UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549



FORM 20-F

(Mark One)



☐

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



OR



x

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





For the fiscal year ended
December 31, 2010



OR



☐

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





OR



☐

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of the event requiring this shell company report________________________



For the transition period from ___________________ to ____________________

Commission file number 0-13391





SAMEX MINING CORP.

(Exact name of Registrant as specified in its charter)



British Columbia, Canada

(Jurisdiction of incorporation or organization)



#301  32920 Ventura Avenue, Abbotsford, British Columbia, Canada V2S 6J3

(Address of principal executive offices)



Larry McLean, Vice President and CFO

Tel: (604) 870-9920  Facsimile: (604) 870-9930

SAMEX Mining Corp.  #301  32920 Ventura Avenue, Abbotsford, British Columbia, Canada V2S 6J3

(Name, telephone, e-mail and/or facsimile number and address of Company contact person)



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



Securities registered or to be registered pursuant to Section 12(g) of the Act:



Common Shares, without par value

(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:



Not Applicable

(Title of Class)





1

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Indicate the number of outstanding shares of each of the Registrants classes of capital of common stock as of December 31, 2010: 119,467,719 Common Shares





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes      x No



If this report is an annual report or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

☐ Yes      xNo



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.



xYes      ☐ No



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☐ Yes      ☐ No



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





Large accelerated filer ☐
      Accelerated filer ☐
      Non-accelerated filer x








Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



|          |  |                                                                                                       |  |       |  
|--------- |  | ----------------------------------------------------------------------------------------------------- |  | ----- | -
|U.S. GAAP |  | International Financial Reporting Standards as issued by the International Accounting Standards Board |  | Other | X



|                                                                                                                                                              |  |         |   |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------- | - | ------- | 
|If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. |  |        
|                                                                                                                                                              |  | Item 17 | X | Item 18 | 





If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

☐ Yes      x No









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SAMEX MINING CORP.

FORM 20-F



TABLE OF CONTENTS



















|Page
|----

|Item 1. Identity of Directors, Senior Management and Advisers                         |  | 7  
|------------------------------------------------------------------------------------- |  | ---
|Item 2. Offer Statistics and Expected Timetable                                       |  | 7  
|Item 3. Key Information                                                               |  | 7  
|Item 4. Information on the Company                                                    |  | 23 
|Item 5. Operating and Financial Review and Prospects                                  |  | 44 
|Item 6. Directors, Senior Management and Employees                                    |  | 61 
|Item 7. Major Shareholders and Related Party Transactions                             |  | 65 
|Item 8. Financial Information                                                         |  | 67 
|Item 9. The Offer and Listing                                                         |  | 68 
|Item 10. Additional Information                                                       |  | 69 
|Item 11. Quantitative and Qualitative Disclosures About Market Risk                   |  | 75 
|Item 12. Description of Securities Other Than Equity Securities                       |  | 82 
|Item 13. Defaults, Dividend Arrearages and Delinquencies                              |  | 82 
|Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 82 
|Item 15. Controls And Procedures                                                      |  | 82 
|Item 16A. Audit Committee Financial Expert                                            |  | 83 
|Item 16B. Code of Ethics                                                              |  | 83 
|Item 16C. Principal Accountant Fees and Services                                      |  | 83 
|Item 16D. Exemptions From The Listing Standards For Audit Committees                  |  | 77 
|Item 16E. Purchase Of Equity Securities By The Issuer And Affiliated Purchases        |  | 77 
|Item 17. Financial Statements                                                         |  | 77 
|Item 18. Financial Statements                                                         |  | 103
|Item 19. Exhibits                                                                     |  | 103



3

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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This Annual Report on Form 20-F and the exhibits attached hereto contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern the Companys anticipated results and developments in the Companys operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future.  These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.  Statements concerning reserves and mineral resource estimates may also be deemed to constitute forward-looking statements to the extent that they involve estimates of the mineralization that will be encountered if the property is developed, and in the case of mineral reserves, such statements reflect the conclusion based on certain assumptions that the mineral deposit can be economically exploited.  Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as expects or does not expect, is expected, anticipates or does not anticipate, plans, estimates or intends, or stating that certain actions, events or results may, could, would, might or will (or the negative and grammatical variations of any of these terms and similar expressions) be taken, occur or be achieved,) are not statements of historical fact and may be forward-looking statements.  Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:



·

risks related to our status as a passive foreign investment company for U.S. tax purposes;

·

risks related to our history of operating losses;

·

risks related to our lack of production history;

·

risks related to our limited financial resources;

·

risks related to our need for additional financing;

·

risks related to competition in the mining industry;

·

risks related to increased costs;

·

risks related to possible shortages in equipment;

·

risks related to mineral exploration activities;

·

risks related to our lack of insurance for certain activities;

·

risks related to all our properties being in the exploration stage;

·

risks related to uncertainty that our properties will ultimately be developed;

·

risks related to fluctuations in precious and base metal prices;

·

risks related to the possible loss of key management personnel;

·

risks related to our mineral properties being subject to prior unregistered agreements, transfers, or claims and other defects in title;

·

risks related to governmental and environmental regulations;

·

risks related to our ability to obtain necessary permits;

·

risks related our status as a foreign corporation;

·

risks related to current economic conditions; and

·

other risks related to our securities.



This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further in the sections entitled Risk Factors, Information on the Company and Operating and Financial Review and Prospects and in the exhibits attached to this Annual Report on Form 20-F.  Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statements.  The Companys forward-looking statements are based on beliefs, expectations and opinions of management on the date the statements are made and the Company does not assume any obligation to update forward-looking statements if circumstances or managements beliefs, expectations or opinions change, except as required by law. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.



All references in this Report on Form 20-F to the terms we, our, us, the Company and SAMEX refer to SAMEX Mining Corp. and its subsidiaries.





4

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CONVERSION TABLE

In this Annual Report a combination of Imperial and metric measures are used.  Conversions from Imperial measure to metric and from metric to Imperial are provided below:



|                            |              |                        |                   
|--------------------------- | ------------ | ---------------------- | ------------------
|Imperial Measure          = | Metric Unit  | Metric Measure       = | Imperial Unit     
|2.47 acres                  | 1 hectare    | 0.4047 hectares        | 1 acre            
|3.28 feet                   | 1 meter      | 0.3048 meters          | 1 foot            
|0.62 miles                  | 1 kilometer  | 1.609 kilometers       | 1 mile            
|0.032 ounces (troy)         | 1 gram       | 31.1 grams             | 1 ounce (troy)    
|1.102 tons (short)          | 1 tonne      | 0.907 tonnes           | 1 ton             
|0.029 ounces (troy)/ton     | 1 gram/tonne | 34.28 grams/tonne      | 1 ounce (troy/ton)







5

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CURRENCY AND EXCHANGE RATES

Canadian Dollars Per U.S. Dollar



The following table sets out the exchange rates for one United States dollar (US$) expressed in terms of one Canadian dollar (Cdn$) in effect at the end of the following periods, and the high, low and average values for such periods.  Exchange rates are based upon the daily noon rate reported by the Bank of Canada.





|                       |                                  |                                   |        |        |        |        |        | 
|---------------------- | -------------------------------- | --------------------------------- | ------ | ------ | ------ | ------ | ------ | 
|                       | Canadian Dollar Per U.S. Dollars
|                       |                                  | 3-Month Period Ended
December 31,
|                       | 2010                             | 2009                              | 2008   | 2007   | 2006   | 2010   | 2009  
|End of period          | 0.9946                           | 1.0466                            | 1.2246 | 0.9881 | 1.1653 | 0.9946 | 1.0466
|Average for the period | 1.0299                           | 1.1420                            | 1.0660 | 1.0748 | 1.1342 | 1.0128 | 1.0562
|High for the period    | 1.0778                           | 1.3000                            | 1.2969 | 1.1853 | 1.1726 | 1.0320 | 1.0845
|Low for the period     | 0.9946                           | 1.0292                            | 0.9719 | 0.9170 | 1.0990 | 0.9946 | 1.0292





The following table sets out the high and low exchange rates for one United States dollar (US$) expressed in terms of one Canadian dollar (Cdn$) during the months from December 2010 to May 2011.  Exchange rates are based upon the daily noon rate reported by the Bank of Canada.







|                    |               |              |               |            |            |         
|------------------- | ------------- | ------------ | ------------- | ---------- | ---------- | --------
|For the month of:   | December
2010 | January
2011 | February
2011 | March
2011 | April
2011 | May
2011
|High for the period | 1.0178        | 1.0022       | 0.9955        | 0.9918     | 0.9691     | 0.9809  
|Low for the period  | 0.9946        | 0.9862       | 0.9739        | 0.9686     | 0.9486     | 0.9490  



The noon rate of exchange on June 10, 2011 as reported by the Bank of Canada for the conversion of United States dollars into Canadian dollars was US$1.00 = Cdn$0.9768.  Unless otherwise indicated, in this Annual Report on Form 20-F (the Annual Report or Form 20-F), all references herein are to Canadian Dollars.



Chilean Pesos Per US Dollar



The tables below set out the average of the Observed US Dollar Exchange Rate expressed in terms of the number of Chilean Pesos per US dollar for the following periods, reported by the Central Bank of Chile:



Yearly Average of Chilean Pesos Per U.S. Dollar



|              |                     
|------------- | --------------------
|Calendar Year | Average For Year    
|2006          | 1 US$ = 530.28 pesos
|2007          | 1 US$ = 522.69 pesos
|2008          | 1 US$ = 521.79 pesos
|2009          | 1 US$ = 559.61 pesos
|2010          | 1 US$ = 510.25 pesos



Monthly Average of Chilean Pesos Per U.S. Dollar for Year 2010



|      |        |        |        |        |        |        |        |        |        |        |        |       
|----- | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------
|Month | Jan    | Feb    | Mar    | Apr    | May    | Jun    | Jul    | Aug    | Sep    | Oct    | Nov    | Dec   
|Pesos | 500.66 | 532.56 | 523.16 | 520.62 | 533.21 | 536.67 | 531.72 | 509.32 | 493.93 | 484.04 | 482.32 | 474.78



Monthly Average of Chilean Pesos Per U.S. Dollar for Year 2011



|      |        |        |        |        |       
|----- | ------ | ------ | ------ | ------ | ------
|Month | Jan    | Feb    | Mar    | Apr    | May   
|Pesos | 489.44 | 475.69 | 479.65 | 471.32 | 467.73





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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable

ITEM 3. KEY INFORMATION

We were incorporated as Silver Duke Mines Ltd. (N.P.L.) on December 15, 1967 under the Company Actof British Columbia (the Company Act).  We changed our name to Totem Resources Ltd. (N.P.L.) on February 3, 1976 and subsequently to Paragon Resources Ltd. (N.P.L.) on June 9, 1978.  On May 13, 1981, we became a limited company instead of a specially limited company and our name became Paragon Resources Ltd.  We changed our name to SAMEX Mining Corp. on September 11, 1995.  On March 29, 2004, the Company Act was repealed and was replaced by the Business Corporations Act (British Columbia).  Because of this change, we replaced our former Memorandum of Incorporation with new Notice of Articles on February 11, 2005.  We also amended our Articles to conform to the new legislation and changed our authorized share capital by eliminating the maximum number of common shares and preferred shares that the Company is authorized to issue, effective June 13, 2005.  Also during 2005, the Company changed its fiscal year-end from November 30th to December 31st.  (see Item 4 Information on the Company - History and Development of the Company).



SAMEX Mining Corp. is a junior resource company engaged in the acquisition and exploration of mineral properties in South America, particularly in the country of Chile.  The Company focuses its exploration activities on the search for deposits of precious and base metals.  SAMEX management is motivated by a strong conviction that gold and silver are precious, valuable hard assets.  SAMEX has persistently maintained and declared its strong belief that gold prices are significantly undervalued.  Our objective is to be well-positioned to benefit from increases in the value of gold and silver and a strong demand for copper.



In Chile, the Company holds an interest in the Los Zorros district gold-copper-silver prospects, the Chimberos gold-silver prospects, the Inca copper, gold, silver and molybdenum prospects, and the Espejismo gold prospects (see Item 4 Description of Property for individual property details). The Company also holds an interest in mineral exploration properties in Bolivia, however in 2009 the Company suspended exploration activities in Bolivia and put all of the Bolivian properties on care and maintenance status (see Item 4 Description of Property for individual property details).  We are an exploration stage company and have no mineral producing properties at this time.  All of our properties are exploration projects, and we receive no revenues from production.  All work presently planned by us is directed at defining mineralization and increasing our understanding of the characteristics and economics of that mineralization.  There is no assurance that a commercially viable ore deposit exists in any of our properties until further exploration work and a comprehensive evaluation based upon unit cost, grade, recoveries and other factors conclude economic feasibility.  The information contained herein respecting our mineral properties is based upon information prepared by, or the preparation of which was supervised by Robert Kell, a Director and the Vice President-Exploration of SAMEX Mining Corp., and Company geologist, Philip Southam, P.Geo., who are qualified persons pursuant to Canadian Securities National Instrument 43-101 concerning Standards Of  Disclosure For Mineral Projects.  Both Mr. Kell and Mr. Southam have signed forms consenting to the use of their names as qualified persons and the filing of this Form 20F Annual Report.



SAMEX is a reporting issuer in British Columbia and Alberta and its common shares trade in Canada on the TSX Venture Exchange under the symbol SXG.   The Companys common shares are also quoted in the United States on the National Association of Securities Dealers OTC Bulletin Board under the symbol SMXMF.



3.A Selected financial data.

This data is derived from our audited consolidated financial statements, which were prepared in accordance with accounting principles generally accepted in Canada (Canadian GAAP) and reconciled to accounting principles generally accepted in the United States (U.S. GAAP).  The following selected financial data has been extracted from the more detailed consolidated financial statements included herein (stated in Canadian Dollars, being the foreign currency our financial statements are denominated in, see Currency and Exchange Rates) and is qualified in its entirety by, and should be read in conjunction with, the consolidated financial statements and notes thereto included elsewhere herein.  The following information should be read in conjunction with Item 5.  Operating and Financial Review and Prospects.





7

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|                                            |                               |              |              |              |             
|------------------------------------------- | ----------------------------- | ------------ | ------------ | ------------ | ------------
|US GAAP                                     | Fiscal Year Ended December 31
|                                            | 2010                          | 2009         | 2008         | 2007         | 2006        
|Net operating revenue                       |                               |              |              |              |             
|Loss from operations                        | $(1,163,026)                  | $(1,591,785) | $(1,154,945) | $(1,865,163) | $(1,961,999)
|Comprehensive loss for the year             | (2,359,809)                   | (2,198,157)  | (2,731,764)  | (5,207,580)  | (3,930,720) 
|Loss from operations per share (1)          | (0.02)                        | (0.02)       | (0.03)       | (0.07)       | (0.06)      
|Total assets                                | 9,066,666                     | 1,132,085    | 423,117      | 1,585,662    | 1,518,760   
|Current assets                              | 9,010,221                     | 1,061,603    | 311,614      | 1,429,923    | 1,406,058   
|Capital stock
(1)                           | 8,974,776                     | 1,058,367    | 318,889      | 1,479,199    | 1,451,032   
|Number of shares                            | 119,467,719                   | 96,856,665   | 81,261,165   | 78,696,165   | 72,287,665  
|Dividends per common share                  | NIL                           | NIL          | NIL          | NIL          | NIL         
|Basic and diluted net loss per
common share | $(0.02)                       | $(0.02)      | $(0.03)      | $(0.07)      | $(0.06)     



|                                            |                               |              |              |              |             
|------------------------------------------- | ----------------------------- | ------------ | ------------ | ------------ | ------------
|Canadian GAAP                               | Fiscal Year Ended December 31
|                                            | 2010                          | 2009         | 2008         | 2007         | 2006        
|Net operating revenue                       |                               |              |              |              |             
|Loss from operations                        | $(1,163,026)                  | $(1,591,785) | $(1,154,945) | $(1,865,163) | $(1,961,999)
|Comprehensive loss for the year             | (1,200,162)                   | (4,282,770)  | (2,571,737)  | (1,903,683)  | (1,979,866) 
|Loss from operations per share (1)          | (0.02)                        | (0.02)       | (0.03)       | (0.07)       | (0.06)      
|Total assets                                | 19,366,455                    | 10,154,038   | 11,125,120   | 12,083,496   | 8,605,000   
|Current assets                              | 9,010,221                     | 1,061,603    | 311,614      | 1,429,923    | 1,406,058   
|Capital stock1)                             | 19,274,565                    | 10,080,320   | 11,020,892   | 11,977,033   | 8,537,272   
|Number of shares                            | 119,467,719                   | 96,856,665   | 81,261,165   | 78,696,165   | 72,287,665  
|Dividends per common share                  | NIL                           | NIL          | NIL          | NIL          | NIL         
|Basic and diluted net loss per
common share | $(0.02)                       | $(0.02)      | $(0.03)      | $(0.02)      | $(0.03)     
|                                            |                               |              |              |              |             



(1)

See Note 11 to attached Consolidated Financial Statements to December 31, 2010.



There are several material differences between Canadian GAAP and U.S. GAAP that are applicable to the financial information disclosed or summarized herein.  Reference is made to Note 11 in the attached financial statements for an explanation of material differences between Canadian GAAP and U.S. GAAP.



See Currency and Exchange Rates for disclosure of exchange rates between Canadian dollars and United States dollars.  Unless indicated otherwise, all references to dollars in this annual report are to Canadian dollars.



International Financial Reporting Standards (IFRS)



In January 2006, the Canadian Accounting Standards Board adopted a strategic plan, which includes the decision to move financial reporting for Canadian publicly accountable enterprises to a single set of globally accepted standards, IFRS, as issued by the International Accounting Standards Board. The effective implementation date of the conversion from Canadian GAAP  to IFRS is December 1, 2011, with an effective transition date of December 1, 2010 for financial statements prepared on a comparative basis.  We are engaged in an assessment and conversion process which includes consultation with external consulting firms.  Our approach to the conversion to IFRS includes three phases.



·

Phase one, an initial general diagnostic of our accounting policies and Canadian GAAP relevant to our financial reporting requirements to determine the key differences and options with respect to acceptable accounting standards under IFRS. This phase was completed in late 2009.



·

Phase two, an in-depth analysis of the IFRS impact in those areas identified under phase one. During 2010, we substantially completed assessing and quantifying IFRS transition adjustments.  Our auditors are in the process of completing their review of these adjustments.  A summary of this analysis is provided in Table 2 below.



·

Phase three, the implementation of the conversion process, including the completion of the opening balance sheet as at December 1, 2010 together with related discussion and notes, has commenced.  Preliminary drafts of financial statement disclosures have been prepared in order to ensure systems are in place to collect the necessary data; to date no significant changes to current procedures have been identified.



Our IT accounting and financial reporting systems are not expected to be significantly impacted.









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The above comments, including the summary in Table 2, should not be considered as a complete and final list of the changes that will result from the transition to IFRS as we intend to maintain a current and proactive approach based on changes in circumstances and no final determinations have been made. IFRS standards, and the interpretation thereof, are constantly evolving.  As a result, we expect there may be new or revised IFRS accounting standards prior to the issuance of our first IFRS financial statements. We are continuing to monitor IFRS accounting developments and updates and will assess their impact in the course of our transition process to IFRS.



Table 2.  Summary of financial statements impact on transition from Canadian GAAP to IFRS.



|                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | 
|-------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|Key Area                               | Canadian GAAP
(as currently applied)                                                                                                                                                                                                                                                                                                                                                                                                                  | IFRS                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Analysis and preliminary conclusions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Property, plant and equipment (PP&E) | PP&E is recorded at historical cost.



Depreciation is based on their useful lives after due estimation of their residual values.                                                                                                                                                                                                                                                                                                                    | PP&E can be recorded using the cost (on transition to IFRS, the then fair value can be deemed to be the cost) or revaluation models.

Depreciation must be based on the useful lives of each significant component within PP&E.                                                                                                                                                                                                                                                  | PP&E will continue to be recorded at their historical costs due to the complexity and resources required to determine fair values on an annual basis.

Based on an analysis of PP&E and our significant components, we have determined that no change to their useful lives is warranted and, therefore, depreciation expense will continue to be calculated using the same rates under IFRS.                                                                                                                                                  
|Key Area                               | Canadian GAAP
(as currently applied)                                                                                                                                                                                                                                                                                                                                                                                                                  | IFRS                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Analysis and preliminary conclusions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Mineral properties                     | Exploration costs and option maintenance payments are capitalized as incurred. If proven and probable reserves are established, costs incurred prospectively to develop the property are capitalized as incurred and depreciated using the unit-of-production depreciation method over the estimated life of the ore body.                                                                                                                            | IFRS 6 provides us with the option of expensing the exploration and evaluation costs as incurred, or deferring these costs until technical feasibility and commercial viability has been determined, at which point they are transferred to the development and production phase and allocated to specific projects.                                                                                                                                                             | The existing accounting policy will be maintained.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Asset retirement obligations
(ARO)   | Canadian GAAP limits the definition of ARO to legal obligations.


ARO is calculated using a current credit-adjusted, risk-free rate for upward adjustments, and the original credit-adjusted, risk-free rate for downward revisions.  The original liability is not adjusted for changes in current discount rates.                                                                                                                                  | IFRS defines ARO as legal or constructive obligations.



ARO is calculated using a current pre-tax discount rate (which reflects current market assessment of the time value of money and the risk specific to the liability) and is revised every reporting period to reflect changes in assumptions or discount rates.


IFRS requires that, on transition, the net book value of the asset related to ARO be adjusted on the basis of the ARO balance existing at inception. | The broadening of this definition will not cause a significant change in our current estimates.


We expect to record a transition adjustment. In accordance with IFRIC 1, the effect of any changes to an existing ARO as a result of changes in market interest rates is added to or deducted from the cost of the related asset.





We will rely on the IFRS 1 exemption which allows a company to use current estimates of future reclamation costs and current amortization rates to determine the net book value on transition to IFRS.
|Key Area                               | Canadian GAAP
(as currently applied)                                                                                                                                                                                                                                                                                                                                                                                                                  | IFRS                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Analysis and preliminary conclusions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Stock-based compensation               | We recognize stock-based compensation on a straight line method and update the value of the options for forfeitures as they occur.


We included stock-based compensation in contributed surplus and previously recognized compensation cost is not reversed if a vested employee stock option expires unexercised.                                                                                                                                   | Under IFRS, stock-based compensation is amortized under the graded method only.  In addition, we are required to update our value of options for each reporting period for expected forfeitures.

IFRS does not preclude us from recognizing a transfer of compensation costs within equity (i.e. from contributed surplus to deficit) after vesting.                                                                                                                            | We are in the process of quantifying the difference.






We do not intend to transfer stock-based compensation expense included in contributed surplus to another component of equity.                                                                                                                                                                                                                                                                                                                                                       
|Income taxes                           | There is no exemption from recognizing a deferred income tax for the initial recognition of an asset or liability in a transaction that is not a business combination.  The carrying amount of the asset or liability acquired is adjusted for the amount of the deferred income tax recognized.

All deferred income tax assets are recognized to the extent that it is more likely than not that the deferred income tax assets will be realized. | A deferred income tax is not recognized if it arises from the initial recognition of an asset or liability in a transaction that is not a business combination, and at the time of the transaction affects neither accounting profit nor taxable profit.



A deferred tax asset is recognized if it is probable that it will be realized.                                                                                                                                     | We do not expect the difference in recognition of deferred income tax to have any significant change in the future.





Probable in this context is not defined and does not necessarily mean more likely than not.  However, we do not expect this difference to have any impact in the future.                                                                                                                                                                                                                                          



The above assessment and conclusions are based on the analysis completed by us as of the date of this report and may be subject to change.



The quantification of the amounts that may result from the differences between Canadian GAAP and IFRS relating to the key standards will be based on managements estimates and decisions, and will be subject to further internal review and audit by our external auditors.





3.B Capitalization and indebtedness.

Not Applicable



3.C. Reasons for the offer and use of proceeds.

Not Applicable



3.D. Risk factors.

In addition to other information in this Report, the following risk factors should be carefully considered in evaluating our business because such factors currently may have a significant impact on our business, operating results and financial condition.  As a result of the risk factors set forth below and elsewhere in this Report, and the risks discussed in our other Securities and Exchange Commission filings, actual results could differ materially from those projected in any forward  looking statements.  See Special Note Regarding Forward Looking Statements.



We have a history of losses.

We have historically incurred losses and have no revenue from operations.  We incurred losses from operations of $1,163,026 for the fiscal year ended December 31, 2010, $1,591,785 for the fiscal year ended December 31, 2009, and $1,154,945 for the fiscal year ended December 31, 2008.  As of December 31, 2010, we had a cumulative net loss from operations of $19,033,384 and a cumulative deficit of $30,631,831.  There can be no assurance that either the Company or any of our subsidiaries will achieve profitability in the future or at all.



We have not identified any commercially viable mineral deposits.  We have not commenced development or commercial production on any of our properties.  We have no history of earnings or cash flow from operations.  We do not have a line of credit and our only present source of funds available may be through the sale of our equity shares or assets.  Even if the results of exploration are encouraging, we may not have the ability to raise sufficient funds to conduct further explorations to determine whether a commercially mineable deposit exists on any of our properties.  While additional working capital may be generated through the issuance of equity or debt, the sale of our properties, the possible optioning or joint venturing of our
properties, and/or the sale of royalty interests or capital assets, we cannot assure you that any such funds will be available for operations on acceptable terms, if at all.







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In addition, should we be unable to continue as a going concern, realization of assets and settlement of liabilities in other than the normal course of business may be at amounts significantly different from those contained in our financial statements.



