of every logging page, every 100
feet, is taken at the drill and sent to the primary lab. Chemex Labs, and more
recently Bondar-Klegg, have carried out the bulk of Issuers analyses over the
decade.

In addition, an experienced gold panner employed at the rig
takes a gold pan full of cuttings at each five foot interval. The cuttings are
panned and the concentrate examined for gold colours, the presence and type of
sulphides and, should suspected tungsten minerals occur, these are placed under
an ultraviolet light for examination. Everything is recorded along with the
details of the lithology. Samplers and loggers are discouraged from wearing
jewellery during work.

Mineral Resources and Mineral Reserve Estimates

Kinross has cited a drill indicated resource figure for the Gil
Mineral Claims of 10,700,000 short tons averaging 0.04 opt, containing 433,000
ounces of gold. This was calculated by polygonal methods utilizing cross
sections and includes only the Main Gil zone.

Metallurgical testing on the Main Gil zone has proven positive.
Preliminary tests indicate that material from the Main Gil is easier to
beneficiate than the Fort Knox ore. Indicated recoveries are in excess of 90%
for the Main Gil and 79% for the North Gil. The positive recovery aspects of the
Gil resource further enhance its eventual placement into the ore category. In
a negative sense, the geometry of the Main Gil zone suggests a fairly high
stripping ratio, possibly in the order of 6:1, overall to a 500-foot depth.

Drilling at the Main Gil has indicated consistent, somewhat
strataform mineralization over a strike length of 2,500 feet. At present, the
numbers indicated would not be viewed as hard mineable reserves. A typical
section is characterised by thin higher grade zones up to 0.6 opt gold
interspersed with relatively wide, low grade or barren intervals. The zone has
been drilled to depths of 500 feet. Thickness is an average of 75 feet. At an
average dip of 65 degrees and a specific gravity of 2.5, such a zone would
contain a resource of 10,795,500 short tons.

The North Gil is characterised by narrow, relatively high
grades zones with intervening zones of low grade to barren rock. The lacking of
any obvious stratigraphic control adds to the difficulty of a resource
calculation, however, the presence of the Main Gil pit one thousand feet to the
south, means that the cost to exploit the adjoining North Gil zone would be
minimal.

The presence of the currently producing Fort Knox mine facility
six miles to the south-west vastly enhances the economics of any deposit within
trucking distance. The experience of the Fort Knox/Kinross/Fairbanks Gold
management group in successfully procuring mining or millsite permits, as well
as dealing with the mining related environmental issues and public hearings in
the Fairbanks area, suggests that any application tendered by the organization
will receive preferential and expedient treatment.

Mining Operations

Currently, there are no mining operations conducted on the Gil
Mineral Claims.

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Exploration and Development-Annual Program Goals

2004 Gil Exploration Area

The goal of the 2004 Gil Exploration Program was to identify
gold targets that could significantly increase the potential resource of the
claim block. Field work began on June 21, 2004 and took place in the central and
eastern portions of the claim area. This included the Main Gil Area, Sourdough
Ridge, Intrusive Ridge, All Gold Ridge and Too Much Gold Ridge. Exploration
activities consisted of geologic mapping, 1,020 feet of trenching, 18 reverse
circulation drill holes totaling 4,175 feet, and the collection of over 1000
rock and soil samples for gold assay. Initial fieldwork outlined eight gold
targets that warranted further exploration. Drilling in the final portion of the
exploration season tested five of the eight targets.

The 2004 Gil Exploration Area begins in the Last Chance Creek
drainage and extends for five miles in a northeast direction to soil anomalies
in the Lohr Creek drainage. Most exploration activities have focused in the Main
Gil area, leaving a large portion under-explored.

During the 2004 first half of the exploration program, the
Companys JV partner, Kinross Gold, constructed approximately 40,000 feet of
soil line and collected approximately 488 soil samples using auger drills. This
work generated several new exploration targets in the Main Gil Area and along
Sourdough Ridge. Field work focused on testing these targets through the use of
trenching and reverse circulation drilling. Nine reverse circulation drill holes
totaling 2,075 feet and three trenches totaling 1,500 feet were completed
testing these targets.

In January 2005, we received a preliminary exploration summary
for the Kinross/Teryl Gil Joint Venture program. The Gil Joint Venture
exploration program consisted of geologic mapping, the excavating of four
trenches totaling 1,020 feet, the drilling of 18 reverse circulation drill holes
totaling 4,175 feet, and collecting of over 1,000 rock and soil samples for
assays.

In April 2005, a Program and Budget was approved by Kinross
Gold Corp. to move the Gil Joint Venture from the exploration to the development
stage. The approved budget is US$793,800.

The budget summary estimated the following costs, in $USD:
Permitting $520,000, Engineering $160,000, Data Folio $75,000, Airborne
Geophysics $28,800, Reclamation $10,000.

The Joint Venture plans to initiate the process of permitting
the Gil deposit once sufficient baseline data has been collected. Several state
permits and approvals are required which will likely include a Plan of
Operations, Solid Waste Disposal Permit, Storm Water Discharge Multi-Sector
General Permit for Industrial Activities or a NPDES Discharge Permit, 404
Wetlands Permit, a Reclamation and Closure Plan and a Monitoring Plan. The U.S.
Army Corps of Engineers will complete an Environmental Assessment as required by
NEPA.

Baseline studies needed include fugitive emissions,
geochemistry, surface and groundwater hydrology, aquatic biota, wetlands
delineation, cultural resource survey, socioeconomic analysis, and noise and
visual impact studies. The cultural resources survey and wetland delineation
were completed in 2004. Surface and ground water hydrology was initiated in
2000. The Environmental Assessment required under NEPA will drive the timeline,
but permitting could be completed in 2006 provided there is no significant
public opposition.

Engineering projects include deposit model, pit design, mine
plan, access road design, geotechnical review for pit slope angles, and
dewatering review of related test work.

- 37 -

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2005 Gil Exploration Area

In April 2005, a Program and Budget was approved by Kinross
Gold Corp. to move the Gil Joint Venture from the exploration to the development
stage. The approved budget is US$793,800. The budget summary estimated the
following costs, in $USD: Permitting $520,000, Engineering $160,000, Data Folio
$75,000, Airborne Geophysics $28,800, Reclamation $10,000.

The objective of the 2005 Gil Venture exploration program was
to generate new gold targets by integrating geologic and geochemical information
with newly acquired geophysical data. Work by Fairbanks Gold Mining Inc./Kinross
Gold consisted of an update of the geologic database and a high-resolution
electromagnetic (HEM) airborne geophysical survey.

Baseline studies for permitting Gil have been initiated in 2005
and will continue in 2006 as will the development of mine plans for the Gil
property. Permitting and engineering activities are significant budgetary items
this year. A properly cleaned, compiled, and interpreted digital database will
be used to identify new targets and develop new target concepts, and will also
have obvious value as Gil transitions from exploration to development.

A high resolution aeromagnetic and EM resistivity survey, the
draped helicopter survey will be flown along 100 m spaced lines and at a 30 m
ground clearance. Approximately 300 line kms of the 2,310 kms survey will be
flown over the Gil Venture property. The purpose of the survey is to provide
resolution of subtle magnetic texture like that associated with the Fort Knox
deposit and to add resistivity as a complimentary data set. The objective is to
produce a more detailed structural and lithologic base map of the Fort Knox
Trend. This base will help focus other targeting activities and may identify
targets for an immediate drill test on the Gil Joint Venture.

On September 6, 2005, a reverse drilling contract between the
Company and GF Back Drilling was announced. The completion of this drilling
program was announced on October 31, 2005. The Gil/Sourdough drilling consisted
of 1,560 feet of RD drilling for a total of 9 holes. Additional drilling is
planned following the seasonal freeze-up to extend the Sourdough mineralized
zone. Teryl has agreed to supervise the exploration program and cover 100% of
the costs. Kinross has agreed to credit their 80% share of the costs n the next
approved budget of the Gil Joint Venture.

The objective of the 2005 Gil Venture exploration program was
to generate new gold targets by integrating geologic and geochemical information
with newly acquired geophysical data. Work by Fairbanks Gold Mining Inc./Kinross
Gold consisted of an update of the geologic database and a high-resolution
electromagnetic (HEM) airborne geophysical survey.

In preparation of the 2006 exploration program, the database
update began in January and continued intermittently throughout the year. Work
focused on revising soil sample locations using updated GPS coordinates,
compiling data for geologic map production and revising the resource model.
Additional database work is planned for the first quarter of 2006.

In July, Fugro Airborne Surveys Inc., under contract to
Fairbanks Gold Mining Inc./Kinross Gold, initiated an HEM airborne geophysical
survey of the area. HydroGeophysics Inc. interpreted the geophysical data and
identified several targets within the Gil Joint Venture claim block. Additional
geophysical analysis is scheduled for 2006.

In July of 2005, Hydrogeophysics Inc. (HGI) delivered an
interpretation map with recommendations for geological and geophysical follow-up
based on the low resolution geophysical data. Two target areas were identified
and recommended for further geologic and geophysical investigation within the
Gil Joint Venture area. These targets are as follows:

- 38 -

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1) Last Chance Creek This target occurs on a shear zone
approximately 3.1 miles east and 1.2 miles south of the Fort Knox Mine in close
proximity to the south end of an interpreted intrusive. The claims in this area
are part of the Gil Joint Venture or are held by Fairbanks Gold Mining Inc.

2) Too Much Gold Creek The Too Much Gold Creek target lies
on a shear located on the west edge of an intrusive approximately 6.2 miles east
and 1.8 miles north of the Fort Knox Mine. This target is largely located within
the Gil Joint Venture, although a portion lies in the Fish Creek Claims. The
Fish Creek claims are 50% owned by Linux Gold Corp. and optioned to Teryl
Resources Corp., but are not part of the Joint Venture.

The final interpretation was completed on December 16th, 2005
and outlined six areas of interest within or partially within the Gil Joint
Venture. Drill holes for three of these target areas were proposed within the
Gil Joint Venture.

2006 Gil Joint Venture Recommendations

The goal of the 2006 Gil Joint Venture exploration program
should initially focus on completing an overall update of the database. This
would include the production of new geologic and geochemical maps. Fieldwork
should consist of mapping and sampling across interpreted geophysical and
geochemical anomalies. This updated information could then be integrated with
the geophysical data to further define existing exploration targets or generate
new targets in the Gil Joint Venture claim block.

WEST RIDGE PROPERTY

Description and Location

The West Ridge Au property is located approximately 15 miles
north of Fairbanks, Alaska, in the Livengood A-2 1:63,360 quadrangle. The
propertys western margin is crossed by the Elliott Highway, a major paved
artery connecting Fairbanks to the North Slope oil and gas production facilities
at Prudhoe Bay (Figure 1). The West Ridge property consists of 48 state of
Alaska mining claims covering 1750.5 acres, 440 acres of leased Mental Health
Trust (MHT) land and 75 acres of patented mining claims under lease purchase
option in the Livengood quadrangle Township 2 North, Range 1 East (Figure 2).
The state claims are registered with the Alaska Division of Mining, Land, and
Water Management with Teryl Resources Corp. as the 100% owner.

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In mid-2003 Teryl acquired and exploration option on a 440 acre
parcel of fee-simple land owned 100% by the Alaska Mental Health Trust (Figure
2). These lands lie within and adjacent to the northern boundary of

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the West Ridge claims and can be converted to a development
lease at the option of Teryl. In consideration for the State of Alaska lease, a
variable net smelter returns (NSR) production royalty on the lease land is
granted to the State of Alaska, Trust Land Office (TLO). The NSR royalty ranges
from 2.5% for gold prices below $300 to 5% for gold prices above $500.
Additionally, Teryl will grant a 1% Net Smelter Return (NSR) on its 100% owned
West Ridge property with first refusal to purchase the 1% NSR in the event that
TLO decides to sell. Annual rental charges on the Mental Health Trust lease
total $2,200 per year for 2003 through 2005 with work commitments of $4,400 per
year for the same period. The Mental Health Trust lease is in good standing.

In mid-August 2003 Teryl acquired an option to purchase 70.785
acres of patented land from Fairbanks mine operator Michael Roberts (Figure 2).
The claim, known as Anderson Group 2nd Tier Right Limit of Dome Creek
was patented as Mineral Survey No. 1740 and is situated on the north side of
Dome Creek in a physically separate block from the other Teryl holdings at West
Ridge. Under terms of the agreement Teryl has the option to purchase 100%
interest in the claim, subject to a 5% net profits interest retained by Roberts,
by making stages cash payment totaling $147,500 before August 31, 2006. The
agreement currently is in good standing.

Mineral rights in this part of Alaska are administered by the
State of Alaska (for both State mining claims and Mental Health Trust lands).
Annual mining claim rents vary according to claim size and age and are due and
payable by November 30 of each year for State mining claims. Claim rentals are
paid in addition to annual work commitment on State mining claims total ($2.50
per acre per year). Amounts spent in excess of these levels are bankable on
State mining claims for up to four years into the future. All claims on the West
Ridge project currently are in good standing. There currently are no unusual
social, political or environmental encumbrances to mining on the project. Two
open pit gold mines currently operate within 10 miles of the West Ridge project,
Fort Knox and True North, both operated by Kinross Gold. None of the claims or
Mental Health Trust lands controlled by the West Ridge project have been
surveyed by a registered land or mineral surveyor and there are no State or
federal laws or regulations requiring such surveying. Teryl currently holds a
valid 3-year Hardrock Exploration Permit on the project. Additional permits for
future work will be acquired from the Alaska Department of Natural Resources on
an as-needed basis.

Accessibility, Climate and Infrastructure

The West Ridge property is approximately 15 road miles north of
Fairbanks via the paved Elliott Highway. The south side of the property is
accessible via seasonal dirt roads and the Old Murphy Dome Road while the north
side of the property is accessible via the Dome Creek Road and seasonal dirt
roads connecting to it. Land telephone lines and a high voltage electrical power
line service Kinross Golds True North mine, less than 2 miles from the
property. A cellular phone network already covers the West Ridge property. The
greater Fairbanks area supports a population of approximately 75,000 and has
excellent labor and services infrastructure, including rail and international
airport access. Exploration and development costs in the Fairbanks area are at
or below those common in the western United States.

Snow generally falls on the property in late September or early
October, remaining on the ground until mid to late May. The month of April is
particular productive for drilling and moving heavy equipment over normally soft
or swampy areas which remain frozen. Exploration work involving heavy equipment
is generally suspended during the break up period extending from mid-April
through the end of May and the freeze up interval through mid-October to early
November.

Elevations on the property range from 800 feet to over 1900 feet
  (Figure 2). Topography in the area is dominated by low rounded hills dissected
  by relatively steep walled valleys. Outcrops are scarce except in man-made exposures.
  Vegetation consists of a tundra mat that supports subarctic vegetation. A variably
  thick layer of aeolian silt covers valley bottoms on the property. Permafrost
  is limited to small discontinuous lenses on steep, poorly drained north-facing
  slopes and has posed no hindrance to past exploration. Average annual precipitation
  is 13 inches, mostly as snowfall. Mining operations can be conducted on a year-round
  basis and heap leach technology has been profitably employed at two locations
  in the Fairbanks district since 1985.

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History

The Dome Creek basin has been one of the most productive placer
gold drainages in the Fairbanks District with the portion of the drainage from
Seattle Creek (draining the central West Ridge project area) downstream to the
townsite of Olnes producing approximately 114,000 ounces of placer gold between
1903 and 1973. The United States Smelting Refining and Mining Company
(USSR&M) conducted dredging in Dome Creek from Seattle Creek to Moose Creek
from 1955  1959. A small scale undergound drift mine was operated by Roberts
Mining started from 1989 to 1993 below the lower limit of U.S.S.R. & M.
dredging. This ground currently is controlled under purchase option by Teryl.
During the summer of 1989 Roberts Mining processed about 14,000 cubic yards of
gravel mined the previous winter that averaged 0.04 ounces per cubic yard. In
1991, Robert's Mining mined 11,470 cubic meters (15,000 cubic yards) of placer
pay at the drift mine, reworking old drifts and removing side pay left by the
early 20th century hand miners. Although limited evidence exists of small scale
surface placer prospecting exists in Seattle Creek, Moose Creek No. 1 and Moose
Creek No. 2, no information is available to the author regarding these
activities or possible production from them.

Several small lode gold and tungsten occurrences occur with and
adjacent to the West Ridge project. Prior to 1943 a small occurrence of
scheelite was discovered at the Old Glory prospect on the ridge between Seattle
Creek and Moose Creek No. 2 (Figure 2). A 3-foot zone of weathered schist
containing disseminated scheelite was found which strikes N44oE and
dips 45oSE. The average tungsten tri-oxide content was estimated at
0.5 to 1%. Channel samples across 4.5 feet of the disseminated scheelite zone
contained 0.48% tungsten tri-oxide. A fine-grained quartz diorite dike was found
8 feet below the surface in the bottom of a small pit sunk in the same trench
where the scheelite was encountered. No record of production or other
exploration is available on this prospect. Vegetation observed in 2003 that had
grown up in the trench suggests this prospect had not been explored of at least
30 years.

In October and November 1996 Placer Dome U.S. (PDUS) conducted
limited diamond drilling on the MHT lands now controlled by Teryl. PDUS
completed core holes FR96-27, FR96-28, FR96-30 with a total footage of 2,420
feet. The cost of this work was approximately $124,000. Following completion of
this drilling it became apparent that holes FR96-28 and FR96-30 were drilled
north of the MHT property line on lands then owned by USSR&M predecessor
Alaska Gold. Data from these two holes was transmitted to MHT but is not
available to Teryl or the author since these data are not owned by MHT.

In early 1997 seven diamond drill core holes (3,271 feet) were
drilled along the basin floor of Moose Creek No. 1 on what is now MHT lands. At
the time these holes were drilled this land consisted of two state mining claims
owned by local prospector John Hannah and leased to PDUS. Shortly afterwards
PDUS terminated its interest in the lease and in 2002 Hannah failed to pay
annual state claim rents thereby terminating the claims. The land formerly
covered by the Hannah claims automatically became fee simple lands owned by MHT
and are now part of the MHT  Teryl lease agreement. Data from the 1997 drilling
is not owned by MHT since the drilling was done prior to their ownership so the
results of the drilling are not available to the author.

Teryl Resources acquired the property in the early 1990s
  and conducted limited ground magnetics surveys and power auger soil sampling
  on 400 foot spaced north-south lines. This work outlined two broadly defined
  gold in soil anomalies, the East anomaly lies on the divide between Seattle
  and Steamboat Creeks on the eastern margin of the property. The Western anomaly
  is located on the divide between Moose Creek No. 2 and small unnamed tributaries
  of Dome Creek in the central portion of the West Ridge property. Follow-up work
  on these anomalies was conducted by Kinross in 1998 and 1999 when Kinross completed
  widely spaced Bombardier auger soil sampling and followed up by drilling 4 reverse
  circulation drill holes (1,650 feet) along the old powerline right or way within
  the Western anomaly. Kinross terminated its option on the property in early
  2000.

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No further work was conducted on the West Ridge prospect until
July 2003 when Teryl retained the author to review past work and make
recommendations for future work on the property. Initial efforts focused on the
Old Glory and the newly discovered Black Dome prospects. During the period July
2003 through January 2004 Teryl funded hand trenching, rock sampling, power soil
auger sampling, trenching and ground magnetics and VLF surveys over the Old
Glory prospect and limited power soil auger sampling, rock sampling and
prospecting on the Black Dome prospect

In September 2004, we discovered a new zone of gold
mineralization. Rock and soil sampling was conducted in August approximately
1,600 meters west of the Old Glory prospect where the Company discovered
significant gold mineralization in 2003. Exploration in the newly discovered
area was prompted by past soil sampling conducted by Amax Gold that indicated
anomalous gold and arsenic in soils on the ridgeline between Moose Creek #1 and
Moose Creek #2. Initial sampling consisted of 14 soil samples and 20 rock
samples collected from hand-dug pits.

As reported by Curt Freeman, of Avalon Development Corp., of
the 175 soil samples collected, 29 returned values greater than 100 parts per
billion gold with the maximum value being 981 parts per billion. An additional
32 returned anomalous gold values ranging between 50 and 100 parts per billion.
Anomalous gold was associated with elevated arsenic, antimony, lead, bismuth and
tungsten. The presence of anomalous bismuth (to 15 ppm) and tungsten (to 370
ppm) in soils suggests that gold mineralization within the sample grid may be
intrusive related, a similarity shared by several other intrusive-related gold
systems the Fairbanks District.

Anomalous gold and pathfinder elements in the 2004 soil grid
occur in four discrete areas of the grid and all four areas are open to
expansion into lands owned and leased by Teryl.

No field work was conducted on the West Ridge property during
2005 or 2006.

Geological Setting

Bedrock geology of the Fairbanks Mining District is dominated
by a N60-80E trending lithologic and structural trend covering a 30-mile by
15-mile area . The southern two-thirds of the West Ridge project is situated
primarily in lower to middle Paleozoic metavolcanic and metasedimentary rocks of
the Cleary Sequence and Fairbanks Schist (Figure 3). These rocks are in fault
contact along the northeast trending Eldorado Fault which separates Fairbanks
Schist on the south from eclogite and amphibolite facies rocks of the Chatanika
Terrane on the north. Rocks of the Cleary Sequence and Fairbanks Schist are
exposed in the Cleary antiform, the northern of two northeast trending
antiformal belts present in the district.

Lithologies in the Fairbanks Schist include quartz muscovite
schist, micaceous quartzite and biotite quartz mica schist. These lithologies
have been metamorphosed to the lower amphibolite facies. Lithologies within the
Cleary Sequence include quartzite, massive to finely laminated mafic to
intermediate flows and tuffs, calc-schist, black chloritic quartzite,
quartz-sericite schist of hydrothermal origin and impure marble.

Most investigators believe rocks of the Cleary Sequence and Fairbanks
  Schist have been over thrust from the northeast by eclogite to amphibolite facies
  rocks of the Chatanika terrane ( Figure 3). The Chatanika terrane consists of
  quartz muscovite schist, carbonaceous quartzite, impure marble, garnet feldspar
  muscovite schist, and garnet-pyroxene eclogite that have yielded Ordovician
  Ar40/Ar39 age dates. Motion on the Chatanika thrust fault
  has been dated at approximately 130 million years, Metamorphic histories of
  the Chatanika eclogite and Fairbanks Schist within the Yukon Tanana Terrane,
  Alaska, as revealed by electron microprobe geothermometry and 40AR/39AR
  single grain dating and resulted in structural preparation of favorable host
  units in the Chatanika terrane and adjacent lower plate rocks. Evidence from
  the district and from other parts of Interior Alaska with similar geologic histories
  suggest rocks classified as part of the Cleary Sequence may in fact be both
  Fairbanks Schist and Chatanika terrane rocks separated by multiple low angle
  structures that could be either thrust or gravity faults or both.