We have no production history from our mineral properties.

We have no history of producing metals from any of our properties as each of our properties are in the exploration stage.  Advancing properties from exploration into the development stage requires significant capital and time, and successful commercial production from a property, if any, will be subject to completing positive feasibility studies, permitting and construction of the mine, processing plants and roads and other related works and infrastructure.  As a result, we are subject to all the risks associated with developing and establishing new mining operations and business enterprises including:



·

Completion of feasibility studies to define reserves and commercial viability, including the ability to find sufficient mineral reserves to support a commercial mining operation;

·

The timing and cost, which can be considerable, of further exploration, preparing feasibility studies, permitting and construction of infrastructure, mining and processing facilities;

·

The availability and costs of drill equipment, qualified exploration personnel, skilled and reliable labour and mining and processing equipment, if required;

·

The availability and cost of appropriate smelting and/or refining arrangements, if required;

·

Compliance with environmental and other governmental approval and permit requirements;

·

The availability of funds to finance exploration, development and construction activities, as warranted;

·

Potential opposition from non-governmental organizations, environmental groups, local groups or local inhabitants which may delay or prevent development activities; and

·

Potential increases in exploration, construction and operating costs due to changes in the cost of fuel, power, materials and supplies.



The costs, timing and complexities of exploration, development and construction activities may be increased by the location of our properties and demand by other mineral exploration and mining companies.  It is common in exploration programs to experience unexpected problems and delays during drill programs and, if warranted, development, construction and mine start-up.  Accordingly, our activities may not result in profitable mining operations and we may not succeed in establishing mining operations or profitability producing metals at any of our properties.



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

Although we believe we have sufficient funds to meet our current obligations, we currently have no external sources of liquidity, and all additional funding required for our activities for the foreseeable future will be obtained from the sale of our securities.  Should we elect to satisfy our cash commitments through the issuance of securities, by way of either private placement or public offering, there can be no assurance that our efforts to raise such funding will be successful, or achieved on terms favourable to us or our shareholders.  Such financings, to the extent they are available, may result in substantial dilution to our existing shareholders.  Failure to obtain additional financing on a timely basis could cause us to forfeit all or a portion of our interests in the assets or rights now held by us

 and our ability to continue as a going concern

..   As described in Note 1 to our consolidated financial statements, our consolidated financial statements have been prepared on the assumption that we will continue as a going concern, meaning that we will continue in operation for the foreseeable future, and will be able to realize assets and discharge our liabilities in the ordinary course of operations.  There can be no assurance that we will be able to continue as a going concern.



Our success depends on our ability to raise additional capital.

As of December 31, 2010, we had working capital of $

8,918,331

 (December 31, 2009: $

987,885).
 
 During fiscal 2010 we raised a total of $10,162,060 from two private placements at a price of $0.30 per unit and at $0.50 per unit and from the exercise of warrants as follows: during the first quarter ended March 31, 2010, the Company received proceeds of $177,000 from the exercise of warrants for the purchase of 885,000 shares at $0.20 per share.  During the second quarter ended June 30, 2010 the Company received proceeds of $10,000 from the exercise of warrants for the purchase of 50,000 shares at $0.20 per share.  During the third quarter ended September 30, 2010, the Company completed a private placement of 3,647,334 units at a price of $0.30 per unit for gross proceeds of $1,094,200 and received proceeds of $20,000 from the exercise of warrants for the purchase of 100,000 shares at $0.20 per share.  During the fourth quarter ended December 31, 2010, the Company completed a private placement of 17,583,720 units at a price of $0.50 per unit for proceeds of $8,791,860 and received proceeds of $69,000 from the exercise of warrants for the purchase of 345,000 shares at $0.20 per share.







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Based on the funds on hand, we believe we have sufficient funds to conduct our ongoing general operations and our proposed exploration programs at the Los Zorros property in Chile over the next year.  Beyond that time,

it will be necessary to raise additional financing in order to fund our ongoing general operations and exploration programs.  

We propose to raise the required funds through the issuance of securities, by way of either private placement, exercise of warrants, or by public offering.  Although we anticipate that we will be able to complete equity placements sufficient to meet our capital requirements, there can be no assurance that we will be able to do so on terms favorable to us or at all.  Failure to obtain additional financing on a timely basis could cause us to forfeit all or a portion of our interests in the assets or rights now held by us

 and our ability to continue our operations.



The business of mineral exploration is highly competitive and there is no assurance we can compete with other competitors for financing, qualified personnel and other resources related to the operation of our business.

Significant competition exists for the limited number of property acquisition opportunities available.  As a result of this competition, some of which is with large established mining companies with substantial capabilities and greater financial and technical resources than our Company, we may be unable to acquire attractive mining properties on terms we consider acceptable.  Competition in the precious metals mining industry is primarily for mineral rich properties which can be developed and exploited economically; the technical expertise to find, develop, and produce such properties; the labor to operate the properties; and the capital for the purpose of funding such properties.  Many competitors not only explore for and mine precious metals and minerals but conduct refining and marketing operations on a worldwide basis.  Such competition may result in our being unable to acquire desired properties, to recruit or retain qualified employees or to acquire the capital necessary to fund our operations and develop our properties.  Our inability to compete with other mining companies for these resources may have a material adverse effect on our results of operation and business.  There can be no assurance that our exploration and acquisition programs will yield any reserves or result in any commercial mining operation.



Our operations are subject to the inherent risk associated with mineral exploration activities.

Mineral exploration activities and, if warranted, development activities generally involve a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to overcome.  Environmental hazards, industrial accidents, unusual or unexpected geological formations, fires, power outages, labor disruptions, flooding, explosions, cave-ins, land slides and the inability to obtain suitable or adequate machinery, equipment or labor are other risks involved in the operation of mines and the conduct of exploration programs.  Operations and activities in which we have a direct or indirect interest will be subject to all the hazards and risks normally incidental to exploration, development and production of precious and base metals, any of which could result in work stoppages, damage to or destruction of mines, if any, and other producing facilities, damage to life and property, environmental damage and possible legal liability for any or all damage.  We plan to obtain insurance, in amounts that we consider to be adequate, to protect ourselves against certain of these mining risks once we commence mining operations.  However, we may become subject to liability for certain hazards which we cannot insure against or which we may elect not to insure against because of premium costs or other reasons.  The payment of such liabilities may have a material, adverse effect on our financial position.  At the present time, we do not conduct any mining operations and none of our properties are under development, and, therefore, we do not carry insurance to protect us against certain inherent risks associated with mining.  Reclamation requirements vary depending on the location and the managing regulatory agency, but they are similar in that they aim to minimize long-term effects of exploration and mining disturbance by requiring the operating company to control possible deleterious effluents and to re-establish to some degree pre-disturbance landforms and vegetation.



Increased costs could affect our financial condition.

We anticipate that costs at our projects that we may explore or develop, will frequently be subject to variation from one year to the next due to a number of factors, many of which are outside of our control.  A material increase in costs at any significant location could have an effect on our operations.



A shortage of equipment and supplies could adversely affect our ability to operate our business.

We are dependent on various supplies and equipment to carry out our mining exploration and, if warranted, development operations. The shortage of such supplies, equipment and parts could have a material adverse effect on our ability to carry out our operations and therefore limit or increase the cost of production.



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

The Companys exploration activities are subject to the hazards and risks normally incident to the exploration for and development and production of precious minerals, any of which could result in damage for which the Company may be held
responsible.







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Hazards such as unusual or unexpected weather, rock formations, formation pressures, fires, power outages, landslides, flooding cave-ins or other adverse conditions such as the inability to obtain suitable or adequate machinery, equipment or labor may be encountered in the drilling and removal of material.  While we may obtain insurance against certain risks in such amounts as we consider adequate, the nature of these risks is such that liabilities could exceed policy limits or could be excluded from coverage.  There are also a number of risks against which we cannot insure or against which we have decided not to insure, due to high premiums or for other reasons.  Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of our common shares. We do not currently maintain insurance against risks relating to our mineral property interests.



All of our properties are in the exploration stage and are highly speculative in nature, which means there can be no assurance that our programs will result in the discovery of any economically feasible mineral deposit.

At present, none of our properties have a known body of ore and all our proposed exploration programs are an exploratory search for ore.  We will only develop our mineral properties if we obtain satisfactory results from our exploration programs.   The development of gold, silver, copper and other mineral properties is affected by many factors, including the cost of operations, variations in the grade of ore mined, fluctuations in metal markets, costs of processing equipment and other factors such as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection.  We have relied and may continue to rely upon consultants and others for exploration expertise.  Substantial expenditures are required to establish reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining.  We cannot assure you that any mineral deposits will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis.  Depending on the price of gold, silver or other minerals produced, if any, we may determine that it is impractical to commence or, if commenced, continue commercial production.



The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the global marketing conditions for gold and silver and other 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.  Our properties are located in Chile and Bolivia.  These jurisdictions impose certain requirements and obligations on the owners of exploratory properties and mineral exploration activities are subject to certain risks which are described elsewhere in this section.



Very few mineral properties are ultimately developed into producing mines.

The business of exploration for minerals and mining involves a high degree of risk such as unusual or unexpected geological formations and the inability to obtain suitable or adequate machinery, equipment or labour and is highly speculative in nature. Few properties that are explored are ultimately developed into commercially viable mining operations. At present, our existing properties have no known significant body of commercial ore. Most exploration projects do not result in the discovery of commercially mineable deposits of ore. The occurrence of unsuccessful exploration efforts may eventually lead to us needing to cease operations.



The success of commodity exploration is determined in part by the following factors:



·

Identification of potential mineralization based on superficial analysis;

·

Exploration permits, as granted by the various government bodies;

·

Experience and quality of management and geological consultants; and

·

Capital available for exploration activity.



Substantial expenditures are required for us to establish proven and probable ore reserves through drilling and analysis, to develop metallurgical processes, to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining.  In making the determination as to the commercial viability of a mineral deposit, a number of factors are considered, which include, without limitation, the particular attributes of the deposit, such as size, grade, and proximity to infrastructure; metal prices, which fluctuate widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure and use, importing and exporting or minerals and environmental protection.



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









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We may invest significant capital and resources in exploration activities and abandon such investments if we are unable to identify commercially exploitable mineral reserves.  The decision to abandon a project may have an adverse effect on the market value of our securities and the ability to raise future financing.



We have no producing mines at this time.



Calculations of mineral reserves and of mineralized material are estimates only, subject to uncertainty due to factors including metal prices, inherent variability of the ore, and recoverability of metal in the mining process.

There is a degree of uncertainty attributable to the calculation of reserves and corresponding grades dedicated to future production. Until mineral reserves are actually mined and processed, the quantity of ore and grades must be considered as an estimate only. In addition, the quantity of mineral reserves and ore may vary depending on metal prices. Estimates of mineral resources under Canadian guidelines are subject to uncertainty as well. The estimating of mineral reserves and mineral resources under Canadian guidelines is a subjective process and the accuracy of such estimates is a function of the quantity and quality of available data and the assumptions used and judgments made in interpreting engineering and geological information. There is significant uncertainty in any reserve or estimate of mineral resources under Canadian guidelines, and the actual deposits encountered and the economic viability of mining a deposit may differ materially from our estimates. Estimated mineral reserves or mineral resources under Canadian guidelines may have to be recalculated based on changes in metal prices, further exploration or development activity or actual production experience. This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other important factors that influence estimates of mineral reserves or mineral resources under Canadian guidelines. Any material change in the quantity of mineral reserves, mineralization, grade or stripping ratio may affect the economic viability of our properties. In addition, there can be no assurance that metal recoveries in small-scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production.



The prices of precious metals and base metals directly impact on our business activities.

Our business activities are significantly affected by the prices of precious metals and base metals on international markets.  The price of minerals affects our ability to raise financing, the commercial feasibility of our properties, the future profitability of our properties should they be developed and our future business prospects. The prices of precious metals and base metals fluctuate widely and are affected by numerous factors beyond our control, including expectations with respect to the rate of inflation, the strength of the U.S. dollar and of other currencies, interest rates, and global or regional political or economic crisis.  The demand for and supply of precious metals and base metals may affect precious metals and base metals prices but not necessarily in the same manner as supply and demand affect the prices of other commodities.



Our business is affected by market fluctuations in the prices of minerals sought (gold, silver, and copper), which are highly volatile.  Depending on the price of gold, silver, copper or other metals, we may determine that it is impractical to continue our exploration activities or, if warranted, to commence commercial development or production of our properties, if a mineral deposit is identified.



Gold, silver, and copper prices may fluctuate widely and are affected by numerous industry factors, such as demand for precious metals, forward selling by producers, central bank sales and purchases of gold and production and cost levels in major mineral-producing regions.  Moreover, mineral prices are also affected by macro-economic factors that are beyond our control, including international economic and political trends, expectations of inflation, currency exchange fluctuations (specifically, the Canadian dollar relative to other currencies), interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods.  We cannot assure you that the price of gold, silver, or copper will remain stable or that such prices will be at a level that will prove feasible to continue our exploration activities, or, if applicable, begin development of our properties.



The current demand for and supply of precious metals and base metals affects their prices, but not necessarily in the same manner as current demand and supply affect the prices of other commodities.  If metal prices should decline for a sustained period, we could determine that it is not economically feasible to continue our exploration activities and such decision will have a material adverse affect on our business and results of operations.



The prices of gold, silver, and copperand other metals have fluctuated in recent years.The volatility of the prices for precious metals and base metals is illustrated by the following charts from kitco.com which show the market prices (US$) of gold, silver, and copper over the last five years.













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We face certain risks associated with our precious metal holdings

We maintain a substantial portion of our current assets in the form of gold and silver bullion recorded in electronic records maintained by Net Transactions Limited, doing business as 'Gold Money", of Jersey, British Channel Islands, UK, with underlying metals held on our behalf by a third party contracted by Gold Money.  At June 7, 2011 our gold holdings with Gold Money were valued at $4,223,737.27 and our silver holdings were valued at $2,542,645.15.  Although we are entitled to require physical delivery of our precious metal holdings, we have in the past and anticipate we will in the foreseeable future rely on Gold Money for physical storage and maintenance of the electronic records of our precious metal holdings and any transactions with respect thereto.  Although we believe the physical security and the integrity of the electronic record of our precious metal holdings is protected by adequate means, there may be a risk that such electronic records may be compromised by fraud, theft, or other means or the physical security of our holdings may be lost or stolen and third party insurance or indemnities provided by Gold Money may not be available to us or may be inadequate, resulting in a loss or impairment of our holdings.  The value of our precious metal holdings is subject to market fluctuation in the value of such metals, which may fluctuate due to circumstances beyond our control, resulting in further loss or impairment of our holdings.  See "The prices of precious metals and base metals directly impact on our business activities".

The loss of key management personnel may adversely affect our business and results of operations.

The success of our operations and activities is dependent to a significant extent on the efforts and abilities of our management: Jeffrey Dahl, President & Chief Executive Officer, Robert Kell, Vice President  Exploration and Larry McLean, Vice President  Operations & Chief Financial Officer.  Investors must be willing to rely to a significant extent on their discretion and judgment.  We do not maintain key employee insurance on any of our employees.



There may be defects in the title to our properties.

In accordance with mining industry practice, we attempt to acquire satisfactory title to our properties but have not obtained title insurance with the attendant risk that some titles, particularly titles to undeveloped properties, may be defective.  In accordance with mining industry practice, we have not obtained title insurance on the Chilean concessions held by us or on the concessions in Bolivia held by our partners.  The Company carries out all normal procedures to obtain title and make a conscientious search of mining records to confirm that the Company has satisfactory title to the properties it has acquired by staking, purchase or option, and/or that satisfactory title is held by the optionor/owner of properties the Company may acquire pursuant to an option agreement, and/or that satisfactory title is held by the owner of properties in which the Company has earned a percentage interest in the property pursuant to a joint venture or other type of agreement.  However, the possibility exists that title to one or more of the concessions held by the Company, or an optionor/owner, or the owner of properties in which the Company has earned a percentage interest, might be defective for various reasons.  The Company will take all reasonable steps to perfect title to any particular concession(s) found to be in question.



All of our properties are in the exploration stage and are highly speculative in nature, which means there can be no assurance that our programs will result in the discovery of any economically feasible mineral deposit.

At present, none of our properties have a known body of ore and all our proposed exploration programs are an exploratory search for ore.  We will only develop our mineral properties if we obtain satisfactory results from our exploration programs.

The development of gold, silver, copper and other mineral properties is affected by many factors, including the cost of operations, variations in the grade of ore mined, fluctuations in metal markets, costs of processing equipment and other factors such as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection.  We have relied and may continue to rely upon consultants and others for exploration expertise.  Substantial expenditures are required to establish reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining.  We cannot assure you that any mineral deposits will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis.  Depending on the price of gold, silver, copper or other minerals produced, if any, we may determine that it is impractical to commence or, if commenced, continue commercial production.

The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the global marketing conditions for gold, silver and copper, 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.



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Our properties are located in Chile and Bolivia.  These countries impose certain requirements and obligations on the owners of exploratory properties which includes, among other things, certain application and permit requirements, certain limitations on mining and exploration activities, periodic reporting requirements, limited terms and certain fees and royalty payments.



There are certain specific risks associated with mineral exploration activities and property ownership in Chile.

The process for acquiring an interest in mineral concessions in Chile is different from procedures for acquiring mining claims in Canada or the United States and involves certain risks not applicable in those jurisdictions.



The rights and obligations associated with mining concession in Chile are governed by legislation and protected by the Chilean Political Constitution enacted in 1980 (the Constitution). Article 19, No 24 of the Constitution, which assures the right of property, in its different forms over corporal or intangible assets, includes mining concessions within this protection.



Law No 18.097 of January 21, 1982, which has constitutional rank, regulates the granting of mining concessions and defines the mining concessions as a real and immovable right, distinctive and independent from property rights over the surface tenements, although owned by the same individual.  Such rights may be claimed against the State and any other person, may be transferred or transmitted, and may be mortgaged or subject to other real rights and, in general, to all acts and contracts.



A mining concession may be granted for exploring or exploiting mineral substances, the latter also being known as a mining claim.  All metallic and non-metallic substances and, in general, all fossil substances, regardless of their natural state, may be subject to concessions or claimed, including those in the subsoil of maritime waters under national jurisdiction, to which access may be had, through tunnels, from land.  Liquid or gaseous hydrocarbons, lithium or deposits of any kind in maritime waters under national jurisdiction or deposits of any kind entirely or partly embraced by areas which, under law have been classified as important, for mining reasons, to national security, are generally excluded from mining concessions, without prejudice to mining concessions validly granted prior to their exclusion or a resolution that classifies them as being important to national security.



Any person is entitled to dig test holes and to take samples in search for mineral substances, regardless of ownership or property rights over the tenements, except in lands included within the limits of a mining concession granted to a third party.



The object of a mining concession is all substances over which a concession may be granted lying within its limits.  The territorial area of a mining concession comprises a solid whose upper surface is, along a horizontal plane, a parallelogram with right angles and of an indefinite depth within the vertical planes that limit it.  The area of an exploitation concession may not cover more than 10 hectares and an exploration concession may not exceed 5,000 hectares.  The owner of the concession can hold any number of mining concessions that comply with the maximum surface indicated above.



Mining concessions are established by a judicial decree given following a non adversarial proceeding, without the decisory participation of any other authority or third party.



In order keep a mining concession valid and in effect, it is necessary to pay an annual license fee (patent).  The patent payments must be made in advance during the month of March of each year.  Patent fees are calculated based upon the value of the Chilean Monthly Tax Unit (M.T.U.) which varies from month to month.  In the case of an exploitation concession the annual patent fee is calculated as one-tenth (1/10th) of the Monthly Tax Unit per hectare (for example, in March 2010 the M.T.U. was 36,752 x 1/10th = 3,675.2 Chilean Pesos per hectare which, at the Observed US$/Peso exchange rate of 516.33 at March 15, 2010 equated to approximately US$7.11 per hectare for exploitation concessions).  In the case of an exploration concession the annual patent fee is calculated as one-fiftieth (1/50th) of the Monthly Tax Unit per hectare (for example, in March 2010 the M.T.U. was 36,752 x 1/50th = 735.04 Chilean Pesos per hectare which, at the Observed US$/Peso exchange of 516.33 rate at March 15, 2010 equated to approximately US$1.42 per hectare for exploration concessions).  Should the holder of the concession fail to pay the fee within the designated period, judicial procedures to publicly auction the concession may be instituted.



A foreign corporation may hold mining rights over mining concessions in Chile without restrictions and without any discrimination regarding Chilean nationals.



Regulatory matters could impact our ability to conduct our business in Chil.e

As our operations are primarily related to the exploration of our properties, many governmental regulations relating to mining activities are not yet applicable to us.



Our potential mining processing operations and exploration activities in Chile are subject to various laws governing land use,
the protection of the environment, prospecting, development, production, exports, taxes, labour standards, occupational health, mine safety and other matters.



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Such operations and exploration activities are also subject to substantial regulation under these laws by governmental agencies and may require that we obtain permits from various governmental agencies.  We believe we are in substantial compliance with all material laws and regulations which currently apply to our activities.  There can be no assurance, however, that all permits which we may require for future operations will be obtainable on reasonable terms or that such laws and regulations would not have an adverse effect on any mining project which we might undertake.



Failure to comply with laws and regulations may result in orders being issued thereunder which may cause operations to cease or be curtailed or may require installation of additional equipment.  Violators may be required to compensate those suffering loss or damage by reason of their mining activities and may be subject to fines or penal sanctions if convicted of an offense under such legislation.



Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation thereof could have a material adverse impact on us or prevent development of our mining properties.



Chilean environmental legislation requires that the mining concessionaire obtains the prior authorization from the applicable environmental authorities to initiate any exploration or exploitation activity and for this purpose the mining concessionaire shall need to present an environmental assessments or an environmental impact study. Chilean environmental legislation defines the requisites that these studies have to fulfill, and the general mechanisms for controlling and ensuring compliance with such legislation. These reports entail a detailed technical and scientific assessment of the site and surrounding environmental as well as a prediction of the impact of proposed development on the environment.  Such authorizations and reports can add to the cost and time frame associated with any potential project development.



Environmental legislation in Chile imposes potential liability on owners and/or operators of mining facilities which release hazardous substances into the environment and are required to carry out their operations using methods and techniques not liable to cause damage to the environment or the land-owner.



Foreign investments in Chile can be repatriated under the Foreign Investment Regulations contained in Decree Law 600, the Foreign Investment Statute, which is based on the principle of non discrimination between foreign and local investors.  Foreign investors may enter into a foreign investment contract with the Republic of Chile where the terms of the investments, access to foreign currency, tax matters and other importation and exportation terms can be agreed upon for a term of 10 years or 20 years, if the investment is of an amount that exceeds US$50,000,000.  Chile and Canada entered into a Free Trade Agreement (FTA), which has been in effect since July 5, 1997.  This FTA enables Canadian investors to export products of Canadian origin into Chile without paying any custom duties and obtain relief under the double taxation provision, pursuant to which taxes paid in Chile on income generated by operations in Chile, including mining, will be used as a tax credit for the taxes levied in Canada on such income.



At present, the income of corporations, limited liability companies and mining companies is taxed in two stages; first, when income is accrued and or perceived, in a yearly basis, the corporate income is taxed with an income tax at a rate of 20% which was established in the year 2011 and future years; and second, when profits are distributed and remitted abroad to shareholders or partners without domicile in Chile, these profits are subject to a 35% Additional Tax rate, with a credit for the income tax paid by the corporation in Chile equivalent to 20% as stated above.  The foregoing taxes may affect the future profitability of any potential mining operations on our properties.  Operations in the mining sector may also be subject to an additional taxation, the Mining Royalty.  Pursuant to Law 20.026  (published in the Official Gazette dated June 16, 2005), amended by Law 20.469 a Royalty Payment was incorporated into the Income Tax Law which established an specific taxation to mining exploitation, known as Mining Royalty.  This specific tax is to be paid by any individual or legal entity who exploits concessionable mineral substances and sells any mineral products.  This specific tax applies to any mining exploitation in which annual sales exceed 50,000 metric tons of fine copper, applying in this case a tax rate which ranges from 0.5% to 34.5%, calculated over fine copper per ton and operational margins, when they exceed 80.000 metric tons.  This rate decreases if the annual production of fine copper is less than 50,000 metric tons of fine copper and more than 12,000 metric tons of fine copper, in which case the amount that exceeds the 12,000 metric tons and is less than 15,000 metric tons will be taxed at a rate of 0.5%.  There is a scale in relation to production and sales up to the amount of 50,000 metric tons of fine copper per year and exceeds this amount over 85.000 metric tons of fine copper as indicated.  In addition, to determine this Royalty, the mining concessionaire is entitled to deduct from the income generated in the sale of the mining products, all the costs necessary to produce the income, in accordance with the terms contemplated in the Income Tax Law.  If additional special taxes or royalties were to be imposed in the future upon operations in the mining sector, this may affect the future profitability of any potential mining operations on our properties.



Foreign currency exchange is regulated by the Central Bank of Chile under Chapter XIV of its Foreign Exchange Regulations.  Currently there is no restriction on bringing investments or credits into Chile, provided that such investments and credits are registered with the Central Bank of Chile in accordance with Chapter XIV of The Foreign Exchange Regulations.  Credits
granted for periods of over 1 year are subject to a stamp tax of 0.6% of the amount of the loan and the Stamp Tax also will affect loans granted for less than 1 year at a reduce rate of 0.05% per month.  Interest on loans granted by banks and financial institutions are subject to a 4% tax levied upon remittance of the interest payment to the lender bank or financial institution.









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Bolivian Interests - There are certain specific risks associated with mineral exploration activities and property ownership in Bolivia.

The process for acquiring, holding and developing an interest in mineral properties in Bolivia is different from procedures for acquiring mining claims in Canada or the United States and involves a number of risks not applicable in those jurisdictions.  In addition, recent legislative, judicial and political changes have seriously added to the risk of conducting mineral operations in Bolivia.



We acquired our property interests in Bolivia under the former Law No. 1777 enacted on March 17, 1997 (the Former Code), which governed the rights and obligations associated with mineral concessions in Bolivia.  Under the Former Code, individuals and corporations were allowed to apply for mining concessions on and subject to certain rules respecting application and filing for such concession, which granted the lawful holder the right to explore for minerals on such concession and, subject to further requirements and qualifications, the right to own and conduct mineral operations on such concession, as well as the right to transfer such concession in compliance with certain prescribed registration and transfer requirements.  The Former Code also restricted ownership of any properties within 50 km of any international border of Bolivia or the Frontier Zone to a Bolivian national or a corporation owned by a Bolivian national(s), provided that such nationals were permitted to enter into a joint venture agreement with a foreign party subject to certain rules as to the form of joint venture and its operation.  Our interests within the Frontier Zone (Santa Isabel Property, Eskapa Property, El Desierto Property) are held under joint venture agreements with a Bolivian national.  In particular, the Eskapa Property and El Desierto Property mineral concessions are owned by Empresa Minera El Roble S.A. (El Roble), a company controlled by a Bolivian national, Patricio Kyllmann, a former director of SAMEX.  Our Bolivian subsidiary, Empresa Minera Boliviana S.A. (Emibol S.A.), earned a 99% interest in any mining operations which may be established on the concessions pursuant to an agreement (originally with Multimin S.A., a company also formerly controlled by Patricio Kyllmann) dated April 16, 1996 and as amended November 23, 1998 with El Roble and our Santa Isabel Property is held under a joint venture agreement with the Bolivian state mining company, Corporacion Minera de Bolivia (COMIBOL) (see Item 4  Information on the Company).



The legal effect of the Former Code has been seriously affected by subsequent legislative and judicial action, resulting in serious concern as to the status of our Bolivian concessions and our rights and obligations with respect thereto.



On May 10, 2006, the Bolivian Constitutional Tribunal determined, under Constitutional Verdict 0032/2006, that the Former Code was unconstitutional in that, under the constitution then in effect (the Old Constitution), all natural resources belonged to the State and therefore mining concessions could not be sold, mortgaged, transferred or inherited.  The tribunal ruled that the Bolivian Parliament would be required to make a number of specific changes to the Former Code in order to comply.  Parliament was given two years to make these changes, which did not occur.  As a result of this decision, the transfer, mortgage or testamentary disposition of mineral concessions may no longer be permitted in Bolivia. This decision has had a significant adverse effect on the ability of concession holders to dispose of their interest.  There does not yet appear to be any restriction on disposition of the shares of companies which own mineral concessions (which is the case for all of the Companys Bolivian properties).  However, this also is not entirely clear.



On May 1, 2007, the Bolivian government issued Supreme Decree N. 29117 which declared the whole country to be a mining fiscal reserve.  This decree granted COMIBOL the right to administer this reserve, and further gave the right to explore the reserve to the government Geological and Technical Mining Service.  This decree effectively eliminated the entire mining concession system in Bolivia, other than filings made before May 1, 2007.



On January 25, 2009 a new constitution was approved by referendum (the New Constitution) which, among other things, provides that all natural resources belong to the Bolivian people and will be administered by the State for their collective interest.  This altered the Old Constitution which provided that all natural resources belong to the State, which could grant concessions according to the law, (in this case the Former Mining Code).  This new provision has given rise to numerous land title claims, particular from aboriginals living near mining concessions.  It is unclear at this time how this provision will be interpreted.



The New Constitution also provides that in relation to any mining concessions granted to national and foreign companies before the enacting of the New Constitution, the companies must sign mining contracts with the Ministry of Mining and Metallurgy (MMM), the signing of which must be within six months of the enactment of a new mining code, which has not yet been enacted.  This provision affects all of our mining concessions in Bolivia, other than possibly our Santa Isabel property, which is held under an existing joint venture agreement with COMIBOL.











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The New Constitution also provides the State must ensure reinvestment of profits from mining operations in Bolivia.  The provision does not state what portion of profits will need to be re-invested, so the effect of this provision is not clear at this time.



As a result of a referendum held on December 6, 2009, under the New Constitution, all nine departments in Bolivia are now autonomous regions that are entitled to create and administer their own taxes. Accordingly, the application and effect of this provision in relation to taxing mineral concessions is uncertain at this time.



A new mining code has been proposed to replace the Former Code, but such legislation has not yet been enacted.  While the new proposed code may resolve some of the uncertainty created by the above legislative and judicial actions, its final content and effect are uncertain.   As a result, we have concluded, the foregoing changes taken as a whole, appear to be highly prejudicial to our interests and seriously adversely affect the viability of prospective mineral projects in Bolivia.   We have also concluded that our rights and obligations with respect to our Bolivian mineral interests, are at best, uncertain.



In light of these and other factors we decided that our mineral interests in Bolivia are subject to a high degree of risk, including a risk of the loss of the entire economic benefit of our mineral interests.  Accordingly we decided to suspend all exploration activities in Bolivia and put all of our Bolivian projects on care and maintenance status.  In the first quarter of 2009, we also decided to abandon three low-priority properties  the Walter, Wara Wara and Yaretani properties.  At December 31, 2009 and again at December 31, 2010 we wrote down the carrying value of our three remaining Bolivian properties - Eskapa, El Desierto, and Santa Isabel - to a nominal value of $1,000 each.  While we hope we will be able to return to exploring our remaining Bolivian properties at some time in the future, we do not anticipate we will be able to do so as long as current political and legal conditions persist.  There can be no assurance that these conditions will improve or, if so, when such changes might take place.



Currency exchange rate fluctuations could adversely affect our operation.

Our functional currency is the Canadian Dollar, and we have obligations and commitments in other currencies including Chilean Pesos, United States Dollars, and Bolivian Bolivianos.  Fluctuations in foreign currency exchange rates may affect our results of operations and the value of our foreign assets, which in turn may adversely affect reported financial figures and the comparability of period-to-period results of operations.  (See Currency and Exchange Rates)



We are a foreign corporation and most of our directors and officers are outside of the United States, which may make enforcement of civil liabilities difficult.

We are incorporated under the laws of the Province of British Columbia, Canada.  All of our directors and officers are residents of Canada, with the exception of Robert Kell (who resides in the United States and Chile), and all of our assets are located outside of the United States.  Consequently, it may be difficult for United States investors to effect service of process within the United States upon those directors or officers who are not residents of the United States, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the United States Securities Exchange Act of 1934, as amended ("the Exchange Act").  A judgment of a US court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the US court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter.  There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or us predicated solely upon such civil liabilities.



We do not intend to pay cash dividends.

We have never, and we do not have any intention of paying cash dividends in the foreseeable future.  In particular, there can be no assurance that our Board of Directors will ever declare cash dividends, which action is completely within their discretion.



We have reserved 34,533,138common shares for future issuance, which if issued may cause dilution in the value of currently issued and outstanding shares.

As of May 31, 2011, we reserved 11,555,000 common shares for issuance on the exercise of incentive stock options (at a weighted average exercise price of $0.68).  In addition we reserved 22,978,138 common shares for issuance upon the exercise of outstanding warrants (at a weighted average exercise price of $0.58).  If such options and warrants are fully exercised, such common shares would constitute 27.4% of our share capital.  The exercise of such options and the subsequent resale of such common share in the public market could adversely affect the prevailing market price and our ability to raise equity capital in the future at a time and price which it deems appropriate.  We may also enter into commitments in the future which would require the issuance of additional common shares and we may grant additional share purchase warrants and stock options.  See Item 6.  Compensation  Incentive Stock Options











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Likely Passive Foreign Investor Company (PFIC) Status Has Possible Adverse Tax Consequences for U.S. Investors



Current holders of and potential

 investors
 in our common shares
 who are U.S. taxpayers should be aware that SAMEX believes it was a passive foreign investment company (PFIC) for the tax year ended December 31, 2010 and may also be a PFIC in subsequent tax years.
  If SAMEX is a PFIC for any year during a U.S. taxpayers holding period, then such U.S. taxpayers generally will be required to treat any so-called excess distribution received on its common shares, or any gain realized upon a disposition of common shares, as ordinary income and to pay an interest charge on a portion of such distributions or gain, unless the taxpayer makes a qualified electing fund (QEF) election or a mark-to-market election with respect to the shares of SAMEX.  In certain circumstances, the sum of the tax and the interest charge may exceed the amount of the excess distribution received, or the amount of proceeds of disposition realized, by the taxpayer.  A U.S. taxpayer who makes a QEF election generally must report on a current basis its share of SAMEXs net capital gain and ordinary earnings for any year in which SAMEX is a PFIC, whether or not SAMEX distributes any amounts to its shareholders. However, U.S. taxpayers should be aware that there can be no assurance that we will satisfy record keeping requirements that apply to a QEF, or that we will supply U.S. taxpayers with information that such U.S. taxpayers require to report under the QEF rules, in event that we are a PFIC and a U.S. taxpayers wishes to make a QEF election.  Thus, U.S. taxpayers may not be able to make a QEF election with respect to their common shares.  Each U.S. taxpayer should consult its own financial advisor, legal counsel, or accountant regarding the availability of, and procedure for making, a QEF election.   A U.S. taxpayer who makes the mark-to-market election generally must include as ordinary income each year the excess of the fair market value of the common shares over the taxpayers basis therein.  U.S. taxpayers are advised to seek the counsel of their professional tax advisors.
 This paragraph is qualified in its entirety by the discussion below under the heading TaxationCertain U.S. Federal Income Tax Considerations.  Each U.S. taxpayer should consult his or her own tax advisor regarding the U.S. federal, U.S. state and local, and foreign tax consequences of the PFIC rules and

 the acquisition, ownership, and disposition of

our common shares.  

See Item 10. Taxation  Certain U.S. Federal Income Tax Considerations.



Economic conditions and fluctuation and volatility of stock price may negatively impact shareholder value



The market price of our common shares is highly volatile.  If investors interest in the sector in which we operate declines, the price for our common shares would likely also decline.  In addition, trading volumes in our common shares can be volatile and if the trading volume of our common shares experiences significant changes, the price of our common shares could be adversely affected.  The price of our common shares could also be significantly affected by other factors, many of which are beyond our control.



Fluctuations in economic conditions, such as the continuing downturn in the global economy, may also significantly affect our ability to meet our objectives which could adversely affect our share price.



Broker-dealers may be discouraged from effecting transactions in our shares because they are considered a penny stock and are subject to the penny stock rules.

Rules 15g-1 through 15g-9 promulgated under the Exchange Act impose sales practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a penny stock. Subject to certain exceptions, a penny stock generally includes any non-NASDAQ equity security that has a market price of less than US$5.00 per share.  The market price of our shares over the fiscal year ended December 31, 2010 ranged between CDN$0.225 and CDN$0.82 and our shares are deemed penny stock for the purposes of the Exchange Act.  The additional sales practice and disclosure requirements imposed upon brokers-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.



Under the penny stock regulations, a broker-dealer selling penny stock to anyone other than an established customer or accredited investor, generally, an individual with net worth in excess of US$1,000,000 or an annual income exceeding US$200,000, or US$300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchasers written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt.  In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the United States Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt.  A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities.  Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customers account and information with respect to the limited market in penny stocks.



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

The Company is a foreign private issuer as defined in Rule 3b-4 of the Exchange Act.  Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 of the
Exchange Act.



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Therefore, the Company is not required to file a Schedule 14A proxy statement in relation to the annual meeting of shareholders.  The submission of proxy and annual meeting of shareholder information on Form 6-K may result in shareholders having less complete and timely information in connection with shareholder actions. The exemption from Section 16 rules regarding reports of beneficial ownership and purchases and sales of common shares by insiders and restrictions on insider trading in our securities may result in shareholders having less data and there being fewer restrictions on insiders activities in our securities.



Recent market events and conditions

In 2008 and 2009, the U.S. credit markets began to experience serious disruption due to a deterioration in residential property values, defaults and delinquencies in the residential mortgage market (particularly, sub-prime and non-prime mortgages) and a decline in the credit quality of mortgage backed securities. These
problems led to a slow-down in residential housing market transactions, declining housing prices, delinquencies in non-mortgage consumer credit and a general decline in consumer confidence.  These conditions caused a loss of confidence in the broader U.S. and global credit and financial markets resulting in the collapse of, and government intervention in, major banks, financial institutions and insurers and creating a climate of greater volatility, less liquidity, widening of credit spreads, a lack of price transparency, increased credit losses and tighter credit conditions causing the broader credit markets to further deteriorate and stock markets to decline substantially in 2008 and into 2009.  In addition, general economic indicators deteriorated, including declining consumer sentiment, increased unemployment and declining economic growth and uncertainty about corporate earnings.  Although some of these conditions  improved in 2010, many of the effects of these events have continued to the present and have been further strained by new economic factors such as increasing concerns over levels of sovereign debt, stock market instability, and a growing euro-zone crisis.



These unprecedented disruptions in the credit and financial markets have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult for us to obtain, or increase our cost of obtaining, capital and financing for our operations.  While market conditions for the shares of junior gold explorers has improved somewhat since the peak of the crisis, access to capital is still restricted for most junior resource companies.  Additional capital may not be available on terms acceptable to us or at all.



General economic conditions

The recent unprecedented events in global financial markets have had a profound impact on the global economy. Many industries, including the gold mining industry, are impacted by these market conditions. Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and precious metal markets, and a lack of market liquidity. A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to, consumer spending, employment rates, business conditions, inflation, fuel and energy costs, consumer debt levels, lack of available credit, the state of the financial markets, interest rates, and tax rates may adversely affect our growth and profitability.  Specifically:

·

The global credit/liquidity crisis could impact the cost and availability of financing and our overall liquidity;

·

the volatility of gold, silver and copper prices may impact our revenues, profits and cash flow;

·

volatile energy prices, commodity and consumables prices and currency exchange rates impact potential production costs; and

·

the devaluation and volatility of global stock markets impacts the valuation of our equity securities



These factors could have a material adverse effect on our financial condition and results of operations.

ITEM 4.  INFORMATION ON THE COMPANY

4.A. History and Development of the Company.

We were originally incorporated as Silver Duke Mines Ltd. (N.P.L.) on December 15, 1967 under the Company Act of British Columbia, Canada.  We changed our name and consolidated our share capital as set forth below on the following dates:

|                   |                                 |                        
|------------------ | ------------------------------- | -----------------------
|Date               | Name                            | Consolidation (Old:New)
|December 15, 1967  | Silver Duke Mines Ltd. (N.P.L.) | Not applicable         
|February 3, 1976   | Totem Resources Ltd. (N.P.L.)   | 4:1                    
|June 9, 1978       | Paragon Resources Ltd. (N.P.L.) | Not applicable         
|May 13, 1981       | Paragon Resources Ltd.          | Not applicable         
|September 11, 1995 | SAMEX Mining Corp.              | 5:1                    











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Effective May 28, 1999, we increased our authorized capital from 100,000,000 shares divided into 50,000,000 common shares without par value and 50,000,000 preferred shares without par value, none of which preferred shares are issued, to 150,000,000 shares divided into 100,000,000 common shares without par value and 50,000,000 preferred shares without par value, none of which preferred shares are issued.



Change in Articles



On March 29, 2004, the corporate legislation under which we were incorporated, the Company Act (British Columbia), was repealed and was replaced with the new Business Corporations Act (British Columbia).   Because of this change, we were required to undertake certain transitional steps set out under the Business Corporations Act, including filing a Transition Application, which, among other things, replaced our former Memorandum of Incorporation with new Notice of Articles and which adopted certain provisions under the Business Corporations Act known as the Pre-existing Company Provisions.  This step was completed on February 11, 2005.  We were also required to amend our Articles to comply with the new legislation.  Coincidentally with these changes, we also altered our authorized share structure to eliminate the maximum number of common shares and preferred shares that the Company is authorized to issue, effective June 13, 2005.  See Item 10. Additional Information  Changes to Corporate Legislation.

Change In Year-End

During the fourth quarter of fiscal 2005,we changed the Companys fiscal year-end to synchronize it with the year-end of our Chilean subsidiary and with the quarter ends of our Bolivian subsidiaries.  The change helps make the Companys accounting and reporting process more streamlined and efficient.  The Companys old financial year-end of November 30th was extended one additional month and the Companys new financial year-end is now December 31st.

Our total mineral interests and exploration costs were $1,523,911 for the fiscal year ended December 31, 2010 as compared to  $1,292,461 for the fiscal year ended December 31, 2009, substantially all of which was spent on our mineral properties in Chile and Bolivia.  We have financed these expenditures primarily through private placement financing and the exercise of warrants and options raising gross proceeds of $1,539,000 during fiscal 2008, $2,586,050 during the 2009 fiscal year and $10,162,060  during the 2010 fiscal year.  Further details applicable to anticipated capital expenditures and funding sources are detailed in Item 5. Liquidity and Capital Resources.



Subsidiaries



We have six subsidiaries, all of which are described below.  The present inter-corporate relationship between us and our subsidiaries is illustrated in the following chart:





|                                                                          |                                                                              |                            |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | -------------------------- |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                                                          | SAMEX Mining Corp.
(British Columbia, Canada)
Listed on TSX Venture Exchange |                           
|                                                                          |                                                                              |                            |  | 
|South American Mining & Exploration Corp.
(British Columbia, Canada) 100% | Minera Samex Chile S.A.
(Chile) 99.9%                                        |                           
|                                                                          |                                                                              |                            |  |  | 
|Samex International Ltd.
(Bahamas) 100%                                   |                                                                              | Bolivex S.A.
(Bolivia) 98%
|                                                                          |                                                                              |                            |  | 
|Samex S.A.
(Bolivia) 98%                                                  |                                                                              | Emibol S.A.
(Bolivia) 98%  | 











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Minera Samex Chile S.A.



Minera Samex Chile S. A. (Samex Chile) was incorporated in Santiago, Chile on July 5, 2002.  The directors and officers of Samex Chile are Jeffrey P. Dahl, Robert E. Kell and Allen D. Leschert and the alternate directors are Francisco Vergara, Felipe Garcia and Pedro Lyon.  Of the 1,000 issued and outstanding common shares, 999 shares are held by SAMEX Mining Corp. and 1 share is held by Francisco Vergara, our Chilean legal counsel.   Samex Chiles principal assets are its interest in mineral concessions at the Los Zorros, Chimberos, Inca, and Espejismo properties in Chile.



South American Mining & Exploration Corp.

South American Mining & Exploration Corp. (S.A.M.E.X. Corp.) was incorporated in British Columbia on November 24, 1993.  S.A.M.E.X. Corp. was involved principally in the acquisition and exploration of mineral properties through its operating subsidiaries in Bolivia.  Its authorized share capital consists of 100,000,000 common shares with 7,925,001 shares outstanding, all of which are held by us.

SAMEX International Ltd.

SAMEX International Ltd. (SAMEX International) was incorporated as an international business company under the laws of the Commonwealth of the Bahamas on August 4, 1995.  The directors and officers of SAMEX International are Patricio Kyllmann (Director, President and Secretary) and Kenneth Taves (Director).  Its authorized share capital consists of 5,000 common shares of which 100 are issued and outstanding, all of which are held by S.A.M.E.X. Corp.  SAMEX International functions as an international holding and finance company and holds 98% of the shares of each of SAMEX S.A. and Emibol S.A.

SAMEX S.A.

SAMEX S.A. was incorporated under the laws of the Republic of Bolivia on May 10, 1994. SAMEX S.A. has authorized capital of 500,000 Bolivianos (Bs.) and paid up capital of 250,000 Bs. represented by 100 common shares issued with a nominal value of 2,500 Bs. each. Of the 100 issued and outstanding shares, 98 are held by SAMEX International and the remaining 2 shares are held by each of Jeffrey Dahl and Peter Dahl, directors of SAMEX.  SAMEX S.A.s only asset is its interest in a portion of the Goya I/El Bonete concession which form the Santa Isabel property.  We have suspended exploration activities in Bolivia due to concern over the current legal and political situation.  See Item 3. Risk Factors  Bolivian Interests.

Bolivex S.A.

Minas Bolivex S.A. (Bolivex S.A.) was incorporated under the laws of the Republic of Bolivia on September 23, 1994. Bolivex S.A. has authorized capital of 500,000 Bs. and paid up capital of 250,000 Bs. represented by 100 common shares issued with a nominal value of 2,500 Bs. each.  Of the 100 issued and outstanding shares, 98 are held by S.A.M.E.X. Corp. and the remaining 2 shares are held by each of Jeffrey Dahl and Peter Dahl, directors of SAMEX.  Bolivex S.As. only asset, was the Walter Property that we abandoned in the first quarter of 2009 (see Description of Properties). We have suspended exploration activities in Bolivia due to concern over the current legal and political situation.  See Item 3. Risk Factors  Bolivian Interests.

Emibol S.A.

Empresa Minera Boliviana S. A. (Emibol S.A.) was incorporated under the laws of the Republic of Bolivia on August 22, 1995.  Emibol S.A. has authorized capital of 200,000 Bs. and paid up capital of 100,000 Bs. represented by 100 common shares issued with a nominal value of 1,000 Bs. each.  Of the 100 issued and outstanding shares, 98 are held by SAMEX International and the remaining 2 shares are held by each of Jeffrey Dahl and Peter Dahl, directors of SAMEX.  Emibol S.A.s assets are its interests in the El Desierto and Eskapa properties in Bolivia. We have suspended exploration activities in Bolivia due to concern over the current legal and political situation.  See Item 3. Risk Factors  Bolivian Interests.





Principal Expenditures And Divestitures



Since the beginning of the last three financial years, we have not made any material principal capital expenditures or divestitures.  During 2009, we wrote down the value of all of our mineral properties in Bolivia to nominal consideration and placed the properties on care and maintenance status due to concerns over the prevailing legal and political climate in Bolivia.  See Item 3. Risk Factors  Bolivian Interests.





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We have not made any acquisitions of other companies and our shares are not subject to any public takeover offers.  Neither we nor any of our subsidiaries have been involved in any bankruptcy, receivership or similar proceedings.



Our head office is located at #301  32920 Ventura Avenue, Abbotsford, British Columbia, V2S 6J3.   The address for our registered and records office is #2760  200 Granville Street, Vancouver, British Columbia, V6C 1S4.  The phone number of our head office is (604) 870-9920.  In South America, we have a field office in Copiapo, Chile.



4.B. Business Overview.

For 2010

During fiscal year 2010 we focused our exploration activities principally on our Los Zorros property in Chile.  As a result of our activities during 2010 our exploration/mineral interests costs totaled $1,523,911 for the fiscal year ended December 31, 2010.



Our exploration work during the first, second and third quarters of 2010 was conducted at four individual projects situated within our Los Zorros gold property holdings in Chile.  The work included bulldozer trenching, sampling, assaying and construction of roads and drill pads at the Milagro, Nora, Cinchado and Milagro Pampa Projects in preparation for drilling programs to test these four projects for multiple precious metal deposits.  By the end of the third quarter we commenced exploration core drilling which continued through the fourth quarter of 2010 and into the first quarter of 2011.  During 2010 we also conducted meetings and property tours for mining companies interested in our Inca Property in Chile.



We raised a total of $10,162,060 during fiscal 2010 from two private placements at a price of $0.30 per unit and at $0.50 per unit and from the exercise of warrants.



For 2009

During 2009 our exploration activities were focused on our gold and silver projects in Chile.  As a result of our activities throughout 2009, our exploration/mineral interests costs totaled $1,292,461 for the fiscal year ended December 31, 2009.



During the first quarter of 2009, we resumed exploration work at our Los Zorros gold project in Chile including re-logging some of our previous drill core and further geologic mapping. We also conducted some preliminary sampling and assaying at our Chimberos silver/gold prospect in Chile.  We concluded the compilation and reporting of Phase I exploration results for the INCA copper-gold-moly property and conducted property visits for companies who expressed interest in possible joint-ventures on this project.  During the first quarter, we made an option payment and an advance royalty payment related to our mineral properties in Chile, and completed a private placement financing raising gross proceeds of $783,050.  During the second quarter 2009, we continued our work related to gold and silver exploration at the Los Zorros project.  We also raised gross proceeds of $600,000 through the private placement of 3,000,000 units at $0.20 per unit.  During the third quarter, we continued exploration at the Nora Project and the Cinchado Project of our Los Zorros Property in Chile that we are exploring for gold deposits.  Detailed geologic mapping, re-logging of some Phase I drill core, and drafting of cross-sections and drill plans was conducted in preparation for the next phase of drilling in these two project areas.  During the third quarter, we also completed the final option payment under the Araya Option to acquire the Providencia Mine concessions situated within the greater INCA project area.   During the fourth quarter of 2009 we continued exploration at the Nora Project and the Cinchado Project of the Los Zorros Property.  We also conducted meetings and property tours at our Inca Property for mining companies interested in that property.  The Company received proceeds of $1,203,000 through the exercise of warrants during the fourth quarter of 2009.