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Intrusives in the Fairbanks district have yielded
Ar40/Ar39 and K-Ar dates of 85-95 million years. These
intrusives range in composition from diorite to granite and possess elevated
Rb/Sr ratios indicative of significant crustal contribution to subduction
generated magmas. Several granodiorite to aplite intrusive bodies are present in
the West Ridge project area. The presence of hypabyssal intrusives and sporadic
Au and Au-W mineralization in the West Ridge project area suggests the area may
be underlain by more extensive intrusive bodies similar to those on Pedro Dome
and Gilmore Dome. This conclusion is supported by airborne geophysical surveys.
Mineralization within the Pedro Dome, Gilmore Dome and Dolphin intrusive
complexes suggests plutonic rocks pre-date or are contemporaneous with
mineralization.

Rocks on the West Ridge project are folded about earlier
northwest and northeast trending isoclinal recumbent fold axes followed by an
open folded N60-80E trending system. Upper plate rocks of the Chatanika terrane
have been affected by more intense northwest and northeast trending isoclinal
and recumbent folding followed by folding along the same N60-80E trending axis
which affected lower plate rocks. Lithologic packages in both the upper and
lower plates are cut by steeply dipping, high angle northwest and northeast
trending shear zones, some of which are mineralized (Figure 3). Airborne
magnetic data in this part of the Fairbanks District indicate the presence of
district scale east-west and northeast trending structures which appear to
pre-date N60-80E folding. Although little empirical evidence exists from the
West Ridge property itself, gold mineralization on the West Ridge project
probably post-dates regional and district scale folding and probably is
contemporaneous with or slightly younger than district-scale northeast trending
structures and plutonic activity.



Deposit Types

Recent discoveries in the Fairbanks District have outlined a
  series of distinctive mineral occurrences which appear to be genetically related
  to mid-Cretaceous plutonic activity which affected a large area of northwestern
  British Columbia, Yukon, Alaska and the Russian Far East.

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This work, based on extensive geologic and structural mapping
  and analytical studies (major and trace element analysis, fluid inclusion microthermometry,
  Ar40/Ar39geochronology, and isotope analysis) has provided
  new information regarding gold metallogenesis in the Fairbanks district. A synthesis
  of this information suggests an ore deposit model in which gold and high CO2bearing fluids fractionate from ilmenite series, I-type mid-Cretaceous
  intrusions during the late phases of differentiation. The gold is deposited
  in anastomosing pegmatite and/or feldspar selvage quartz veins. Brittle fracturing
  and continued fluid convection and concentration lead to concentration of gold
  bearing fluids in intrusions and schist-hosted brittle quartz-sericite shear
  zones. Carbonate and/or calcareous metamafic horizons host W-Au skarns and replacement
  deposits. Structurally prepared calcareous and/or carbonaceous horizons may
  host bulk-mineable replacement deposits. These occur most distal to the intrusions
  within favorable host rock in the Fairbanks Schist and Chatanika Terrane.

Seven different potentially economic gold deposit types have
been identified in Interior Alaska and the Fairbanks district. They are:

| | 1. | Gneiss or high-grade schist-hosted quartz veins or
      metasomatic replacement zones proximal to or within causative intrusives.
      Metals associated include Au, Bi, and As and possibly Cu and W. Pogo (5.6
      Moz) and Gil (433,000 oz) are examples of such mineralization. There is a
      strong genetic relationship between the causative intrusion and gold
      mineralization but no obvious spatial relationship.                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | Stockwork-shear style mineralization hosted in
      porphyritic intermediate to felsic intrusives. Mineralization contains Au
      with anomalous Bi, Te, W and trace Mo. Examples include Fort Knox (7.2
      Moz) and Dublin Gulch (+1 Moz). There is a strong genetic and spatial
      relationship between host intrusion and gold mineralization.                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 3. | Porphyritic stockwork with intrusion/schist shear hosted
      Au-As-Sb (Ryan Lode, 2.4 Moz) with a strong genetic and spatial
      relationship between host intrusion and gold mineralization,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 4. | Base metal ± Au, Ag and W intrusion hosted mineralization
      with both spatial and genetic relationship between precious metal
      mineralization and intrusion. Examples include Dolphin (0.6 Moz) and
      Silver Fox prospects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 5. | Structurally controlled mineralization hosted by
      schist-only high angle shear zones and veins. Associated metals include
      Au, As, Sb, Ag, Pb and W in low sulfide quartz-carbonate veins. Alteration
      adjacent to veins is pervasive quartz-sericite-sulfide alteration that can
      extend for up to one mile from the source structure. Deposits were mined
      heavily prior to World War II and are noteworthy because of their
      exceptional grades (+1 to +5,000 opt Au). Examples include Cleary Hill
      (280,000 oz production), Christina, Hi Yu (110,000 oz production) and
      Tolovana (500 oz production) veins. There is a strong genetic relationship
      between the causative intrusion and gold mineralization but no obvious
      spatial relationship.
| | 6. | Low angle, disseminated, carbonate-hosted Au-As-Sb
      mineralization associated with brittle thrust or detachment zones distal
      to generative intrusives. The True North deposit (1.3 Moz) is an example
      of this type of mineralization. There is a strong genetic relationship
      between causative intrusions and gold mineralization but no obvious
      spatial relationship.                                                                                                                                                                                                                                                                                                                                                                                                       
| | 7. | Shear-hosted monominerallic massive stibnite pods and
      lenses. Trace As, Au, Ag and Pb but these prospects are noteworthy because
      they appear to represent the most distal end members of the intrusive gold
      hydrothermal systems. Examples include Scrafford and Stampede mines. There
      is a strong genetic relationship between causative intrusions and gold
      mineralization but no obvious spatial
relationship.                                                                                                                                                                                                                                                                                                                                                           

Mineralization

Little is know of the controls for mineralization on the West
  Ridge project however gold mineralization in the Fairbanks District is well
  documented and reasonably well understood. The majority of the mineralized structures
  in the district trend either N60-80W and dip steeply to the southwest or N40-60E
  and dip steeply to the northwest. These shear zone geometries and their distribution
  may represent sympathetic structures generated by regional scale shear couples
  related to Tertiary (post 55 Ma) motion of the Tintina and Denali faults.

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Examination of the spatial arrangement of gold occurrences in
  the Fairbanks District suggests clusters or swarms of gold-bearing veins, stockworks
  and shear zones are controlled by a series of district-scale northeast-trending
  structures regularly spaced approximately 8,000 feet (2.4 km) apart across the
  district. These structures were first identified as district scale features
  evident on public airborne geophysical surveys conducted in the mid-1990s.
  Their periodicity with respect to clusters of known gold occurrences was unrecognized
  prior to that time. The Eldorado fault, which cuts through the West Ridge property
  (Figure 3), is the best documented of these district scale northeast structures
  and appears to control mineralization at both the Ryan Lode (2.4 million ounces)
  and the True North (1.3 million ounces) deposits. This 8,000-foot periodicity
  extends to the east where it is associated with the 600,000 ounce Dolphin deposit
  and several of the districts largest past-producing lode gold mines (Freeman,
  2004). Gold mineralization to the west of the Eldorado Creek fault in the Treasure
  Creek area and the Sheep Creek area of Ester Dome may also be controlled by
  regularly spaced northeast trending structures.

The other recently recognized feature of gold mineralization in
the West Ridge area is related to the structural relationship between lower
plate rocks of the Fairbanks Schist  Cleary Sequence and upper plate rocks
of the Chatanika Terrane. Published maps of the district indicate that the
contact between the overlying Chatanika Terrane and rocks of the lower plate are
marked by a single north-dipping thrust plane that strikes northeast. This
thrust event was dated at 130 Ma based on data derived from a single core hole
drilled by Placer Dome on Marshall Dome several miles east of the West Ridge
project. The actual contact between upper and lower plate rocks is not exposed
at surface anywhere along its mapped trace so the inferred motion direction
(thrust versus low-angle gravity fault) is unknown. With the exception of gold
and antimony mineralization in the vicinity of the True North deposit, published
geologic maps of the district indicate that all of the historic lode gold,
tungsten and antimony occurrences in the district are hosted in lower plate
rocks. However, geological and geochemical data from the West Ridge property
suggest that lode gold mineralization on the Old Glory prospect on the West
Ridge project is hosted in a zone containing mixed lithologies derived from both
upper and lower plate rocks. This mixed zone appears to may be the result of
multiple en-echelon low angle structures separating upper and lower plate rocks.
If this interpretation is correct, the grade and geometry of gold mineralization
in the West Ridge project area may be controlled in part by district-scale
northeast trending master structures and favorable physio-chemical conditions
in host rocks separated by en-echelon low-angle faults related to emplacement of
the Chatanika Terrane.

Drilling and Exploration and Development

Prior to the work conducted by Teryl in 2003 the only
significant exploration work conducted on the West Ridge project was that
conducted by Teryl (1992-96) and Kinross (1998 and 1999, See History). Teryls
efforts consisted of ground magnetics and soil auger sampling which identified
the East and West anomalies (see History). Except for gold values, details of
these surveys are not available to the author. A total of 718 soil auger samples
were collected by Teryl with gold values ranging from 2 to 990 ppb (Teryl,
1996). Anomalous gold was clustered in two locations in the central part of the
property on the ridge between Moose Creek and Seattle Creek and on the divide
between upper Dome Creek and Steamboat Creek. A single anomalous soil sample
containing 215 ppb gold was detected near the Old Glory prospect but was not
associated with other anomalous soil samples.

In 1998 Kinross Gold, then operating the Fort Knox project and
conducting district-scale work on a number of other projects acquired the West
Ridge property and completed due diligence sampling that confirmed the presence
of anomalous gold, arsenic and antimony on the East and West Anomalies.
Additional widely spaced Bombardier soil auger sampling was completed in 1999
and reverse circulation drilling was conducted on the West anomaly. This work
identified two large gold in soil anomalies, the East and West anomalies. The
West anomaly measures 4,000 feet NW-SE by 3,000 feet NE-SW and contained
numerous

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samples with +100 ppb gold and +200 ppm arsenic. Limited
surface rubble crop returned anomalous gold in felsic intrusive and quartzite
with the values ranging from <5 ppb to 16.45 ppm. The East anomaly, while
containing lower overall geochemical values, is over 7,000 feet long NE-SW and
extends off the West Ridge property to the northeast. Gold in soils on the East
anomaly reached a high of 1.64 ppm. A single sample anomaly containing 960 ppb
gold was identified 2,000 feet west of the Old Glory prospect but the Old Glory
prospect was not covered by the Kinross soil sampling grid.

Kinross conducted follow-up reverse circulation drilling in 5
holes (1,650 feet) on the West anomaly. This drilling failed to intersect
significant mineralization except for a 20 foot interval in hole WR1 with
returned 0.033 opt gold from 115 to 135 feet and a 10 foot interval in hole WR4
with returned 0.040 opt gold from 340 to 350 feet. Gold-bearing intrusive rocks
that were mapped and sampled at the surface were not found to be extensive in
drilling. Anomalous gold in drill cuttings was associated with elevated arsenic
and antimony similar to other gold-bearing systems in the central Fairbanks
Mining District. Kinross terminated its interest in the property prior to the
2000 exploration season.

In July of 2003 Teryl retained Avalon Development to evaluate
the West Ridge project and make recommendations for future exploration. This
evaluation revealed a number of significant gold and pathfinder anomalies where
no follow-up work had been completed. Initial field exploration efforts in 2003
focused on the Black Dome area of the property where prospecting revealed the
presence of a previously undocumented abandoned adit/trench on the north facing
ridge above the Dome Creek (Figure 2). Chatanika terrain eclogite, black
carbonaceous schist and quartzite are exposed in the walls of the excavation
which appears to date back to the 1950s. Samples of the carbon rich, Fe-oxide
stained carbonaceous schist returned a high of 105 ppb gold. Due to the low gold
concentrations and lack of quartz stockwork veining characteristic of upper
plate mineralization, exploration emphasis was shifted to the south to the Old
Glory prospect.

Initial efforts at the Old Glory prospect included
hand-trenching in the vicinity of the historic tungsten-bearing trench. Grab
rock sampling conducted in and around this old slit trench produced several
significant gold values with associated with highly anomalous arsenic and
sporadic anomalous lead, bismuth, antimony and tungsten (Table 2). The presences
of gold-bearing calc-silicate alteration in some rock samples and sporadic
anomalous bismuth (<2 to 144 ppm) suggests the presence of a gold-favorable
intrusive system similar to that being drilled currently by Kinross Gold at
their Gil project in the eastern Fairbanks District.

The extent of this type of mineralization and the possible
presence of the causative intrusive were unknown so a small closely spaced (10
meter spacing) soil auger grid was placed over the Old Glory discovery area.
This work revealed a 100 square meter + 50 ppb gold anomaly within which 56 out
of 121 samples contained over 100 ppb Au with a high of 1,155 ppb Au. An
expanded soil sampling program was conducted August-October and consisted of an
additional 405 soil auger samples on 25 meter centers.

Geochemical data from the two integrated grids delineated at
least two prominent structural trends associated with gold mineralization at Old
Glory. The dominant trend for gold in soils is N30E. This trend lies along a
mapped district-scale northeast trending linear defined from airborne
geophysical surveys. A less apparent N45W trending gold anomaly can also be
interpreted from the soil geochemistry however the northwest trending anomalies
are less continuous and of lower magnitude than the northeast trending
anomalies. There is a strong correlation in soil geochemistry between Au, As and
Sb and to a lesser degree with Bi and W. Gold, arsenic and antimony are elevated
within a northeast trending corridor measuring 650 meters in length by 375
meters in width. The anomaly remains open to expansion beyond the limits of the
soil auger grid. Gold, arsenic and antimony also display less obvious northwest
trending soil anomalies suggesting the northwest trending mineralization
pre-dates the district-scale northeast shear system.

Soil geochemistry also delineates a remarkably clear boundary
between schists of the Chatanika Terrane, Fairbanks Schist and Cleary Sequence
on the south and hornblende granodiorite to the north. This intrusive is thought
to be the western limit of the Pedro Dome intrusive. Limited rubble crop of the
Pedro Dome

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intrusive exists along the old powerline access road on the
north end of the soil grid. These rubble crops are unaltered and unmineralized
as are most of the soil chips collected from soil samples in the northern 1/3 of
the soil grid area. However, more felsic derivatives of the Pedro Dome intrusive
are concentrated along the intrusive  schist contact and intruding into the
schist units south of the main contact. These contact units are strongly
sericite altered and contain variable amounts of gold and pathfinder elements.
Soil geochemistry suggests potassic alteration and Au-As-Sb mineralization are
associated with these marginal phase intrusives. In addition elevated bismuth
values in soils, while generally low (3-5 ppm), are generally located within or
proximal to sericite-altered granodiorite. These findings suggest gold
mineralization may be related to late-stage intrusives which are in turn
controlled by the district scale northeast trending structures. Similar genetic
conclusions have been drawn for two other deposits in the district: the 1.3
million ounce True North deposit mineralization, located along the Eldorado
fault, a district-scale northeast trending structure that is parallel to and
approximately one mile northwest of the Old Glory area, and the 0.6 million
ounce Dolphin deposit located along a similar northeast trending linear that is
parallel to and approximately one-half mile southeast of the Old Glory area.

The preliminary rock sampling and soil auger sampling results
prompted Teryl to approved backhoe trenching over the central portion of the Old
Glory soil anomaly. Three trenches (342 meters total) were excavated, mapped and
sampled in October 2003. In addition, ground based magnetics and VLF-EM surveys
that parallel trenches were completed in late November and a follow-up magnetic
survey was completed in mid January 2004 to expand geophysical coverage to the
south of the trenches.

Two of the three trenches were oriented west-northwest to cross
the main trend of soil anomalies and the predominant structural grain through
the Old Glory area. The other was oriented N30E parallel to and within the heart
of the Old Glory soil anomaly. Overburden thickness ranges from about 3 to 8
feet and consisted of thawed aeolian silt on heavily weathered bedrock. Trench
WR-1 is a total of 155 meters in length, trench WR-2 was 72 meters in length and
trench WR-3 was 115 meters in length. Each trench was mapped and chip channel
samples collected from the floor of the trench. Geochemical sampling was
conducted on 1 meter centers for altered and/or mineralized intervals and 2
meter centers for unaltered rocks. Samples collected for trenches WR-1, WR-2,
and WR-3 totaled 119, 35, and 93, respectively. An additional 34 samples were
collected as high-grade material from selected locations.

The dominant lithologies present in the WR trenches include
massive to thinly bedded gray quartzite, massive to fissile brown and buff
micaceous quartzite, and fissile brown to gray quartz mica schist. Less common
lithologies observed include dark gray aphanitic quartz porphyry dikes, eclogite
and biotite diorite to granodiorite. Barren metamorphic sweat quartz lenses
from 1 to 3 centimeters in width are common and normally parallel metamorphic
foliation. Unaltered rocks generally weather rusty brown-orange to rusty
orange-brown.

Folding, faulting and shearing of varying degrees and orientations
  were observed in the West Ridge trenches. In general, foliation (S1)
  and original bedding (S0) are parallel and dip variably to the south.
  Small folds are common with a predominant fold axis orientation of 070owith axes plunging 14oE. There is no preferred orientation
  for faults. Dominant trends are NE, NW, and E-W +/- 20o. with variable
  but generally steep (+60o) dips. Faulting and shearing appear to
  be polyphase and some evidence was observed for foliation plane or low angle
  displacement. Shears are characterized by variable sericite alteration and occasional
  quartz veins/lenses. Several orientations of vertical to steeply dipping joints
  also are present, the most prominent being N20-25oE, N80oW,
  N80oE, and N40oW.

Sericite alteration is pervasive in rocks containing significant
  anomalous gold and/or pathfinder elements and varies from weak and patchy in
  less altered rocks to pervasive and strong in highly altered rocks, most commonly
  where host rocks are cut by shear zones or at contacts with altered granitic
  rocks. Secondary oxidation products consists of As, Sb, Fe, and Mn oxides. Relative
  trace element concentrations help in identification between and among the various
  rock types at the nearby True North mine and proved useful in helping distinguish
  between oxidized, hydrothermally altered and fresh units within the Chatanika
  terrane, Cleary Sequence and Fairbanks Schist.

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Quartz of hydrothermal origin was observed in all trenches,
most commonly as 1 to 15 cm veins or stockwork veins in shear zones. Although
surface oxidation is nearly complete, small amounts of unoxidized vein material
remains in some of these shears and contain 1-3% sulfide/sulfosalts including
arsenopyrite, pyrite, stibnite and/or boulangerite-jamesonite. The best
exposures of mineralized shear zone was about the 70-meter mark of trench WR-1.
The shear zone at this location is controlled by a steeply south dipping fault
trending 290o. The immediate 10 meters in the hanging wall (south
side) of this mineralized structure contained abundant slickensides. The shear
itself consists of 30 cm of mineralized milky quartz vein and sericite altered
schist fragments. A one-meter chip channel rock sample from this shear returned
595 ppb gold and 2,430 ppm arsenic. Grab samples from this same zone returned
2,120 ppb gold and 5,280 ppm arsenic.

Trench 2 intercepted variably mineralized rock but failed to
return plus-1 gram per tonne gold values from channel or grab samples. The best
interval in trench 2 was a six-meter zone from 18 to 24 meters that returned
three consecutive 2-meter samples which returned 189, 705 and 136 ppb gold,
respectively. The first of these three samples contained a small dike of dark
greenish gray siliceous sericite-altered intrusive suggesting a genetic
relationship between anomalous gold and intrusive rocks on the prospect.

Trench WRTR0303 was oriented northeast  southwest and extended
from trench WRTR0302 on the north through and beyond trench WRTR0301 on the
south. The southern 15 meters of trench 3 intercepted a diorite to granodiorite
intrusive which had been noted in soil chips. This intrusive was highly oxidized
but was strongly sericite altered where fresh rock was present. Oxidized sulfide
cast suggest the fresh rock contained 1%-5% total sulfides. This intrusion is
also cut by two white aplite dikes. Geochemistry from channel samples collected
in trench 3 show a dramatic increase in gold and arsenic content within the
intrusive. The 14-meter section of the trench which intercepted the intrusive
averages 660 ppb gold and 1,022 ppm arsenic with the highest grade portion of
this interval being a two-meter zone nearest the country rock contact which
averaged 2,052 ppb gold and 2,527 ppm arsenic. The intrusive mineralization
remains open to expansion beyond the end of trench WRTR0303.

Following return of geochemical results from the 2003 trenching
program, two ground geophysical surveys were conducted over the Old Glory
prospect. The initial survey consisted of magnetics and very low frequency
electromagnetics (VLF-EM) lines which were coincident with the three trenches.
These surveys revealed the presence of several coincident magnetic and VLF-EM
anomalies. Coincident magnetic and VLF-EM anomalies outlined in trenches 1 and 2
suggested that alteration and mineralization are likely controlled by a
northeast striking structural zone which has an apparent dip of 55 degrees to
the west. This interpretation is in agreement with soil geochemistry collected
earlier in the season. In addition, the magnetic response from last 15 meters of
trench WRTR0303 was markedly lower that the surrounding traverses within the
metamorphic country rocks suggesting magnetic surveys could be a useful tool in
tracing the extent of the mineralized intrusive encountered in trench 3.
Magnetic lows are known to be associated with gold-bearing intrusives elsewhere
in the Tintina Gold Belt.

A follow-up magnetic survey was completed over the Old Glory
prospect in January 2004 in an attempt to determine the extent of the intrusive
rocks encountered in trench WRTR0303. This survey consisted of three lines
ranging from 500 to 700 feet in length which extended from the south end of
trench 3 in a fan pattern to the southwest, south and southeast. All three lines
showed a marked decrease in magnetic response to the south suggesting a possible
schist  intrusive contact in that area. Additional exploration will be required
to determine if significant gold mineralization is associated with this probably
contact zone.

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Drilling

Past drilling on the West Ridge property was conducted by
Kinrsoss Gold in 1999. (see History). This work consisted of 4 reverse
circulation drill holes (1,650 feet).

A magnetic survey was conducted January 26th, 2004. The survey
was a southern extension to the earlier work based on prior trenching and soil
sampling, and is an attempt to define the southern limits of the intrusive -
hosted schist.

In September 2004, we announced the discovery of a new zone of
gold mineralization. Rock and soil sampling was conducted in August
approximately 1,600 meters west of the Old Glory prospect where the Company
discovered significant gold mineralization in 2003. Exploration in the newly
discovered area was prompted by past soil sampling conducted by Amax Gold that
indicated anomalous gold and arsenic in soils on the ridgeline between Moose
Creek #1 and Moose Creek #2. Initial sampling consisted of 14 soil samples and
20 rock samples collected from hand-dug pits.