For 2008

During 2008 we focused principally on continued exploration of our INCA copper-gold-silver-moly prospect in Chile.  By December 2007 we had completed the last of more than 10,300 meters of drilling as part of our Phase I exploration program on the Inca property.  Then, continuing through fiscal 2008, our work was mainly focused on logging drill core, assaying, correlating, analyzing and interpreting the results from more than 10,000 meters of drill core.   As a result of the activities on our mineral exploration properties during fiscal 2008, our expenditures on mineral interests and exploration costs for the year totaled $1,949,405 at December 31, 2008.



During the first quarter of 2008 our activities included processing drill core and compiling data from the INCA project, making option payments and an advance royalty payment related to our mineral properties in Chile, and arranging a private placement financing.  During the second quarter our activities at the INCA project in Chile included continued processing of drill core and data compilation, as well as additional trenching, channel sampling, assaying and installation of safety ladders to provide exploration access to the historic underground workings at the Jardinera mine on the INCA property.  We also made option payments on certain mineral properties in Chile and completing a private placement financing that had been announced in the first quarter.  At the Eskapa project in Bolivia, work was conducted to complete construction of the new Eskapa exploration camp.  During the third quarter our activities at the INCA project in Chile included the installation of a system of safety ladders
and platforms to facilitate exploration access into the underground workings of the Providencia mine and then we conducted rock-chip channel sampling and assaying of the underground workings.  We also continued with the process of compiling and interpreting the extensive amount of data from the Phase I exploration program at the INCA project.  During the fourth quarter of 2008, the Company conducted property visits on the INCA Project in Chile for larger companies who expressed interest in possible joint-ventures on the project.  The Company also continued compiling and interpreting the results from the Phase I exploration program at the INCA project.



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Plans and Projections, 2011 - The Company's exploration activities over the next year will continue to be focused on our high quality gold and silver projects in Chile including the Los Zorros property and the Chimberos property.  The Company will also conduct meetings and property tours with parties interested in our INCA copper-gold-moly property in Chile in a continuing effort to arrange a joint venture or sale of all or a portion of the INCA property.



We raised a total of $10,162,060 during fiscal 2010 from two private placements and from the exercise of warrants.  Based on the funds on hand, we believe we have sufficient funds to conduct our ongoing general operations and our proposed exploration programs at the Los Zorros property in Chile over the next year.  Beyond that time,

it will be necessary to raise additional financing in order to fund our ongoing general operations and exploration programs.  

We propose to raise the required funds through the issuance of securities, by way of either private placement, exercise of warrants, by public offering and/or joint venture or sale of certain mineral properties in order to fund our exploration.  Although we anticipate we will be able to complete equity placements sufficient to meet our capital requirements, there can be no assurance that we will be able to do so on terms favorable to us or at all.  See Item 4 Information on the Company  Description of Property - Los Zorros Property.  See Special Note Regarding Forward Looking Statements.



WE ARE AN EXPLORATION STAGE COMPANY AND HAVE NO MINERAL PRODUCING PROPERTIES AT THIS TIME.  ALL OF OUR PROPERTIES ARE EXPLORATION PROJECTS, AND WE RECEIVE NO REVENUES FROM PRODUCTION.  ALL WORK PRESENTLY PLANNED BY US IS DIRECTED AT DEFINING MINERALIZATION AND INCREASING UNDERSTANDING OF THE CHARACTERISTICS AND ECONOMICS OF THAT MINERALIZATION.  THERE IS NO ASSURANCE THAT A COMMERCIALLY VIABLE MINERAL DEPOSIT EXISTS IN ANY OF OUR PROPERTIES NOR DO WE ANTICIPATE SAME UNTIL AFTER COMPLETION OF FURTHER EXPLORATION WORK AND A COMPREHENSIVE EVALUATION BASED UPON UNIT COST, GRADE, RECOVERIES AND OTHER FACTORS CONCLUDE ECONOMIC FEASIBILITY.  THE INFORMATION CONTAINED HEREIN RESPECTING OUR MINERAL PROPERTIES IS BASED UPON INFORMATION PREPARED BY OR THE PREPARATION OF WHICH WAS SUPERVISED BY GEOLOGIST, ROBERT KELL, OUR VICE PRESIDENT EXPLORATION AND DIRECTOR OF THE COMPANY AND COMPANY GEOLOGIST, PHILIP SOUTHAM, P. Geo.   MR. KELL AND MR. SOUTHAM ARE QUALIFIED PERSONS PURSUANT TO CANADIAN SECURITIES NATIONAL INSTRUMENT 43-101 CONCERNING STANDARDS OF DISCLOSURE FOR MINERAL PROJECTS.



Description of Property

CHILEAN PROPERTIES







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[samex20f06292011008.gif]







LOS ZORROS PROPERTY, Chile

The Los Zorros Property in the Atacama region of northern Chile is located approximately 60 kilometers south of the city of Copiapo, Chile.  The property is accessed by vehicle by driving approximately 60 kilometers south of the city of Copiapo on the paved, two-lane Pan American Highway (Highway 5) then traveling 5.5 kilometers east on a government maintained dirt road to the western boundary of the property and a further 4 kilometers to the Companys exploration camp.  Although gold is the primary focus of SAMEXs exploration at Los Zorros, important values of silver and copper are also present in certain target areas.



The Los Zorros property consists of multiple project areas situated within a single property holding.  Our property covers approximately 80 square kilometers within a district of scattered numerous small mines and prospects where there was sporadic attempts at small-scale production for gold and copper-silver in the past.  Systematic exploration by SAMEX has revealed that the Los Zorros district is situated at the convergence of important geologic and structural features:



·

the property covers the breadth of a regional anticlinorium with bedrock of calcareous sediments and diorite sills.



·

the property is diagonally crossed by an 8-kilometer-long trend of barite veins which appears to comprise an extensive sigmoidal (S-shaped) fracture system.



·

the property is also the locus of younger porphyry intrusions.



·

clay-sericite-pyrite alteration is superposed on the porphyry intrusions in four areas that have been identified so far - much of these altered areas and parts of the barite vein swarm, are largely concealed beneath a thin veneer of gravel and wind-blown silt.  Trenching and a gravity survey have helped better outline the extent of the altered intrusions.



·

the style of mineralization at Los Zorros varies from steep crosscutting veins and breccia to bedded mantos-like
occurrences  hosted within sedimentary rocks outboard to the altered porphyritic intrusions.  There is widespread occurrence of gold-bearing barite veins and altered fault zones; common, widespread occurrence of  jasperoid silica; large areas/intersections of anomalous gold and the presence of important pathfinder metals (Hg, As, Sb) often found in association with gold mineralization.



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Metal-laden hydrothermal fluids thought to be derived from the younger porphyritic intrusions, likely expelled out along fault structure pathways and into favorable sedimentary intervals to form the significant gold and copper-silver mineralized areas of Cinchado, Nora, Milagro, and Milagro Pampa. There are also many outlying mineral occurrences at Los Zorros yet to be systematically explored by SAMEX including: La Florida and Lora (gold and copper-gold), Virgen de Carmen and Colorina (copper-silver; possible deeper-seated gold and copper-gold), and Salvadora and Cresta de Gallo (barite vein systems with possible deeper-seated gold and copper-gold).



What has been revealed geologically at Los Zorros has provided SAMEX with strong impetus to explore for multiple precious metal deposits that may be clustered beneath the widespread precious metal occurrences in this little-explored district of historic small mining activity.



During 2004, we completed 8,617 meters of diamond core drilling in 26 holes, 10,800 meters of bulldozer trenching in 65 trenches and more than 3,100 trench and surface samples/assays; and an additional 1,865 meters of trenching (10 trenches/559 samples) during 2005.  Our Phase I exploration yielded significant results including: Nora - DDH-N-04-05 with 15.96 g/mt gold over 7.66 meters, Trench TN-9 with 0.757 g/mt gold over 131 meters, and Trench TN-3 with 0.558 g/mt gold over 117 meters; Milagro - DDH-ML-04-01 with 2.579 g/mt gold over 4.4 meters true width; West Florida - trench TMW-10 with .405 g/mt gold over 138 meters; Cinchado - values ranging from 0.05 to 9.5 g/mt gold in 151 rock-chip samples of breccia in the open-cut of the old San Pedro mine.  Phase I exploration work was conducted on only a portion of the target/project areas that we have identified to-date at Los Zorros.



SAMEX resumed exploration at the Los Zorros Property in 2009 and work is continuing to the present time in 2011.  The encouraging results from phase I exploration, trenching and drilling during 2004-2005 provide important guides for ongoing exploration.  Work over the past year has included bulldozer trenching, sampling assaying, constructing access roads, drill pads and core drilling at several projects areas situated within our Los Zorros property holdings. In late January 2011 we commenced a substantial geophysical survey over portions of the Los Zorros district.  The survey, which included five survey lines totaling over 20 line-kilometers, was conducted by Quantec Geoscience utilizing their proprietary Titan 24 technology.  The Titan 24 Magnetotellurics and IP/Resistivity survey is a deep-earth-imaging technology system for detecting conductive mineralization, disseminated mineralization, alteration, structure and geology which can help target and direct exploration drilling to depth.  Results from our multi-faceted exploration programs at Los Zorros in the latter part of 2010 and into 2011 are strongly encouraging and demonstrate important advancements on several projects.  The Titan-24 geophysical survey, which was completed subsequent to the drilling reported below, has provided key insights into many of the project targets.  Program highlights include:



-

Breakthrough in target definition at the Cinchado project

-

Titan-24 geophysical survey reveals numerous additional targets while refining existing ones.

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A 900-meter step-out drill hole at the Milagro project intersects multiple auriferous (gold-bearing) stratigraphic intervals, favorable for hosting gold deposits.

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Deep drilling at Milagro Pampa intersects a long interval of stock-work veined, variable mineralized, porphyry intrusion, which Titan-24 shows may be the halo to a large IP anomaly centered 400 meters to the east.



SAMEX President, Jeff Dahl says; The Titan-24 geophysical survey, in conjunction with our detailed geologic mapping and drilling, has proven successful in assisting us with understanding the mineral potential at Los Zorros.  Its been effective in refining and advancing our existing project targets while outlining important new ones.  I expect that we will be utilizing this exploration tool again shortly.



Cinchado Gold Project at Los Zorros - Exploration core drilling was designed to test both beneath and the westward down-dip projected continuation of a prospective zone of strong jasperoid-barite vein/mantos alterations features.  Such features at the south end of Cerro (Mt.) Cinchado can be traced down into the gold-mineralized breccia (3 grams/tonne gold average grade) at the San Pedro mine.  The iron-oxide character of the matrix to the mined breccia suggests that the clasts were cemented by considerable copper- and iron-sulfide.  The three drill holes, DDH-CC-10-01, -02, & -03, did not intersect the target, but instead found that a +250-meter thick diorite sill had been emplaced, post-mineralization/alteration, cutting through the target interval.  This resulted in the target being displaced laterally and decoupled (separated) from the capping jasperoid-barite alteration features by the thickness of the sill.



Titan-24 geophysical survey Line 1, which was run over Cerro Cinchado crossing in the vicinity of the drill holes, subsequently identified the position of the displaced target as a significant IP anomaly situated beneath the diorite sill and 200
to 400 meters west of the drill platform locations.  The character of the IP anomaly in profile (+35 milliradianes chargeability/<10 ohm meters resistivity) indicates a steeply oriented, sulfide-mineralized body with great depth extent, and perhaps a width of 100 to over 200 meters.   The 1,200-meter lateral extent of the surface alteration features suggests the target might have a significant strike length dimension.  Testing this IP target will be a high priority for the exploration drilling campaign.



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Titan 24 DC-IP & MT Geophysical Survey  The Titan-24 survey identified 47 interpreted geophysical anomalies, of which 19 anomalies are considered first priority anomalous zones for follow up with potential for sulphide and gold mineralization from near surface to >500m depth. The remaining 28 anomalies are second priority targets that represent small area anomalies, generally with weak to moderate responses near surface.



Approximately 14 of the 47 anomalies coincide with known areas of mineralization determined by surface workings, surface sampling or drilling, including 7 first priority anomalous zones and 7 second priority targets. The known target areas which have coincident anomalies are: (Cinchado, Cinchado East, Nora North  L100N), (Nora Central, Lora Southeast - L200N), (Milagro Pampa - L300N) and (Milagro Mine - L400N).  The additional 12 first priority zones and numerous second priority targets, represent new shallow and/or deep target areas worthy of exploration by mapping, sampling and drilling, and will be systematically followed up as they are evaluated and prioritized.



Milagro Gold Project at Los Zorros  Early in 2011, two drill holes (DDH-MM-10-01 and -02) were completed as a follow up to test the eastward, down-dip projected continuation of a highly prospective gold-mineralized mantos intercepted in the 2004 drill program (DDH-MM-04-01 encountered 97.3 meters averaging 0.302 g/t gold, including 2.579 g/t gold over 4.7 meters as previously reported in 2005).



The first hole DDH-MM-10-01 was sited 140 meters east of DDH-ML-04-01 and aimed inclined westward with the intention of making a relatively shallow intercept of the gold-mineralized mantos layer and underlying altered volcanic debris-flow breccia which too was found to be highly anomalous in gold averaging 0.167 g/t over 71 meters (from 31.7 to 102.7 meters).  The target interval was found, in the vicinity of the new drill site, to be displaced by a steeply westward dipping normal fault intersected between depths of 37 to 53 meters.  As a result, the hole penetrated through the fault gap and beneath the target interval intended to be drill tested.  However, the footwall (54  60 meters) to the fault zone was a strongly pyritized/silicified volcaniclastic debris flow breccia with high anomalous gold content (averaging 0.364 g/t).  Strongly altered quartz-sericite-pyrite altered volcaniclastic sediments and interlayered debris flow breccia intervals continued to a depth of 369 meters where the hole was stopped after penetrating well into weakly altered porphyritic diorite sill (354  369 meters).  This entire long interval (53 to 369 meters) continuously contains elevated detectible gold values (>0.010 to <0.100 g/t) with numerous subintervals of anomalous gold (0.108 to 0.807 g/t).  One interval (268.0 to 270.0 meters) comprised of strong pyritization and silicification associated with a narrow fault zone contains 11.8 g/t gold.



The second drill hole (DDH-MM-10-02) was sited 900 meters east-southeast of DDH-ML-04-01.  This long step-out and location were chosen to test again the projected southeastward down-dip continuation of the gold-mineralized mantos layer and within a structural block that is largely intact without significant fault disruptions.  This hole was aimed inclined northwestward and, below an altered mafic sill, entered into a thick interval (from 228 to 517 meters) of prospective-looking, quartz-sericite-pyrite altered volcaniclastic debris-flow breccia units.  Geochemical analyses show that the interval from 261.5 to 373.0 meters continuously contains elevated detectible (<0.010 to <0.100 g/t) amounts of gold.  Within this interval, three prominent intervals of significantly anomalous gold (>0.100 to 2.14 g/t) were intersected: 261.5 to 278.0 meters, 313.0 to 332.0 meters, and 350.0 to 373.0 meters.  The hole was stopped at a depth of 517.0 meters within a silicified/pyritized carbonaceous black shale sedimentary unit where subsequent assaying shows low-level anomalous gold values (0.105 to 0.151 g/t) begin to reappear.



The results of the Milagro project reconnaissance drilling are encouraging and show widespread low-level to anomalous values of gold spread over great thicknesses of quartz-sericite-pyrite altered volcaniclastic sedimentary rock.  The extent and style of alteration, and anomalous gold are indicative of large-scale mineralizing processes, and possibly comprise a halo to areas of significant gold mineralization.  Titan-24 Line 4, which runs through the Milagro project area and in close vicinity to the drill holes, shows that DDH-MM-10-02 was drilling down into, but not through, a very strong IP chargeability anomaly; and over top of, thus missing, a strong resistivity anomaly.  The latter resistivity anomaly outlines a target highly prospective for a gold-mineralized, silicified body positioned along the range front.  This resistivity anomaly was also observed on Titan-24 Line 3, so, is known to extend for at least 700 meters from the Milagro project area northward across the east part of the Milagro Pampa project area (open-ended to the north and south).



Further west and south of the Milagro drilling, 46 samples were collected on shallow, exposed barite veins, fault zones, narrow breccias and minor jasperoid occurrences observed during prospecting traverses over a 1,300 x 800 meter area.  The 46 samples range from <0.005 to 20.2 g/t gold including 10 samples returning >1.0 g/t gold, with four of these ranging from 4.26 to 5.56 g/t gold.  Underlying this sampled area, a second sizeable IP anomaly characterized by high chargeability and high
resistivity situated at relatively shallow depth was identified by Titan-24 Line 4.  The character of this anomaly is that of a thick/extensive, strongly silicified/pyritiferous mantos interval and which is known to be positioned adjacent/proximal to a shallow concealed altered porphyry intrusion (gravity low).  In light of the geologic environment of favorable sedimentary host rocks and widespread, low-level to anomalous gold, this IP anomaly represents another exciting drill target for the Milagro project.









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Milagro Pampa Project at Los Zorros  Late in 2010, one exploration core hole (DDH-MP-10-01) was drilled westward inclined to a depth of 869.4 meters.  This hole tested down across anhydrite and quartz stock work veinlets and sheeted vein swarm within a sericite-quartz-pyrite altered porphyritic intrusion.  These bedrock features are concealed beneath 12 meters of gravel cover.  The hole proceeded downward through intense veinleting and pyritiferous sericite-altered porphyritic intrusion, which appears to comprise an extensive phyllic alteration halo.  The west margin of the intrusion was intersected at 657 meters depth where pyritized hornfelsed and calc-silicate skarnoid metasedimentary rocks were intersected.



Geochemical results on continuous sampling show, from 150 to 500 meters depth, overall increasing levels of variably anomalous copper (>100 to 905 ppm) copper and elevated detectible to anomalous gold (>0.050 to 0.332 g/t).  Below approximately 500 meters, the hole encountered a series of prominent vein and brecciated intervals from 0.3 to 1.2 meters thickness with >1% copper, and 0.475 to 6.08 g/t gold.  A 1.9-meter (true width) vein/fault interval assayed 13.0 g/t gold including 0.75 meters (true width) at 29.4 g/t gold.  The interval, 692.0 to 738.6 meters (23.3 meters true width), averaged 1.51 g/t Au, 2.15 g/t Ag and 0.27% Cu with strongly anomalous mercury and arsenic.  The dominant orientation of veins and veinlets intersected in core indicated that the drill hole was cutting down at an acute angle to the vein dip direction and that perhaps was also drilling westward and away from the heart of the mineralizing system.



Titan-24 Line 3, which crosses through the area of the drill hole, indeed shows that a sizeable and very strong IP chargeability anomaly (to +40 milliradianes) lies centered 400 meters to the east.  On the profile, hole DDH-MP-10-01 can be seen to be located at the very west edge of the large IP anomaly.  The target at Milagro Pampa is a high-grade, gold-bearing; copper-sulfide mineralized sheeted veins system perhaps of substantial size.



Below are summaries/histories of other important exploration project areas within the Los Zorros property that we identified during our first phase of exploration in 2004 and 2005 and that we will be further exploring:



NORA Project at Los Zorros, High-Grade Gold Target  Nora is a large area hosting a complex swarm of numerous copper-gold-mineralized barite veins and a series of broad zones of anomalous gold we exposed by trenching.  The upper oxide parts of some principal veins of the swarm have been mined historically on a small scale for gold, copper and barite.  Exploration work we carried out at Nora during 2004 included: geologic mapping and surface outcrop rock-chip sampling mostly across principal vein structures (193 samples), approximately 2,000 meters of trenching (14 trenches/520 channel samples), and 3,799.5 meters of core drilling in 10 holes, and during 2005, an additional 1,865 meters of trenching (10 trenches/559 samples).



During phase I drilling at Nora, an impressive, mantos-style (layered), high-grade gold intersection (15.96 g/mt gold over 7.66 meters or 0.51 oz/mt over 25.12 ft.) was made in drill hole DDH-04-05.  The intersected gold mineralization occurs in a complicated package of volcaniclastic detrital rocks, volcanic breccia, and minor siliclastic sedimentary rocks.  The highest grades of gold occur within a distinctly layered clastic sequence and specifically within two, closely spaced, unique black-matrix breccia sub-intervals which have been silicified and contain abundant disseminated pyrite and minor chalcopyrite.  A 250-meter wide alteration halo surrounds the gold mineralized interval and consists of a narrow outer chloritic zone and thick interior zone of silica-clay-pyrite with scattered veinlets of quartz-pyrite+/-chalcopyrite.  Coincident with the alteration halo are numerous anomalous to highly anomalous values of copper, mercury, and silver and many elevated (>25 ppb to <100 ppb range) to anomalous (>100 ppb range) gold values.  This alteration and geochemical expression suggests strong and widespread mineralizing processes were associated with the deposition of the gold-rich interval.



Importantly, the high-grade, gold-mineralized interval is possibly widespread beneath the NORA area.  The substantial width of the haloes of both the associated hydrothermal alteration and anomalous values of copper, mercury, and silver, plus elevated to anomalous gold surrounding the gold-mineralized interval in DDH-N-04-05, indicate a strong mineralizing system that could have produced an extensive gold ore body of moderate- to high-grade nature. This may be supported by the presence at the surface, of numerous copper-gold-mineralized barite veins and a series of north-trending broad zones of anomalous gold exposed by trenching which may be leakage up from the deeper seated, high-grade, gold-mineralized mantos.  These anomalous gold zones may prove to comprise an important guide to deeper seated high-grade gold mineralization.



Late in 2010 and into 2011, access roads and multiple drill pads were prepared along a 600-meter strike length in the Nora project area, and drilling is planned to begin soon in 2011.  Six new bulldozer trenches have been completed and sampled in other parts of the Nora Project to help extend the target zones further northward.  An additional new barite-jasperoid in-filled fault zone in the eastern part of the project area is in the early stages of evaluation.





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West Florida area at Los Zorros West Florida is an area where Phase I trenching and sampling exposed silicified and clay-altered quartz-eye porphyritic intrusion with significantly anomalous gold content including a 138-meter interval averaging 0.405 g/mt.  The gold mineralized/altered intrusion intrudes up through a little-altered, thick diorite sill and coincides with a well-defined gravity low.  The surface outcropping, oval-shaped area of gold mineralized quartz-eye porphyritic dacite intrusion encompasses approximately 200 meters wide by 400 meters long.   Similar altered/mineralized porphyritic intrusion outcrops/daylights elsewhere in the vicinity, indicating the target extends over a much greater distance beneath the surrounding area.



Lora area at Los Zorros The Lora project at Los Zorros is situated in an area of pampa and low-lying hills with numerous prospected showings of fault-hosted, fracture-controlled and veinleted, oxide-copper mineralization.  Bulldozer trenching during our phase-one exploration exposed a large copper-gold-molybdenum anomaly within variably leached rocks over an area measuring approximately 1,000-meters long and 800-meters wide (open-ended to the east) with anomalous copper (>250 ppm), gold (>100 ppb) and elevated molybdenum (>10 ppm) in trench (see table below) and outcrop samples.



|                                                  |                  |                  |                   |                       
|------------------------------------------------- | ---------------- | ---------------- | ----------------- | ----------------------
|Trench                                            | Length
In Meters | Average Copper
% | Average Gold
ppm* | Average Molybdenum
ppm
|P-1                                               | 106.0            | 0.105            | 0.039             | 20                    
|P-2                                               | 219.0            | 0.252            | 0.103             | 13                    
|P-3                                               | 213.4            | 0.186            | 0.212             | 33                    
|P-5                                               | 67.0             | 0.266            | 0.189             | 20                    
|P-6                                               | 110.8            | 0.145            | 0.256             | 12                    
|P-9b                                              | 104.3            | 0.066            | 0.069             | 18                    
|P-9c                                              | 89.0             | 0.077            | 0.018             | 51                    
|P-16                                              | 129.4            | 0.277            | 0.149             | 12                    
|P-18                                              | 207.3            | 0.102            | 0.081             | <2                    
|C-1                                               | 199.0            | 0.069            | 0.100             | <6                    
|LR1-17                                            | 51.0             | 0.051            | 0.580             | 17                    
|Weighted average of trench samples in target area | 0.151            | 0.143            | 17               

* Analytical results are reported in parts per million (ppm).  1 ppm = 1 gram/metric tonne (g/mt)



The geologic setting of this target has been disclosed by trenching to be porphyritic diorite and quartz diorite which has been strongly hypogene altered (clay-silica and sericite-pyrite) and cut by later igneous dikes.  Strong supergene effects have produced secondary clays plus iron-oxide and oxide-copper minerals.  The oxide-copper mineralization occurs in all rock types mostly as copper wad and chysocolla along abundant fractures, structurally controlled wide zones of multiple orientation, and as strong disseminations in altered diorite.  The original copper mineralization appears likely to have been comprised of gold-bearing, copper sulfide (chalcopyrite) associated with the hypogene alteration within the porphyritic dioritic rocks.