One of two areas selected for this work returned soil samples
containing gold values ranging up to 848 ppb with elevated arsenic and antimony
values. Gold, arsenic and antimony values were consistently higher in soil
samples collected over granodiorite intrusive host rocks suggesting a possible
genetic association between the intrusive rocks and gold mineralization. Rock
samples collected from the same hand-dug pits where soil samples were collected
returned gold values ranging up to 4,350 ppb (4.3 gpt or 0.127 opt). Gold was
associated with anomalous arsenic and antimony and was hosted by iron oxide
stained quartz-bearing intrusives and quartz-mica schist of the Fairbanks
Schist. The extent of the mineralization is open to expansion beyond the areas
sampled to date in 2004.

In November 2004, a total of 161 power auger soil samples were
collected on a small grid over the southern part of the West Ridge claims
adjacent to and within the 1⁄4 mile square block of State Trust land leased to
Teryl. In addition to the 161 auger samples, 14 shovel soil samples were
collected in the same area as previous rock sampling which returned gold values
ranging up to 4,350 ppb (4.3 gpt or 0.127 opt). The grid was extended to the
south onto the northwestern edge of the Fox Creek claims in an attempt to see if
mineralization on the two properties could be linked via soil samples.

Of the 175 soil samples collected, 29 returned values greater
than 100 parts per billion gold with the maximum value being 981 parts per
billion. An additional 32 returned anomalous gold values ranging between 50 and
100 parts per billion. Anomalous gold was associated with elevated arsenic,
antimony, lead, bismuth and tungsten. The presence of anomalous bismuth (to 15
ppm) and tungsten (to 370 ppm) in soils suggests that gold mineralization within
the sample grid may be intrusive related, a similarity shared by several other
intrusive-related gold systems the Fairbanks District.

Anomalous gold and pathfinder elements in the 2004 soil grid
occur in four discrete areas of the grid and all four areas are open to
expansion into lands owned and leased by Teryl.

In December 2004, we received initial drill results from the
2004 exploration drilling at its Fox Creek prospect in the Fairbanks District,
Alaska.

The two Fox Creek reverse circulation drill holes were
completed in October to test surface sample results that returned 1.36 gpt gold
during initial due diligence sampling and a 1995 hole drilled by AMAX Gold that
returned 35 feet grading 1.68 grams of gold per tonne (0.049 opt) including a 20
foot section that returned 2.2 grams gold per tonne (0.064 opt).

Hole FC04-01 was terminated at 287 feet after passing through
approximately 50 feet of sulfide-bearing granite from surface to 50 feet.
Sulfides observed include pyrite and molybdenite. The hole then passed into

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oxidized quartzite and quartz mica schist from 50 feet to
termination depth. Assays from this hole returned gold (values up to 5 feet
grading 216 ppb) but did contain anomalous arsenic maximum value of 785 ppm and
sporadic anomalous molybdenum (maximum value of 79 ppm) and tungsten (maximum
value 2,840 ppm). The highest tungsten and molybdenum values came from the
bottom 50 feet of the hole suggesting possible intrusive-related mineralization
at depth nearby.

Hole FC04-02 was collared 20 feet northwest of hole FC04-01 and
was directed to the northwest to test for subsurface extensions of granitic
rocks mapped at surface in this part of the claim block. The hole encountered
variably oxidized quartzite and quartz mica schist from surface to approximately
230 feet and then passed into a mixed zone of hornfelsed sediments and granitic
intrusives. The hole bottomed at 300 feet in hornfelsed sediments. Significant
gold mineralization was encountered in two five-foot intervals: 1,300 ppb gold
from 30 to 35 feet and 2,500 ppb gold from 180 to 185 feet. Both gold-bearing
intervals were hosted in altered metasediments containing minor quartz veinlets.
Elevated gold values were associated with anomalous arsenic (to 5,700 ppm),
molybdenum (maximum value of 82 ppm) and tungsten (maximum value 40 ppm).

Combined with soil sampling results from the adjacent West
Ridge property, the Phase 1 Fox Creek drilling results suggest the presence of
intrusive related and/or intrusive hosted gold mineralization on the Fox Creek
property. Additional soil auger sampling and possible ground geophysics are
being planned prior to additional drilling.

Trenching

Geochemical results from the three West Ridge trenches indicate
the presence of widespread elevated gold, arsenic and antimony with sporadic but
lower level anomalous lead, molybdenum, bismuth and tungsten . Host rocks
consist of quartz mica schist, quartzite, felsic intrusives and breccia zones
containing one or more of these rock types and clearly show a strong shear zone
at about 70 meters in Trench 1 which separates quartzite and quartz mica schists
of the Fairbanks Schist with low level gold and pathfinder levels on the west
from more elevated gold and pathfinder levels to the east. Host rocks east of
this structure contain elevated levels of Mg, K, Ba, Ca, Ba, Sr, and V and
appear to be composed of host rocks with compositions similar to eclogitic rocks
of the Chatanika Terrane, an allochthonous terrane which hosts the True North
deposit to the northwest but which has never been identified as being present on
the West Ridge claims. The shear at the 70 meter mark returned grab samples with
values up to 2.12 grams per tonne gold and 5,280 ppm arsenic and strikes to the
northeast. This shear probably is responsible for the northeast-trending
gold-in-soil anomaly outlined previously by auger sampling. The extension of
this shear into Trench 2 did not yield significant gold mineralization but did
correspond to a 10-meter section of the trench with anomalous gold, arsenic and
antimony mineralization.

The most significant intervals encountered in trenching came
from the last 15 meters of trench 3 which averaged 596 ppb gold and intersected
a highly oxidized sericite altered diorite to granodiorite intrusive containing
up to 2.98 grams per tonne gold with 3,140 ppm arsenic (Table 1). This intrusive
did not contain anomalous Pd, Ag, Sb, Bi or W. Alteration associated with the
intrusive included strong sericitic alteration and a marked increase in aluminum
and sodium values. This sort of silicate alteration is normally associated with
albitization in and adjacent to gold-bearing intrusives in the Tintina Gold Belt
of Alaska and the Yukon. This intrusive mass remains open to expansion to the
west and south into an area of the previously completed soil auger grid where
gold soil values are consistently anomalous (+50 ppb) and reach up to 1,000 ppb.
This portion of the soil grid, measuring at least 100 meters north-south by 150
meters east-west, is defined by an amorphous gold-in-soil pattern similar to
that seen in intrusive hosted gold occurrences elsewhere in the district. This
portion of the grid also grab rock samples which returned up to 10 grams per
tonne gold from quartz-vein float, the highest grades recovered from the
property to date.

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Sampling Method and Approach

All rock samples collected during the 2003 field programs were
marked in the field using Garmin 48XL and Garmin Etrex hand-held GPS units. Each
grab rock sample collected for geochemical analysis was accompanied by a
separate hand sample retained by Avalon for reference purposes. Each soil sample
collected for analysis was accompanied by a separate lithology sample that was
washed, logged and added to the digital database by Avalon. Samples collected
were placed in double nylon shipping sacks and picked up at Avalons secured
warehouse by representatives of ALS Chemex of Fairbanks.

Soil sampling completed in 2003 consisted of power auger soil
sampling using 3-inch wide auger flights powered by man-portable gas powerheads.
Sampling protocols in place for the program dictated that only top of bedrock
soil samples would be collected. Samples were not collected at sample stations
where overburden was deeper than the 12 feet of auger flight on hand or where
discontinuous permafrost prevented sampling at the soil  bedrock interface.
Trench channel sampling conducted in October was conducted with geologic pick
and chisel.

Sample Preparation, Analyses and Security

All samples collected in 2003 were prepared by ALS Chemex at
their Fairbanks preparation facility and analyzed by ALS Chemex at their North
Vancouver laboratory. The entirety of each grab and channel rock sample was
crushed to 85% passing 75 microns (200 mesh). The entirety of each soil sample
collected in 2003 was dried, sieved through a 180 micron (80 mesh) screen and
pulverized to +85% passing 75 microns (200 mesh). All soil and rock samples were
analyzed for Au by 30 gram lead collection fire assay techniques with an atomic
emission spectrographic finish. In addition each sample was analyzed for a suite
of 27 trace elements using a four acid digestion procedure followed by
inductively coupled plasma (ICP) finish. Pulps and rejects from the 2003 program
were returned to Avalon Developments Fairbanks warehouse for permanent storage.

Data Verification

Sample blanks composed of Browns Hill Quarry basalt from the
Fairbanks Mining District, Alaska were inserted as the first sample in a
submittal and thereafter in the same submittal on a minimum 1 for 25 basis. A
total of 82 sample blanks were inserted into the sampling sequence for the 2003
program. Extensive previous analysis of this same blank rock type has given
Avalon a large geochemical database for use on a comparative basis. Analyses
performed by ALS Chemex on the blanks from the West Ridge project indicate no
unusual or spurious sample results in the blanks submitted. No standards were
included in analytical sample shipments.

Mineral Processing and Metallurgical Testing

There has been no mineral processing or metallurgical testing
on mineralized material from the West Ridge property.

Mineral Resource and Mineral Reserve Estimates

There are currently no mineral resources or mineral reserve
estimates on the West Ridge property.

Mining Operations

Currently, there are no mining operations conducted on the West
Ridge Mineral Claims.

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OIL AND GAS WELL INTERESTS

The Company owns 6.5% working interest (4.680% net revenue
interest) in the Peters No. 1 Well, in Fayette County, Texas, and a 7.5% working
interest (5.79375% net revenue interest) in each of the C-S #1, Jancik #2 and
Herrmann #4 wells, located in Burleson County, Texas.

On May 18, 2006, the Company entered into an agreement with IAS
Communications, Inc. to purchase a 40% interest (subject to 40% net revenue
interests to others) in the Ken Lee #1 natural gas well, located in Knox County,
Kentucky, USA, for $103,045 ($92,500 US). As the well was still being drilled at
the date of the balance sheet, no depletion has been allowed for. The Company
has first refusal rights to participate in up to 23 future wells.

Plan of Operations

Source of Funds for Fiscal 2005/2006

Our primary source of funds since incorporation has been
through the issuance of equity securities.

We have been successful in the past in acquiring capital
through the issuance of shares of our common stock, sales of options on mineral
properties and through advances from related parties. Although we intend to
continue utilizing these sources, there has been no assurance in the past that
these sources and methods would continue to be available in the future.

On February 14, 2000, John G. Robertson, our President, issued
a "Commitment to Provide Financing to Teryl Resources Corp. as Required for
Ongoing Operations". The substance of the Commitment states that, if the Company
is not able to obtain funds required for maintaining its ongoing operations and
status as a publicly traded company, from other sources, Mr. Robertson agrees
and commits to provide, and/or arrange for any such funds for the Company on
either a loan, equity, or combination basis, on mutually agreeable terms, and
which comply with any regulatory rules and regulations applicable to such
transactions. Mr. Robertson further states that such maintenance funding
requirements are estimated at approximately C$100,000 per year and that he is
capable of and willing to provide and/or arrange for such funding until the
Company is able to obtain adequate funding from other sources, and/or is able to
generate net earnings from revenues which will sustain its ongoing
operations.

In the event that Mr. Robertson were not able to meet his
commitments, and no other sources of capital were available to the Company in
the future, on a reasonable financial basis, it would face the same obstacles as
many small, undercapitalized companies do, and, in the worst case, could be
forced to reorganize or liquidate, either of which consequence would likely have
an adverse financial effect upon the Company's shareholders.

At the present time, and in its present circumstances, there
exists substantial doubt as to the ability of the Company to continue as a going
concern, since there is no ongoing source of revenues and profits capable of
sustaining the Company's operating overhead, although Mr. Robertson has
committed to ensuring that the Company is able to survive on an interim basis,
over the longer term, the Company will need to either begin to derive revenues
from its existing resource-based assets, or find and enter into a business which
holds the prospects of ensuring that it can continue as a going concern.
Management is aware of such need and is both researching new business
opportunities and assessing potential financing possibilities for funding its
existing resource property obligations and also any new business which may be
entered into or acquired.

We had a working capital surplus of $ 207,994 on May 31, 2006.
Subsequent to May 31, 2006, we have raised an additional $ 5,878 from Oil &
Gas operations and $Nil through the sale of common shares.

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Use of Funds for Fiscal 2006/2007

During Fiscal 2006/2007, we estimate that we will expend
approximately $350,000 on general and administrative expenses. During Fiscal
2006/2007 we estimate that we will expend approximately $198,000 on property
exploration and development expenses.

Anticipated Changes to
Facilities/Employees

We anticipate there will not be any changes to either
facilities or employees in the near future.

United States vs. Foreign Sales/Assets

We have had no revenue during the past five fiscal years from
the sale of assets.

As of May 31, 2006, we had assets valued at $ 240,586 located
in Canada; and assets valued at $ 3,261,017 located in the United States.

ITEM 4A.     UNRESOLVED STAFF COMMENTS

This section is not applicable as we are not an accelerated
filer or a large accelerated filer, as defined in Rule 12b-2 of the Exchange
Act, or a well-known seasoned issuer as defined in Rule 405 of the Securities
Act.

ITEM 5.        OPERATING AND
FINANCIAL REVIEW AND PROSPECTS

The following contains forward-looking statements relating to
  revenues, expenditures and sufficiency of capital resources. Actual results
  may differ from those projected in the forward-looking statements for a number
  of reasons, including those described in this Annual Report.

Our financial statements have been prepared in accordance with
Canadian Generally Accepted Accounting Principles (GAAP) and Canadian/USA
Generally Accepted Auditing Standards (GAAS). All material numerical differences
between Canadian GAAP and US GAAP, are described in footnotes to the financial
statements. We are a Canadian company and therefore our financial statements
have been prepared in Canadian dollars.

Audited financial statements for the fiscal years ended May 31,
2006, May 31, 2005 and May 31, 2004 respectively are included in this
Registration Statement.

Overview

We are an oil, gas, and mineral exploration company engaged in
the acquisition and exploration of oil and gas, and mineral properties. Our
expenditures are made acquiring mineral properties and carrying out exploration
work. We do not have any producing mineral properties at this time. We also
acquire oil and gas property interests and participate in drilling wells. The
recoverability of amounts shown for investments, mineral properties, interests
in oil and gas properties and the related deferred expenditures is dependent
upon the existence of economically recoverable reserves, the ability to obtain
the necessary financing to complete the exploration, the profitability of future
production or our ability to dispose of those assets on a profitable basis. Our
ongoing operation is dependent upon cash flow from successful operations and
equity financing. We have incurred a loss of $ 430,646 in the year ended May 31,
2006 (2005 - $ 515,740; 2004 - $ 791,776).

A.        OPERATING RESULTS

This review of the results of operations should be read in
conjunction with our audited financial statements for the years ended May 31,
2006, May 31, 2005 and May 31, 2004.

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Fiscal Year Ended May 31, 2006 compared to Fiscal year Ended
May 31, 2005

Results of Operations

During fiscal 2006, revenue from oil and gas operations was $
27,154 as compared to $ 28,307 for fiscal 2005. The Company also received
advances from related parties of $26,956 during fiscal 2006.

Administrative expenses in fiscal 2006 totaled $378,474 as
compared to $528,086 in 2005. The expenses decreased from the prior year mainly
due to the decreased activity in investor relations, which was $110,076 in
fiscal 2006 (2005 - $229,678). Office, rent and telephone totaled $11,944
compared to $13,786 in 2005. Professional fees totaled $46,228 compared to
$50,718 in 2005. Management and directors fees decreased to $74,262 in 2006 from
$84,899 in 2005. The Company paid $163,320 for mining exploration work in 2006
as compared to $253,967 in 2005. Keltic Bryce Enterprises was paid $ 161,749
regarding their outstanding debenture and accrued interest.

Fiscal Year Ended May 31, 2005 compared to Fiscal year Ended
May 31, 2004

Results of Operations

During fiscal 2005, revenue from oil and gas operations was $
28,307 as compared to $ 21,037 for fiscal 2004.

Administrative expenses in fiscal 2005 totaled $528,086 as
compared to $769,158 in 2004. The expenses decreased from the prior year mainly
due to the decreased activity in investor relations, which was $229,678 in
fiscal 2005 (2004 - $327,302) and management and directors fees which decreased
to $84,899 from $224,877 in fiscal 2004. Office, rent and telephone totaled
$13,786 compared to $18,393 in 2004. Professional fees totaled $50,718 compared
to $29,435 in 2004. The Company paid $253,967 for mining exploration work in
2005 as compared to $654,642 in 2004. The Company paid $22,602 for mining
acquisitions in 2005 as compared to $20,645 in 2004. Related parties were repaid
$142,203 in advances from prior years.

Results of Operations for the three months ended August 31,
  2006 compared to August 31, 2005

Financial Results

During the period ended August 31, 2006, revenue from oil and
  gas operations was $6,661 as compared to $6,362 for 2005. The Company also received
  advances from related parties of $7,548 during the period

For the three months ended August 31, 2006, the Company
incurred a net loss of $69,002 (loss per share - $0.002) compared to a net loss
of $84,138 (loss per share - $0.002) for the period ended August 31, 2005. The
loss is comprised of the general and administrative expenses of $74,880 (2005 
$73,326) and oil and gas operating expenses of $783 (2005 - $1,296). In the
August 31, 2005 period the Company wrote off $15,878 in mineral property
acquisition costs as the Fox Creek option was cancelled.

In the three-month period ended August 31, 2006 compared to the
same period in prior year, the Company decreased its mineral exploration
expenses to $2,664 from $34,509 and its investor relations to $23,672 from
$30,403. Since the Keltic Bryce debenture was repaid in fiscal 2006, the
interest payments are no longer a factor in administration costs. Most of the
other expenses for the Company remain relatively constant between the two
comparative periods.

B.        LIQUIDITY AND
CAPITAL RESOURCES

Liquidity and Capital Resources

In the past, we have derived most of our development and
operating capital primarily from the issuance of capital stock. Minor amounts
were derived from interest.

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We have been successful in the past in acquiring capital
through the issuance of shares of our Common Stock, and through advances from
related parties. Although we intend to continue utilizing these sources, there
has been no assurance in the past that these sources and methods would continue
to be available in the future.

In the event that no other sources of capital were available to
us in the future, on a reasonable financial basis, it would face the same
obstacles as many small, undercapitalized companies do, and, in the worst case,
we could be forced to reorganize or liquidate, either of which consequence would
likely have an adverse financial effect upon our shareholders.

Liquidity

Fiscal Year Ended May 31, 2006 compared to Fiscal year Ended
May 31, 2005

During 2006, we financed our operations by the issue of
2,690,500 common shares for cash proceeds of $671,250, which consisted of the
issuance of 2,648,000 common shares pursuant to private placement offerings
completed during the year to raise cash proceeds of $657,746 after issue costs,
the issuance of 37,500 common shares pursuant to the exercise of stock options
for cash proceeds of $7,500, and the issuance of 5,000 shares pursuant to the
exercise of share purchase warrants for cash proceeds of $1,750.

During 2006, we spent $390,492 of these funds on operating
activities as discussed above under Results of Operation for the year ended May
31, 2006 as compared to $529,428 the year ended May 31, 2005.

Our cash position decreased by $108,651 to $209,636 and our
working capital as at May 31, 2006 was $207,994.

Fiscal Year Ended May 31, 2005 compared to Fiscal year Ended
May 31, 2004

During 2005, we financed our operations by the issue of
3,597,000 common shares for cash proceeds of $926,213, which consisted of the
issuance of 2,000,000 common shares pursuant to private placement offerings
completed during the year to raise cash proceeds of $593,363 after issue costs
and the issue of 1,597,000 shares pursuant to the exercise of share purchase
warrants for cash proceeds of $332,850.

During 2005, we spent $529,428 of these funds on operating
activities as discussed above under Results of Operation for the year ended May
31, 2005 as compared to $1,167,809 the year ended May 31, 2004.

Our cash position decreased by $52,271 to $318,287 and our
working capital at May 31, 2005 was $138,460.

Fiscal Year Ended May 31, 2004 compared to Fiscal year Ended
May 31, 2003

During 2004, we financed our operations by the issue of
7,741,000 common shares for cash proceeds of $2,650,187, which consisted of the
issuance of 7,000,000 common shares pursuant to private placement offerings
completed during the year to raise cash proceeds of $2,505,012 after issue
costs, the issuance of 297,500 common shares pursuant to the exercise of stock
options for cash proceeds of $57,125, and the issue of 443,500 shares pursuant
to the exercise of share purchase warrants for cash proceeds of $88,050.

During 2004, we spent $1,201,934 of these funds on operating
activities as discussed above under Results of Operation for the year ended May
31, 2004 as compared to $342,517 the year ended May 31, 2003.

Our cash position increased by $420,939 to $370,558 and our
working capital at May 31, 2004 was $20,032.

Capital Resources

Our authorized capital consists of 100,000,000 common shares
without par value and 5,000,000 Preferred Shares (non-voting) with a par value
of $1.00. At May 31, 2006 we had 39,468,188 issued and outstanding

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common shares (May 31, 2005  36,777,688) issued and
outstanding common shares), and at November 8, 2006 we had 39,468,188 issued and
outstanding common shares. No Preferred Shares have been issued to date. The
directors of the Company adopted the Teryl Resources Corp. 2002 Stock Option
Plan (the Plan or the 2002 Plan), and received shareholder approval of same
on January 22, 2003. The Company has adopted a type of plan under which options
may be granted for a number of shares up to 10% of the issued and outstanding
shares of the Company from time to time. As the number of shares reserved for
issuance under the Plan increases with the issue of additional shares by the
Company, the Plan is considered to be a rolling stock option plan. This
rolling plan requires Shareholder approval annually.

During the year ended May 31, 2006, 37,500 stock options were
exercised, 375,000 stock options expired or were cancelled and no stock options
were granted. As at May 31, 2006 we had 2,177,500 stock options outstanding at
exercise prices ranging from $0.15 per share to $0.45 per share with expiry
dates ranging from October 7, 2006 to March 5, 2009. These stock options vest
over a two-year period from the date of grant. Subsequent to May 31, 2006, no
stock options have been exercised and 250,000 options at an exercise price of
$0.285 per share and 50,000 at an exercise price of $0.30 were issued. If
exercised, the remaining 2,177,500 stock options would increase our available
cash by $463,500.

As at May 31, 2006 we had 1,324,000 warrants outstanding
exercisable at a price of $0.30 per share before May 17, 2007 and $0.35 per
share before May 17, 2008. If exercised, the outstanding 1,324,000 warrants
would increase our available cash by $430,300 at an average price of $0.325.

Contributed surplus was $169,401 as at May 31, 2006 (2005 -
$175,935). The decrease of $ 6,534 represents the difference between the fair
value of 37,500 stock options exercised in the fiscal year ended May 31, 2006,
which had already been recorded in the Companys books and the fair market value
at the date of exercise. The fair value of the outstanding options, compensation
options and brokers warrants granted was calculated using the Black-Scholes
method of valuation.