During our phase-one drilling program in 2004, six core drill holes tested only a portion of the porphyry intrusions, encountering long intervals of low-grade copper/gold mineralization (see table below) in each hole.  Drilling was principally along a 500-meter long fence of four inclined holes (P1, P2, P3, P4) which were spaced on an east-west line, systematically testing across the central part of the large copper/gold anomaly defined earlier by trenching.  Two additional inclined holes (P5 and P6) were drilled 200-meters southwest, and 400-meters south of the fence, respectively.





|          |       |       |              |       |       
|--------- | ----- | ----- | ------------ | ----- | ------
|Hole #    | From  | To    | Interval (m) | Cu %  | Au ppm
|P1        | 5.45  | 228   | 222.55       | 0.163 | 0.061 
|including | 16.7  | 37    | 20.3         | 0.499 | 0.051 
|          | 14    | 86    | 69.3         | 0.236 | 0.045 
|AND incl. | 206.5 | 227   | 20.5         | 0.404 | 0.276 
|P2        | 7.5   | 245.8 | 238.3        | 0.144 | 0.117 
|including | 178   | 204   | 26           | 0.31  | 0.216 
|P3        | 2.1   | 330   | 327.9        | 0.175 | 0.147 
|including | 2.1   | 72    | 69.9         | 0.29  | 0.243 
|P4        | 6.5   | 306   | 299.5        | 0.163 | 0.108 
|including | 9.5   | 86.75 | 77.25        | 0.249 | 0.145 
|OR incl.  | 9.5   | 132   | 122.5        | 0.237 | 0.152 
|P5        | 6.3   | 293.2 | 286.9        | 0.035 | 0.03  
|P6        | 7.5   | 221.5 | 214          | 0.083 | 0.057 







Evaluation of the drill data suggests that this mineralization may represent the low-grade, distal zone or outer halo to more intensely altered and better mineralized parts of the porphyry copper/gold system within the Lora area.  Further exploration is required in the Lora area to search for higher grade oxide and secondary sulfide mineralization which may be advantageously positioned at shallow depths and for proto-ore zones of combined high copper/gold grade with significant width.



Colorina area at Los Zorros Colorina is an area of strong hydrothermal alteration with geochemical values of gold, silver and copper that are characteristic of the high-level part, or outer halo, of a possible deeper seated epithermal, precious metal system.  A unique feature of the alteration found in the Colorina area is its unusually high sodium enrichment which is similarly reported to occur associated with the large copper/gold deposits of the Candelaria and Punta del Cobre District situated 40 kilometers north of Los Zorros.  The area of alteration is hosted in a thick diorite sill and measures 1500-meters (north-south) by 400- to 800-meters across (east-west).  The center of the alteration is just outboard in low-lying pampa to the west of a higher, range-front mine where barite breccia and mantos-hosted oxide-copper-silver mineralization was exploited on a small scale.  The alteration is characterized by hematite-clay-silica with later fracture-controlled superimposed clay-silica.  This style of alteration and weakly anomalous gold, silver, copper suggests a position above perhaps deeper seated, gold-copper-silver (Candelaria-type), or gold-silver (Andacollo-type) mantos- and related vein zone-hosted mineralization similar to other ore bodies in this lower Cretaceous geologic belt.



Initial reconnaissance chip sampling (44 samples) of scattered outcrops of clay-red hematite altered and silicified porphyry and diorite in the area showed common elevated (0.022 to 0.082 ppm) levels of gold with anomalous silver (1 to 6.1 ppm).  Eight samples contained weakly to moderately anomalous gold values (0.173 to 1.22 ppm) with anomalous silver (1.9 to 8.4 ppm), and mercury (110 to 1180 ppb).  Higher gold values (two samples, 4.73 ppm and 5.19 ppm) are restricted to a meter-wide, oxide copper-mineralized (to 3.04% copper) northeast-trending structure.  High sodium values (most >3%) and strongly depleted calcium (most <0.5%) and magnesium (most <0.2%) in the samples suggest the colorful alteration includes a peculiar sodic metasomatism which is noted to importantly occur associated with the copper-gold deposits at Punta del Cobre and Candelaria located in this same geologic belt.   Also in this area, barite-bearing mantos-hosted and breccia-hosted silver and oxide-copper mineralization to several meters thick occurs, replacing a limestone unit just above the zone of altered porphyritic rock.  Samples across the mantos and breccia are polymetallic in character containing anomalous copper (0.32% to 1.06%), silver (11.1 to 49.3 ppm), and zinc (1365 ppm to 9230 ppm).  Detectible elevated gold values (0.011 to 0.055 ppm) are also present with markedly anomalous amounts of arsenic (2490 ppm to 2560 ppm), mercury (260 to 950 ppb), and antimony (112 to 304 ppm).  An intensive program of detailed sampling and trenching has not yet been conducted.  However, spot, outcrop chip sampling was extended northward, and a channel cut was taken along a 300-meter-long reconnaissance trench, located 400 meters north of the core area.  This east-west oriented bulldozer trench exposed numerous altered zones with widths from a meter to over 50 meters which are separated by intervals of weakly altered to unaltered diorite.  Continuous sampling along the trench wall was carried out at 5-meter-long intervals across all rock types.  The geochemical analytical results from this trench and other samples within the target area show the common presence of elevated to anomalous gold and silver, high amounts of sodium, and many samples also contain low-level anomalous copper and mercury.



Virgen del Carmen area at Los Zorros The Virgin del Carmen area is situated along the same range front as the Colorina area and includes an area of previous small mining of oxide-copper-silver-mineralized mantos and breccia which is similar to that exploited at the small mine in the Colorina area.  Additional exploration is required to further evaluate the outlying pampa to the west of the Virgen del Carmen mine for alteration/geochemical indications of a target of deeper seated, epithermal, gold-silver-copper mineralization.



Salvadora area at Los Zorros  The Salvadora area is a barite vein system hosted in andesite and volcaniclastic rocks.  The system is +700 meters long and nearly 300 meters wide.  Historic barite mining activity to shallow depths (+/- 15 meters) focused on steep-dipping veins that averaged a meter in width.  Barite is commonly associated with gold, silver and gold-silver deposits in epithermal environments.  This area requires drilling to test the down-dip character of the veins for possible gold, silver, and copper content.  The presence of complicated minor veining locally in outcrops suggests potential for a bulk-tonnage target comprised of spaced major veins with intervening rocks containing abundant minor veins/veinlets.



In summary, the Los Zorros property contains numerous large-sized gold, silver and copper targets on a single property holding.  The property is geologically well-situated within the highly prospective mining belt that contains the copper-gold ore bodies of the Punta del Cobre District (150 million cumulative tonnes with an average grade of 1.5% copper, 0.2 to 0.6 g/mt gold, 2 - 8 g/t silver), the large Candelaria mine (460 million tonnes containing 0.82% copper, 0.22 g/mt gold, 3.1 g/mt silver), the large, mined-out Chanarcillo silver deposit (+100 million ounces of silver), plus many smaller copper-gold and gold ore bodies which still locally support mining operations.  Infrastructure for large mining activity is readily available in the area with power, transportation, water, communications and manpower all within advantageously close distances.  Because of the large size of the property, and the fact that our exploration is still in progress, the information and ideas behind the targets currently being developed must be considered as an evolving picture.  The possibility of defining further new targets and project areas on the property remains strong.







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Sampling, analytical procedures, controls - Geochemical analyses on samples were performed by ALS Chemex, an independent, internationally recognized and ISO certified laboratory complying with the international standards ISO 9001:2000 and ISO 17025:1999.  In preparing drill core samples for analysis, the core is cut or split in half, with one half kept for reference and re-analysis if necessary, while the other half is bagged and sealed as a sample for analysis.  To provide quality control, pre-packaged, sealed, certified standard (include low and medium grade copper-gold pulps) and blank pulps are included for analysis by inserted them as samples in random order at approximately 1 per every 30 samples. To ensure chain of custody, the bagged samples for analysis are picked up by an agent of ALS Chemex and transported directly to the ALS Chemex laboratory at Antofagasta or at La Serena, Chile.



Except where otherwise noted, the analytical and test data underlying the information disclosed herein was verified by or under the supervision of Robert Kell, Vice-President Exploration for SAMEX Mining Corp. and Phil Southam, Geologist, who are qualified persons pursuant to Canadian Securities National Instrument 43-101 concerning Standards Of Disclosure For Mineral Projects.



Mineral Interests - The Companys Chilean subsidiary, Minera Samex Chile, S.A, has mineral rights to 65 exploitation mining concessions that cover an area of approximately 7,782 hectares that comprise the Los Zorros property in Chile.  Following is a list of the Los Zorros property concession names with their respective ROL #:



FOXES 1 AL 8  #03201-8071-6;FOXES II 1 AL 2  #03201-8849-0; SELOMY 1 AL 30  #03201-9111-4; PLACER 20 1 AL 30  #03201-7005-2; PLACER 21 1 AL 30  #03201-7006-0; EL ZORRO VI 1 AL 30  #03201-7294-2; EL ZORRO VII 1 AL 30  #03201-7292-6; EL ZORRO VIII 1 AL 10  #03201-7295-0; EL ZORRO IX 1 AL 20  #03201-7293-4; EL ZORRO X 1 AL 30  #03201-7308-6; EL ZORRO XI 1 AL 30  #03201-7309-4;  EL ZORRO XII 1 AL 26  #03201-7310-8; EL ZORRO XIII 1 AL 29  #03201-7311-6; EL ZORRO XIV 1 AL 19  #03201-7312-4; EL ZORRO XV 1 AL 15  #03201-7313-2;NORITA 1-36  #03201-9564-0; LA CURIOSA 1-51  #03201-9563-2; EL ZORRO 16 B 1 AL 17  #03201-7666-2; EL ZORRO 17 1 AL 30  #03201-7667-0; EL ZORRO 18 1 AL 20  #03201-7668-9; EL ZORRO 19 1 AL 30  #03201-7669-7; EL ZORRO 20 1 AL 30  #03201-7670-0; EL ZORRO 21 1 AL 20  #03201-7671-9; EL ZORRO 1 AL 2  #03201-7664-6; THE FOXES ONE 1 AL 40  #03201-7185-7; THE FOXES TWO 1 AL 40  #03201-7186-5; THE FOXES THREE 1 AL 30  #03201-7187-3; THE FOXES FOUR 1 AL 20  #03201-7188-1; EL ZORRO V 1 AL 9  #03201-7483-K; PIERNAS LARGAS 1 AL 16  #03201-7482-1; POLO 1  #03201-7484-8; POLO 2  #03201-7485-6; POLO 3  #03201-7486-4; POLO 4  #03201-7487-2; POLO 5  #03201-7488-0; EL ZORRO 22 1 AL 17  #03201-7606-9; EL ZORRO 23 1 AL 19  #03201-7607-7; BARBAS 1-7  #03201-3085-9; BARBAS 21-37  #03201-3086-7; BARBAS 41-68  #03201-3087-5; BARBAS 61-74  #03201-3088-3; BARBAS 81-100  #03201-3089-1; BARBAS 101-103  #03201-3090-5; CANDY 1 1-14  #03201-5547-9; COSTA PINTO(1/15) 1-4 Y 6-12  #03201-7094-K; ELISA 1 AL 4  #03201-0183-2; FLOR MARIA 1-74  #03201-2550-2; GOLD MINING I 1  #03201-6533-4; GRINGO 1-29  #03201-3941-4; GRINGO 31-60  #03201-3942-2; KARINA LXVIII 3-11  #03201-5553-3; LA COLORINA 1-15  #03201-2233-3; LA SOCIALISTA 1-20  #03201-3022-0; LA SOCIALISTA 11  #03201-1012-2; LAS VIZCACHAS 1-9  #03201-2483-2; LEONEOR 1-3  #03201-2489-1; MILAGRO 1-20  03201-2416-1; NORA I  #03201-0527-7; NORA II  #03201-2166-3; NORA TERCERA  #03201-2643-6; POLO 1  #03201-6687-K; POLO 2  #03201-6688-8; PLACER 22 1-20  #03201-6957-7; SAN PEDRO 1-5  #03201-1246-K; SANTA ROSA 1-20  #03201-2490-5.



The Company acquired the concessions by a combination of staking and acquisition through government auctions (approximately 6,049 hectares), a purchase agreement (1,429 hectares), and by the exercise of two purchase option contracts (209 hectares and 95 hectares).  The Company holds 100% interest in the concessions subject to the terms described below in the Purchase and Sale Agreement with Compania Contractual Minera Ojos del Salado, the Purchase Option Contract with Comercial Sali Hochschild S.A., the Purchase Option Contract with Compania Minera San Estaban Primera S.A., and subject to the Finders Fee, Bonus and Royalty described below:



Purchase and Sale Agreement dated January 29, 2003 between our subsidiary, Minera Samex Chile S.A. and Compania Contractual Minera Ojos del Salado - We entered into a purchase agreement dated January 29, 2003, with the vendor, Compania Contractual Minera Ojos del Salado, to acquire approximately 1,429 hectares of mineral concessions covering old goldmines and gold showings in the Los Zorros district for US$50,000 cash (which has been paid).  Because of the vendors interest in copper, under the purchase agreement, the vendor retained a back-in right to earn an interest in the property in the event that we discover a copper deposit containing not less than two million tonnes of contained equivalent copper on or within a half kilometer of the property.  The vendor can elect to exercise the back-in right to earn a 30% interest by reimbursing us three times the expenditures incurred, and up to 51% interest by expending 100% of all further costs necessary to complete a bankable feasibility study on the property.  Thereafter, the parties would negotiate a joint venture to carry out development and mining of the property.



Purchase Option Contract dated November 6, 2003, between our subsidiary, Minera Samex Chile S.A. and Compañia Minera y Comercial Sali Hochschild S.A.  In October 2006 we completed the acquisition of mineral concessions covering a 209-hectare-portion of the Los Zorros property (covers portions of the Milagro and Lora areas of the Los Zorros property).  Under
the Option, SAMEX acquired the concessions by making option payments totaling US$230,000 as follows: US$30,000 upon signing of the Option Agreement (paid); US$50,000 by October 31, 2004 (paid); US$50,000 by October 31, 2005; (paid); US$100,000 by October 31, 2006 (paid).



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Pursuant to the exercise of the option and the related Purchase Contract dated October 27, 2006, SAMEX holds 100% interest in the concessions subject to a Net Smelter Return Royalty of 2% on gold and silver, 1.5% on copper, and 1.5% on other payable minerals, if the US$ price per pound of the mineral is less than US$1 or 2% if the US$ price per pound of the mineral is US$1 or greater.  SAMEX has an option to buyout the royalty at any time for US$1,800,000.  Pursuant to the option/purchase agreement, if the concessions are not in production by December 31, 2007, advance royalty payments of US$100,000 per year are required for five years (by February 29, 2008 (paid), by March 1, 2009 (paid), by March 1, 2010 (paid), by March 1, 2011 (paid), and by March 1, 2012) to a maximum of US$500,000, or until the commencement of commercial exploitation.   The advance royalty payments are recoverable from future royalty payments.  SAMEX is not obligated to make the advance royalty payments if it elects to return the concessions to the previous owner.



Purchase of Mineral Concessions Completed  Re; Unilateral Purchase Option Contract dated June 29, 2005 between our subsidiary, Minera Samex Chile S.A. and Compañia Minera San Estaban Primera S.A.   In December 2006 we completed the acquisition of mineral concessions covering a 95-hectare-portion of the Los Zorros property by making option payments totaling US$200,000 over 18 months as follows: US$75,000 upon signing the Option Agreement (paid); US$25,000 by December 20, 2005 (paid); US$50,000 by March 20, 2006 (paid); and US$50,000 by December 20, 2006 (paid).  SAMEX now holds 100% interest in the concessions subject to a Net Smelter Return Royalty of 1.5% on copper, gold, silver, and other payable minerals.  SAMEX has an option to buyout the royalty at any time for US$1,000,000.



Finders Fee, Bonus and Royalty - Pursuant to a Consulting Agreement dated September 25, 2002 between SAMEX and Geosupply Servicios de Geologia & Mineria & Sondajes de Diamantina, the concessions in the Los Zorros district are subject to the following finders fee, bonus and royalty:



a)

A finders fee of US$10,000 payable within 90 days of commencement of a drilling program on the concessions (which has been paid);

b)

A bonus of US$150,000 payable within one year from the date of Commencement of Commercial Production on the concessions; and

c)

Net Smelter Return royalty equal to 0.25% of Net Smelter Returns.



Patent payments must be paid annually to the Chilean government during the month of March in order to maintain the mining concessions.  Patent fee are calculated based upon the value of the Chilean Monthly Tax Unit (M.T.U.) which varies from month to month.  In the case of an exploitation concession the annual patent fee is calculated as one-tenth (1/10th) of the Monthly Tax Unit per hectare (for example, in March 2010 the M.T.U. was 36,752 x 1/10th = 3,675.2 Chilean Pesos per hectare which, at the Observed US$/Peso exchange rate of 516.33 at March 15, 2010 equated to approximately US$7.11 per hectare for exploitation concessions).  In the case of an exploration concession the annual patent fee is calculated as one-fiftieth (1/50th) of the Monthly Tax Unit per hectare (for example, in March 2010 the M.T.U. was 36,752 x 1/50th = 735.04 Chilean Pesos per hectare which, at the Observed US$/Peso exchange of 516.33 rate at March 15, 2010 equated to approximately US$1.42 per hectare for exploration concessions).



The Los Zorros Property is without a known body of commercial ore and our activities to date have been exploratory in nature.



INCA PROPERTY, Chile

Location and means of access - The INCA property in the Atacama region of Chile is located approximately 90 kilometers north of the city of Copiapo, Chile and 6.0 kilometers east of the paved highway that connects Copiapo to Diego Del Amargo and the El Salvador Mine.  The property is accessed by vehicle by driving north from Copiapo on paved, two-lane highway (Highway C-17) to the village of Inca de Oro.  The INCA property and the Companys exploration camp are located about 6 kilometers east of the village of Inca de Oro along a government maintained gravel road leading to the San Pedro de Cachiyuyo district.   The INCA property is favorably situated from both a geological and a logistical perspective, being close to important transportation routes, power lines and general mining infrastructure.



Historically, the INCA project area has been the center of small mining activity primarily for production of oxide-copper and some secondary enriched copper sulfide ores. This area hosts variably sized breccia pipes with outcropping, or historically mined copper, molybdenum and gold mineralization and the exploration objective has been to search beneath and around this area for substantial deposits of copper with important gold, silver and molybdenum credits.



During 2006 we completed the construction and equipping of a camp and exploration office at the INCA project and compiled extensive maps of the project area.  We also conducted more than 30 line-kilometers of IP geophysical survey over six survey
lines.



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In 2007 we conducted additional geophysical surveys and a program of bulldozer trenching, sampling and assaying was completed.  Blasting and bulldozer work was conducted to prepare access roads and drill pads for a Phase I core drilling program.  The core-drilling program completed 10,309 meters of drilling in 35 holes, with an average hole length of approximately 300 meters.  Generally the program was designed to test shallow targets proximal to existing historic mine workings and coincident with IP geophysical anomalies, for areas of stock-work veining, breccia bodies, and disseminated and/or porphyry style copper-gold-molybdenum mineralization.  More specifically the program was set up to test, in systematic fashion, two principal target zones including: the Delirio-Tucumana breccia complex (14 holes) and the Puntilla-San Antonio vein system with a coincident strong IP expression (8 holes).   Other target areas received more cursory drilling attention and these include: San Antonio-Providencia (7 holes), Magallanes (2 holes), Manto Cuba-San Pedro (2 holes) and Jardinera (2 holes).



From the results of the Phase I exploration, it became apparent that, although some of the results (particularly in the area around the Providencia mine) were very promising, the first phase of exploration did not discover the presence of a wide-spread, near-surface porphyry copper deposit that we had hoped for.  We concluded that, although the possibility still existed to find a large scale copper deposit at INCA, considerable more exploration work and expenditures would be required to do so, which exceeded our available resources.  Further, we faced option payments on certain concessions covering portions of the INCA property which came due in March and April of 2009, which have not been paid: As disclosed in Note 3 of the financial statements, the Company has not made an option payment of US$1,000,000 that was due March 31, 2009 pursuant to the Minera Porvenir Option by which the Company can acquire a 2,138-hectare portion of the INCA project, therefore, under the terms of the option, the owner may terminate the option upon default of payment by giving 30 days written notice.  We are of the view that, the owner is in default of the agreement in that the owner has not to date resolved certain title issues on a 85-hectare portion of the property and is therefore, not able to validly terminate the option, however, if the owner is able to correct this defect or if our position is not upheld on arbitration, we may face termination of this option.  Also, the Company has not made an option payment of US$150,000 that was due April 30, 2009 pursuant to the Rojas Option by which the Company can acquire a 20-hectare portion of the INCA project, therefore, the owner may terminate the option by giving 30 days written notice.  We determined that, regardless of our legal position under the Minera Porvenir Option, in light of economic and market conditions, exploration results to date on these particular concessions and other factors, expenditures on these option payments were not justified at this time.   At the date of this report, the Company had not received written notice of default with respect to non-payment of the option payments that were due under the Minera Porvenir Option and the Rojas Option.  During 2009, the Company also decided not to make an option payment of US$80,000 due April 9, 2009 pursuant to the Parra Option by which the Company could acquire an interest in a 21-hectare portion of the INCA project, and subsequently, the owner delivered the Company written notice terminating the Parra Option.



As a result of non-payment of the Minera Porvenir Option payment and the Rojas Option payment, the Company may be required to relinquish the options on these portions (2,138 hectares and 20 hectares) of the INCA property.  Due to the possibility of relinquishing these portions of the INCA property, we wrote-off a $2,699,263 portion of the deferred expenditures on the INCA property at December 31, 2009.



The INCA property consists of concessions covering approximately 3,488 hectares.  In addition, the Company also has the option to acquire another 2,158 hectares of mineral interests in the INCA project area pursuant to the Minera Porvenir Option and the Rojas Option agreements, however, as disclosed above and in Note 3 of the financial statements, the Company has not made the final option payments on these options.



Araya Option Exercised To Acquire the Providencia Mine Concessions - Of importance, during 2009 we completed the final option payment under the Araya Option to acquire the Providencia Mine concessions situated within the greater INCA project area.  These concessions cover one of the stronger mineralized areas identified during phase I exploration at the INCA project including the Providencia copper breccia pipe, a swarm of sheeted veins, and other tourmalinized/silicified breccia bodies and pipes.  With this acquisition and its other land holdings, SAMEX holds what we consider to be the most prospective and strategic concessions within the INCA project area.



The size and shape of the Providencia mine breccia pipe is not fully exposed by mining and could be over 80 meters across.  The pipe is well mineralized with chalcopyrite and abundant accessory pyrite; our initial rock chip-channel samples in the mined areas were taken as a series of both vertical and several horizontal oriented lines.  The copper (total) grade of initial chip-channel sampling (25 samples) shows a range via mine level of 1.24% to 2.94% copper with an overall average of 2.16% copper.  The presence of strong sericite alteration, anomalous amounts of silver, lead, zinc, and antimony and position of the roof indicate that this level is at the top of the pipe and that very little of the pipe has actually been mined out.  A target size of over 10 million metric tonnes is tentatively outlined for this mine-exposed breccia pipe.



The Providencia mine breccia pipe has a distinct IP signature and occurs within what appears to be a cluster of additional concealed, possibly well-mineralized breccia pipes with similar or stronger IP responses, which were disclosed by our regional IP survey.  The Providencia breccia cluster is a highly prospective area 1600 meters long by 500 meters across  with several
separate IP targets for copper-molybdenum-gold mineralization hosted by sulfide-bearing breccia pipes/elongate tapered bodies and perhaps out into surrounding veinleted zones.











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One set of our exploration core drill tests on one of the IP anomalies discovered a concealed, faulted part of a breccia pipe (Providencia West) with indications that it contains significant copper and molybdenum mineralization and anomalous silver, lead, and zinc content.  This breccia pipe is positioned 700 meters to the west of the Providencia mine where an outcropping sheeted vein swarm with oxide-copper mineralization and tourmalinized/silicified pods of breccia are present over a large area in the monzonite cap above the pipe.  Additional drilling is required in the Providencia area to test for other concealed breccia pipes with the objective of discovering multiple ore bodies and the potential deeper source from which these pipes have emanated.



The Company plans to conduct additional meetings and property tours with interested parties in its continuing efforts to arrange a joint venture or sale of all or a portion of the INCA property.  Of note, several kilometers to the west, Chilean miner, Codelco, is planning to advance the development of their Inca de Oro ore body, which could serve to further enhance the value of our prospects.



Mineral Interests - The Companys Chilean subsidiary, Minera Samex Chile S.A. has mineral rights to 35 exploitation mining concessions that cover an area of approximately 3,488hectares.  Following is a list of the INCA property concession names with their respective ROL #:



BLANCA O CONSUELO #03102-0525-3; CONCEPCION 1-6  #03102-0897-3; JUSTA 1  #03102-0581-8; PROVIDENCIA 1-9  #03102-1054-4; VIZCACHA 1-2  #03102-2609-2; VIZCACHA 1  #03102-2300-K; IRLANDA I 1/ 3  #03102-3047-2; IRLANDA II 1/ 2  #03102-3048-0; IRLANDA IX 1-3  #03102-3112-6; IRLANDA IV 1/4  #03102-3050-2; IRLANDA V 1  #03102-3051-0; IRLANDA VI 1   #03102-3052-9; IRLANDA VII 1  #03102-3053-7; IRLANDA VIII 1  #03102-3054-5; IRLANDA XI 1 AL 9  #03102-3056-1; IRLANDA XII 1 AL 20  #03102-3057-K; IRLANDA X 1 AL 4  #03102-3055-3; MONTANA TRES 1 AL 30  #03102-3419-2; MONTANA CUATRO 1 AL 30  #03102-3420-6; MONTANA VII 1 AL 30  #03102-7802-5; LINDA I 1 AL 50  #03102-3044-8; LINDA II 1  # 03102-3045-6; LINDA III 1 AL 3  #03102-3046-4; MONTANA UNO 1 AL 30  #03102-3417-6; MONTANA DOS 1 AL 30  #03102-3418-4;  MONTANA CINCO 1 AL 30  #03102-3392-7; MONTANA 15 1 AL 10  #03102-3439-7;  MONTANA 16 1 AL 10  #03102-3440-0;  MONTANA 18 1 AL 10   #03102-3442-7; MONTANA 19 1 AL 30  #03102-3551-2; MONTANA 21 1 AL 30  #03102-3444-3;  MONTANA II 1 AL 30  #03102-7797-5; MONTANA VI 1 AL 30  #03102-7801-7; MONTANA VIII 1 AL 30  #03102-7803-3; MONTANA IX 1 AL 30  #03102-7804-1.



The Company acquired the concessions by a combination of staking, purchase at government auction, a purchase agreement, and exercise of the Araya Option agreement.



Araya Option  Pursuant to a Unilateral Option Purchase Contract dated April 4, 2006 with Malvina del Carmen Araya Santander the Company acquired 100% interest in 45 hectares of mineral interests (the Providencia Mine concessions situated within the greater INCA project area) for consideration of option payments totaling the Chilean Peso-equivalent of US$300,000 (paid).  A 1% NSR retained by the vendor for a period of 20 years.  The Company has the option to buyout the NSR at any time for US$500,000.



Vizcacha I Purchase  In September 2007, the Company purchased the Vizcacha I mineral concession covering a 3-hectare-portion of the INCA project for a total consideration of US$32,938 (17,000,000 Chilean Pesos).  No royalty is payable on this concession.



The Company also has the option to acquire an additional 2,158 hectares of mineral interests in the INCA project area pursuant to the Minera Porvenir Option and the Rojas Option agreements:



Minera Porvenir Option - Under the Unilateral Option Purchase Contract dated March 31, 2006 between Sociedad Contractual Minera Porvenir (Optionor) and our subsidiary Minera Samex Chile S. A., SAMEX can acquire 100% interest in concessions covering a 2,138-hectare portion of the INCA project for consideration of the Chilean Peso-equivalent of US$2,000,000 (US$1,000,000 paid).  Option payment due: US$1,000,000 comprised of US$38,500 (has not been paid) payable on behalf of the optionor to a third party when they resolve certain title issues on a 85-hectare portion of the property, and US$961,500 that was due March 31, 2009 (has not been paid) (See Note 3 of the financial statements).  A 1% net smelter royalty (NSR) has been retained by the vendor and the vendor has the right to purchase up to 50% of any oxide-copper production at cost from the Company (to a limit of 10,000 tonnes per month) and subject to a cumulative maximum of 1,200,000 tonnes or ten years, which ever is reached first.



Rojas Option - Under the Unilateral Option Purchase Contract dated May 25, 2006 between Oscar David Rojas Garin and our subsidiary Minera Samex Chile S. A., SAMEX can acquire 100% interest in concessions covering a 20-hectare portion of the Inca project for consideration of the Chilean Peso-equivalent of US$300,000 (US$150,000 paid).  A final option payment was due April 30, 2009 - US$150,000 (has not been paid) (See Note 3 of the financial statements).  No NSR is payable on these
concessions.









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Patent payments must be paid annually to the Chilean government during the month of March in order to maintain the mining concessions.  Patent fee are calculated based upon the value of the Chilean Monthly Tax Unit (M.T.U.) which varies from month to month.  In the case of an exploitation concession the annual patent fee is calculated as one-tenth (1/10th) of the Monthly Tax Unit per hectare (for example, in March 2010 the M.T.U. was 36,752 x 1/10th = 3,675.2 Chilean Pesos per hectare which, at the Observed US$/Peso exchange rate of 516.33 at March 15, 2010 equated to approximately US$7.11 per hectare for exploitation concessions).  In the case of an exploration concession the annual patent fee is calculated as one-fiftieth (1/50th) of the Monthly Tax Unit per hectare (for example, in March 2010 the M.T.U. was 36,752 x 1/50th = 735.04 Chilean Pesos per hectare which, at the Observed US$/Peso exchange of 516.33 rate at March 15, 2010 equated to approximately US$1.42 per hectare for exploration concessions).



Sampling, analytical procedures, controls at INCA - Geochemical analyses on samples were performed by ALS Chemex, an independent, internationally recognized and ISO certified laboratory complying with the international standards ISO 9001:2000 and ISO 17025:1999.  In preparing drill core samples for analysis, the core is cut or split in half, with one half kept for reference and re-analysis if necessary, while the other half is bagged and sealed as a sample for analysis.  To provide quality control, pre-packaged, sealed, certified standard (include low and medium grade copper-gold pulps) and blank pulps are included for analysis by inserted them as samples in random order at approximately 1 per every 30 samples. To ensure chain of custody, the bagged samples for analysis are picked up by an agent of ALS Chemex and transported directly to the ALS Chemex laboratory at Antofagasta or at La Serena, Chile.



Except where otherwise noted, the analytical and test data underlying the information disclosed herein was verified by or under the supervision of Robert Kell, Vice-President Exploration for SAMEX MINING CORP. and Phil Southam, Geologist, who are qualified persons pursuant to Canadian Securities National Instrument 43-101 concerning Standards Of Disclosure For Mineral Projects.



The INCA property is without a known body of commercial ore and our activities to date have been exploratory in nature.



ESPEJISMO PROSPECTS, Chile - Gold Prospects, Inca de Oro region, Chile.  SAMEX has acquired rights to approximately 817 hectares of mineral concessions covering gold prospects by purchasing concessions at a government auction and by staking.  No exploration is planned for these gold prospects until additional concessions are acquired.



CHIMBEROS PROPERTY, Chile  The Chimberos Property is a gold-silver prospect located about 75 kilometers north of the city of Copiapo and is situated in the historic Chimberos mining district which was one of Chiles largest silver producing areas.  The property is accessed by vehicle by driving north from Copiapo on a paved, two-lane highway (Highway C-17) to the property which is adjacent to the highway.  We recognized the potential of this old mining district a number of years ago and began quietly accumulating concessions by purchasing concessions at government auctions and by staking.  These strategic concessions cover a significant, but partial, portion of the Company's exploration objectives in this prospective, but little-explored Chimberos district.



SAMEX reconnaissance work indicates that the geologic setting of the Chimberos District includes widespread sericite-pyrite alteration of volcanic rocks cut by a principal silver-mineralized fissure vein zone, and complete garnet skarn replacement of a thick calcareous sedimentary unit, which also hosts oxide-copper mineralization.  Although SAMEX has only conducted preliminary sampling and limited detailed mapping in the area, some of the acquired concessions are clustered and cover much of the core of a complex fissure fault zone which controlled the enriched silver mineralization that was mined in the Buena Esperanza mines at Chimberos.  Historically, mining was focused along discrete narrow vein structures of this zone, but SAMEX has been studying the property with a view to defining important targets of shallow bulk-tonnage gold and/or gold-silver mineralization, and also looking for deeper, higher-grade, gold-silver/copper sulfide mineralization  perhaps as an underground, bulk-tonnage target comprised of mineralized anastomizing veins.  Potential for extensive, deeper-seated, mantos-style, more-disseminated style, copper-sulfide mineralization with important gold-silver content hosted by the skarn replacement has also been identified.   Other SAMEX concessions at Chimberos are over projected extensions of the principal fissure fault zone, parts of large areas of sericite-pyrite alteration, and outlying garnet skarn with oxide-copper showings, which are areas where additional targets might be outlined in the future.



Mineral Interests - The Companys Chilean subsidiary, Minera Samex Chile, S.A, has mineral rights to 28 exploitation mining concessions that cover an area of approximately 1,672 hectares that comprise the Chimberos Property in Chile.  The Company acquired the concessions by a combination of staking and purchase of concessions through government auctions.  Following is a list of the Chimberos Property concession names with their respective ROL #:



TRES PUNTAS I 1 AL 38  #03201-7314-0; TRES PUNTAS II 1 AL 20  #03201-7315-9; TRES PUNTAS III 1 AL 20  #03201-7316-7; TRES PUNTAS IV 1 AL 20  #03201-7317-5; TRES PUNTAS V 1 AL 20  #03201-7318-3; TRES PUNTAS
VI 1 AL 4  #03201-7319-1; TRES PUNTAS VII  #03201-7320-5; TRES PUNTAS XIII 1 AL 30  #03201-7323-K; TRES PUNTAS XIV 1 AL 53  #03201-7324-8; PUNTITA 1, 1 AL 4  #03201-; PUNTITA 2, 1  #03201-; PUNTITA 5, 1  #03201-; PUNTITA 6, 1  #03201-; PUNTITA 7, 1  #03201-; PUNTITA 8, 1  #03201-; PUNTITA 9, 1  #03201-; PUNTITA 10, 1 AL 5  #03201-; PUNTITA 11, 1  #03201-; BUENA ESPERANZA  #03201-0128-K; COLORADA 1-4  #03201-0981-7; DOS AMIGOS 1 AL 5  #03201-2242-2; GLORIA 1-2  #03201-1341-5; HILDA 2 AL 6  #03201-1765-8; INDEPENDENCIA 1-2  #03201-1157-9; PEHUENCHA  #03201-0065-8; RECOVECO 1 AL 10  #03201-1330-K; SALVADORA  #03201-1838-7; ZIG-ZAG  #03201-0195-6.



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Patent payments must be paid annually to the Chilean government during the month of March in order to maintain the mining concessions.  Patent fee are calculated based upon the value of the Chilean Monthly Tax Unit (M.T.U.) which varies from month to month.  In the case of an exploitation concession the annual patent fee is calculated as one-tenth (1/10th) of the Monthly Tax Unit per hectare (for example, in March 2010 the M.T.U. was 36,752 x 1/10th = 3,675.2 Chilean Pesos per hectare which, at the Observed US$/Peso exchange rate of 516.33 at March 15, 2010 equated to approximately US$7.11 per hectare for exploitation concessions).  In the case of an exploration concession the annual patent fee is calculated as one-fiftieth (1/50th) of the Monthly Tax Unit per hectare (for example, in March 2010 the M.T.U. was 36,752 x 1/50th = 735.04 Chilean Pesos per hectare which, at the Observed US$/Peso exchange of 516.33 rate at March 15, 2010 equated to approximately US$1.42 per hectare for exploration concessions).



The Chimberos Property is without a known body of commercial ore and our activities to date have been exploratory in nature.



MISCELLANEOUS PROPERTIES, Chile - The Company holds mineral concessions (approximately 25 hectares) for possible future evaluation.  The property is inactive and no exploration is currently planned.



BOLIVIAN PROPERTIES



Cautionary Note:  Over the past several years events in Bolivia have led to a number of special risks affecting mineral exploration and the holding of mineral concessions in Bolivia, the extent and affect of which have not been fully determined, but which may have serious adverse effects on the value of our Bolivian properties and the on the viability of our Bolivian mineral projects.  See Item 3 Key Information  Risk Factors  Bolivian Interests.



EL DESIERTO PROPERTY, Bolivia

The El Desierto property is located in southwestern Bolivia at an elevation of about 3,800 meters, near the villages of El Desierto and Abra de Napa, processing centers for sulfur mines in the area. The property is located approximately 25 km north of the Quebrada Blanca and Collahuasi copper porphyry mines in Chile and is readily accessible by road from both Bolivia and Chile.  The property is situated along a trend of a geologic belt that is renowned for some of the worlds largest porphyry copper-gold mines.  Limited exploration on the property from 1997 to 2000 included geologic mapping, sampling and reconnaissance IP surveys.  We have not conducted any exploration on the property since that time, however we continue to maintain concessions covering approximately 319 hectares for possible future evaluation.  Since the El Desierto property is currently inactive, the property interest has been written down to a nominal carrying value of $1,000.



The El Desierto mineral concessions are owned by Empresa Minera El Roble S.A. (El Roble), a company controlled by a Bolivian national, Patricio Kyllmann, a former director of SAMEX Mining Corp.  Our Bolivian subsidiary, Emibol S.A. (Empresa Minera Boliviana S.A.) earned a 99% interest in any mining operations which may be established on the concessions pursuant to an agreement dated April 16, 1996 and as amended November 23, 1998 with El Roble.  Under the agreements, Emibol S.A. is required to make all expenditures on the concessions in exchange for a 99% interest in any mining operations which may be established on the concessions while El Roble is required to continue to hold the concessions and is entitled to a 1% interest in such operations. The property is also subject to a net smelter royalty of an aggregate of 0.6 % payable to Robert Kell, Front Range Exploration Corp., and El Roble S.A.



Patent fees ranging from approximately US$1.60 to US$3.20 per hectare (depending on US$/Boliviano exchange rate) must be paid annually to maintain the mining concessions.  The El Desierto Property is without a known body of commercial ore and our activities to date have been exploratory in nature. Our Bolivian properties are subject to a number of special risks.  See Item 3 Key Information  Risk Factors  Bolivian Interests.



ESKAPA PROPERTY, Bolivia

SAMEX, through its Bolivian subsidiary, EMIBOL S.A., holds a 99% interest in any mining operations which may be established on the 3,700 hectare Eskapa property located in the Enrique Baldevieso Province, Department of Potosi, Bolivia.  The Eskapa concession (elevation between 4200 to 4400 meters) is centered over the eroded-out core zone of the extinct Cerro Eskapa stratovolcano which is situated in the southwestern part of Bolivia, approximately 48 airline kilometers east of the frontier with Chile and 55-airline kilometers southeast of Ollague, Chile.









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Location and means of access - The Eskapa Property is situated in the southwest part of Bolivia approximately 3 kilometers east of the village of Copacabana.  The Eskapa property is accessible from both Bolivia and Chile by four-wheel drive vehicle.  The Chile access route is somewhat easier due to the better condition of roads in that country.  Starting from the city of Calama, Chile, where air service is available from and to Santiago, Chile, travel is by Route 21 to the border town of Ollague, Chile.  The first 62 kilometers of Route 21 is paved highway and the remaining 123 kilometers to Ollague is gravel and/or dirt road..  After crossing the border into Bolivia, travel is approximately 35 kilometers along dirt road following the railway tracks to the village/military outpost/train station of Chiguana and then a further 35 kilometers on dirt road to the village of Copacabana.  The property is accessed from Copacabana by a 3 kilometer dirt road constructed and maintained by the Company.   Access within Bolivia  - From the town of Uyuni, Bolivia travel is by an improved gravel road for approximately 150 kilometers and by dirt roads for approximately 35 kilometers to the Eskapa Property.



We explored the Eskapa property in sporadic fashion from 1995 to 1998 and carried out a ten-hole core drilling program in 1999. Additional exploration work was conducted during two time periods in 2001 and included drilling six core holes.   SAMEX expended more than one million dollars exploring the Eskapa property since 1995.  Since the Eskapa property is currently inactive, the property interest has been written down to a nominal carrying value of $1,000.



The region, where the Cerro Eskapa prospect is situated, is part of the Cordillera Occidental which consists of numerous extinct or dormant late-Tertiary to early quaternary, andesite-dacite stratovolcanoes positioned on a high plateau (3500 meters mean elevation) of mid- to late-Tertiary volcanic and sedimentary rocks.  The Cerro Eskapa stratovolcano is uniquely considerably eroded such that strong alteration and silver-lead-antimony sulfosalt-mineralized zones are exposed over a large 2 km. by 3 km. area of the core zone.  The stratovolcano core zone had, up until 1995, surprisingly not been explored during modern times.  Colorful chrysocolla mineralization on the lower north flank of the stratovolcano was worked in pre-historic times by indigenous people.  In the stratovolcano core zone, Spanish Colonial-era prospectors explored silver-mineralized vuggy silica-barite outcrops with minor production from shallow irregular workings.  An unknown Chilean mining concern sank a 45 meter-deep shaft near one of the Spanish workings in the late-1870s just before the outbreak of the War of the Pacific. There is no indication of any production from this shaft.  The geologic setting, extensive hydrothermal alteration, presence of silver-lead-antimony sulfosalt mineralization, accessible location, and lack of any previous exploration drilling made the area attractive to us for acquisition.



The strong argillic, advanced-argillic, and vuggy silica alteration are focused on porphyritic dacite and hydrothermal breccia which occupy the stratovolcano core zone.  The nature of the alteration and widespread abundant pyrite are characteristic of the high-sulfidation-type of precious-metal mineralizing system, which occur in the Cordillera Occidental of South America.  At Cerro Eskapa, silver-lead-antimony sulfosalt-mineralization occurs, at the surface of the eroded-out stratovolcano core zone, in linear/steeply dipping zones of vuggy silica-barite strongly controlled along west-northwest-trending faults.  The zones range from 1 to 3 meters in width and several can be traced for up to several thousands of meters.  Based on our sampling, grades of this mineralization in dump and rock-chip samples are variable, but typically contain high amounts of silver (>69.3 ppm to 2260 ppm (g/mt), lead (>144 ppm to 23100 ppm) and antimony (165 ppm to 25800 ppm) with anomalous mercury 1140 ppb (to 90000 ppb), but with very low gold values (<5 ppb).  Surrounding clay-pyrite-altered porphyritic dacite contains anomalous amounts of mercury, arsenic, and antimony, and low values in gold and silver.  The mineralized zones appear to represent the leakage up from more substantial mineralization at depth.



Our exploration of the stratovolcano core zone (1995-1999) included: considerable road building for access, geologic mapping, considerable rock-chip sampling and running IP surveys over long lines.  The data from these efforts showed that silver-lead-antimony sulfosalt/sulfide mineralization is tightly restricted to the zones of vuggy silica-barite and no indication could be found of a shallow bulk-tonnage type of deposit.  The IP surveys generally detected the high-resistivity expression of the zones and demonstrated a depth extent in excess of the 250-meter search depth limit.  The first attempt in 1999 to core drill the zones (March-June, 1999) produced mixed results.  Some holes were unfortunately not properly located and aimed, and missed making the intended down-dip intersection.  However, two drill holes (DDH-EK-99-02 and -04) did make interesting intersections confirming that the vuggy silica-barite rock does continue to depth, but silver grades were disappointing.  DDH-EK-99-02 intersected a thick vuggy silica-barite zone of 13.0 meters true width containing 41.8 ppm (g/mt) silver with low detectible gold (7 ppb) and anomalous copper, lead, antimony with anomalous mercury.  However, the intersection was considerably affected by a late oxidation alteration of sulfosalt/sulfide minerals producing abundant limonitic minerals.  This suggested that the metal values were much reduced in the intercept due to possible leaching of silver and base and pathfinder metals.  Hence, the intersection was not representative of mineralization elsewhere along strike or at depth along the zone.  The other intersection (DDH-EK-99-04) was located at high elevations at the east end of the same zone and was complicated by faulting.  The recovered fault-bounded sliver of the vuggy silica rock contained 109.2 ppm (g/mt) silver over a 0.30 meter true width.  No funding was available to pursue follow-up drilling and consequently, no exploration work was carried out from June, 1999 to December, 2000.



In November 2000, we granted International Chalice Resources (Chalice) an option to earn up to a 40% joint venture interest
in mineral operations on the Eskapa property by making payments totaling US $500,000 by November 15, 2003.









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Later, we agreed with Chalice to amend certain terms of the agreement by reducing total option payments required, to US $461,137.98, by an earlier date, February 28, 2002.  Chalice completed option payments totaling US $461,137.98 by February 28, 2002 and thereby earned the right to receive, upon formation of a joint venture, a 40% joint venture interest with respect to mineral operations on the property.  However, in October 2002, we negotiated an agreement to restore our original 99% interest in the Eskapa property by purchasing-back the rights earned by Chalice under the Eskapa Property Option/Joint Venture Agreement.   We arranged to purchase-back this right to a 40% interest from Chalice by:



|a) | paying Chalice $50,000 cash ($25,000 paid on signing and $25,000 by October 3, 2003 [paid]);                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b) | issuing 200,000 of our shares to Chalice (issued November 4, 2002);                                                                                                                                                                   
|  
|c) | granting Chalice a US$2,000,000 cash royalty, to be paid out of production on the property in eight equal quarterly payments of US$250,000 beginning after the ninth month of
continuous commercial mining operations on the property.
|  



Pursuant to the buy-back agreement, the Eskapa Property Option/Joint Venture Agreement with Chalice terminated and we now hold a 99% interest in any mining operations which may be established on the property.



The option payments from Chalice provided us with the funding to resume exploration on the Eskapa property in 2001 to identify and drill new targets for precious-metal mineralization.  Compilation of our previous exploration data outlined ten (I-X) prospective mineralized zones within the stratovolcano core zone, but exploration attention was instead focused in the Breccia Area to the southwest where considerable breccia was found and then evaluated using geologic mapping, rock-chip sampling, and running IP surveys.   These zones could be interpreted as the fault-offset continuation of those found in the stratovolcano core zone.  However, although the breccia zones contain anomalous mercury and, locally, antimony, arsenic, and zinc, no values for gold or silver are present.  The only attempt at drilling in the Breccia Area encountered faulting and no indication of precious-metal mineralization was intersected.  Exploration for a concealed significant copper deposit related to the oxide-copper-mineralized pebble breccia bodies of the Copper Zone also did not yield positive results from drill testing one of the IP chargeability targets.  A cored intersection through one of the pebble breccia bodies (DDH-EK-01-1C) yielded a 1.0 meter true width of 5% copper and 10 ppm (g/mt) silver.  The decision was made to locate a deep drill test of one of the vuggy silica-barite zones (Zone III) in the stratovolcano core zone.  The test (DDH-EK-01-11) was sited toward the far southeast end of Zone III, using DDH-EK-99-02 as control, and made a complete drill intersection through the vuggy silica target at a depth between 392.70 to 457.10 meters depth.  The intersection revealed toward the footwall of the zone, the vuggy silica-barite rock is cut by massive veins/veinlets of gold-bearing, high-grade copper-silver-antimony-bismuth sulfosalt/sulfide mineralization.   The analytical results, solely on the recovered part of one of the veins (0.20 meters apparent width), give a glimpse of the tenor of the mineralization which might be more extensive elsewhere along this and similar mineralized zones.  This vein sample contains 1890 ppm (g/mt) silver, 6.1% copper, 4.18% antimony, and 2.93% bismuth with 1.180 ppm (g/mt) gold and occurs in an interval (0.75 meters true width) of vuggy silica-barite (445.45 to 446.95 meters) which contains 0.583 ppm (g/mt) gold, 331 ppm (g/mt) silver, 1.04% copper, 0.71% antimony, and 0.43% bismuth.  Toward the top of the interval is a silica-barite veinlet interval with 1.280 ppm (g/mt) gold and 89.0 ppm (g/mt) silver and low copper, antimony, and bismuth.  This veinlet is relatively gold-rich and is considered different perhaps reflecting late-stage, secondary gold veins or gold deposition.  Although the deep intersection revealed that the mineralizing system below the stratovolcano core zone becomes auriferous and could contain high-grade copper-silver-antimony-bismuth mineralization, no funding was available at that time to continue follow-up drilling elsewhere along the numerous prospective zones.



When the results of DDH-EK-01-11 are combined with those from DDH-EK-99-02, the cross section demonstrates that the vuggy silica rock and contained precious-metal mineralization of Zone III are surrounded by outlying coherent/well-developed haloes of argillic and advanced-alteration and anomalous base- and pathfinder-metal zoning.  The spatial relationship of the alteration and base and pathfinder metal zoning in cross section importantly provides a guide to the position of the centrally positioned vuggy silica rock and deeper seated gold-silver-copper-antimony-bismuth mineralization. From the cross section, the outlying haloes of pathfinder and base metals surround the target zone and show that, at high levels in the system, anomalous values in outcrop samples, especially for silver, base and pathfinder metals (i.e. mercury, antimony, and arsenic) are the shallow expression of deep-seated, gold-bearing, high-grade, copper-silver-antimony-bismuth sulfosalt-sulfide mineralization.   Extrapolated to the other nine mineralized zones in the stratovolcano core zone, whose surface expressions are also marked by anomalous pathfinder metals, suggests that the deep-seated, gold-bearing, high-grade, copper-silver-antimony-bismuth sulfosalt-sulfide mineralization may likely be widely distributed at depth within various zones.  The ten zones can be traced confidently across the floor of the eroded stratovolcano core zone for over 11 kilometers of cumulative strike-length distance. Another +3 kilometers of cumulative strike length can be inferred in areas of cover and where zones are open ended.  The remaining potential for discovery of substantial amounts of vein, veinleted, and breccia-hosted gold-bearing, high-grade, copper-silver-antimony-bismuth mineralization is considered very good and should be pursued in the future with a rigorous drill testing.  The exploration objective is to discover a cumulative resource containing +25M metric tons in the range of +2 to +8 g/mt gold, +1500 g/mt silver, 5% to 8% copper, 2% to +4%  antimony, and 2% to 4% bismuth.  This target is postulated to occur along parts of the mineralized zones and would be accessible for selective underground mining methods via level tunnels
driven underneath the stratovolcano core zone.









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The next phase of exploration would require a drill program involving several thousand meters of core drilling or the driving of access tunnels to test beneath Zones I-II, III, IV, V, IX, and X.  During fiscal 2007 we constructed a new exploration camp, and completed bulldozer work to repair and expand access roads, and built drill pads for the next phase of drill testing proposed for the Eskapa property at a later date.



Sampling, analytical procedures, controls - Geochemical analysis for rock-chip and drill core samples from the Eskapa property were conducted by two major laboratories, Bondar-Clegg (from 1995-1999) and ALS Chemex in 2001.  These laboratories subsequently merged as ALS Chemex which is an independent, internationally recognized and ISO certified laboratory complying with the international standards ISO 9001:2000 and ISO 17025:1999.  In preparation for analysis, drill core was cut or split in half, with one half kept for reference and re-analysis if necessary, while the other half was bagged and sealed as a sample for analysis.  No standards or blanks were submitted with any of the samples for analysis by Bondar-Clegg, whereas the samples for analysis by ALS Chemex in 2001 included blanks and standards to provide quality control and check analysis were run on approximately 10% of the samples for any one submittal.