As at May 31, 2005 we had 2,590,000 stock options outstanding
ranging from an exercise price of $0.15 per share to $0.45 per share with expiry
dates ranging from February 19, 2006 to October 19, 2009. These stock options
vest over a two year period from the date of grant.

As at May 31, 2005 we had 3,184,500 warrants outstanding
ranging from an exercise price of $0.35 per share to $0.60 per share with expiry
dates ranging from August 26, 2005 to May 18, 2006.

During fiscal 2005, no stock options were exercised, 622,000
warrants were exercised at $0.30 per share for proceeds of $186,600 and 975,000
warrants were exercised at $0.15 per share for proceeds of $146,250. We do not
have any long-term debt or other obligations.

Financings

We have financed our operations through funds raised in loans,
private placements of equity securities, shares issued for property, shares
issued in debt settlements, and shares issued upon exercise of stock options and
share purchase warrants.

- 57 -

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AmountFiscal Year
      Nature of Share Issuance
      
      Number of Shares
      (Cdn $)Fiscal 2005
      Private placement warrants exercised
      A
      622,000
      186,600Private placement warrants exercised
      B
      975,000
      146,250Private placement
      C
      2,000,000
      593,363Fiscal 2006
      Stock option exercised
      D
      37,500
      7,500EPrivate placement
      
      2,648,000
      662,000FStock option exercised
      
      5,000
      1,750


| | A. | During the August 31, 2004 quarter, 10 individuals
      exercised private placement warrants totalling 622,000 shares at a price
      of $ 0.30 per share to net the treasury $ 186,600.                                                                                                                                                                               
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | B. | During the November 30, 2004 quarter, 3 individuals
      exercised private placement warrants totalling 975,000 shares at a price
      of $ 0.15 per share to net the treasury $ 146,250.                                                                                                                                                                              
| | C. | On May 18, 2005, the Company issued 2,000,000 units of
      capital stock pursuant to a Private Placement with 42 placees at a price
      of $ 0.30 per unit ($ 600,000 less issue costs of $ 6,637) to net the
      treasury $ 593,363. Each unit consists of one share and one-half share
      purchase warrant exercisable within one year for $ 0.35 per
  share.
| | D. | On February 23, 2006, a consultant exercised a portion of
      his stock option for 37,500 common shares at a price of $ 0.20 to net the
      treasury $ 7,500.                                                                                                                                                                                                        
| | E. | On May 17, 2006, the Company issued 2,648,000 units of
      capital stock pursuant to a Private Placement with 3 placees at a price of
      $0.25 per unit. Each unit consists of one share and one- half share
      purchase warrant exercisable within one year for $0.30 per share (or for
      $0.35 within the second year).                                    
| | F. | On May 18, 2006, one individual exercised warrants for
      5,000 shares at a price of $0.35 per share.                                                                                                                                                                                                                                                                 

Capital Expenditures

Fiscal YearFiscal 2005
    $ 39,686 (1)Fiscal 2006
    $ 103,045 (2)


(1) This expenditure related to the purchase of mineral
properties for $ 22,602 and automotive and office equipment for $17,084

(2) This expenditure related to the purchase gas well
interests. For US GAAP this amount is expensed.

- 58 -

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Accumulated expenditures for the Mineral properties to May 31,
2006:

Westridge
    Black Dome (1)
    Fish Creek
    Fox Creek (2)Expense ($)
    Gil Property
    PropertyGeology
    1,299,592
    244,902
    Nil
    53,113
    nilDrilling and
    769,090
    Nil
    Nil
    48,785
    nilTrenchingGeophysics
    Nil
    351,113
    Nil
    Nil
    NilAdmin.
    Nil
    25,832
    Nil
    Nil
    NilTech. Anal.
    7,383
    6,789
    Nil
    20,884
    NilAcquisition
    31,127
    116,189
    Nil
    33,538
    NilCosts


(1) All expenses for this claim included in Westridge property
figures.(2) The lease was cancelled in the May 31, 2006 year and
accordingly, property costs and exploration costs were written off.

US GAAP Reconciliation

Under Canadian GAAP, it is acceptable to defer mineral property
acquisition and exploration costs until a decision to abandon the property is
made, it is determined that the property does not have economically recoverable
reserves or that a company is unlikely to pursue exploration activities on the
property. Under U.S. GAAP, mineral exploration costs are expensed until it can
be proven that economically viable reserves are present on the property and a
company has the ability and intention to pursue exploitation of these reserves.

Under Canadian GAAP, cash flows relating to mineral property
exploration costs are reported as investing activities. For U.S. GAAP, these
costs would be characterized as operating activities.

Under Canadian GAAP, future income taxes are calculated based
on enacted or substantially enacted tax rates applicable to future years. Under
U.S. GAAP, only enacted rates are used in the calculation of future income
taxes. This GAAP difference did not result in a difference in our financial
position, results of operations or cash flows for the years ended May 31, 2006,
2005 and 2004.

We have adopted the fair value based approach to Stock Based
Compensation under the provisions of CICA 3870 and SFAS No. 148. The method of
adoption applied by us is permissible under both Canadian and US standards.

C.        RESEARCH AND
DEVELOPMENT, PATENTS AND LICENSES, ETC.

There were no expenditures on research and development over the
past three years ended May 31, 2004, May 31, 2005 and May 31, 2006. We do not
hold any patents, trademarks or copyrights.

D.        TREND INFORMATION

We currently have no active business operations that would be
effected by recent trends in productions, sales, etc. We have no material net
sales or revenues that would be affected by recent trends other than the general
effect of mineral and oil and gas prices on our ability to raise capital and
those other general economic items.

- 59 -

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E.        OFF-BALANCE SHEET
ARRANGEMENTS

There are no known off-balance sheet arrangements other than
those disclosed in this Form 20-F and in our audited consolidated financial
statements for the year ended May 31, 2006.

F.        TABULAR DISCLOSURE
OF CONTRACTUAL OBLIGATIONS

The following table provides information as of the latest
fiscal year end balance sheet date with respect to the Companys known
contractual obligations specified below.

Payments due by periodContractual Obligations
      Total
      Less than 
        1 year
      1-3 years
      3-5 
        years
      More 
        than 5 
        yearsMineral Property Obligations
      447,500
      447,500
      Nil
      Nil
      NilLong-term debt obligations
      Nil
      
      
      -
      -Capital (Finance) Lease obligations
      Nil
      
      
      -
      -Operating lease obligations
      Nil
      
      
      -
      -Purchase Obligations
      Nil
      
      
      -
      -Other Long-term liabilities reflected 
        on the Companys Balance sheet under 
        US GAAP
      Nil
      
      
      -
      -Total
      447,500
      447,500
      Nil
      Nil
      Nil


As we explore our properties, we decide which ones to proceed
with and which ones to abandon. To fully exercise the options under various
agreements for the acquisition of interests in properties located in Alaska and
Arizona, we must incur exploration expenditures on the properties and make
payments to the optionors as follows:

Property
    Calendar Year
    Option/Advance Royalty Payment
    Expenditure Commitment
    Number of SharesGil Property, Alaska
    2006
    $ -
    $ -
    -2007
    $ -
    $ -
    -Westridge Property, Alaska
    2006
    $ -
    $ -
    -2007
    $ -
    $ -
    -Fish Creek, Alaska
    2006
    $ -
    $ 193,750
    100,0002007
    $ -
    $ 193,750
    -Black Dome, Alaska
    2006
    $ -
    $ -
    -2007
    $ -
    $ -
    -Gold Hill, Arizona
    2006
    $ -
    $ -
    -2007
    $ 10,000
    $ 50,000
    -


These amounts may be reduced in the future as we determine
which properties are of merit and abandon those with which we do not intend to
proceed.

- 60 -

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Oil and Gas Wells:

The Company has no commitment to participate in the drilling of
gas wells in Knox & Laurel Counties located in Kentucky, USA, however it has
first right of refusal to participate in up to 23 future wells to be
drilled.

G.        Safe Harbor

Not applicable.

ITEM 6.        DIRECTORS,
SENIOR MANAGEMENT AND EMPLOYEES

A.        DIRECTORS AND SENIOR
  MANAGEMENT

As of May 31, 2006, our Board of Directors consisted of four
Directors, two of whom are independent (or outside) non-executive Directors.
The following table provides certain information about the members of our Board
of Directors as of January 2, 2007.

Name
    Position with the Company
    Age
    Date of First Election or
      AppointmentJohn G. Robertson (2)(3)
    President, Director
    66
    October 25 , 1982Jennifer Lorette (1)(3)
    Director
    34
    February 20, 2004Susanne Robertson (1)(2)(3)
    Director
    60
    September 12 , 1990Monique van Oord (1)(3)
    Chief Financial Officer, Secretary, Director
    45
    October 17, 2002


| | (1) | Indicates member of the Issuer's audit
  committee.                                                                                                                                                                                                                                                                  
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                      
| | (2) | The Senior Management serves at the pleasure of the Board
      of Directors.                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                      
| | (3) | Each director of the Issuer holds office until the next
      Annual General Meeting unless his or her office is earlier vacated in
      accordance with the Articles of the Company and the Business
      Corporations Act(British Columbia), or unless he or she becomes
      disqualified to act as a director.

John Robertson.Mr. Robertson is thePresident
  and a founder of the Company since 1982; Mr. Robertson has been the Chairman,
  President and Chief Executive Officer of REGI U.S., Inc., an Oregon corporation
  traded on the OTC bulletin board, since July 1992, a U.S. public company engaged
  in the development of a rotary engine/compressor (Rand Cam Engine)
  and hydrogen separator technology. Since October 1984 Mr. Robertson has been
  President and a Director of Reg Technologies Inc., a British Columbia corporation
  listed on the TSX Venture Exchange that has financed the research on the Rand
  Cam Engine since 1986. REGI U.S. is ultimately controlled by Reg Technologies
  Inc. Mr. Robertson has been the President and Principal Executive Officer and
  a Director of IAS Communications, Inc. since its formation in December 1994,
  a U.S. public company which is developing and marketing proprietary antenna
  technology. Since June 1997 Mr. Robertson has been President, Principal Executive
  Officer and a Director of Information Highway.com, Inc., an inactive reporting
  Florida corporation. Since May 1977 Mr. Robertson has been President and a member
  of the Board of Directors of SMR Investments Ltd., a private British Columbia
  corporation engaged in management of public companies. Mr. Robertson is also
  the President and Director of the following private companies: JGR Petroleum,
  Inc., BlueCrow Internet Co. Ltd., 394754 B.C. Ltd., dba SOVO Computer Centre,
  Pavlik Travel Services Ltd., World Tel-Internet (Toronto) Ltd., International
  Diamond Syndicate Ltd., Argon Investment Corporation, and Airstream Communications,
  Inc. Mr. Robertson is a citizen and resident of Canada.

- 61 -

---

Jennifer Lorette.Ms. Lorette has been a director since
  June 2001. Since June 1994 Ms. Lorette, has been Vice President of REGI U.S.,
  Inc., an Oregon corporation traded on the OTC bulletin board. Since April 1994
  she has also been Vice President of Administration for Reg Technologies, Inc.,
  a British Columbia corporation listed on the TSX Venture Exchange. REGI U.S.
  is ultimately controlled by Reg Technologies Inc. Since June 1997 Ms. Lorette
  has been Secretary/Treasurer, and a Director of Information Highway.com, Inc.,
  a Florida corporation. Ms. Lorette is a founder, and has been Secretary/Treasurer
  of IAS Communications, Inc. since February 1995. Ms. Lorette is a citizen and
  resident of Canada.

Susanne Robertson.Director of the Company since 1990;
Principal of SMR Investments, Ltd., a private business and financial consulting
company, since 1979; Director of Linux Gold Corp, a BC company reporting in the
US and Canada involved in the development of computer software, since 1984. Ms.
Robertson is a citizen and resident of Canada

Monique van Oord.Director of the Company and Chief
Financial Officer since January 2003. Director of Linux Gold Corp. since
February 2004, Administrator for several public and private companies from 2002
to date; Counsellor with Magdeline Society between 2001 and 2002. Ms. van Oord
is a citizen and resident of Canada.

The Directors have served in their respective capacities since
their election and/or appointment and will serve until the next Annual General
Meeting or until a successor is duly elected, unless the office is vacated in
accordance with our Articles.

The Board of Directors appoints Senior Management who serve at
  the discretion of the Board of Directors.

No Director and/or Senior Management had been the subject of
  any order, judgement, or decree of any governmental agency or administrator
  or of any court or competent jurisdiction, revoking or suspending for cause
  any license, permit or other authority of such person or of any corporation
  of which he is a Director and/or Senior Management, to engage in the securities
  business or in the sale of a particular security or temporarily or permanently
  restraining or enjoining any such person or any corporation of which he is an
  officer or director from engaging in or continuing any conduct/practice/employment
  in connection with the purchase or sale of securities, or convicting such person
  of any felony or misdemeanour involving a security or any aspect of the securities
  business or of theft or of any felony.

There is a family relationship between two of the Directors or
Senior Management. John Robertson and Susanne Robertson are husband wife.

There are no arrangements or understandings with major
shareholders, customers, suppliers or others, pursuant to which any person
referred to above was selected as a Director or member of senior management.

B.        COMPENSATION

The following table sets out the compensation information for
the fiscal years ended May 31, 2006, May 31, 2005 and May 31, 2004 for our
directors and members of our administrative, supervisory or management bodies.

- 62 -

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Name and  Principal 
        Position
      Year
      Annual Compensation
      Long-Term CompensationAwards
      PayoutsSalary 
        ($)
      Bonus 
        ($)
      Other Annual
         Compensation 
        ($)
      Securities
         Granted under 
        Options(2)/
        SARS(3)
        Granted 
        #
      RestrictedShares orRestrictedShareUnits
        ($)
      LTIP (4) Payouts 
        ($)
      All Other 
        Compensation 
        ($)John G.Robertson,President
      200620052004
      12,000(1)12,000(1)12,000(1)
      NilNilNil
      30,000.00(5)30,000.00(5)17,500.00*(5)*
      990,000 / Nil990,000 / Nil990,000 / Nil
      NilNilNil
      NilNilNil
      NilNilNil*Jennifer*Lorette,Director
      200620052004
      19,000(6)25,750(6)24,375 (6)
      NilNilNil
      NilNilNil
      100,000 / Nil100,000 / Nil100,000 / Nil
      NilNilNil
      NilNilNil
      NilNilNil*Susanne*Robertson,Director
      200620052004
      NilNilNil
      NilNilNil
      NilNilNil
      500,000 / Nil500,000 / Nil500,000 / Nil
      NilNilNil
      NilNilNil
      NilNilNilMonique vanOord, ChiefFinancial
        Officer,Secretary,Director
      200620052004
      19,55023,50020,874
      NilNilNil
      NilNilNil
      50,000 / Nil50,000 / Nil25.000 / Nil
      NilNilNil
      NilNilNil
      NilNilNil


|(1) | John Robertson received $12,000 in Directors
  Fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(2) | During fiscal 2006, Mr. Robertson held 990,000 options
      exercisable at $0.15, none of which have been exercised to record date..
      Jennifer Lorette, a Vice President, held 100,000 options exercisable at
      $0.15 per share, Jennifer Lorette has not exercised any options to record
      date. Susanne Robertson, a Director, held 500,000 options exercisable at
      $0.15, none of which have been exercised to record date. Yale Hirsch, a
      Vice President, was granted 200,000 options exercisable at $0.15 during
      fiscal 2002. Yale Hirsch exercised all his options during fiscal 2004. In
      February, 2004, Monique van Oord, an Officer and Director, exercised
      25,000 options granted previously at $0.40 and was issued 50,000 options
      exercisable at $0.35 in March 2004, none of which have been exercised to
      record date.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(3) | "SARS"or "stock appreciation right"means
      a right granted by the Company, as compensation for services rendered, to
      receive a payment of cash or an issue or transfer of securities based
      wholly or in part on changes in the trading price of publicly traded
      securities of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(4) | "LTIP"or "long term incentive plan"means
      any plan which provides compensation intended to serve as incentive for
      performance to occur over a period longer than one financial year, but
      does not include option or stock appreciation right plans or plans for
      compensation through restricted shares or restricted share
units.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(5) | Management fees paid to SMR Investments Ltd., a company
      for which John Robertson acts as a director.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(6) | Jennifer Lorette, a Vice President, received consulting
      fees directly and wages were paid through KLR Petroleum Ltd. which
      administer the payroll for the Company and related
  parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

There are no other management contracts in existence at this
time which the Company is a party to.

- 63 -

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Option/SAR Grants

Name
      Number 
        of Options
      Granted
      % of Total 
        Options
      Granted as of May 31, 2006
      Exercise or 
        Base Price
      ($/Security) (1)
      Date of 
        Grant
      Mkt. Value of 
        Securities
      Underlying Options on Date of Grant ($)
      Expiry 
        DateDirectors who are not Named
      Executive Officers
    Nil
    nil% (2)
    $0(1)
    
    $0


| | (1) | During the fiscal year ended May 31, 2006 no stock
      options were granted. During the three month period ended August 31, 2006
      275,000 were granted to consultants.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company entered into a Management Agreement with SMR
Investments Ltd. for the provision of management and administrative services.
Pursuant to the Management Agreement, SMR Investments Ltd. provides management
and administrative services to the Company, and is in a unique position to
service the promotion, marketing, investment and business management needs of
the Company, for which the Company pays up to $2,500 per month. The Management
Agreement also provides that the manager will be reimbursed for all reasonable
out-of-pocket expenses. Susanne Robertson, a director of the Company, is the
sole shareholder of SMR Investments Ltd. and John Robertson, President and a
director of the Company is a director of SMR Investments Ltd. During the last
fiscal year of the Company, the sum of $30,000 was paid as a management fee to
SMR Investments Ltd.

No cash or non-cash compensation was paid or distributed to the
executive officers of the Company under any pension or other plans nor is there
any plan for such payments or distributions during the following fiscal year
contributed to the directors and officers.

During the fiscal year ended May 31, 2006 no stock options were
granted pursuant to stock option plans. 37,500 employee options were exercised
and 375,000 options were cancelled or expired (see Note 12 to our Financial
Statements).

Total options currently exercisable at the date of this 20-F
are 2,452,500. All exercise prices are CDN dollars as listed in the following
tables. See Note 12 to the financial statements.

The following table gives certain information concerning stock
option exercises during the year ended May 31, 2006 by our Senior Management and
Directors. It also gives information concerning stock option values.

- 64 -

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Aggregated Stock Options Exercises in Fiscal 2006
Fiscal Year End Unexercised Stock Options Fiscal
Year End Stock Option Values Senior
Management/Directors

|Name                                                      | Number of Shares
      Acquiredon Exercise | **Aggregate Value**
      Realized | Number of Unexercised
      Options at Fiscal Year-End Exercisable/Unexercisable | Value of Unexercised In-
      the-Money Options at Fiscal Year-End
      Exercisable/ Unexercisable
|--------------------------------------------------------- | ------------------------------------------ | ---------------------------------- | -------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------
|                                                          |                                            |                                    |                                                                                  |                                                                                                     
|John G. Robertson, President
      and Director           | N/A                                        | N/A                                | 990,000 / Nil                                                                    | $0.15 / N/A                                                                                         
|                                                          |                                            |                                    |                                                                                  |                                                                                                     
|Jennifer Lorette, Director                                | N/A                                        | N/A                                | 100,000 / Nil                                                                    | $0.15 / N/A                                                                                         
|                                                          |                                            |                                    |                                                                                  |                                                                                                     
|Susanne Robertson, Director                               | N/A                                        | N/A                                | 500,000 / Nil                                                                    | $0.15 / N/A                                                                                         
|                                                          |                                            |                                    |                                                                                  |                                                                                                     
|Monique van Oord, Director, Chief
      Financial Officer | N/A                                        | N/A                                | 50,000 / Nil                                                                     | $0.35 / $N/A                                                                                        

Options to Purchase Registrant's Common Shares Held by Officers
  and Directors of Registrant

NAME OF OPTIONEE
    NUMBER OF OPTIONS
    EXERCISE PRICE (CDN $)
    EXPIRY DATEJohn G. Robertson
    990,000
    $0.15
    April 22, 2007Jennifer Lorette
    100,000
    $0.15
    April 22, 2007Monique van Oord
    50,000
    $0.35
    March 5, 2009Susanne Robertson
    500,000
    $0.15
    April 22, 2007TOTAL HELD AS A GROUP:
    1,640,000


Options to Purchase Registrants Common Shares Held by
  Persons Other than Officers and Directors of theRegistrant

Name of Optionee
      No. of Optioned Shares
      Exercise Price Per Share
      Expiry DateArnie Winrob
    50,000
    $0.40
    December 16, 2007James Kerr
    75,000
    $040
    March 4, 2008Peter Zihlmann
    112,500
    $0.20
    October 20,2008George Duggan
    300,000
    $0.45
    November 13, 2008Agoracom Investor Relations Corp.
    250,000
    $0.285
    June 1, 2009Barbara West
    25,000
    $0.30
    June 11, 2011TOTAL HELD AS A GROUP:
    812,500


INDEBTEDNESS OF DIRECTORS AND OFFICERS

None of the directors and senior officers of the Company,
proposed nominees for election or associates of such persons is or has been
indebted to the Company or its subsidiaries, other than routine indebtedness, at
any time since the beginning of the last completed financial year of the
Company.

- 65 -

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C.        BOARD PRACTICES

Under section 224 of the Business Corporations Act,S.B.C. 2002, c. 57, the directors of a company must, at their first meeting
on or after each annual reference date, elect an audit committee, to hold office
until the next annual reference date. The audit committee must be composed of at
least 3 directors, and a majority of the members of the committee must not be
officers or employees of the company or of an affiliate of the company. The
members must elect a chair from among their number and determine their own
procedures. The auditor of a company must be given reasonable notice of, and has
the right to appear before and to be heard at each meeting of the companys
audit committee and must appear before the audit committee when request to do so
by the committee and after being given reasonable notice to do so. Our Board of
Directors established an Audit Committee which members consist of Monique van
Oord, Susanne Robertson and Jennifer Lorette.

The Directors are elected by the shareholders to hold office
for a term of one year or until re-elected at the next annual general
meeting.

D.        EMPLOYEES

We employed no employees during any of the years ended May 31,
2006, May 31, 2005 and May 31, 2004. Our legal, accounting, marketing and
administrative functions are, and have been during the last three fiscal years,
contracted out to consultants.

We have no employees; as such, no directors or officers belong
to any labor unions. We have not been subject to any strikes or other labor
disturbances that have interfered with our operations.