The Eskapa property covers approximately 3,700 hectares and consists of the Eskapa concession (concession #4717), a principal 2885-hectare exploitation concession which covers most of the west half of the Cerro Eskapa stratovolcano.  This large concession encompasses two smaller concessions, Estrella / Mi Morena (concession #4763) which together cover 115 hectares.  On the north side of the stratovolcano, the Eskapa II concession covers 700 hectares.



The concessions are owned by Empresa Minera El Roble S.A. (El Roble), a company controlled by a Bolivian national, Patricio Kyllmann, a former director of SAMEX Mining Corp.  Our Bolivian subsidiary, Emibol S.A. (Empresa Minera Boliviana S.A.) earned a 99% interest in any mining operations which may be established on the concessions pursuant to an agreement dated April 16, 1996 and as amended November 23, 1998 with El Roble.   Under the agreement, Emibol S.A. is required to make all expenditures on the concessions in exchange for a 99% interest in any mining operations which may be established on the concessions while El Roble is required to continue to hold title to the concessions and is entitled to a 1% interest in such operations.



The property is subject to a net smelter royalty of an aggregate of 0.6 % payable to Robert Kell, Front Range Exploration Corp., and El Roble S.A., and to a US$2,000,000 cash royalty payable to International Chalice Resources Inc., to be paid out of production on the property in eight equal quarterly payments of US $250,000 beginning after the ninth month of continuous commercial mining operations on the property.



Patent fees ranging from approximately US$1.60 to US$3.20 per hectare (depending on US$/Boliviano exchange rate) must be paid annually to the Bolivian government in order to maintain the mining concessions.  The Eskapa Property is without a known body of commercial ore and our activities to date have been exploratory in nature. Our Bolivian properties are subject to a number of special risks.  See Item 3 Key Information  Risk Factors  Bolivian Interests.



SANTA ISABEL PROPERTY, Bolivia

The Santa Isabel property (1,803 hectares) is located in the Sud Lipez province in the south-central Altiplano of Bolivia.  The prospect is approximately 105 kilometers by road west from Tupiza and 150 kilometers east-southeast of the rail station of Chiguana.  Surface elevations of the prospect area range from 14,000 feet (4260 m.) to 17,000 feet (5180 m.).



The Santa Isabel property covers a well-mineralized dacitic porphyry intrusive complex with propylitic alteration and widely disseminated sulfide mineralization.  Minerals explored for on this property include zinc, silver, lead, indium, copper, gold, antimony and molybdenum.  During 1996 and 1997, we drilled 4,704 meters in 15 holes as part of reconnaissance exploration on the Santa Isabel porphyry system.  Drilling intersected vein swarms and disseminated sulfides hosting lead, zinc, silver, copper, gold, antimony and molybdenum.  The significant intervals of zinc-lead-silver mineralization in a number of the holes, suggested the potential for bulk tonnage zinc, silver, lead targets on the property.  During 1998, an additional 2,537 meters of core drilling was completed on the Vera Cruz West Zone situated within the Candelaria concession which at that time was part of the Santa Isabel property.  Results for zinc, silver, lead and indium were encouraging, but declining prices for zinc and other metals through the year forced us to re-evaluate the priority of exploration on the Santa Isabel properties.  As a result, effective September 7, 1998, we abandoned our option on the Candelaria concession which covered a 200 hectare portion of the Santa Isabel property.  The Candelaria option agreement required us to make substantial cash payments to the owner and, in addition, assume certain debts of the owner related to this concession.  Although a significant portion of the work on the Santa Isabel property had been conducted on the Candelaria concession, management concluded that continuing with the Candelaria option agreement on the existing terms could not be justified.  We wrote off $1,551,099 deferred exploration cost related to the Candelaria concession in 1998.  In relation to the remaining portion of the Santa Isabel property, a further $2,113,801 of costs were written off in fiscal 2000 due to inactivity on the property.



The Santa Isabel property consists of our interest in 1,803 hectares covering a portion of the Goya I and El Bonete concessions which are held under an agreement dated March 24, 1995 between the owner of the concessions, Corporation Minera de
Bolivia (Comibol) and our subsidiary, Samex S.A.









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The agreement was subsequently amended by agreement registered under Transcript Number 408/97 dated November 12, 1997 (the Comibol Agreement).  Under the terms of the amended Comibol Agreement, Samex S.A. is entitled to explore all or part of the property for a period of 6 years divided into three phases after which it is required to decide whether to enter into commercial production from all or a portion of the property.  If a favourable production decision is reached, Samex S.A. will have 3 years to commence production from the property after which it will be entitled to manage the joint venture project and will be required to pay a royalty to Comibol equal to 5.5% of net positive cash flow until recovery of capital investment and thereafter 16% of net positive cash flow.  The Goya I/El Bonete concessions are also subject to a 1.2% Net Profits interest in favour of Robert Kell and Front Range Exploration Corp. based on Samex S.A.s net profits interest in the property.  Comibol is the owner of the Goya I and Bonete concessions and pays annual patent payments on theses concessions.



In order to earn its interest under the Comibol Agreement, Samex S.A. has completed:



a)

an initial payment of US$6.00 per hectare ($14,124.00), which has been paid;

b)

during the first year, a payment of US$3.00 per Hectare ($7,062.00), which has been paid;

c)

during the first year, an additional payment of US$1,000.00/ month to March 1996, which has been paid;

d)

during the second year, an additional payment of US$2,000.00/ month from April 1996 through March 1997 (which has been paid); and

e)

a payment due March 1997 of US$100.00 per hectare on property retained for further exploration (US$180,300 was paid to retain 1,803 hectares); in addition, Samex S.A. was required to fulfill work commitments totaling US$1,140,000.00 during the first two years of the agreement, which requirement was fulfilled by March, 1997.



In order to maintain its rights under the Comibol Agreement, Samex S.A. is required to make a payment by April 11, 2000 of US$500.00 per hectare on property which Samex S.A. should decide to exploit (up to US$901,500 if all 1,803 hectares are retained).  This payment, which was due April 11, 2000, has not been made.  Samex S.A. suspended any decision with respect to retention of property or delivery of the corresponding payment pending resolution of certain ongoing legal proceedings between Comibol and a third party.  Comibol confirmed to Samex S.A. that a portion of the Santa Isabel property was subject to a claim by a third party with respect to two areas covering approximately 10 hectares and 24 hectares of the 1,803 hectares covered by the Goya1/El Bonete concessions.  Comibol formally advised Samex that it was taking legal proceedings to resolve the dispute and asked Samex S.A to wait for it to do so.  Comibol advised that it was taking active steps to assert its legal rights to the disputed area and anticipated success in doing so.  Samex in turn formally advised Comibol that it considered Comibol to be in default of its obligations under the Comibol Agreement because of the dispute, but agreed to await the results of legal proceedings before taking further action.  Comibol was apparently successful in the legal proceedings against the third partys claim to the disputed areas, but Comibol did not advised SAMEX S.A. of this outcome.   Instead, Comibol has attempted to terminate the agreement between Comibol and Samex S.A., but has not been successful in doing so.   As of the date of this report, Comibol had not yet resolved this issue with Samex S.A.  We are waiting for resolution of the issue with Comibol before making any further plans concerning the property. Due to the inactivity on the property, and the issue with Comibol, the property interest has been written down to a nominal value of $1,000.



An oxide target with enriched silver values is present on a portion of the Santa Isabel property.  Here, prominent sulfide veins, intervals of vein swarms and disseminated sulfide, have been oxidized to depths of 100 meters or more.  Geologic mapping and IP geophysical surveys have outlined a sulfide-mineralized body 1,000 meters long by 900 meters wide beneath the oxide zone. Dump material and surface rock-chip samples of oxide material positioned above the sulfide target contain 119.4 to 754.8 grams/metric ton silver with 1.82% to 8.0% lead, low zinc (0.12% to 27%), 0.054 to 1.233 grams/metric ton gold (most >0.200 grams/metric ton).  Some samples contain 0.23% to 0.50% antimony.  Further geologic mapping and rock-chip sampling are needed to advance this target to a drill-ready status.  We have not conducted any exploration at Santa Isabel since 1998. The Santa Isabel Property is without a known body of commercial ore and activities to date have been exploratory in nature. Our Bolivian properties are subject to a number of special risks.  See Item 3 Key Information  Risk Factors  Bolivian Interests.



WALTER PROPERTY, WARA WARA PROPERTY, AND YARETANI PROPERTY ABANDONED, Bolivia  In March 2009 the Company decided to reduce a portion of its property interests in Bolivia and consequently abandoned three low-priority properties, Walter, Wara Wara and Yaretani.  These properties had been inactive for a number of years and consequently had been written down in past years to a nominal carrying value of $1,000 each.  The $1,000 deferred expenditure carrying value for each of the Walter, Wara Wara and Yaretani properties was written off during the fiscal year ended December 31, 2009.





4.C. Organizational Structure.

See History and Development of the Company for subsidiaries and organizational chart.















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4.D. Property, Plants and Equipment.

We do not own any of our offices.  Our executive office is located at suite 301, 32920 Ventura Avenue, Abbotsford, British Columbia, Canada that we rent on a month-to-month basis at a monthly cost of $2,125 including rent/taxes/operating costs.  We have a field-office/residence in Copiapo, Chile that we rent on a month to month basis at a cost of approximately US$950 per month which also functions as a residence for our Chilean geologic and support staff.    See Business Overview for a description of our mineral exploration properties.



Item 4.A. Unresolved Staff Comments.

Not applicable



Item 5. Operating And Financial Review And Prospects

The following discussion of our operating results explains material changes in our consolidated results of operations for the fiscal year ended December 31, 2010, compared to the fiscal years ended December 31, 2009 and December 31, 2008.  The discussion should be read in conjunction with the consolidated financial statements to December 31, 2010 and the related notes included in Item 17 of this report.  In order to synchronize the different year ends, the consolidated financial statements for fiscal year 2010 include the accounts of the Bolivian subsidiaries for a 12month period that includes their second, third and fourth quarters from January 1, 2010 to September 30, 2010 and the first quarter of their 2011 fiscal year from October 1, 2010 to December 31, 2010.  Managements discussion and analysis of our operating results in this section is qualified in its entirety by, and should be read in conjunction with, the consolidated financial statements and notes thereto.  This discussion contains forward-looking statements, the accuracy of which involves risks and uncertainties and our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including, but not limited to, those risk factors described elsewhere in this report.  See Special Note Regarding Forward Looking Statements and Risk Factors.  Our consolidated financial statements have been prepared in Canadian dollars and in accordance with Canadian GAAP, which differ in significant respects from U.S. GAAP.  As such, this discussion of our financial condition and results of operations is based on the results prepared in accordance with Canadian GAAP.  The significant differences between Canadian GAAP and U.S. GAAP as applicable to our financial statements are summarized in Note 11 to our consolidated financial statements for the fiscal year ended December 31, 2010.



Overview

Our business is exploration for minerals.  We do not have any properties that are in development or production. We have no earnings and, therefore, finance these exploration activities by the sale of our equity securities or through joint ventures with other mineral exploration companies.  The key determinants of our operating results include the following:

(a)

Our ability to identify and acquire quality mineral exploration properties on favorable terms;

(b)

The cost of our exploration activities;

(c)

our ability to finance our exploration activities and general operations;

(d)

our ability to identify and exploit commercial deposits of mineralization; and

(e)

the write-down and abandonment of mineral properties as exploration results provide further information relating to the underlying value of such properties.

These determinates are affected by a number of factors, most of which are largely out of our control, including the following:

(a)

The competitive demand for quality mineral exploration properties;

(b)

Political and regulatory climate in countries where properties of interest are located;

(c)

Regulatory and other costs associated with maintaining our operations as a public company;

(d)

the costs associated with exploration activities; and

(e)

the cost of acquiring and maintaining our mineral properties.



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Our primary capital and liquidity requirements relate to our ability to secure funds, principally through the sale of our securities, to raise sufficient capital to maintain our operations and fund our efforts to acquire mineral properties with attractive exploration targets and conduct successful exploration programs on them.  We anticipate this requirement will continue until such time as we have either discovered sufficient mineralization on one or more properties with sufficient grade, tonnage and type of mineralization to support the commencement of sustained profitable mining operations and are thereafter able to place such property or properties into commercial production or until we have obtained sufficient positive exploration results on one or more of our properties to enable us to successfully negotiate a joint venture with a mining company with greater financial resources than us or some other suitable arrangement sufficient to fund our operations.

Our success in raising equity capital is dependent upon factors which are largely out of our control including:

a)

market prices for gold, silver, copper and other metals and minerals;

b)

the market for our securities; and

c)

the results from our exploration activities.

Significant factors affecting our operations over the past several years have been the instability in the global financial situation and the related volatility in the demand for, and in the prices of precious and base metals.  However, during 2010, lingering effects of the financial crisis and government responses to it - including high levels of government debt, adoption of expansionist monetary policies, Eurozone instability, the decline of the US dollar as a reserve currency and a growing sovereign debt crisis - contributed to spectacular increases in the price of gold and silver and a corresponding improvement in the market for securities of precious metal exploration companies.  These trends improved our ability to raise capital during 2010 at higher prices, on more favourable terms, and in greater amounts than in previous years.  We believe this trend is likely to continue through the next year and possibly beyond and may result in a significant increase in the demand for, and in the price of, gold and silver, and an improved market and price for shares of companies focused on precious metals which should enable us to secure additional equity financing.  Metal prices cannot be predicted with accuracy and our plans will be largely dependent upon the timing and outcome of metal markets, particularly the price of gold, silver and copper which is entirely outside of our control.  We also anticipate that our operating results would be significantly affected by the results of our exploration activities on our existing properties. See Special Note Regarding Forward Looking Statements and Risk Factors.

Currency Risk

Currency exchange rate fluctuations could adversely affect our operations.  Our functional currency is the Canadian dollar, and we have obligations and commitments in other currencies including United States dollars, Chilean Pesos and Bolivian Bolivianos.  Fluctuations in foreign currency exchange rates may affect our results of operations and the value of our foreign assets, which in turn may adversely affect reported financial figures and the comparability of period-to-period results of operations.

Accounting Policies



We have adopted a number of accounting policies and made a number of assumptions and estimates in preparing our financial reporting, which are described in Note 2 to the consolidated financial statements.  These policies, assumptions and estimates significantly affect how our historical financial performance is reported and also your ability to assess our future financial results.  In addition, there are a number of factors which may indicate our historical financial results, but will not be predictive of anticipated future results.  You should carefully review the following disclosure, together with the attached consolidated financial statements and the notes thereto, including, in particular, the statement of significant accounting policies set out in Note 2 to such statements.



Going Concern Assumptions



As described in Note 1 to our consolidated financial statements, our consolidated financial statements have been prepared on the assumption that we will continue as a going concern, meaning that we will continue in operation for the foreseeable future and will be able to realize assets and discharge our liabilities in the ordinary course of operations.  We do not have any mineral properties in production, and have not yet generated any revenues and have a history of losses.   Our continuation as a going concern is uncertain and dependent on our ability to discover commercial mineral deposits on our properties and place them into profitable commercial production and our ability to sustain our operations until such time.  This, in turn depends on our ability to continue to fund our operations by the sale of our securities and other factors which are largely out of our control.  Although we have been successful in the past in obtaining financing, it cannot be assured that adequate financing or financing on acceptable terms can be obtained in the future.  In the event we cannot obtain the necessary funds, it will be necessary to



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delay, curtail or cancel further exploration on our properties.  Our consolidated financial statements do not reflect adjustments to the carrying values and classifications of assets and liabilities that might be necessary should we not be able to continue in our operations, and the amounts recorded for such items may be at amounts significantly different from those contained in our consolidated financial statements.



Treatment of Mineral Property Costs



As we are at the exploration stage, we capitalize the acquisition and exploration costs of our mineral properties under Canadian GAAP.  Should any of these properties be placed into production, such costs would be amortized over the life of the properties on a unit-of-production basis.  Should exploration results of any of our properties prove unsatisfactory, we would then abandon such property or properties, and write off costs incurred up to that time.  The impact on our net loss for the fiscal period would be dependent upon the amount of costs deferred up to the time of the write-off.



Accounting Estimates and Assumptions



The preparation of consolidated financial statements in conformity with Canadian GAAP requires management to make a wide variety of estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and (ii) the reported amounts of expenses during the reporting periods covered by the consolidated financial statements.  Our management routinely makes judgements and estimates about the effect of matters that are inherently uncertain.  As the number of variables and assumptions affecting the future resolution of the uncertainties increases, these judgements become even more subjective and complex.  We have identified certain accounting policies that are most important to the portrayal of our current financial condition and results of operations.  Our significant accounting policies are disclosed in Note 2 of notes to our consolidated financial statements, which should be read in conjunction with this Report.



Among other things, we determine our stock-based compensation costs using an option pricing model which involves the selection of highly subjective assumptions, including an assumption as to price volatility.  Changes in these assumptions can materially affect the fair value estimate and therefore the current model does not provide a consistently reliable measure of the fair value cost of the Companys outstanding stock options.



Stock-Based Compensation



We have a stock option plan whereby we grant incentive stock options as partial compensation to our directors, officers, employees and consultants.  Based on recommendations of the CICA Handbook - Section 3870, effective December 1, 2002, we adopted a new method to account for stock-based compensation and other stock-based payments that is described in note 2.h to our consolidated financial statements.  Under the new standard, any stock-based payments to non-employees, and any employee awards involving direct awards of stock, call for settlement in cash or other assets, or stock appreciation rights that call for settlement by the issuance of equity instruments will be accounted for using the fair value based method.  The fair value of the options at the grant date is determined using the Black-Scholes option pricing model.



During the year ended December 31, 2010, the Company granted stock options to employees and consultants on a total of 540,000 shares at $0.35 per share with a fair value on the grant dates of $126,535.  A $76,530 portion of this stock-based compensation expense was expensed in the statement of operations in the category Salaries, Benefits and Stock-Based Compensation and $50,005 was expensed in the category Consulting.



During the year ended December 31, 2009, the Company granted stock options to consultants, employees, directors and officers of the Company on a total of 3,615,000 shares at $0.20 per share with a fair value on the grant dates of $522,475.  Of this stock-based compensation expense, a $362,834 portion was expensed in the statement of operations and deficit in the category Salaries, Benefits and Stock-Based Compensation, $47,162 was expensed in the category Consulting, and $112,479 was capitalized to mineral interests in the category Geology, Mapping and Surveys in relation to grants to geologists working on the Los Zorros Property.



During fiscal 2008 we granted the following options: in the second quarter the Company granted stock options to a geologic consultant working on the INCA project, on 150,000 shares at a price of $0.65 per share with a fair value of $55,745 based on the Black-Scholes option-pricing model.  This stock-based compensation expense of $55,745 was capitalized to mineral expenses included in the category, Geology, Mapping and Surveys for the INCA project in the Statements of Mineral Interests.  During the third quarter the Company granted stock options to a consultant, on 60,000 shares at a price of $0.50 per share with a fair value of $5,873 based on the Black-Scholes option-pricing model.  This stock-based compensation expense of $5,873 was included in the category, Consulting in the Statements of Operations and Deficit.  This grant was to a Chilean consultant contracted to assist in brokering a potential joint venture/investment for the INCA project. No other stock options were granted during fiscal 2008.



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5.A. Operating Results

Overview Of Results For The 2010 Fiscal Year Ended December 31, 2010 - The following section contains a summary of our operating results for the year ended December 31, 2010, which is qualified by detailed descriptions that follow elsewhere in this document.  This section also contains a number of forward looking statements which, although intended to be accurate, may be affected by a number of risks and uncertainties that may cause them to be materially different from actual outcomes.  See Special Note Regarding Forward Looking Statements and Risk Factors.



As a junior exploration company, our operations are significantly affected by a number of external factors, particularly those that affect the price of the commodities we explore for or those that affect the market for our securities.  The principal external factors in 2010 resulted from the lingering effects of the severe global financial crisis which took place in the two preceding years, and various government responses to it.  During late 2008, the world experienced a number of adverse events in the financial sector including the failure, forced takeover or government bailout of a number of major financial institutions in September-October 2008 and the start of a deep world-wide financial crisis - considered by many to be the worst since the Great Depression.  These events brought about a major decline in stock markets, which fell almost 45% from their 2007 high, and a sharp decline in the price of a number of commodities, including copper and gold, which, although usually thought to be a counter-cyclical commodity, fell at the deepest point in the crisis in October, 2008 to almost US$700 per ounce.  Prices for copper continued to remain soft during 2009, but the price of gold, likely due in large part to continuing uncertainty in the US and global economy, continued to climb throughout 2009, breaking the historical US$1,000 per ounce level in October, 2009. While 2010 saw significant economic improvement in certain parts of the world, particularly in developing countries, the effects of the financial crisis continued in many places - particularly the United States and Euro-zone countries, which have continue to suffer from slow growth and high levels of unemployment.  Further, likely due in part to high levels of government fiscal stimulus and other responses to the financial crisis, a new range of issues began to emerge in 2010, including extraordinarily high levels of government debt, major currency instability and a growing sovereign debt crisis.  These factors in turn resulted in international bailouts of Greece and Ireland, and growing concern over the fiscal stability of Spain and Portugal.  In the US, the effect of unprecedented levels of government funded stimulus, institutional bailouts, repeated "quantitative easing" and other expansionist monetary policies has led to deterioration of the US dollar and its role as a reserve currency, and serious concern over economic retrenchment.  At the same time, likely in response to global economic conditions, the price of gold soared during 2010 from a low of $1,058 in February, 2010 to over $1,400 in December 2010, climbing even further to a record price of over $1,500 in April of this year.  Silver had an even more spectacular climb from a low of $15.14 in February 2010 to over $30 in December, reaching over $46 by April.  Further, the market for the shares of junior precious metal explorers also improved significantly, offering greater access to capital to fund exploration of our gold and silver projects in Chile.



During fiscal 2010 we focused our exploration activities principally on four individual projects situated within our Los Zorros gold property holdings in Chile.  The work included bulldozer trenching, sampling, assaying and construction of roads and drill pads at the Milagro, Nora, Cinchado and Milagro Pampa Projects in preparation for drilling programs to test these four projects for multiple precious metal deposits.  By the end of the third quarter we commenced exploration core drilling which continued through the fourth quarter of 2010 and into the first quarter of 2011.  Quarterly summaries are as follows:



During the first quarter ended March 31, 2010 we continued exploration work in the Nora, Cinchado and Milagro Project areas of our Los Zorros gold property in preparation for a drill program to test these various project areas for multiple large gold targets.   We also made an advance royalty payment (US$100,000) related to the Hochschild Purchase by which we acquired concessions that are part of our Los Zorros Property in Chile.  During the first quarter ended March 31, 2010, the Company received proceeds of $177,000 from the exercise of warrants for the purchase of 885,000 shares at $0.20 per share.  As a result of the Companys activities during the three months ended March 31, 2010, exploration/mineral interests costs totaled $328,197 at March 31, 2010 as compared to $594,469 for the first quarter ended March 31, 2009.  During the second quarter ended June 30, 2010 we continued exploration work on the Nora, Cinchado, Milagro and Milagro Pampa Projects at our Los Zorros gold property in preparation for a drill program to test these various project areas for multiple large gold targets.  During the second quarter ended June 30, 2010, the Company received proceeds of $10,000 from the exercise of warrants for the purchase of 50,000 shares at $0.20 per share.  As a result of the Companys activities during the three months ended June 30, 2010, exploration/mineral interests costs for the second quarter totaled $194,281 as compared to $243,404 for the second quarter ended June 30, 2009.



During the third quarter ended September 30, 2010 we continued exploration work at four individual projects situated within our Los Zorros gold property holdings in Chile.  Work was focused on constructing roads and drill pads at the Milagro, Nora, Cinchado and Milagro Pampa Projects in preparation for drilling programs to test these projects for multiple precious metal deposits.  By the end of the third quarter we had commenced exploration core drilling at Cinchado that is only one of the numerous project areas in the Los Zorros district.  Our exploration/mineral interests costs for the third quarter totaled $286,519for the three months ended September 30, 2010, as compared to $239,275 for the third quarter ended September 30, 2009.



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During the third quarter of 2010, the Company received proceeds of $20,000 from the exercise of warrants for the purchase of 100,000 shares at $0.20 per share.  Also, during the third quarter, the Company completed a private placement of 3,647,334 units at a price of $0.30 per unit for gross proceeds of $1,094,200.  During the fourth quarter ended December 31, 2010 we were core drilling at the Cinchado Project and Milagro Pampa Project situated within our Los Zorros property holdings.  Our exploration/mineral interests costs for the fourth quarter totaled $714,914for the three months ended December 31, 2010, as compared to $215,313 for the fourth quarter ended December 31, 2009.  During the fourth quarter 2010 the Company completed a private placement of 17,583,720 units at a price of $0.50 per unit for gross proceeds of $8,791,860. During the fourth third quarter, the Company also received proceeds of $69,000 from the exercise of warrants for the purchase of 345,000 shares at $0.20 per share.



As a result of our activities throughout 2010 our exploration/mineral interests costs totaled $1,523,911 for the fiscal year ended December 31, 2010 compared to $1,292,461 for the year ended December 31, 2009.  During fiscal 2010 we raised a total of $10,162,060 from two private placements at a price of $0.30 per unit and at $0.50 per unit and from the exercise of warrants as compared to 2009 when we raised $2,586,050 through two private placements at $0.10 per unit and at $0.20 per unit and the exercise of warrants.