E.        SHARE
OWNERSHIP

The following table sets forth the ownership of our common
shares by our Directors and Officers as at May 31, 2006:

Shareholder
    Number of shares issued and outstanding
    Percentage ownership (1)John G. Robertson
    3,185,996 (2)
    8.1%Jennifer Lorette
    162,800 (3)
    0%Monique van Oord
    80,000 (4)
    0%Susanne Robertson
    6,529,983 (5)
    16.5%


| | (1) | as at May 31, 2006, there were 39,468,188 issued and
      outstanding common shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | includes 395,450 shares registered in the name of Access
      Information Services, a corporation controlled by the Robertson Family
      Trust, and 990,000 options registered in the name of Mr. Robertson that
      are currently exercisable. [Mr. Robertson is one of three trustees of the
      Robertson Family Trust, which acts by the majority vote of the three
      trustees. Mr. Robertson disclaims beneficial ownership of the shares owned
      or controlled by the Robertson Family Trust], 50,000 shares registered in
      the name of KLR Petroleum (a company controlled by Mr. Robertson). Mr.
      Robertson's address is the same as our address].
| | (3) | Includes 100,000 options that are currently exercisable.
      Ms. Lorette's address is the same as our address.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (4) | Includes 50,000 options that are currently exercisable.
      Ms. van Oords address is the same as the Companys.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (5) | includes 5,338,883 shares registered in the name of SMR
      Investments Ltd., and 500,000 options that are currently exercisable, .
      Ms. Robertson's address is the same as the
Companys.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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* Beneficially owns less than one percent of our common shares.

For information regarding the ownership of stock options to
acquire our common shares which are held by our Directors and Officers, and also
by our employees, please refer to Item 6.B above  Stock Options Granted to
Employees, Directors and Senior Managers.

ITEM 7.        MAJOR
SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.        MAJOR
SHAREHOLDERS.

To the best of our knowledge, we are not indirectly owned or
  controlled by any other corporation, foreign government or by any other natural
  or legal person, except as set out below.

At May 31, 2006, we are aware of one shareholder who owns 5% or
greater of the voting shares of the Company. Sue Robertson, our director, owns
5,949,983 of our issued and outstanding common shares. Of these, 691,100 common
shares are held directly and the balance of 5,258,883 common shares are held by
SMR Investments Ltd., a private company wholly-owned by Susanne M. Robertson.
Mrs. Robertson does not have any different voting rights.

Over the past three years, there has not been a significant
change in the percentage ownership held by any major shareholder.

Canadian Share Ownership.

On November 30, 2006, our shareholders list showed 39,468,188
common shares outstanding with 220 registered shareholders. The indirect holding
by depository institutions and other financial institutions is estimated as 71
holders of record resident in Canada, holding an aggregate of 31,089,285 common
shares; 144 holders of record resident in the United States, holding an
aggregate of 6,943,653 common shares; and 5 holders of record resident elsewhere
holding an aggregate of 1,435,250 common shares.

Control of the Company

We are a publicly owned Canadian corporation, with shareholders
in Canada, the United States and other foreign jurisdictions. We are not
controlled by any foreign government or other person.

We do not know of any arrangements which could result in a
change in control of the Company.

B.        RELATED PARTY
TRANSACTIONS.

The Company entered into a Management Agreement with SMR
Investments Ltd. for the provision of management and administrative services.
Pursuant to the Management Agreement, SMR Investments Ltd. provides management
and administrative services to the Company, and is in a unique position to
service the promotion, marketing, investment and business management needs of
the Company, for which the Company pays up to $2,500 per month. The Management
Agreement also provides that the manager will be reimbursed for all reasonable
out-of-pocket expenses. Susanne Robertson, a director of the Company, is the
sole shareholder of SMR Investments Ltd. and John Robertson, President and a
director of the Company is a director of SMR Investments Ltd. During the last
fiscal year of the Company, the sum of $30,000 was paid as a management fee to
SMR Investments Ltd.

We paid a director's fee of $12,000 to John G. Robertson, our
President, during each of fiscal years 2006, 2005 and 2004.

We had related party advances outstanding of $ 83,255 at the
  May 31, 2006 year-end, compared to $ 75,058

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at the end of our previous fiscal year. These were unsecured,
non-interest bearing and with no fixed terms of repayment. These transactions
with related parties during the year ended May 31, 2006 are as follows:

- SMR Investments Ltd. is a private company controlled by an officer of the
  Company. Under a management contract with SMR Investments Ltd., the Company
  agreed to pay up to $2,500 per month for management services. The Company was
  charged management fees of $30,000 (2005 - $30,000; 2004 - $17,500) by SMR
  during the current year.
- The Company holds 15,880 shares of Linux Gold, Inc., a BC public company
  with common directors.
- Directors fees of $12,000 (2005 - $12,000; 2004 - $12,000) were paid to J.
  Robertson, President of the Company; administration consulting fees of $19,000
  (2005 - $25,750; 2004 - $24,375) were paid to J. Lorette, a director of the
  Company and secretarial fees of $19,550 (2005 - $23,500; 2004 - $20,874) were
  paid to M. van Oord, a director of the Company.
- Fees of $6,770 (2005 - $9,019; 2004 - $1,646) were paid to KLR Petroleum
  Ltd. (which is controlled by an officer of the Company) for administration of
  the Company payroll and benefit plan.
- Office rent amounted to $17,040 (2005 - $16,680; 2004 - $15,600) for the
  year ended May 31, 2006 of which $11,360 (2005 - $11,120; 2004 - $10,400) has
  been shared with Reg Technologies Inc. and REGI US, Inc.

We believe that the terms of these transactions were incurred
in the normal course of operations and are equivalent or more favorable than
terms we would be able to negotiate in arms-length transactions with
unaffiliated parties.

C.        INTERESTS OF
EXPERTS AND COUNSEL.

Not applicable.

ITEM
8.        FINANCIAL INFORMATION

A.        CONSOLIDATED
STATEMENTS AND OTHER FINANCIAL INFORMATION

Our financial statements are stated in Canadian Dollars (CDN$)
and are prepared in accordance with Canadian Generally Accepted Accounting
Principles (GAAP), the application of which conforms in all material respects
for the periods presented with United States GAAP, except as discussed in
footnotes to the financial statements.

See our audited consolidated financial statements for the
fiscal years ended May 31, 2006, May 31, 2005 and May 31, 2004 and our interim
financial statements for the three months ended August 31, 2006, attached
hereto.

Legal Proceedings

We are not a party to any material legal proceedings.

Dividend Distribution Policy

We have not paid any cash dividends to date and we do not
intend to pay cash dividends in the foreseeable future.

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B.        SIGNIFICANT
CHANGES

None.

ITEM 9.        THE
OFFER AND LISTING

A.        OFFER AND
LISTING DETAILS

Our shares trade solely on the TSX Venture Exchange (the
"TSXV") under the symbol TRC-V. There are currently no restrictions on the
transferability of these shares under Canadian securities laws. There has been
no U.S. market in our shares.

We believe that our common stock falls under the classification
of a penny stock, as that term is defined by Rule 3a51-1 of the Securities
Exchange Act of 1934. Transaction costs associated with purchases and sales of
penny stocks are likely to be higher than those for other securities. Penny
stocks generally are equity securities with a price of less than US $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).

The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer must also provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customers account. The bid and
offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customers confirmation. In addition, the penny stock rules require
that prior to a transaction in a penny stock not otherwise exempt from such
rules, the broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction.

The following table shows the annual high and low closing
prices of our stock traded on the TSXV during the last five fiscal years as
follows:

Year
    High ($CDN)
    Low ($CDN)
    Close ($ CDN)2006
    0.41
    0.185
    0.2752005
    0.56
    0.265
    0.272004
    0.85
    0.24
    0.372003
    0.53
    0.08
    0.352002
    0.27
    0.05
    0.22


The following table shows the quarterly high and low closing
prices of our stock traded on the TSXV during the last two fiscal years, for
each quarter as follows:

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Period
    High
    Low
    Close
    Volume2006  Q4 5/31/06
    0.41
    0.255
    0.275
    2,370,397Q3 2/28/06
    0.39
    0.20
    0.355
    2,176,794Q2 11/30/05
    0.28
    0.185
    0.235
    1,250,975Q1 8/31/05
    0.33
    0.23
    0.235
    739,9252005 Q4 5/31/05
    0.375
    0.265
    0.27
    1,449,964Q3 2/28/05
    0.45
    0.30
    0.35
    2,078,611Q2 11/30/04
    0.56
    0.34
    0.415
    1,400,497Q1 8/31/04
    0.48
    0.30
    0.385
    847,615


(Information provided by the TSX Venture Exchange. The
quotations reflect inter-dealer prices, without retail mark-up, markdown, or
commission and may not represent actual transactions.)

As a foreign private issuer, our officers, directors and ten
percent beneficial owners we will not be subject to the reporting obligations of
the proxy rules of the Section 14 of the Securities Exchange Act of 1934
or the insider short-swing profit rules of Section 16 of the Securities
Exchange Act of 1934.

Common Share Description

Our authorized share capital consists of 100,000,000 common
shares without par value and 5,000,000 preferred shares with a par value of
$1.00. All of our authorized common shares are of the same class and, once
issued, rank equally as to dividends, voting powers, and participation in
assets. The Preferred Shares have attached thereto a right to receive dividends
as determined by the Directors. The Preferred Shares may be issued in series,
with special rights and restrictions therefor being determined by the Directors,
subject to regulatory approval. No Preferred Shares have been issued to the date
of this 20-F.

Holders of common shares are entitled to one vote for each
share held of record on all matters to be acted upon by the shareholders.
Holders of common shares are entitled to receive such dividends as may be
declared from time to time by the Board of Directors, in its discretion, out of
funds legally available therefore.

Upon our liquidation, dissolution or winding up, holders of
common shares are entitled to receive pro rata our assets, if any,
remaining after payments of all debts and liabilities.

No shares have been issued subject to call or assessment. There
are no pre-emptive or conversion rights and no provisions for redemption or
purchase for cancellation, surrender, or sinking or purchase funds. Provisions
as to the modification, amendment or variation of such shareholder rights or
provisions are contained in the Business Corporations Act (British
Columbia). Unless the Act or our Articles otherwise provide, any action to be
taken by a resolution of the shareholders may be taken by an ordinary
resolution, being approved by a vote of a majority of the votes cast in respect
of the matter at the shareholders meeting. There are no restrictions on the
repurchase or redemption of our common shares while there is any arrearage in
the payment of dividends or sinking fund installments.

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Convertible Securities / Warrants

The following table lists, as of May 31, 2006, the share
purchase warrants outstanding. As of May 31, 2006, we were aware of 3 holders of
our 1,324,000 share purchase warrants, 2 of whom were resident in Canada, 1
holder was offshore and no holders were resident in the United States. These
warrants were issued in conjunction with one private placement for the purchase
of a total of 2,648,000 common shares.

Effective Date
      Number of
      Number of
      Year 1
      Year 2
      Expiration Date of Shareof Issuance
      Share Purchase
      Share Purchase
      
      
      Purchase WarrantsWarrants
      Warrants StillOriginally
      OutstandingIssuedMay 17, 2006
      1,324,000
      1,324,000
      0.30
      0.35
      May 17, 2008


B.        PLAN OF
DISTRIBUTION

Not applicable.

C.        MARKETS

Our shares trade solely on the TSX Venture Exchange (the
"TSXV") under the symbol TRC-V. There are currently no restrictions on the
transferability of these shares under Canadian securities laws.

D.        SELLING
SHAREHOLDERS

Not applicable.

E.        DILUTION

Not applicable.

F.        EXPENSES OF
THE ISSUE

Not applicable.

ITEM
10.        ADDITIONAL INFORMATION

A.        SHARE CAPITAL

Not applicable.

B.        MEMORANDUM
AND ARTICLES OF ASSOCIATION

We were incorporated on May 23, 1980, as Candy Mountain Gold
Corporation under a perpetual charter pursuant to the Company Act
(British Columbia) by the registration of its Memorandum of Association and
Articles of Association. On January 20, 1984, a special resolution was passed
changing its name to Teryl Resources Corp.

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On March 29, 2004, the new British Columbia Business
Corporations Act (the "BCA") came into force in British Columbia and replaced
the former Company Act (Former Act), which is the statute under which we were
previously governed. Under the BCA, we have two years within which to transition
("Transition") under the new statute. In accordance with the BCA, we cannot
amend our Articles or Notice of Articles until the Transition to the BCA is
completed. We filed a transition application with the Registrar of Companies
British Columbia to transition to the BCA and completed the Transition on
September 13, 2004.

On November 15, 2004, at the Annual General Meeting of
shareholders, our shareholders passed a special resolution to delete and replace
our Articles as they applied to the Former Act in their entirety for new
articles under the BCA. Under the Business Corporations Act(British
Columbia) we are permitted to conduct any lawful business that we are not
restricted from conducting by our memorandum and articles, neither of which
contain any restriction on the business we may conduct. Our Incorporation Number
is BC0187279.

A director who, in any way, directly or indirectly, is
interested in a proposed contract or transaction with us must disclose in
writing the nature and extent of the director's interest at a meeting of
directors and abstain from voting on approval of the matter. Our Articles permit
an interested director to be counted in the quorum and the Business
Corporations Act(British Columbia) provides that a director of a company is
not deemed to be interested in a proposed contract or transaction merely because
the proposed contract or transaction relates, among other things, to an
indemnity, liability insurance or the remuneration of a director in that
capacity. Hence, directors can vote compensation to themselves or any of their
members. The board of directors has an unlimited power to borrow, issue debt
obligations and to charge our assets, provided only that such power is exercised
bona fide and in our best interests. There is no mandatory retirement age for
directors. A director is not required to have any share qualification.

We have two classes of shares. We have 100,000,000 authorized
common shares, voting, without par value; and authorized 5,000,000 non-voting
preferred shares with a par value of $1.00. Our common shares are without any
special rights or restrictions.

The Preferred Shares have attached thereto a right to receive
dividends as determined by the Directors. The Preferred Shares may be issued in
series, with special rights and restrictions therefor being determined by the
Directors, subject to regulatory approval. No Preferred Shares have been issued
to the date of this 20-F.

The dividend entitlement of a common shareholder of record is
fixed at the time of declaration by the board of directors. A vested dividend
entitlement does not lapse, but unclaimed dividends are subject to a statutory
six year contract debts limitation. Each common share is entitled to one vote on
the election of each director. There are no cumulative voting rights, in
consequence of which a simple majority of votes at the annual meeting can elect
all of our directors. Each common share carries with it the right to share
equally with every other common share in dividends declared and in any
distribution of our surplus assets after payment to creditors on any winding up,
liquidation or dissolution. There are no sinking fund provisions. All common
shares must be fully paid prior to issue and are thereafter subject to no
further capital calls by us. There exists no discriminatory provision affecting
any existing or prospective holder of common shares as a result of such
shareholder owning a substantial number of shares.

Under the Business Corporations Act(British
Columbia), the rights of shareholders may be changed only by the shareholders
passing a special resolution approved by 2/3 of the votes cast at a general
meeting of shareholders, the notice of which is accompanied by an information
circular describing the proposed action and its effect on the shareholders.
Shareholders representing 10% of our common shares who vote against such a
resolution may apply to the Court to set aside the resolution and the Court may
set aside, affirm or affirm and order us to purchase the shares of any
shareholder at a price determined by the Court.

The Board of Directors must call an annual general meeting once
  in each calendar year and not later than 15 months after the last such meeting.
  The Board may call an extraordinary general meeting at any time. Notice of such
  meetings must be accompanied by an information circular describing the proposed
  business to be dealt with and making disclosures as prescribed by statute.

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A shareholder or shareholders having in the aggregate 5% of
  our issued shares may requisition a meeting and the Board is required to hold
  such meeting within four months of such requisition. Admission to such meetings
  is open to registered shareholders and their duly appointed proxies. Others
  may be admitted subject to the pleasure of the meeting.

Our memorandum and articles contain no limitations on the
rights of non-resident or foreign shareholders to hold or exercise rights on our
shares. There is no limitation at law upon the right of a non-resident to hold
shares in a Canadian company.

There are no provisions in our memorandum and articles that
would have an effect of delaying, deferring or preventing a change in control
and that would operate only with respect to a merger, acquisition or corporate
restructuring involving us or any of our subsidiaries.

There is no provision in our articles setting a threshold or
requiring or governing disclosure of shareholder ownership above any level.
Securities Acts, regulations and the policies and rules thereunder in the
Provinces of Alberta and British Columbia, where we are a reporting company,
require any person holding or having control of more than 10% of our issued
shares to file insider returns disclosing such share holdings.

C.        MATERIAL CONTRACTS

During the years ended May 31, 2006 and May 31, 2005, we
entered into the following material contracts.

Fish Creek Joint Venture Agreement

On March 5, 2002 we announced that a joint venture has been
completed for a 50% interest in 30 Fish Creek claims in Alaska based on the
following terms and conditions. The Company would issue 200,000 treasury shares
of its common shares, which shares were issued on December 16, 2002, and will
give to Linux Gold Corp. a 5% royalty interest until $2,000,000 U.S. has been
received from the royalty payments. We may purchase the 5% net royalty for
$500,000 U.S. within 1 year after production. We also agree to expend a minimum
of $500,000 U.S. after three years from the date of the agreement.

On November 4, 2002, we amended the March 5, 2002 agreement
with Linux Gold Corp. We agreed that in consideration for receiving a mining
license which was not disclosed to us at the time of the March 5, 2002
agreement, both parties agreed to grant Linux a back in working interest for a
25% interest in the mining lease after Teryl completes the US$500,000
expenditures.

In March 2005, the joint venture agreement was extended until
March 5, 2007, subject to TSX approval. Other than the extension, all other
terms remain the same. The Company authorized 100,000 common shares for issuance
to Linux as consideration for the extension. TSX approval of the extension is
dependent upon receipt of approval of disinterested shareholders. Approval was
obtained at the Annual General Meeting on November 14, 2006. As of the date of
this 20-F, the shares have not been issued pending TSX approval.

D.        EXCHANGE CONTROLS.

There are no governmental laws, decrees or regulations in
Canada relating to restrictions on the export of capital affecting the
remittance of interest, dividends or other payments to nonresident holders of
the Registrant's shares. Any such remittances, however, are subject to
withholding tax. See Item 10.E, "Taxation".

There are no limitations under the laws of Canada, the Province
of British Columbia or in the charter or any other constituent documents of the
Company on the right of foreigners to hold or vote the shares of the Company.
However, under the provisions of the Investment Canada Act, when control of a
Canadian

- 73 -

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business is acquired by a non- Canadian, the transaction may be
reviewable in certain circumstances by Investment Canada, an agency of the
federal government of Canada. Reviewable transactions are those in which a
non-Canadian acquires the assets of a Canadian business or the voting shares of
a Canadian corporation the value of which assets or shares exceeds $5 million
(Canadian). Also, certain transactions are specifically exempted from review.

E.        TAXATION.

Certain Canadian Federal Income Tax Consequences

The discussion under this heading summarizes the principal
Canadian federal income tax consequences of acquiring, holding and disposing of
shares of our common stock for a shareholder of ours who is not a resident of
Canada but is a resident of the U.S. and who will acquire and hold our common
shares as capital property for the purposes of the Income Tax Act
(Canada) (the Canadian Tax Act). This summary does not apply to a
shareholder who carries on business in Canada through a permanent
establishment situated in Canada or performs independent personal services
in Canada through a fixed base in Canada if the shareholders holding in Teryl
Resources Corp. is effectively connected with such permanent establishment or
fixed base. This summary is based on the provisions of the Canadian Tax Act and
the regulations thereunder and on an understanding of the administrative
practices of Canada Customs & Revenue Agency, and takes into account all
specific proposals to amend the Canadian Tax Act or regulations made by the
Minister of Finance of Canada as of the date hereof. It has been assumed that
there will be no other relevant amendment of any governing law although no
assurance can be given in this respect. This discussion is general only and is
not, nor is it intended to provide a detailed analysis of the income tax
implications of any particular shareholders interest. Investors are advised to
obtain independent advice from a shareholders own Canadian and U.S. tax
advisors with respect to income tax implications pertinent to their particular
circumstances.

The provisions of the Canadian Tax Act are subject to income
tax treaties to which Canada is a party, including the Canada-United States
Income Tax Convention(1980), as amended (the Convention).

Dividends on Common Shares and Other
Income

Under the Canadian Tax Act, a non-resident of Canada is
generally subject to Canadian withholding tax at the rate of 25 percent on
dividends paid or deemed to have been paid to him or her by a corporation
resident in Canada. We are responsible for withholding of tax at the source. The
Convention limits the rate to 15 percent if the shareholder is a resident of the
U.S. and the dividends are beneficially owned by and paid to such shareholder,
and to 5 percent if the shareholder is also a corporation that beneficially owns
at least 10 percent of the voting stock of the payor corporation.

The amount of a stock dividend (for tax purposes) would
generally be equal to the amount by which the paid up or our stated capital had
increased by reason of the payment of such dividend. We will furnish additional
tax information to our shareholders in the event of such a dividend. 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.

The Convention generally exempts from Canadian income tax
dividends paid to a religious, scientific, literary, educational or charitable
organization or to an organization constituted and operated exclusively to
administer a pension, retirement or employee benefit fund or plan, if the
organization is a resident of the U.S. and is exempt from income tax under the
laws of the U.S.

Dispositions of Common Shares

Under the Canadian Tax Act, a taxpayers capital gain or
  capital loss from a disposition of a share of our common stock is the amount,
  if any, by which his or her proceeds of disposition exceed (or are exceeded
  by, respectively) the aggregate of his or her adjusted cost base of the share
  and reasonable expenses of disposition.

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The capital gain or loss must be computed in Canadian currency
  using a weighted average adjusted cost base for identical properties. The capital
  gains net of losses included in income are as follows. For gains net of losses
  realized before February 28, 2000, as to 75%. For gains net of losses realized
  after February 27, 2000 and before October 18, 2000, as to 66 2/3%. For gains
  net of losses realized after October 17, 2000, as to 50%. There are special
  transitional rules to apply capital losses against capital gains that arose
  in different periods. The amount by which a shareholders capital loss
  exceeds the capital gain in a year may be deducted from a capital gain realized
  by the shareholder in the three previous years or any subsequent year, subject
  to certain restrictions in the case of a corporate shareholder.

Under the Canadian Tax Act, a non-resident of Canada is subject
to Canadian tax on taxable capital gains, and may deduct allowable capital
losses, realized on a disposition of taxable Canadian property. Shares of our
common stock will constitute taxable Canadian property of a shareholder at a
particular time if the shareholder used the shares in carrying on business in
Canada, or if at any time in the five years immediately preceding the
disposition 25% or more of the issued shares of any class or series in our
capital stock belonged to one or more persons in a group comprising the
shareholder and persons with whom the shareholder and persons with whom the
shareholder did not deal at arms length and in certain other circumstances.

The Convention relieves U.S. residents from liability for
Canadian tax on capital gains derived on a disposition of shares unless:

(a) the value of the shares is derived principally from
real property in Canada, including the right to explore for or exploit
natural resources and rights to amounts computed by reference to production;

(b) the shareholder was resident in Canada for 120 months
during any period of 20 consecutive years preceding, and at any time during the
10 years immediately preceding, the disposition and the shares were owned by him
when he or she ceased to be resident in Canada; or

(c) the shares formed part of the business property of a
permanent establishment that the holder has or had in Canada within the
12 months preceding the disposition.

F.        DIVIDENDS AND
PAYING AGENTS

Not applicable.

G.        STATEMENT BY
EXPERTS.

Our financial statements included in this Registration
Statement for the years ended May 31, 2006, 2005, and 2004 were audited by
Morgan and Company, Chartered Accountant as stated in their reports appearing
herein (which reports express an unqualified opinion), and are included in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.

H.        DOCUMENTS ON
DISPLAY.

Material contracts and publicly available corporate records may
be viewed at our registered and records office located at Suite 240, 11780
Hammersmith Way, Richmond, British Columbia.

Our registration statement may be inspected and copied, including
  exhibits and schedules, and the reports and other information as filed with
  the Securities and Exchange Commission in accordance with the Securities
  Exchange Act of 1934 at the public reference facilities maintained by the
  Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street, Room
  1024, N.W., Washington, D.C. 20549. Copies of such material may also be obtained
  from the Public Reference Section of the Securities and Exchange Commission
  at 100F Street, NE, Room 1580, Washington, D.C. 20549, at prescribed rates.
  Information may be obtained regarding the Washington D.C. Public Reference Room
  by calling the Securities and Exchange Commission at 1-800-SEC-0330 or by contacting
  the Securities and Exchange Commission over the Internet at its website at http://www.sec.gov.

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I.        SUBSIDIARY
  INFORMATION.

We hold a 100% interest Teryl, Inc., a private Delaware
corporation which is currently inactive.

ITEM
11.        QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

In June 2006, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes,
an interpretation of FASB Statements No. 109. FIN 48 clarifies the accounting
for uncertainty in income taxes by prescribing a two-step method of first
evaluating whether a tax position has met a more likely than not recognition
threshold and second, measuring that tax position to determine the amount of
benefit to be recognized in the financial statements. FIN 48 provides guidance
on the presentation of such positions within a classified statement of financial
position as well as on derecognition, interest and penalties, accounting in
interim periods, disclosure, and transition. FIN 48 is effective for fiscal
years beginning after December 15, 2006. The adoption of this statement is not
expected to have a material effect on the Company's future reported financial
position or results of operations.

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 re-measurement 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 15, 2006,
with earlier application allowed. The adoption of this statement is not expected
to have a material effect on the Company's future reported financial position or
results of operations.

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. The adoption of
this statement is not expected to have a material effect on the Company's future
reported financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, Fair Value
  Measurements. The objective of SFAS 157 is to increase consistency and
  comparability in fair value measurements and to expand disclosures about fair
  value measurements. SFAS 157 defines fair value, establishes a framework for
  measuring fair value in generally accepted accounting principles, and expands
  disclosures about fair value measurements. SFAS 157 applies under other accounting
  pronouncements that require or permit fair value measurements and does not require
  any new fair value measurements. The provisions of SFAS No. 157 are effective
  for fair value measurements made in fiscal years beginning after November 15,
  2007. The adoption of this statement is not expected to have a material effect
  on the Company's future reported financial position or results of operations.

- 76 -

---

In September 2006, the FASB issued SFAS No. 158, Employers
  Accounting for Defined Benefit Pension and Other Postretirement Plans 
  an amendment of FASB Statements No. 87, 88, 106, and 132(R). This statement
  requires employers to recognize the overfunded or underfunded status of a defined
  benefit postretirement 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 of a business entity or changes in unrestricted net assets of a not-for-profit
  organization. This statement also requires an employer to measure the funded
  status of a plan as of the date of its year-end statement of financial position,
  with limited exceptions. The provisions of SFAS No. 158 are effective for employers
  with publicly traded equity securities as of the end of the fiscal year ending
  after December 15, 2006. The adoption of this statement is not expected to have
  a material effect on the Company's future reported financial position or results
  of operations.

We are a small business issuer as defined in Rule 405 of the
Securities Act of 1933, and Rule 12b-2 of the Securities Exchange Act
of 1934, as amended, and therefore need not provide the information
requested by this item.

ITEM
12.        DESCRIPTION OF SECURITIES
OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM
13.        DEFAULTS, DIVIDEND ARREARAGES
AND DELINQUENCIES

None.

ITEM
14.        MATERIAL MODIFICATIONS TO THE
RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.

A.        MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

None.

B.        USE OF PROCEEDS.

Not applicable.

- 77 -

---

ITEM
15.        CONTROLS AND PROCEDURES

Based upon the evaluation of the effectiveness of the
disclosure controls and procedures as of the end of the period covered by this
registration statement, our Chief Executive Officer and Chief Financial Officer
have concluded that, as of such date, the disclosure controls and procedures
were effective to ensure that material information relating to the Company was
made known to others within the company particularly during the period in which
this registration statement and accounts were being prepared, and such controls
and procedures were effective to ensure that information required to be
disclosed by the Company in the reports that it files or submits under
regulatory rules and securities laws is recorded, processed, summarized and
reported, within the time periods specified. Management recognizes that any
controls and procedures can only provide reasonable assurance, and not absolute
assurance, of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

Changes in Internal Controls over Financial Reporting.

There were no changes in our internal controls over financial
reporting that occurred during the period covered by the registration statement
that has materially affected, or is reasonably likely to materially affect our
internal control over financial reporting.

ITEM
16.        [Reserved]

ITEM 16A.     Audit Committee Financial
Expert

We do not currently have a financial expert in our audit
committee due to our relatively small size. In 2006, we had no employees and we
relied upon the services of a chartered accounting firm in Vancouver, BC,
Canada, to prepare our interim unaudited quarterly consolidated financial
statements. Also, we retained the audit services of Morgan and Company,
Chartered Accountants to perform the audit on our year-end consolidated
financial statements.

Moreover, the audit committee is comprised of seasoned business
professionals, whereby the members have over 25 years of experience in the
investment business and are board members of several corporations.

On these bases, we believe that the audit committee has
adequate resources available to it when financial expertise and advice are
necessary.

ITEM 16B.     Code of Ethics

We have not adopted a formal written code of ethics given our
relatively small size, whereby we had no employees in 2006.

Directors are subject to the laws of the Province of British
Columbia, Canada, whereby they are required to act honestly, in good faith and
in the best interests of the Company.

ITEM 16C.     Principal Accountant Fees and
Services

The following table discloses accounting fees and services of
the Registrant:

- 78 -

---

(Stated in terms of Canadian dollars)

2006
    2005Type of Services Rendered
    Fiscal Year
    Fiscal Year


(a) Audit Fees
    $22,620
    $19,500(b) Audit-Related Fees
    $8,075
    $16,725(c) Tax Fees
    $1,320
    $l,800(d) All Other Fees
    $750
    $2,025


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

Not applicable.

ITEM 16E.     Purchases of Equity
Securities by the Issuer and Affiliated Purchasers

Not applicable.

PART III

ITEM 17.        FINANCIAL
STATEMENTS

Our financial statements are stated in Canadian Dollars and are
prepared in accordance with Canadian Generally Accepted Accounting Principles
(GAAP), the application of which, in our case, conforms in all material respects
for the periods presented with United States GAAP, except as discussed in
footnotes to the financial statements.

|Independent Auditors
      Report dated July 28, 2006                                                 
|-------------------------------------------------------------------------------------------------------
|                                                                                                       
|Consolidated Balance Sheets
      at May 31, 2006 and 2005                                             
|                                                                                                       
|Consolidated Statement
      of Income and Expenses for the years ended May 31, 2006, 2005 and 2004    
|                                                                                                       
|Consolidated Statements
      of Operations and Deficit for the years ended May 31, 2006, 2005 and 2004
|                                                                                                       
|Consolidated Statements
      of Cash Flows for the years ended May 31, 2006, 2005 and 2004            
|                                                                                                       
|Notes to the Consolidated
      Financial Statements for the years ended May 31, 2006, 2005 and 2004   

- 79 -

---



TERYL RESOURCES CORP.



CONSOLIDATED FINANCIAL STATEMENTS



MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

---



INDEPENDENT AUDITORS REPORT

To the Shareholders of 
  Teryl Resources Corp.

We have audited the consolidated balance sheets of Teryl Resources
  Corp. as at May 31, 2006 and 2005, and the consolidated statements of operations,
  deficit, and cash flows for each of the years in the three-year period ended
  May 31, 2006. These consolidated financial statements are the responsibility
  of the Companys management. Our responsibility is to express an opinion
  on these consolidated financial statements based on our audits.

We conducted our audits in accordance with Canadian generally
  accepted auditing standards and the standards of the Public Company Accounting
  Oversight Board (United States). Those 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.

In our opinion, these consolidated financial statements present
  fairly, in all material respects, the financial position of the Company as at
  May 31, 2006 and 2005, and the results of its operations and its cash flows
  for each of the years in the three-year period ended May 31, 2006 in accordance
  with Canadian generally accepted accounting principles.

|Vancouver, Canada | Morgan & Company   
|----------------- | ---------------------
|July 28, 2006     | Chartered Accountants

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S.
  REPORTING DIFFERENCES

The reporting standards of the Public Company Accounting Oversight
  Board (United States) for auditors 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 consolidated
  financial statements. Our report to the shareholders, dated July 28, 2006, is
  expressed in accordance with Canadian reporting standards which do not permit
  a reference to such events and conditions in the auditors report when
  these are adequately disclosed in the consolidated financial statements.

|Vancouver, Canada | Morgan & Company   
|----------------- | ---------------------
|July 28, 2006     | Chartered Accountants



---

TERYL RESOURCES CORP.

CONSOLIDATED BALANCE SHEETS(Stated in Canadian Dollars)

|                                                           |   | MAY
      31 |  
|---------------------------------------------------------- | - | ------------ | -
|                                                           |   | 2006         |  
|                                                           |   |              |  
|ASSETS                                                     |   |              |  
|Current                                                    |   |              |  
|Cash                                                       | $ | 209,636      |  
|Amounts receivable                                         |   | 95,869       |  
|Prepaid expenses                                           |   | 8,067        |  
|                                                           |   | 313,572      |  
|Advances To Related Companies(Note
      3)                |   | 6,840        |  
|Investments(Note 4)                                        |   | 4,026        |  
|Equipment(Note 5)                                          |   | 16,043       |  
|Natural Gas Well(Note 6)                                   |   | 103,045      |  
|Mineral Property Interests(Note 7)                         |   | 190,236      |  
|Deferred Exploration Expenditures(Note 7)                  |   | 2,867,841    |  
|                                                           |   |              |  
|                                                           | $ | 3,501,603    |  
|                                                           |   |              |  
|LIABILITIES                                                |   |              |  
|Current                                                    |   |              |  
|Accounts payable and accrued
      liabilities             | $ | 21,719       |  
|Income taxes
      payable                                 |   | 604          |  
|Debenture payable (Note 9)                                 |   | -            |  
|Advances
      from related companies (Note 10)            |   | 83,255       |  
|                                                           |   | 105,578      |  
|Subscriptions Received(Note 15)                            |   | 69,972       |  
|                                                           |   | 175,550      |  
|                                                           |   |              |  
|SHAREHOLDERS EQUITY                                       |   |              |  
|                                                           |   |              |  
|Share Capital(Note 12)                                     |   |              |  
|Authorized:                                                |   |              |  
|100,000,000 common shares, voting, no par value            |   |              |  
|5,000,000 preferred shares, non-voting,
      $1 par value |   |              |  
|Issued and outstanding:                                    |   |              |  
|39,468,188 (2005  36,777,688) common
      shares         |   | 10,624,107   |  
|                                                           |   |              |  
|Contributed Surplus                                        |   | 169,401      |  
|                                                           |   |              |  
|Deficit                                                    |   | (7,467,455   | )
|                                                           |   | 3,326,053    |  
|                                                           |   |              |  
|                                                           | $ | 3,501,603    |  
|                                                           |   |              |  
|Contingencies And Commitments(Note 11)                     |   |              |  

Approved by the Directors:

|J. Robertson |  | J.
      Lorette
|-------------- |  | ------------------
|Director       |  | Director          

The accompanying notes are an integral part of these consolidated
  financial statements.

---

TERYL RESOURCES CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS(Stated in Canadian Dollars)

|                                            |   | YEARS
      ENDED MAY 31 |  
|------------------------------------------- | - | ------------------------ | -
|                                            |   | 2006                     |  
|                                            |   |                          |  
|Revenue                                     |   |                          |  
|Oil and gas income                          | $ | 27,154                   |  
|                                            |   |                          |  
|Expenses                                    |   |                          |  
|Amortization                                |   | 6,847                    |  
|Corporation capital taxes                   |   | 11,549                   |  
|Filing fees                                 |   | 12,804                   |  
|Foreign exchange loss (gain)                |   | 4,687                    |  
|Management
      and directors fees        |   | 74,262                   |  
|Office and sundry                           |   | 14,756                   |  
|Office rent
      and utilities             |   | 5,737                    |  
|Oil and gas production, royalties
      and |   |                          |  
|other                                       |   | 12,605                   |  
|Professional fees                           |   | 46,228                   |  
|Publicity,
      promotion and investor     |   |                          |  
|relations                                   |   | 110,076                  |  
|Secretarial
      and employee benefits     |   | 33,578                   |  
|Shareholders and meeting
      costs        |   | 7,180                    |  
|Telephone                                   |   | 6,207                    |  
|Transfer agent fees                         |   | 6,830                    |  
|Travel, auto
      and entertainment        |   | 25,128                   |  
|                                            |   | 378,474                  |  
|                                            |   |                          |  
|Operating Loss                              |   | (351,320                 | )
|                                            |   |                          |  
|Other Income (Expenses)                     |   |                          |  
|Interest
      income                       |   | 3,079                    |  
|Interest expense                            |   | (14,704                  | )
|Mineral property
      written off          |   | (29,161                  | )
|Exploration expenditures
      written off  |   | (38,540                  | )
|Accounts
      receivable written off       |   | -                        |  
|                                            |   | (79,326                  | )
|                                            |   |                          |  
|Net Loss For The
      Year                 | $ | (430,646                 | )
|                                            |   |                          |  
|                                            |   |                          |  
|Loss Per Share, Basic and diluted           | $ | (0.01                    | )
|                                            |   |                          |  
|                                            |   |                          |  
|Weighted Average Number Of                  |   |                          |  
|Common Shares Outstanding                   |   | 36,889,399               |  

The accompanying notes are an integral part of these consolidated
  financial statements.

---

TERYL RESOURCES CORP.

CONSOLIDATED STATEMENTS OF DEFICIT(Stated in Canadian Dollars)

|                           |   | YEARS
      ENDED MAY 31 |  
|-------------------------- | - | ------------------------ | -
|                           |   | 2006                     |  
|Deficit, Beginning Of Year | $ | (7,036,809               | )
|Net Loss For The Year      |   | (430,646                 | )
|Deficit, End Of Year       | $ | (7,467,455               | )

The accompanying notes are an integral part of these consolidated
  financial statements.

---

TERYL RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS(Stated in Canadian Dollars)

|                                                 |   | YEARS
      ENDED MAY 31 |  
|------------------------------------------------ | - | ------------------------ | -
|                                                 |   | 2006                     |  
|                                                 |   |                          |  
|Cash Flows From Operating Activities             |   |                          |  
|Revenue receipts
      for the year              | $ | 27,343                   |  
|Receipt of interest income                       |   | 3,079                    |  
|Refunds of
      Goods and Services Tax          |   | 10,201                   |  
|Payment of interest on debenture                 |   | (26,749                  | )
|Payments
      to suppliers for goods and        |   |                          |  
|services                                         |   | (404,366                 | )
|                                                 |   | (390,492                 | )
|                                                 |   |                          |  
|Cash Flows From Financing Activities             |   |                          |  
|Borrowings under bank overdraft
      facilities |   | -                        |  
|Share capital
      issued for cash              |   | 671,250                  |  
|Repayment of debenture                           |   | (150,000                 | )
|Related party
      advances (repayments)        |   | 26,956                   |  
|                                                 |   | 548,206                  |  
|                                                 |   |                          |  
|Cash Flows From Investing Activities             |   |                          |  
|Purchase
      of mineral property interests     |   | -                        |  
|Purchase of equipment                            |   | -                        |  
|Purchase
      of natural gas well interest      |   | (103,045                 | )
|Exploration expenditures                         |   | (163,320                 | )
|                                                 |   | (266,365                 | )
|                                                 |   |                          |  
|(Decrease) Increase In Cash                      |   | (108,651                 | )
|                                                 |   |                          |  
|Cash, Beginning Of Year                          |   | 318,287                  |  
|                                                 |   |                          |  
|Cash, End Of Year                                | $ | 209,636                  |  
|                                                 |   |                          |  
|Supplemental Disclosure Of Cash Flow             |   |                          |  
|Information                                      |   |                          |  
|Interest
      paid                              | $ | 26,749                   |  
|Income taxes paid                                |   | -                        |  
|                                                 |   |                          |  
|Non-Cash Financing Activities                    |   |                          |  
|Shares issued for debt
      settlement          | $ | -                        |  

The accompanying notes are an integral part of these consolidated
  financial statements.

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|1. | NATURE OF OPERATIONS AND GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Teryl Resources Corp. is a public company
        incorporated under the British Columbia Business Corporations Act on July
        16, 1985. Its shares are listed on the TSX Venture Exchange.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | The Company makes expenditures on acquiring
        mineral properties and carries out exploration work. It also acquires
        oil and gas property interests and participates in drilling wells. The
        recoverability of amounts shown for investments, mineral properties, interest
        in oil and gas properties and the related deferred expenditures is dependent
        upon the existence of economically recoverable reserves, the ability to
        obtain the necessary financing to complete the exploration, the profitability
        of future production or the ability of the Company to dispose of those
        assets on a profitable basis. The Company's ongoing operation is dependent
        upon cash flow from successful operations and equity financing. The Company
        has incurred a loss of $430,646 in the year ended May 31, 2006 (2005 -
        $515,740; 2004 - $791,776). These consolidated financial statements do
        not include adjustments that would be necessary should it be determined
        that the Company may be unable to continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Office equipment
      20% per annumAutomotive equipment
      30% per annum


---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|2. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | c)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   | d)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|2. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | d)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   | e)                                        
|   |                                           
|   |                                           
|   |                                           
|   | f)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   |                                           
|   | g)                                        
|   |                                           
|   |                                           
|   |                                           
|   |                                           

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|2. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | h)                                        
|   |                                           
|   |                                           
|   |                                           
|   | i)                                        
|   |                                           
|   |                                           
|   |                                           
|   | j)                                        
|   |                                           
|   |                                           
|   |                                           
|   | k)                                        
|   |                                           
|   |                                           

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|2. | SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | ------------------------------------------
|   |                                           
|   | l)                                        
|   |                                           
|   |                                           
|   |                                           
|   | m)                                        
|   |                                           
|   |                                           
|   |                                           
|   | n)                                        
|   |                                           
|   |                                           
|   |                                           
|   | o)                                        
|   |                                           
|   |                                           
|   |                                           
|   | p)                                        
|   |                                           
|   |                                           

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|3. | ADVANCES TO RELATED COMPANIES
|-- | -----------------------------

| |                                                     |   | 2006  |  |   | 2005   | 
| | --------------------------------------------------- | - | ----- |  | - | ------ | 
| |                                                     |   |       |  |   |        | 
| | Access Information Systems                          | $ | -     |  | $ | 70     | 
| | Information Highway.com Inc.                        |   | -     |  |   | 818    | 
| | KLR Petroleum Inc.                                  |   | -     |  |   | 8,810  | 
| | Reg Technologies Inc.                               |   | 5,419 |  |   | -      | 
| | REGI US, Inc.                                       |   | 1,420 |  |   | 1,420  | 
| | SMR Investments Ltd.                                |   | -     |  |   | 14,480 | 
| | International Diamond Syndicate Ltd. (Note
      4) |   | 1     |  |   | 1      | 
| |                                                     |   |       |  |   |        | 
| |                                                     | $ | 6,840 |  | $ | 25,599 | 

|   | The advances to related companies bear no interest and
        have no fixed repayment terms.
|-- | ---------------------------------------------------------------------------------------------
|   |                                                                                              
|4. | INVESTMENTS                                                                                  

| |                             |   | 2006  |  |   | 2005  | 
| | --------------------------- | - | ----- |  | - | ----- | 
| |                             |   |       |  |   |       | 
| | Linux Gold Corp.            |   |       |  |   |       | 
| | 15,880 shares
      at cost | $ | 4,026 |  | $ | 4,026 | 

|   | Linux Gold Corp. (formerly LinuxWizardry Systems, Inc.)
        is a public company listed on US Stock Exchanges having a market value
        of $7,347 at May 31, 2006 (2005 - $2,492).
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                          
|5. | EQUIPMENT                                                                                                                                                                                

| |                                 |   | 2006    |   |   | 2005    |  
| | ------------------------------- | - | ------- | - | - | ------- | -
| |                                 |   |         |   |   |         |  
| | Furniture and fixtures, at cost | $ | 21,237  |   | $ | 48,215  |  
| | Less: Accumulated amortization  |   | (12,804 | ) |   | (36,197 | )
| |                                 |   | 8,433   |   |   | 12,018  |  
| |                                 |   |         |   |   |         |  
| | Automotive equipment, at cost   |   | 15,531  |   |   | 15,531  |  
| | Less: Accumulated amortization  |   | (7,921  | ) |   | (4,659  | )
| |                                 |   | 7,610   |   |   | 10,872  |  
| |                                 |   |         |   |   |         |  
| |                                 | $ | 16,043  |   | $ | 22,890  |  

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|6. | OIL AND GAS WELL INTERESTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company owns 6.5% working interest (4.680% net revenue
        interest) in the Peters No. 1 Well, in Fayette County, Texas, and a 7.5%
        working interest (5.79375% net revenue interest) in each of the C-S #1,
        Jancik #2 and Herrmann #4 wells, located in Burleson County, Texas. The
        carried cost of these wells has been completely depleted.                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On May 18, 2006, the Company entered into an agreement
        with IAS Communications, Inc. to purchase a 40% interest (subject to 40%
        net revenue interests to others) in the Ken Lee #1 natural gas well, located
        in Knox County, Kentucky, USA, for $103,045 ($92,500 US). As the well
        was still being drilled at the date of the balance sheet, no depletion
        has been allowed for. The Company has first refusal rights to participate
        in up to 23 future wells.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|7. | MINERAL PROPERTY INTERESTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                      |   | BALANCE |  |   |           |  |   |            |   |   | BALANCE | 
| | -------------------- | - | ------- |  | - | --------- |  | - | ---------- | - | - | ------- | 
| |                      |   | MAY 31  |  |   |           |  |   |            |   |   | MAY 31  | 
| |                      |   | 2005    |  |   | ADDITIONS |  |   | WRITE-OFFS |   |   | 2006    | 
| |                      |   |         |  |   |           |  |   |            |   |   |         | 
| | Property costs       |   |         |  |   |           |  |   |            |   |   |         | 
| | Silverknife          | $ | 1       |  | $ | -         |  | $ | -          |   | $ | 1       | 
| | Fish Creek           |   | 33,538  |  |   | -         |  |   | -          |   |   | 33,538  | 
| | Anderson Group  2nd |   | 15,878  |  |   | -         |  |   | (15,878    | ) |   | -       | 
| | Fox Creek            |   | 13,283  |  |   | -         |  |   | (13,283    | ) |   | -       | 
| | West Ridge           |   | 116,189 |  |   | -         |  |   | -          |   |   | 116,189 | 
| | Gil Venture          |   | 31,127  |  |   | -         |  |   | -          |   |   | 31,127  | 
| | Stepovich Lease      |   | 9,381   |  |   | -         |  |   | -          |   |   | 9,381   | 
| |                      |   |         |  |   |           |  |   |            |   |   |         | 
| |                      | $ | 219,397 |  | $ | -         |  | $ | (29,161    | ) | $ | 190,236 | 

| |                      |   | BALANCE |  |   |           |  |   |            |  |   | BALANCE | 
| | -------------------- | - | ------- |  | - | --------- |  | - | ---------- |  | - | ------- | 
| |                      |   | MAY 31  |  |   |           |  |   |            |  |   | MAY 31  | 
| |                      |   | 2004    |  |   | ADDITIONS |  |   | WRITE-OFFS |  |   | 2005    | 
| |                      |   |         |  |   |           |  |   |            |  |   |         | 
| | Property costs       |   |         |  |   |           |  |   |            |  |   |         | 
| | Silverknife          | $ | 1       |  | $ | -         |  | $ | -          |  | $ | 1       | 
| | Fish Creek           |   | 33,538  |  |   | -         |  |   | -          |  |   | 33,538  | 
| | Anderson Group  2nd |   | 6,559   |  |   | 9,319     |  |   | -          |  |   | 15,878  | 
| | Fox Creek            |   | -       |  |   | 13,283    |  |   | -          |  |   | 13,283  | 
| | West Ridge           |   | 116,189 |  |   | -         |  |   | -          |  |   | 116,189 | 
| | Gil Venture          |   | 31,127  |  |   | -         |  |   | -          |  |   | 31,127  | 
| | Stepovich Lease      |   | 9,381   |  |   | -         |  |   | -          |  |   | 9,381   | 
| |                      |   |         |  |   |           |  |   |            |  |   |         | 
| |                      | $ | 196,795 |  | $ | 22,602    |  | $ | -          |  | $ | 219,397 | 

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|7. | MINERAL PROPERTY INTERESTS(Continued)
|-- | -------------------------------------
|   |                                      
|   | a)                                   
|   |                                      
|   |                                      
|   |                                      
|   | b)                                   
|   |                                      
|   |                                      
|   |                                      
|   | c)                                   
|   |                                      
|   |                                      
|   |                                      
|   | d)                                   
|   |                                      
|   |                                      

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|7. | MINERAL PROPERTY INTERESTS(Continued)
|-- | -------------------------------------
|   |                                      
|   | e)                                   
|   |                                      
|   |                                      
|   |                                      
|   | f)                                   
|   |                                      
|   |                                      
|   |                                      
|   | g)                                   
|   |                                      
|   |                                      

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|7. | MINERAL PROPERTY INTERESTS(Continued)
      Deferred Exploration Expenditures
|-- | -----------------------------------------------------------------------------

| |                                                      |   | 2006      |   |   | 2005      |  
| | ---------------------------------------------------- | - | --------- | - | - | --------- | -
| |                                                      |   |           |   |   |           |  
| | Silverknife Claims (Joint Venture)                   |   |           |   |   |           |  
| | Work assessment                                      | $ | 2,163     |   | $ | 2,019     |  
| |                                                      |   |           |   |   |           |  
| | Fish Creek Claims (Joint Venture)                    |   |           |   |   |           |  
| | Geophysical survey                                   |   | 756       |   |   | 7,257     |  
| | Placer sampling
      and drilling                   |   | 26,967    |   |   | 21,818    |  
| | Assays, maps, reports and
      insurance            |   | 11,949    |   |   | 6,440     |  
| |                                                      |   | 39,672    |   |   | 35,515    |  
| |                                                      |   |           |   |   |           |  
| | Fox Creek Claims                                     |   |           |   |   |           |  
| | Geophysical survey                                   |   | 1,564     |   |   | 34,813    |  
| |                                                      |   |           |   |   |           |  
| | West Ridge Claims                                    |   |           |   |   |           |  
| | Geophysical
      survey                             |   | 8,794     |   |   | 34,982    |  
| | Rent assessment                                      |   | -         |   |   | 7,832     |  
| |                                                      |   | 8,794     |   |   | 42,814    |  
| |                                                      |   |           |   |   |           |  
| | Gil Venture (Joint Venture)                          |   |           |   |   |           |  
| | Maps and reports                                     |   | -         |   |   | 937       |  
| | Phase II
      exploration  trenching and drilling  |   | 111,127   |   |   | 126,925   |  
| |                                                      |   | 111,127   |   |   | 127,862   |  
| |                                                      |   |           |   |   |           |  
| | Exploration expenditures for the year                |   | 163,320   |   |   | 243,023   |  
| |                                                      |   |           |   |   |           |  
| | Exploration expenditures written off  abandoned and |   |           |   |   |           |  
| | inactive
      claims                                |   | (38,540   | ) |   | (2,019    | )
| |                                                      |   | 124,780   |   |   | 241,004   |  
| | Exploration expenditures, beginning of year          |   | 2,743,061 |   |   | 2,502,057 |  
| |                                                      |   |           |   |   |           |  
| | Exploration expenditures, end of year                | $ | 2,867,841 |   | $ | 2,743,061 |  

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|8. | INCOME TAXES                                                                                                                                                                                                                                                                                                                             
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                          
|   | Future income taxes reflect the net tax effects of the
        temporary differences between the carrying amounts of assets and liabilities
        for financial reporting purposes and the amounts used for income tax purposes.
        Significant components of the Companys future tax assets as of May
        31 are as follows:

| |                                   |   | 2006       |   |   | 2005       |  
| | --------------------------------- | - | ---------- | - | - | ---------- | -
| |                                   |   |            |   |   |            |  
| | Non-capital losses carry forwards | $ | 804,000    |   | $ | 741,000    |  
| | Equipment                         |   | 16,000     |   |   | 14,000     |  
| | Resource deductions               |   | 474,000    |   |   | 472,000    |  
| |                                   |   | 1,294,000  |   |   | 1,227,000  |  
| | Valuation allowance               |   | (1,294,000 | ) |   | (1,277,000 | )
| |                                   |   |            |   |   |            |  
| | Future income tax asset           | $ | -          |   | $ | -          |  

A reconciliation of the combined federal
  and provincial income taxes at statutory rates and the Companys effective
  income tax expense is as follows:

| |                                       |   | 2006     |   |   | 2005     |  
| | ------------------------------------- | - | -------- | - | - | -------- | -
| |                                       |   |          |   |   |          |  
| | Statutory tax rate                    |   | 34%      |   |   | 36%      |  
| |                                       |   |          |   |   |          |  
| | Income tax recovery at statutory rate | $ | (148,300 | ) | $ | (183,800 | )
| | Permanent differences                 |   | 2,900    |   |   | 1,300    |  
| | Effect of change in tax rate          |   | 51,700   |   |   | 43,100   |  
| | Tax benefits not recognized           |   | 93,700   |   |   | 139,400  |  
| |                                       |   |          |   |   |          |  
| |                                       | $ | -        |   | $ | -        |  

The Company has non-capital losses of
  approximately $2,356,000 (2005 - $2,082,000), which expire over the years 2007
  to 2016. The Company also has cumulative exploration expenses in the amount
  of $1,584,000 (2005 - $1,545,000) in Canada, which can be carried forward indefinitely.

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|9.  | DEBENTURE PAYABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Pursuant to various agreements, the Company agreed to
        issue a convertible debenture for $150,000 to Keltic Bryce Enterprises
        Inc. (Keltic Bryce), subject to regulatory approval. The original
        agreement, dated September 1, 1991, was approved. However, an amendment
        requested by Keltic Bryce, which resulted in the withdrawal of the original
        agreement, increasing the number of units and decreasing the share and
        warrant prices, did not subsequently receive approval and the debenture
        is not convertible under existing regulatory policy. The Company paid
        Keltic Bryce $15,000 interest on November 15, 2005. Interest of $11,749
        was accrued to May 1, 2006 (2005 - $13,260). Therefore, the $150,000 debenture
        has been fully repaid plus accrued interest.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10. | ADVANCES FROM RELATED COMPANIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| |                       |   | 2006   |  |   | 2005   | 
| | --------------------- | - | ------ |  | - | ------ | 
| |                       |   |        |  |   |        | 
| | Linux Gold, Inc.      | $ | 20,936 |  | $ | 23,371 | 
| | JGR Petroleum Inc.    |   | 22,584 |  |   | 22,584 | 
| | KLR Petroleum, Inc.   |   | 485    |  |   | -      | 
| | Rainbow Network       |   | 22,569 |  |   | 22,946 | 
| | Reg Technologies Inc. |   | -      |  |   | 6,157  | 
| | SMR Investments Ltd.  |   | 16,681 |  |   | -      | 
| |                       |   |        |  |   |        | 
| |                       | $ | 83,255 |  | $ | 75,058 | 

|    | The advances from related companies bear no interest
        and have no fixed repayment terms.                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|11. | CONTINGENCIES AND COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Pursuant to an agreement dated May 24, 2006, effective
        June 1, 2006, Agoracom Investor Relations Corp. will provide investor
        relation services for one year for $3,000 per month plus GST, and a stock
        option allowing Agoracom to purchase up to 250,000 common shares in four
        equal instalments of 62,500 shares, vesting each quarter starting September
        1, 2006, and exercisable June 1, 2007 at a price of $0.285 per share.
        The option will expire on June 1, 2009.

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|12. | SHARE CAPITAL                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                        
|    | Authorized share capital consists of:                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                        
|    | 100,000,000 voting common shares with no par value
        5,000,000 non-voting preferred shares with $1 par value                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                        
|    | The Preferred Shares have attached thereto a right to
        receive dividends as determined by the Directors. The Preferred Shares
        may be issued in series, with special rights and restrictions therefore
        being determined by the Directors, subject to regulatory approval. No
        Preferred Shares have been issued to the date of these financial statements.

| |                                          |  | NUMBER OF  |  |   |            |   |   | CONTRIBUTED |  
| | ---------------------------------------- |  | ---------- |  | - | ---------- | - | - | ----------- | -
| |                                          |  | SHARES     |  |   | AMOUNT     |   |   | SURPLUS     |  
| |                                          |  |            |  |   |            |   |   |             |  
| | Balance, May 31, 2004                    |  | 33,180,688 |  | $ | 9,018,122  |   | $ | 169,355     |  
| |                                          |  |            |  |   |            |   |   |             |  
| | Private placement warrants exercised     |  |            |  |   |            |   |   |             |  
| | (a)                                      |  | 622,000    |  |   | 186,600    |   |   | -           |  
| | Private placement warrants exercised     |  |            |  |   |            |   |   |             |  
| | (b)                                      |  | 975,000    |  |   | 146,250    |   |   | -           |  
| | Private placement (c)                    |  | -          |  |   | 600,000    |   |   | -           |  
| | Share issue costs                        |  | -          |  |   | (6,637     | ) |   | -           |  
| | Stock based compensation                 |  | -          |  |   | -          |   |   | 6,580       |  
| |                                          |  | 3,597,000  |  |   | 926,213    |   |   | 6,580       |  
| |                                          |  |            |  |   |            |   |   |             |  
| | Balance, May 31, 2005                    |  | 36,777,688 |  |   | 9,944,335  |   |   | 175,935     |  
| |                                          |  |            |  |   |            |   |   |             |  
| | Stock options exercised (d)              |  | 37,500     |  |   | 7,500      |   |   | -           |  
| | Fair value of stock options exercised    |  | -          |  |   | 12,776     |   |   | (12,776     | )
| | Private placement (e)                    |  | 2,648,000  |  |   | 662,000    |   |   | -           |  
| | Private placement warrants exercised (f) |  | 5,000      |  |   | 1,750      |   |   | -           |  
| | Share issue costs                        |  | -          |  |   | (4,254     | ) |   | -           |  
| | Stock based compensation                 |  | -          |  |   | -          |   |   | 6,242       |  
| |                                          |  | 2,690,500  |  |   | 679,772    |   |   | (6,534      | )
| |                                          |  |            |  |   |            |   |   |             |  
| | Balance, May 31, 2006                    |  | 39,468,188 |  | $ | 10,624,107 |   | $ | 169,401     |  

| | a) | From June 4 to August 12, 2004, 10 individuals exercised
        private placement warrants totalling 622,000 shares at a price of $0.30
        per share.      
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                  
| | b) | From September 14 to October 19, 2004, 3 individuals
        exercised private placement warrants totalling 975,000 shares at a price
        of $0.15 per share.

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|12. | SHARE CAPITAL(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | On October 19, 2004, the Company granted a
        consultant stock options for up to 25,000 common shares exercisable at
        $0.45 per share for a five-year term; and on March 7, 2005, one employees
        options for 50,000 common shares were repriced from $0.63 to $0.35. On
        October 7, 2005, one employees options for 150,000 common shares
        were repriced from $0.40 to $0.20; and on November 17, 2005, one employees
        options for 25,000 common shares at $0.45 were cancelled. On February
        19, 2006, a consultants options for 350,000 common shares at a price
        of $0.40 expired without being exercised.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Subsequent to year-end, on June 29, 2006,
        the Company granted a consultant stock options for 25,000 common shares
        exercisable at $0.30 per share for a five-year term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Outstanding Commitments to Issue Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | At May 31, 2006, the following commitments
        to issue shares were outstanding:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| | TYPE OF                    | NUMBER OF |             | EXPIRY           
| | -------------------------- | --------- | ----------- | -----------------
| | COMMITMENT                 | SHARES    | PRICE       | DATE             
| |                            |           |             |                  
| | Private placement warrants | 1,324,000 | $ 0.30/0.35 | May 17, 2007/2008
| | Consultants options       | 112,500   | $ 0.20      | October 7, 2006  
| | Directors options         | 1,590,000 | $ 0.15      | April 22, 2007   
| | Employees options         | 50,000    | $ 0.40      | December 16, 2007
| | Consultants options       | 75,000    | $ 0.40      | March 4, 2008    
| | Consultants options       | 300,000   | $ 0.45      | November 13, 2008
| | Directors options         | 50,000    | $ 0.35      | March 5, 2009    
| |                            |           |             |                  
| |                            | 3,501,500 |             |                  

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|12. | SHARE CAPITAL(Continued)                                                                          
|--- | --------------------------------------------------------------------------------------------------
|    |                                                                                                   
|    | During the year ended May 31, 2006, the Company had
        the following stock option activities:

| |                       |  |           |   |   | WEIGHTED | 
| | --------------------- |  | --------- | - | - | -------- | 
| |                       |  | NUMBER    |   |   | AVERAGE  | 
| |                       |  | OF        |   |   | EXERCISE | 
| |                       |  | OPTIONS   |   |   | PRICE    | 
| |                       |  |           |   |   |          | 
| | Balance, May 31, 2004 |  | 2,565,000 |   | $ | 0.26     | 
| |                       |  |           |   |   |          | 
| | Granted               |  | 25,000    |   |   | 0.45     | 
| |                       |  |           |   |   |          | 
| | Balance, May 31, 2005 |  | 2,590,000 |   |   | 0.27     | 
| |                       |  |           |   |   |          | 
| | Expired               |  | (350,000  | ) |   | 0.40     | 
| | Exercised             |  | (37,500   | ) |   | 0.20     | 
| | Cancelled             |  | (25,000   | ) |   | 0.45     | 
| |                       |  |           |   |   |          | 
| | Balance, May 31, 2006 |  | 2,177,500 |   | $ | 0.21     | 

Stock Based Compensation Expense

The fair value of each option granted
  is estimated on the grant date using the Black-Scholes option-pricing model
  assuming no dividend yield and the following weighted average assumptions for
  options granted: expected volatility of 52% (2005 - 158%; 2004  158%),
  weighted average risk free interest rate of 3.40% (2005 - 4.56%; 2004 
  4.56%) and expected life of 1 year (2005  2 years; 2004  2 years).

The following table summarizes information
  about the stock options outstanding at May 31, 2006:

WEIGHTEDWEIGHTED
      NUMBER
      AVERAGE
      NUMBERAVERAGE
      OF
      REMAINING
      OFEXERCISE
      OPTIONS
      CONTRACTUAL
      OPTIONSPRICE
      OUTSTANDING
      LIFE
        (YEARS)
      EXERCISABLE$ 0.15
      1,590,000
      0.89
      1,590,000$ 0.40
      125,000
      1.68
      125,000$ 0.45
      300,000
      2.46
      300,000$ 0.35
      50,000
      2.76
      50,000$ 0.20
      112,500
      0.35
      112,500$ 0.20
      2,177,500
      1.17
      2,177,500


---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|13. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Related party transactions are in the normal
        course of operations and are measured at the exchange amount, which is
        the amount of consideration established and agreed to by the related parties.
        Related party transactions not disclosed elsewhere in these financial
        statements are as follows:                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Reg Technologies Inc. is a public company
        which shares office facilities and staff, and several directors. REGI
        US, Inc. is another company with common directors, staff and office facilities.                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | SMR Investments Ltd. is a private company
        controlled by an officer of the Company. Under a management contract with
        SMR Investments Ltd., the Company agreed to pay up to $2,500 per month
        for management services. The Company was charged management fees of $30,000
        (2005 - $30,000; 2004 - $17,500) by SMR during the current year.                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Company holds 15,880 shares of Linux
        Gold, Inc., a BC public company with common directors.                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | During the 2006 fiscal year, directors
        fees of $12,000 (2005 - $12,000; 2004 - $12,000) were paid
        to J. Robertson, President of the Company; administration consulting fees
        of $19,000 (2005 - $25,750; 2004 - $24,375) were paid to J.
        Lorette, a director of the Company and secretarial fees of $19,550
        (2005 - $23,500; 2004 - $20,874) were paid to M. van Oord, a director
        of the Company.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Fees of $6,770 (2005 - $9,019; 2004
        - $1,646) were paid to KLR Petroleum Ltd. (which is controlled by
        an officer of the Company) for administration of the Company payroll and
        benefit plan.                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Office rent amounted to $17,040 (2005
        - $16,680; 2004 - $15,600) for the year ended May 31, 2006 of
        which $11,360 (2005 - $11,120; 2004 - $10,400) has been shared
        with Reg Technologies Inc. and REGI US, Inc.                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|14. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | On June 10, 2006, the Company and Frederic
        & John Rothermel (the Vendors) entered into an agreement whereby the
        Company would purchase a 100% interest in the Gold Hill Patented Claim
        Group located in the Warren Mining District, Cochise County, Arizona,
        USA, subject to a 10% Net Profits Royalty to the vendors, for the following
        considerations:                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | b)                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | c)                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | d)                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|15. | TERYL, INC. TRANSACTIONS (100% US SUBSIDIARY)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | In 1998, Teryl, Inc. offered a private placement for
        up to 1,000,000 shares at a price of $0.23 ($0.15 US) and subscriptions
        of $146,044 ($96,750 US) were received by November 19, 1999. Since
        the offering was not fully subscribed, the Companies negotiated with the
        subscribers to replace the Teryl, Inc. shares with Teryl Resources Corp.
        shares. $76,072 ($51,750 US) worth of capital stock was issued
        on May 23, 2003 for these subscriptions. One subscriber did not return
        the agreement and negotiations are proceeding to resolve this.                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
        GENERALLY ACCEPTED ACCOUNTING PRINCIPLES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | These consolidated financial statements have been
        prepared in accordance with Canadian generally accepted accounting principles
        (Canadian GAAP). Material variations in the accounting measurement
        principles, practices and methods used in preparing these consolidated
        financial statements from measurement principles, practices and methods
        accepted in the United States (US GAAP) are described and
        quantified below.                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Mineral Properties and Deferred Exploration Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Under Canadian GAAP, mineral property interests and
        deferred exploration costs, including acquisition and exploration costs,
        are carried at cost and written down if the properties are abandoned,
        sold or if management determines there to be an impairment in value. Under
        United States GAAP, mineral property interests are carried at cost and
        deferred exploration costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Asset Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Under US GAAP, Statement of Financial Accounting Standards
        No. 143, Accounting for Asset Retirement Obligations (SFAS
        143) requires companies to record the fair value of the liability
        for closure and removal costs associated with legal obligations upon the
        retirement or removal of any tangible long-lived assets effective June
        1, 2003. Under this standard, the initial recognition of the liability
        is capitalized as part of the asset cost and amortized over its estimated
        useful life. For Canadian GAAP purposes, effective June 1, 2004, the Company
        adopted the provisions of CICA HB 3110 Asset Retirement Obligations
        which are substantially similar to those of SFAS 143.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company has determined that there were no material
        differences in the measurement and presentation of asset retirement obligations
        between Canadian GAAP and US GAAP as at May 31, 2006, 2005 and 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
        GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Under US GAAP, Statement of Financial Accounting Standard
        No. 123, Accounting for Stock-Based Compensation (SFAS
        123) encourages companies to establish a fair market value based
        method of accounting for stock-based compensation plans. Accounting Principles
        Board Opinion No. 25 (APB 25) permits the measurement of compensation
        cost for stock options as the excess, if any, of the quoted market price
        of the Companys stock at the date of grant over the option price.
        The Company has chosen to account for stock-based compensation under SFAS
        123.                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company has a stock-based compensation plan which
        is described in note 12. The Company accounts for stock-based compensation,
        including stock options and warrants, using the fair value based method,
        as prescribed by CICA HB 3870 Stock-based Compensation and Other
        Stock-Based Payments to account for stock based transactions with
        officers, directors and consultants. Under this method, the fair value
        of the stock options and warrants at the date of grant is amortized over
        the vesting period, with an offsetting credit recorded as an increase
        in contributed surplus. If the stock options or warrants are exercised,
        the proceeds are credited to share capital and the fair value at the date
        of the grant is reclassified from contributed surplus to share capital.
        Accordingly, there were no material differences between Canadian GAAP
        and US GAAP for the years ended May 31, 2006, 2005 and 2004.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Marketable Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Under Canadian GAAP, short-term marketable securities
        are carried at the lower of aggregate cost or current market value, with
        any unrealized loss included in the statements of operations. Long-term
        investments are carried on the cost or equity basis and are only written
        down when there is evidence of a decline in value that is other than temporary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Under US GAAP, Statement of Financial Accounting Standard
        No. 115, Accounting for Certain Investments in Debt and Equity Securities
        (SFAS 115) requires that certain equity investments must be classified
        into available-for-sale securities and carried at fair market value. Any
        unrealized holding gains or losses are reported as a separate component
        of shareholders equity until realized for available-for-sale securities,
        and included in earnings for trading securities. Under US GAAP, the Companys
        investments are classified as available-for-sale securities.                                                                                                                                                                                                                                                                                                                                                                                       

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
        ACCEPTED ACCOUNTING PRINCIPLES(Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | In May 2005, the Financial Accounting Standards Board (FASB)
      issued SFAS No. 154, Accounting Changes and Error Corrections 
      A Replacement of APB Opinion No. 20 and SFAS No. 3. SFAS No.
      154 changes the requirements for the accounting for and reporting of a change
      in accounting principle and applies to all voluntary changes in accounting
      principle. It also applies to changes required by an accounting pronouncement
      in the unusual instance that the pronouncement does not include specific
      transition provisions. SFAS No. 154 requires retrospective application to
      prior periods financial statements of changes in accounting principle,
      unless it is impracticable to determine either the period-specific effects
      or the cumulative effect of the change. The provisions of SFAS No. 154 are
      effective for accounting changes and correction of errors made in fiscal
      years beginning after June 1, 2006. The adoption of this standard is not
      expected to have a material effect on the Companys results of operations
      or financial position.                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | In December 2004, the FASB issued SFAS No.
        153, Exchanges of Non-monetary Assets - An Amendment of APB Opinion
        No. 29. The guidance in APB Opinion No. 29, Accounting
        for Non-monetary Transactions, is based on the principle that
        exchanges of non-monetary assets should be measured based on the fair
        value of the assets exchanged. The guidance in that Opinion, however,
        included certain exceptions to that principle. SFAS No. 153 amends Opinion
        No. 29 to eliminate the exception for non- monetary exchanges of similar
        productive assets and replaces it with a general exception for exchanges
        of non-monetary assets that do not have commercial substance. A non- monetary
        exchange has commercial substance if the future cash flows of the entity
        are expected to change significantly as a result of the exchange. The
        provisions of SFAS No. 153 are effective for non-monetary asset exchanges
        occurring in fiscal periods beginning after June 1, 2006. Early application
        is permitted and companies must apply the standard prospectively. The
        adoption of this standard is not expected to have a material effect on
        the Companys results of operations or financial position.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The FASB has also issued SFAS No. 155 Accounting
        for Certain Hybrid Financial Instruments and SFAS No. 156 Accounting
        for Servicing of Financial Assets, but they will not have any
        relationship to the operations of the Company. Therefore, a description
        and its impact for each on the Companys operations and financial
        position have not been disclosed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
        ACCEPTED ACCOUNTING PRINCIPLES(Continued)                     
|--- | -------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                
|    | The impact of the differences between Canadian GAAP
        and US GAAP on the consolidated balance sheets would be as follows:

| |                            |   |           |  |   | 2006        |   |   |         | 
| | -------------------------- | - | --------- |  | - | ----------- | - | - | ------- | 
| |                            |   | BALANCE   |  |   |             |   |   | BALANCE | 
| |                            |   | CANADIAN  |  |   |             |   |   | US      | 
| |                            |   | GAAP      |  |   | ADJUSTMENTS |   |   | GAAP    | 
| |                            |   |           |  |   |             |   |   |         | 
| | Current Assets             | $ | 320,412   |  | $ | -           |   | $ | 320,412 | 
| | Investments                |   | 4,026     |  |   | 3,321       |   |   | 7,347   | 
| | Equipment                  |   | 16,043    |  |   | -           |   |   | 16,043  | 
| | Natural gas well           |   | 103,045   |  |   | (103,045    | ) |   | -       | 
| | Mineral property interests |   | 190,236   |  |   | -           |   |   | 190,236 | 
| | Deferred expenditures      |   | 2,867,841 |  |   | (2,867,841  | ) |   | -       | 
| |                            |   |           |  |   |             |   |   |         | 
| |                            | $ | 3,501,603 |  | $ | (2,967,565  | ) | $ | 534,038 | 
| |                            |   |           |  |   |             |   |   |         | 
| | Current liabilities        | $ | 105,578   |  | $ | -           |   | $ | 105,578 | 
| | Shareholders equity       |   | 3,396,025 |  |   | (2,967,565  | ) |   | 428,460 | 
| |                            |   |           |  |   |             |   |   |         | 
| |                            | $ | 3,501,603 |  | $ | (2,967,565  | ) | $ | 534,038 | 

| |                            |   |           |  |   | 2005        |   |   |         | 
| | -------------------------- | - | --------- |  | - | ----------- | - | - | ------- | 
| |                            |   | BALANCE   |  |   |             |   |   | BALANCE | 
| |                            |   | CANADIAN  |  |   |             |   |   | US      | 
| |                            |   | GAAP      |  |   | ADJUSTMENTS |   |   | GAAP    | 
| |                            |   |           |  |   |             |   |   |         | 
| | Current Assets             | $ | 420,335   |  | $ | -           |   | $ | 420,335 | 
| | Investments                |   | 4,026     |  |   | (1,534      | ) |   | 2,492   | 
| | Equipment                  |   | 22,890    |  |   | -           |   |   | 22,890  | 
| | Mineral property interests |   | 219,397   |  |   | -           |   |   | 219,397 | 
| | Deferred expenditures      |   | 2,743,061 |  |   | (2,743,061  | ) |   | -       | 
| |                            |   |           |  |   |             |   |   |         | 
| |                            | $ | 3,409,709 |  | $ | (2,744,595  | ) | $ | 665,114 | 
| |                            |   |           |  |   |             |   |   |         | 
| | Current liabilities        | $ | 256,276   |  | $ | -           |   | $ | 256,276 | 
| | Shareholders equity       |   | 3,153,433 |  |   | (2,744,595  | ) |   | 408,838 | 
| |                            |   |           |  |   |             |   |   |         | 
| |                            | $ | 3,409,709 |  | $ | (2,744,595  | ) | $ | 665,114 | 

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
        ACCEPTED ACCOUNTING PRINCIPLES(Continued)
|--- | ----------------------------------------------------------------------------------------------------------

| |                            |   |           |  |   | 2004        |   |   |         | 
| | -------------------------- | - | --------- |  | - | ----------- | - | - | ------- | 
| |                            |   | BALANCE   |  |   |             |   |   | BALANCE | 
| |                            |   | CANADIAN  |  |   |             |   |   | US      | 
| |                            |   | GAAP      |  |   | ADJUSTMENTS |   |   | GAAP    | 
| |                            |   |           |  |   |             |   |   |         | 
| | Current Assets             | $ | 427,773   |  | $ | -           |   | $ | 427,773 | 
| | Investments                |   | 4,026     |  |   | 519         |   |   | 4,545   | 
| | Equipment                  |   | 13,470    |  |   | -           |   |   | 13,470  | 
| | Mineral property interests |   | 196,795   |  |   | -           |   |   | 196,795 | 
| | Deferred expenditures      |   | 2,502,057 |  |   | (2,502,057  | ) |   | -       | 
| |                            |   |           |  |   |             |   |   |         | 
| |                            | $ | 3,144,121 |  | $ | (2,501,538  | ) | $ | 642,583 | 
| |                            |   |           |  |   |             |   |   |         | 
| | Current liabilities        | $ | 407,741   |  | $ | -           |   | $ | 407,741 | 
| | Shareholders equity       |   | 2,736,380 |  |   | (2,501,538  | ) |   | 234,842 | 
| |                            |   |           |  |   |             |   |   |         | 
| |                            | $ | 3,144,121 |  | $ | (2,501,538  | ) | $ | 642,583 | 

The impact of the differences between
  Canadian GAAP and US GAAP on the consolidated statements of operations and deficit
  would be as follows:

| |                                   |   | 2006       |   |   | 2005       |   |   | 2004       |  
| | --------------------------------- | - | ---------- | - | - | ---------- | - | - | ---------- | -
| |                                   |   |            |   |   |            |   |   |            |  
| | Net loss for the year, Canadian   |   |            |   |   |            |   |   |            |  
| | GAAP                              | $ | (430,646   | ) | $ | (515,740   | ) | $ | (791,776   | )
| |                                   |   |            |   |   |            |   |   |            |  
| | Adjustments:                      |   |            |   |   |            |   |   |            |  
| | Deferred exploration costs        |   | (124,780   | ) |   | (241,004   | ) |   | (652,490   | )
| |                                   |   |            |   |   |            |   |   |            |  
| | Net loss for the year, US GAAP    | $ | (555,426   | ) | $ | (756,744   | ) | $ | (1,444,266 | )
| |                                   |   |            |   |   |            |   |   |            |  
| | Basic and diluted loss per share, |   |            |   |   |            |   |   |            |  
| | US GAAP                           | $ | (0.02      | ) | $ | (0.02      | ) | $ | (0.05      | )
| |                                   |   |            |   |   |            |   |   |            |  
| | Weighted average number of        |   |            |   |   |            |   |   |            |  
| | common shares outstanding,        |   |            |   |   |            |   |   |            |  
| | basic and diluted                 |   | 36,889,399 |   |   | 34,436,365 |   |   | 28,925,934 |  

---

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2006 AND 2005(Stated in Canadian Dollars)

|16. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
        ACCEPTED ACCOUNTING PRINCIPLES(Continued)
|--- | ----------------------------------------------------------------------------------------------------------
|    |                                                                                                           
|    | The Companys comprehensive loss is comprised as
        follows:                                         

| |                                            |   | 2006     |   |   | 2005     |   |   | 2004       |  
| | ------------------------------------------ | - | -------- | - | - | -------- | - | - | ---------- | -
| | Net loss for the year, US GAAP             | $ | (555,426 | ) | $ | (756,744 | ) | $ | (1,444,266 | )
| | Change in net unrealized gains (losses) on |   |          |   |   |          |   |   |            |  
| | available-for-sale investments             |   | 4,855    |   |   | (2,053   | ) |   | 4,002      |  
| | Comprehensive loss                         | $ | (550,571 | ) | $ | (758,797 | ) | $ | (1,440,264 | )

The impact of the differences between
  Canadian GAAP and US GAAP on the consolidated statements of cash flows would
  be as follows:

| |                                              |   | 2006     |   |   | 2005     |   |   | 2004       |  
| | -------------------------------------------- | - | -------- | - | - | -------- | - | - | ---------- | -
| | Cash flows used in operating activities,     |   |          |   |   |          |   |   |            |  
| | Canadian GAAP                                | $ | (390,492 | ) | $ | (529,428 | ) | $ | (1,167,809 | )
| | Deferred exploration costs                   |   | (163,320 | ) |   | (253,967 | ) |   | (654,642   | )
| | Cash flows used in operating activities, US  |   |          |   |   |          |   |   |            |  
| | GAAP                                         |   | (553,812 | ) |   | (783,395 | ) |   | (1,822,451 | )
| | Cash flows provided by financing activities, |   |          |   |   |          |   |   |            |  
| | Canadian GAAP and US GAAP                    |   | 548,206  |   |   | 770,810  |   |   | 2,275,765  |  
| | Cash flows used in investing activities,     |   |          |   |   |          |   |   |            |  
| | Canadian GAAP                                |   | (266,365 | ) |   | (293,653 | ) |   | (687,017   | )
| | Deferred exploration costs                   |   | 163,320  |   |   | 253,967  |   |   | 654,642    |  
| | Cash flows used in investing activities, US  |   |          |   |   |          |   |   |            |  
| | GAAP                                         |   | (103,045 | ) |   | (39,686  | ) |   | (32,375    | )
| | (Decrease) Increase in cash                  |   | (108,651 | ) |   | (52,271  | ) |   | 420,939    |  
| | Cash (Bank indebtedness), beginning of       |   |          |   |   |          |   |   |            |  
| | year                                         |   | 318,287  |   |   | 370,558  |   |   | (50,381    | )
| | Cash, end of year                            | $ | 209,636  |   | $ | 318,287  |   | $ | 370,558    |  

---

ITEM 18.        FINANCIAL
  STATEMENTS

Not applicable.

ITEM 19.        EXHIBITS

Documents filed as exhibits to this annual report:

Number
    Description1.1
    Certificate of Incorporation 
      Candy Mountain Gold Corporation May 23, 1980
    (1)1.2
    Certificate of Name Change,
      Special Resolution and Altered Memorandum to change name from Candy
      Mountain Resources to Teryl Resources Corp. dated January 20, 1984
    (1)1.3
    Special resolutions and Altered
      memorandum dated October 25, 1985 increasing the authorized capital to
      15,000,000 by creating 5,000,000 Preferred Shares with a par value of
      $1.00, and amending the Articles of the Company by adding Special Rights
      and Restrictions Attached to the Preferred Shares as a Class
    (1)1.4
    Altered memorandum and special
      resolution dated November 30, 1988 increasing the number of authorized
      common shares to 30,000,000 common shares from 10,000,000 common shares
    (1)1.5
    Altered memorandum and special
      resolution dated November 30, 1988 canceling the then existing Articles of
      the Company and replacing the Articles in their entirety with new Articles
      of the Company
    (1)1.6
    Altered memorandum and special
      resolution dated November 20, 2000 increasing the authorized capital to
      100,000,000 common shares from 30,000,000, effective December 4, 2002
    (4)1.7
    Altered Memorandum and special
      resolution, certificate of name change dated February 4, 2003 changing the
      name from Teryl Resources Corp. to Teryl Gold Corp.
    (4)1.8
    Transition Application and Notice
      of Articles transitioning from the former Company Act (British Columbia)
      to the Business Corporations Act (British Columbia) dated September 15,
      2004
    (6)1.9
    Notice of Alteration effective
      November 25, 2004 changing the name of the Company back to Teryl Resources
      Corp.
    (6)1.10
    Notice of Articles dated November
      25, 2004 reflecting the Altered memorandum and special resolution dated
      November 15, 2004 canceling the then existing Articles of the Company and
      replacing the Articles in their entirety with new Articles of the Company
    (6)2.1
    Specimen copy of Registrants
      common share certificate
    (1)4.1
    Commitment to provide financing
      to Teryl Resources Corp. as required for ongoing operations dated February
      14, 2000 from John Robertson
    (2)4.2
    Mining Joint Venture Agreement
      between Fairbanks Gold Mining, Inc. and Teryl, Inc. dated September 23,
      1999
    (1)4.3
    Management Agreement dated
      December 1, 1994 between Teryl Resources Corp. and SMR Investments Ltd.
    (1)4.4
    Agreement between Teryl Resources Corp. and
      Linux Gold Corp. (formerly LinuxWizardry Systems, Inc.) made March 5, 2002
      Fish Creek Mineral Claims
    (3)4.5
    Amendment to Joint Venture
      Agreement between Linux Gold Corp. and Teryl Resources Corp. dated
      November 4, 2002
    (4)


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4.6
      Anderson Group Property Purchase Agreement dated
        August 18, 2003
      (5)4.7
      West Ridge Property Lease Agreement dated July
        2003
      (5)4.8
      Extension to Joint Venture Agreement between
        Linux Gold Corp. and Teryl Resources Corp. dated March 5, 2005
      (6)4.9
      Upper Fox Creek Development Agreement dated
        June 23, 2004 between the Company, Jean Turner and Ron Way
      (6)8.1
      List of Subsidiaries
      (7)12.1
      Certification pursuant
        to Title 18, United States Code, Section 1350 as adopted pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002 
        (John G. Robertson)
      (7)12.2
      Certification pursuant
        to Title 18, United States Code, Section 1350 as adopted pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002 
        (Susanne Robertson)
      (7)13.1
      Certification pursuant
        to Title 18, United States Code, Section 1350 as adopted pursuant to Section
        906 of the Sarbanes-Oxley Act of 2002 
        (John G. Robertson)
      (7)13.2
      Certification pursuant
        to Title 18, United States Code, Section 1350 as adopted pursuant to Section
        906 of the Sarbanes-Oxley Act of 2002 
        (Susanne Robertson)
      (7)14.1
      Consent of Morgan
        and Company
      (7)


|(1) | incorporated by reference to the Registrants
      Registration Statement on Form 20-F filed on December 29, 2000 with the US
      Securities and Exchange Commission
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | incorporated by reference to the Registrants Annual
      Report on Form 20-F for the fiscal year-ended May 31, 2000.                                                 
|(3) | incorporated by reference to the Registrants Annual
      Report on Form 20-F for the fiscal year-ended May 31, 2002                                                  
|(4) | incorporated by reference to the Registrants Annual
      Report on Form 20-F for the fiscal year-ended May 31, 2003                                                  
|(5) | incorporated by reference to the Registrants Annual
      Report on Form 20-F for the fiscal year-ended May 31, 2004                                                  
|(6) | incorporated by reference to the Registrants Annual
      Report on Form 20-F for the fiscal year-ended May 31, 2005                                                  
|(7) | attached hereto                                                                                                                                                        

GLOSSARY OF MINING TERMS

The following is a glossary of some of the terms used in the
mining industry and referenced herein:

Alluvial: A term used to identify particular types of,
or minerals found associated with, deposits made by flowing water, such as
alluvial gold

Arsenopyrite:A major ore of arsenic, Arsenopyite can
  contain a small amount of gold as an impurity

Assay  a precise and accurate analysis of the metal
contents in an ore or rock sample

Au - gold.

Auger drill  a handheld machine that produces small,
continuous core samples in unconsolidated materials

Breccia: A fragmental rock; any rock formation
essentially composed of uncemented, or loosely consolidated, small angular

Contained gold  total measurable gold in grams or
ounces estimated to be contained within a mineral deposit. Makes no allowance
for economic criteria, mining dilution or recovery losses.

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Diamond drill  a large machine that produces a more or
less continuous core sample of the rock or material being drilled.

Feasibility study  a detailed report assessing the
feasibility, economics and engineering of placing a mineral deposit into
commercial production

Fracture: The general term to include any kind of
discontinuity in a body of rock if produced by mechanical process such as shear
stress or tensile stress

Gm/mtor gpt- grams per metric tonne.

Gold deposit - means a mineral deposit mineralized with
gold.

Gold resource  see geological or mineral resource

Grams per cubic meter - alluvial mineralization measured
by grams of gold contained per cubic meter of material, a measure of gold
content by volume not by weight.

Graphite: A allotropic form of carbon found in nature

Inferred mineral resource:That part of a mineral resource
  for which quantity and grade or quality can be estimated on the basis of geological
  evidence and limited sampling and reasonably assumed, but not verified, geological
  and grade continuity. The estimate is based on limited information and sampling
  gathered through appropriate techniques from locations such as outcrops, trenches,
  pits, workings and drill holes

Indicated mineral resource: That part of a mineral
resource for which quantity and grade or quality, densities, shape and physical
characteristics, can be estimated with a level of confidence sufficient to allow
the appropriate application of technical and economic parameters, to support
mine planning and evaluation of the economic viability of the deposit. The
estimate is based on detailed and reliable exploration and testing information
gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that are spaced closely enough for
geological and grade continuity to be reasonably assumed

Intrusive:cuts across (is intrusive into)

Listwanite: (carbonate altered serpentinite) is
associated with gold mineralization.

Lode mining  mining of gold bearing rocks, typically in
the form of veins or stockworks

Measured resourcemeans that part of a mineral resource
for which quantity, grade or quality, densities, shape, physical characteristics
are so well established that they can be estimated with confidence sufficient to
allow the appropriate application of technical and economic parameters, to
support production planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration, sampling
and testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.

mineral claim or mining claim: The portion of
mining ground held under law by a claimant.

mineralization: Implication that the rocks contain
sulphide minerals and that these could be related to ore.

net profit interest (NPI)  effectively a royalty based
on the net profits generated after recovery of all costs

net smelter royalty or NSR - a royalty based on
the gross proceeds received from the sale of minerals less the cost of smelting,
refining, freight and other related costs.

ore  a naturally occurring rock or material from which
economic minerals can be extracted at a profit

ounce or oz. - a troy ounce or 20 pennyweights or 480
grains or 31.103 grams.

opt troy ounces per short ton

placer: A place where gold is obtained by washing; an
  alluvial or glacial deposit, as of sand or gravel, containing particles of gold
  or other valuable minerals including gemstones.

probable reserve- the economically mineable part of an
indicated, and in some circumstances a measured resource demonstrated by at
least a preliminary feasibility study. This study must include adequate
information on mining, processing, metallurgical, economic, and other relevant
factors that demonstrate, at the time of reporting, that economic extraction can
be justified.

prospect  an area prospective for economic minerals
based on geological, geophysical, geochemical and other criteria

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proven reservemeans the economically mineable part of a
measured resource demonstrated by at least a preliminary feasibility study. This
study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting,
that economic extraction is justified.

reserve: That part of a mineral deposit which could be
economically and legally extracted or produced at the time of the reserve
determination.

reverse circulation drill a large machine that
produces a continuous chip sample of the rock or material being drilled

skarn:a fine-grained metamorphic rock that is usually
coloured green or red, occasionally gray, black, brown or white. It forms
through thermal metamorphism as the mineralogical, chemical and crystallographic
changes in a solid-state rock, i.e. without melting, in response to new
conditions of pressure and/or temperature, and/or introduction of fluids.

Stockwork: Small veins of mineralization that have so
penetrated a rock mass that the whole rock mass can be considered mineralized

ton- short ton (2,000 pounds).

tonne- metric tonne (2,204.6 pounds).

trenching  the surface excavation of a linear trench to
expose mineralization for sampling

vein  a tabular body of rock typically of narrow
thickness and often mineralized occupying a fault, shear, fissure or fracture
crosscutting another pre-existing rock

For ease of reference, the following conversion factors are
provided:

1 mile
    = 1.609 kilometers
    2,204 pounds
    = 1 tonne1 yard
    = 0.9144 meter
    2,000 pounds/1 short ton
    = 0.907 tonne1 acre
    = 0.405 hectare
    1 troy ounce
    = 31.103 grams


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SIGNATURE PAGE

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

TERYL RESOURCES CORP. REGISTRANT

|Dated: August 7, 2007 | By: | /s/
      John G. Robertson   
|--------------------- | --- | ------------------------------
|                      |     | John G. Robertson             
|                      |     | Chairman of the Board/Director

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