Los Zorros Property, Chile   Our Los Zorros property holding consists of multiple project areas that cover approximately 80 square kilometers within a district of scattered numerous small mines and prospects where there was sporadic attempts at small-scale production for gold and copper-silver in the past.  Systematic exploration by SAMEX has revealed that the Los Zorros district is situated at the convergence of important geologic and structural features:



·

the property covers the breadth of a regional anticlinorium with bedrock of calcareous sediments and diorite sills.



·

the property is diagonally crossed by an 8-kilometer-long trend of barite veins which appears to comprise an extensive sigmoidal (S-shaped) fracture system.



·

the property is also the locus of younger porphyry intrusions.



·

clay-sericite-pyrite alteration is superposed on the porphyry intrusions in four areas that have been identified so far - much of these altered areas and parts of the barite vein swarm, are largely concealed beneath a thin veneer of gravel and wind-blown silt.  Trenching and a gravity survey have helped better outline the extent of the altered intrusions.



·

the style of mineralization at Los Zorros varies from steep crosscutting veins and breccia to bedded mantos-like occurrences  hosted within sedimentary rocks outboard to the altered porphyritic intrusions.  There is widespread occurrence of gold-bearing barite veins and altered fault zones; common, widespread occurrence of jasperoid silica; large areas/intersections of anomalous gold and the presence of important pathfinder metals (Hg, As, Sb) often found in association with gold mineralization.



Metal-laden hydrothermal fluids thought to be derived from the younger porphyritic intrusions, likely expelled out along fault structure pathways and into favorable sedimentary intervals to form the significant gold and copper-silver mineralized areas of Cinchado, Nora, Milagro, and Milagro Pampa. There are also many outlying mineral occurrences at Los Zorros yet to be systematically explored by SAMEX including: La Florida and Lora (gold and copper-gold), Virgen de Carmen and Colorina (copper-silver; possible deeper-seated gold and copper-gold), and Salvadora and Cresta de Gallo (barite vein systems with possible deeper-seated gold and copper-gold).



What has been revealed geologically at Los Zorros has provided SAMEX with strong impetus to explore for multiple precious metal deposits that may be clustered beneath the widespread precious metal occurrences in this little-explored district of historic small mining activity.  See Item 4. Information On the Company - Description of Property - "Los Zorros Property" for more details concerning the Los Zorros Property.



Subsequent to the year ended December 31, 2010 we continued drilling at projects situated within our Los Zorros property holdings and in late January 2011 commenced a substantial geophysical survey over portions of the Los Zorros district.  The survey, which included five survey lines totaling over 20 line-kilometers, was conducted by Quantec Geoscience utilizing their proprietary Titan 24 technology.  The Titan 24 Magnetotellurics and IP/Resistivity survey is a deep-earth-imaging technology system for detecting conductive mineralization, disseminated mineralization, alteration, structure and geology which can help target and direct exploration drilling to depth.  Data from the Titan 24 survey will be correlated with data from earlier exploration and current drilling to help guide ongoing exploration throughout the extensive Los Zorros gold district.



Trends and Financing - Over the past several years, we have experienced a number of important external changes in the market place that had an affect on our overall performance.  In the latter part of 2008, commodity prices, particularly the price of copper, began a serious decline, eventually falling to a five year low.  Shortly thereafter, we found ourselves in the middle of
a global economic crisis, with its actual or threatened bank failures, major international liquidity issues, and a general slowdown leading to a global recession.



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These events also fed into both the decline in commodity prices and a decline in the share prices of most public companies including in particular junior resource stocks such as ours, which greatly reduced our ability to raise capital.  During that time, we were able to raise additional capital by private placements, but at lower prices and less favourable terms than our private placements completed in the previous several years.  While many parts of the world - particularly developing countries - had largely recovered from the financial crisis by 2010, many countries - particularly the US and Euro-zone countries - were still experiencing slow growth, high unemployment and other factors.  In addition, due in part to excess government funded stimulus measures, institutional bailouts, and expansionist monetary policies effected in response to the financial crisis, the many countries were left with extraordinarily high levels of government debt, weakened currencies and, in the Euro-zone, a growing sovereign debt crisis.  In the US, expansionist monetary policies have resulted in a weakening of the US dollar as a reserve currency and inflationary concerns.  These and other factors have led to a price resurgence for many commodities, particularly gold and sliver, which are trading at successively new historic highs, and appear to be showing further strength. Along with this, the market for the shares of junior precious metal explorers has also significantly improved, offering us greatly improved access to capital to fund our gold and silver exploration projects.



We believe these economic trends are likely to continue through the next year and possibly beyond and may result in a significant increase in the demand for, and in the price of, gold and silver, and an improved market and price for shares of companies focused on precious metals.



These trends during 2010 improved our ability to raise capital at higher prices, on more favourable terms, and in greater amounts.   For example, during 2009 we raised a total of $2,586,050 through two private placements at a price of $0.10 per unit and at $0.20 per unit and from the exercise of warrants.  By comparison, during fiscal 2010 we raised a total of $10,162,060 from two private placements at a price of $0.30 per unit and at $0.50 per unit and from the exercise of warrants.



Upon completing a major private placement of 17,583,720 units at $0.50 per unit during the fourth quarter of 2010, SAMEX President, Jeff Dahl said; Were pleased to raise this substantial funding which will allow us to not only expand, but accelerate our exploration efforts in general and in particular, at our projects within the Los Zorros district where we have just commenced drilling.  Mineral exploration is a challenging endeavor and having adequate capital is a strategic advantage.  We have the utmost respect and appreciation for our many supportive shareholders and in consideration have arranged this funding above market prices.  We also believe that the decade long bull market in precious metals may be entering an accelerating up-phase which should encourage the markets to more fully recognize the value and opportunity that exploration companies represent.



Gold and Silver Holdings - During the third and fourth quarters of fiscal 2010 the Company used a portion of its cash assets to purchase approximately $1.8 million worth of silver bullion and $2.2 million worth of gold bullion to hold in lieu of cash.  By the fiscal year-end, the Companys Gold and Silver Holdings of 48,193.324 grams of gold and 63,498.734 ounces of silver had a market value of $4,107,333 at December 31, 2010



INCA Property, Chile - Option Payments Not Made On Minera Porvenir Option and Rojas Option - Back in fiscal 2009, we made some important decisions concerning the INCA Property.  From the results of the Phase I exploration that we conducted at INCA from 2006 to 2008, it became apparent that, although some of the results (particularly in the area around the Providencia mine) were very promising, the first phase of exploration did not identify the presence of the wide-spread, near-surface porphyry copper deposit that we had hoped for.  We concluded that, although the possibility still existed to find a large-scale copper deposit at INCA, considerable more exploration work and expenditures would be required to do so.  Further, certain portions of the INCA property were covered by option agreements for which payments came due in March and April of 2009. Under the Minera Porvenir Option, which covers a 2,138-hectare portion of the INCA project, a final payment of US$1,000,000 (which would entitle us to 100% of the Property) was due March 31, 2009, less an amount required to resolve certain title issues on a 85-hectare portion of the property (which remains unresolved).  Under the Rojas Option which covers a 20-hectare portion of the INCA project, a final payment of US$150,000 was due April 30, 2009.  As disclosed in Note 3 of the consolidated financial statements, the Company has not made these payments.  In the case of the Porvenir Option, we considered, among other things, the fact that the optionor had not resolved title issues with respect to a portion of the property covered by the option and therefore was not able to deliver title to the entire optioned property, or for us to determine the appropriate adjustment to the final option price.  We also determined, for this and the other option, that, in light of economic and market conditions, exploration results to date on these particular concessions and other factors, payment of these option payments was not economically justified at the time.  These two option agreements provide that the owner may terminate the option on default by giving 30 days written notice.  At the date of this report, we have not received written notice of default under the Minera Porvenir Option and the Rojas Option.  We are of the view that the optionor cannot at this time give valid notice of termination under the Minera Porvenir Option, since it is unable to deliver title to the entire optioned property, however, if for any reason, notice of termination is given for these properties, which is held to be valid, we may be required to relinquish the options on these portions (2,138 hectares and 20 hectares) of the INCA property.  Due to the possibility of relinquishing these portions of the INCA property, we wrote-off a $2,699,263 portion of the deferred expenditures on the
INCA property at December 31, 2009.



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Our landholdings at the INCA project consist of approximately 3,488 hectares of prospective and strategic concessions including the Providencia Mine concessions that we acquired in 2009 pursuant to the Araya Option.  In addition, the Company also has the option to acquire another 2,158 hectares of mineral interests in the INCA project area pursuant to the Minera Porvenir Option and the Rojas Option agreements, however, as disclosed above and in Note 3 of the consolidated financial statements, the Company has not made the final option payments on these options.



The Company is conducting meetings and property tours with interested parties in its continuing efforts to arrange a joint venture or sale of all or a portion of the INCA property.  Of note, several kilometers to the west, the Codelco/PanAust joint venture is conducting a feasibility study on their Inca de Oro copper-gold ore body, which could serve to further enhance the value of our INCA property.



Bolivia - Bolivian Properties Remain In Care And Maintenance Status  Back in 2009, the Company suspended exploration activities in Bolivia and put the Bolivian properties on care and maintenance status.  For several years, we had been monitoring with concern a number of changes in the political climate in Bolivia.  Over that time, the political climate for resource companies continued to deteriorate with events such as the nationalization of Bolivias natural gas resources, a moratorium on the grant of new mineral exploration licenses, a national referendum that resulted in constitutional changes and requirements that all mining projects be conducted only in partnership with the state mining company  on economically unfavorable terms.  In light of these and other factors we decided that Bolivia currently carried a significant risk for development of future mineral projects.  Accordingly in 2009 we minimized our activities in Bolivia by suspending exploration activities, putting all of our Bolivian projects on care and maintenance status, and reducing our Bolivian office, staff, and operating expenses.  While we hope we will be able to return to exploring our remaining Bolivian properties at some time in the future, we do not anticipate we will be able to do so as long as current political conditions persist.



Plans and Projections  SAMEX exploration activities will continue to be focused on its high quality gold and silver projects in Chile including the Los Zorros property and the Chimberos property.  The Company will also conduct meetings and property tours with parties interested in our INCA copper-gold-moly property in Chile in an effort to arrange a joint venture or sale of all or a portion of the INCA property.  See Liquidity and Capital Resources and Anticipated Capital Requirements.  See Special Note Regarding Forward Looking Statements and Risk Factors.



Summary for fiscal 2010 - As a result of the activities on our mineral exploration properties throughout 2010, our expenditures on mineral interests and exploration costs for the fiscal year totaled $1,523,911 at December 31, 2010 as compared to $1,292,461 for the 2009 fiscal year ended December 31, 2009.  A $208,939 portion of the mineral interests and exploration costs for 2010 was expensed in the Statement of Operations and Deficit as Mineral Interests Administration and Investigation Costs.  The remaining $1,314,972 comprises the Deferred Expenditures in the Statements of Mineral Interests.



Our assets categorized in the consolidated financial statements as Mineral Interests increased to $10,299,789 at December 31, 2010 as compared to $9,021,953 at December 31, 2009.  Certain costs related to mineral interests were written off December 31, 2010 on the Espejismo Property ($4,016), the Miscellaneous Properties-Chile ($2,547), El Desierto ($1,282) and the Eskapa Property ($29,291) since no current exploration is being conducted on these properties. These mineral interests were written down to a nominal value of $1,000 each (see category Summary of Deferred Expenditures) until exploration activity is resumed on the respective properties.



The amount of cash on hand at December 31, 2010 was $4,870,337 compared to $1,020,863 at December 31, 2009 and the  Company's "Gold and Silver Holdings" had a market value of $4,107,333 at December 31, 2010 as compared to a $757 market value at December 31, 2009.  The Company's assets were $19,366,455 at December 31, 2010 compared to $10,154,038 at December 31, 2009.  At December 31, 2010, we were debt-free, apart from accounts payable and accrued liabilities of $91,890 compared to $73,718 at December 31, 2009.



The following comments relate to certain categories in the consolidated financial statements to December 31, 2010:



Consolidated Balance Sheet

Gold and Silver Bullion - During the third and fourth quarters of fiscal 2010 the Company used a portion of its cash assets to purchase $1,799,925 worth of silver bullion and $2,200,000 worth of gold bullion to hold in lieu of cash.  By the fiscal year-end, the Companys Gold and Silver Bullion" holdings of 48,193.324 grams of gold and 63,498.734 ounces of silver had a market value of $4,107,333 at December 31, 2010 (the unrealized gain on the gold and silver holdings at December 31, 2010 is $108,812  see Unrealized Financial Instrument Gain in Consolidated Statements of Comprehensive Loss and Accumulated Other Comprehensive Income and also see comment below concerning Accumulated Other Comprehensive Income) (also see Note 2 c. to the Financial Statements  Financial Instruments Gold and silver bullion, which are measured at fair value, are classified as available-for-sale financial assets).









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Contributed Surplus  The contributed surplus includes a stock-based compensation expense of $26,815 in relation to a stock option granted during the first quarter of 2010 on 110,000 shares at $0.35 per share to a consultant and also includes a stock-based compensation expense of $99,720 in relation to stock options granted on 430,000 shares at $0.35 per share to three employees and a consultant during the third quarter of 2010 (see Note 6.c (ii) Stock Options and Note 6.d Contributed Surplus to the consolidated financial statements).



Accumulated Other Comprehensive Income - $109,275 includes an unrealized gain of $108,812 at December 31, 2010 on the Company's gold and silver holdings (see comment concerning "Gold and Silver Bullion" holdings above and see Unrealized Financial Instrument Gain in Consolidated Statements of Comprehensive Loss and Accumulated Other Comprehensive Income).



Consolidated Statements of Operations and Deficit

Consulting  includes $50,005 of stock-based compensation expense comprised of $26,815 in relation to a stock option granted to a consultant during the first quarter of 2010 on 110,000 shares at $0.35 per share and $23,190 in relation to a stock option granted to a consultant during the third quarter on 100,000 shares at $0.35 per share (also see Note 6.c (ii) to the Consolidated Financial Statements).



Finance Fees - $269,415 at December 31, 2009 - The extension of warrant terms during the 2009 fiscal year resulted in an incremental increase in the fair value of the warrants of $269,415 which was expensed as a finance charge in the statement of operations and deficit.



Mineral Interests Administration and Investigation Costs - are expensed as incurred and are not capitalized to mineral interests and include operating costs related to the Companys activities in Chile and Bolivia that are not allocated to one of the Companys specific mineral properties, and include generative exploration or investigating and evaluating mineral properties not acquired by the Company.



Office, Supplies and Miscellaneous - includes rent and utilities for the Canadian corporate office, book-keeping/accounting, office supplies, telephone, postage, couriers, parking, mileage, and printing.  Included is a miscellaneous cost of US$5,487 to subscribe for Buyins.net research and reports concerning short-selling of SMXMF.



Salaries, Benefits and Stock-Based Compensation  The amount at December 31, 2010 includes a stock-based compensation expense of $76,530 in relation to stock options granted during fiscal 2010 (see Note 6.c (ii) Stock Options to the Consolidated Financial Statements).  The larger comparative amount of $734,820 at December 31, 2009 includes stock-based compensation expenses of $362,834 related to stock options granted during 2009. These stock-based compensation expenses were determined using the Black-Scholes option-pricing model.  The existing models do not necessarily provide a reliable single measure of the fair value of the Companys stock options.



Gain On Sale Of Assets  $(39,444) at December 31, 2009 - During the first quarter of 2009, the Company sold 2,000 grams of its gold holdings for proceeds of $75,224 resulting in a $39,444 gain on sale of assets.



"Mineral Interests Written Off" - $2,730,429 at December 31, 2009 includes the following write-off: Due to the possibility of relinquishing certain portions of the INCA property, the Company wrote-off a $2,699,263 portion of the deferred expenditures on the INCA property at December 31, 2009 (see Mineral Interests Note 3 iii. "INCA Property" to the Consolidated Financial Statements).



Consolidated Statements of Mineral Interests

Geology, Mapping and Surveys  includes salaries and expenses for geologists, support staff and geologic consultants doing work related to the respective mineral properties.





Overview Of Results For The 2009 Fiscal Year Ended December 31, 2009 - The following section contains a summary of our operating results for the year ended December 31, 2009, which is qualified by detailed descriptions that follow elsewhere in this document.  This section also contains a number of forward looking statements which, although intended to be accurate, may be affected by a number of risks and uncertainties which may cause them to be materially different from actual outcomes.  See Special Note Regarding Forward Looking Statements and Risk Factors.



As a junior exploration company, our operations are significantly affected by a number of external factors, particularly those that affect the price of the commodities we explore for or those that affect the market for our securities.  During late 2008, the world experienced a number of adverse events in the financial sector including the failure, forced takeover or government bailout of a number of major financial institutions in September-October 2008 and the start of a deep world-wide financial
crisis - considered by many to be the worst since the Great Depression.



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These events brought about a major decline in stock markets, which fell almost 45% from their 2007 high, and a sharp decline in the price of a number of commodities, including copper and gold, which, although usually thought to be a counter-cyclical commodity, fell at the deepest point in the crisis in October, 2008 to almost US$700 per ounce.  Prices for copper continued to remain soft during 2009, but the price of gold, likely due in large part to continuing uncertainty in the US and global economy, continued to climb throughout 2009, breaking the historical US$1,000 per ounce level in October, 2009, and has continued to hold above that level since then.  Although there were signs of improvement in the world economy throughout 2009, a number of the negative effects of the crisis continued throughout the year and are still evident at the date of this report.   Due in large part to lingering concern over the state of the global economy gold prices have continued to remain strong, and the market for shares of companies focused on gold has also significantly improved.



In light of these and other events, once we completed and reported our evaluation of prior exploration work on our INCA Project (which focuses primarily on copper) in early 2009, we shifted our focus to our gold and silver projects, principally our Los Zorros gold project in Chile.  Because of improvements in the market for our shares, we were able to complete a series of private placements in 2009, which provided funding for our exploration efforts.  We also continued to look for possible purchasers or joint venture partners for our INCA Project.



During the 2009 fiscal year we resumed exploration work at our Los Zorros Property in Chile.  Our exploration was mainly focused in the Nora Project and the Cinchado Project areas which are two of the numerous projects that comprise the Los Zorros property that we are exploring for gold deposits.  Detailed geologic mapping, re-logging of some Phase I drill core, and drafting of cross-sections and drill plans was conducted in preparation for the next phase of drilling (see more details in Los Zorros Property, Chile below).  During the first quarter of 2009 we also conducted some preliminary sampling and assaying at our Chimberos silver/gold prospect in Chile (see Chimberos Gold/Silver Property, Chile below).  During the first quarter we also concluded the compilation and reporting of Phase I exploration results for the INCA copper-gold-moly property and throughout the year we conducted several property visits for companies who expressed interest in possible joint-ventures on the INCA project.  During the third quarter, we completed the final option payment (Araya Option) to acquire the Providencia Mine concessions situated within the greater INCA project area (see Providencia Mine Concessions Acquired At INCA Property below). As a result of our activities throughout 2009, our exploration/mineral interests costs totaled $1,292,461 for the fiscal year ended December 31, 2009.  The Company raised gross proceeds of $1,383,050 by completing two private placements during the 2009 fiscal year and also received proceeds of $1,203,000 through the exercise of warrants during the fourth quarter of 2009.



Los Zorros Property, Chile  Exploration work at the Los Zorros Property identified a significant Carlin-type breccia- and sediment-hosted gold exploration target in the Cinchado Project area of the property.  The target is positioned in a large down-faulted structural block adjacent to an up-thrown fault block containing a wedge-shaped breccia body.  This 40-meter thick breccia was historically exploited for gold on a small scale at the San Pedro mine.  Detailed exploration work by SAMEX indicates that the gold-mineralized breccia of the San Pedro mine may be a small, faulted-off portion of a more extensive breccia body at a drilling depth of 250 to 300 meters beneath the Cerro (Mt.) Cinchado area. There has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in discovery of a mineral resource within the Cinchado breccia target. The target is based on a model developed by the Company using available geological information which, although thought by the Company to be a reasonable explanation for the occurrence of identified mineralization in the Cinchado area, has yet to be proven by drilling and other exploration activities.



INCA Property, Chile - Providencia Mine Concessions Acquired At INCA Property - During 2009 we completed the final option payment under the Araya Option to acquire the Providencia Mine concessions situated within the greater INCA project area.  These concessions cover one of the stronger mineralized areas identified during phase I exploration at the INCA project including the Providencia copper breccia pipe, a swarm of sheeted veins, and other tourmalinized/silicified breccia bodies and pipes. The Providencia mine breccia pipe is well mineralized with chalcopyrite and abundant accessory pyrite; our initial rock chip-channel samples in the mined areas were taken as a series of both vertical and several horizontal oriented lines.  The copper (total) grade of initial chip-channel sampling (25 samples) shows a range via mine level of 1.24% to 2.94% copper with an overall average of 2.16% copper.  The presence of strong sericite alteration, anomalous amounts of silver, lead, zinc, and antimony and position of the roof indicate that this level is at the top of the pipe and that very little of the pipe has actually been mined out.  The size and shape of the Providencia mine breccia pipe is not fully exposed by mining and could be over 80 meters across.  A target size of over 10 million metric tonnes is tentatively outlined for this mine-exposed breccia pipe.



The Providencia mine breccia pipe has a distinct IP signature and occurs within what appears to be a cluster of additional concealed, possibly well-mineralized breccia pipes with similar or stronger IP responses, which were disclosed by our regional IP survey.  The Providencia breccia cluster is a highly prospective area 1600 meters long by 500 meters across  with several separate IP targets for copper-molybdenum-gold mineralization hosted by sulfide-bearing breccia pipes/elongate tapered bodies and perhaps out into surrounding veinleted zones.  One set of our exploration core drill tests on one of the IP anomalies discovered a concealed, faulted part of a breccia pipe (Providencia West) with indications that it contains significant copper and
molybdenum mineralization and anomalous silver, lead, and zinc content.









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This breccia pipe is located 700 meters to the west of the Providencia mine breccia pipe and is situated where an outcropping sheeted vein swarm with oxide-copper mineralization and tourmalinized/silicified pods of breccia are present over a large area in the monzonite cap above the pipe.  Additional drilling is required in the Providencia area to test for other concealed breccia pipes with the objective of discovering multiple ore bodies and the potential deeper source from which these pipes have emanated.



Option Payments Not Made On Minera Porvenir Option and Rojas Option, Termination Of Parra Option - After reviewing the results of the Phase I exploration that we conducted at INCA from 2006 to 2008, we concluded that, although some of the results (particularly in the area around the Providencia mine) were very promising, the first phase of exploration did not identify the presence of the wide-spread, near-surface porphyry copper deposit that we had hoped for.  Accordingly, we concluded that, although the possibility still existed to find a large scale copper deposit at INCA, considerable more exploration work and expenditures would be required to do so.  This conclusion also affected our consideration of three portions of the properties covered by option payments which were becoming due.



Under the Minera Porvenir Option, which covers a 2,138-hectare portion of the INCA project, a final payment of US$1,000,000 (which would entitle us to 100% of the Property) was due March 31, 2009, less an amount required to resolve certain title issues on a 85-hectare portion of the property (which remains unresolved).  Under the Rojas Option which covers a 20-hectare portion of the INCA project, a final payment of US$150,000 was due April 30, 2009.   Under the Parra Option which covers  a 21-hectare portion of the INCA project, a payment of US$80,000 was due April 9, 2009.  As disclosed in Note 3 of the financial statements, the Company has not made these payments.  In the case of the Minera Porvenir Option, we considered, among other things, the fact that the optionor had not resolved title issues with respect to a portion of the property covered by the option and therefore was not able to deliver title to the entire optioned property, or for us to determine the appropriate adjustment to the final option price.  We also determined, for this and the other options, that, in light of economic and market conditions, exploration results to date on these particular concessions and other factors, payment of these option payments was not economically justified at the time.  All three option agreements provide that the owner may terminate the option on default by giving 30 days written notice.  We received notice under the Parra Option and relinquished the 21 hectare portion of the property covered by it, but at the date of this report, have not received written notice of default under the Minera Porvenir Option and the Rojas Option.  We are of the view that the optionor cannot at this time give valid notice of termination under the Minera Porvenir Option, since it is unable to deliver title to the entire optioned property, however, if for any reason, notice of termination is given for these properties, which is held to be valid, we may be required to relinquish the options on these portions (2,138 hectares and 20 hectares) of the INCA property.  Due to the possibility of relinquishing these portions of the INCA property, we have written-off a $2,699,263 portion of the deferred expenditures on the property thereby writing-down the property interest on the INCA property to a carrying value of $3,500,000 at December 31, 2009.



As a result of our decisions during 2009 our landholdings at INCA were reduced, however, with the acquisition of the Providencia Mine concessions (described above) and our other remaining landholdings, SAMEX holds what we consider to be the most prospective and strategic concessions within the core of the INCA project area.  In addition, the Company also has the option to acquire another 2,158 hectares of mineral interests in the INCA project area pursuant to the Minera Porvenir Option and the Rojas Option agreements, however, as disclosed above and in Note 3 of the financial statements, the Company has not made the final option payments on these options.



Seeking Joint Venture Or Sale Of All Or A Portion Of The INCA Property  We are planning to conduct meetings and property tours with interested parties in a continuing effort to arrange a joint venture or sale of all or a portion of the INCA property.  Of note, several kilometers to the west, Chilean miner, Codelco, is planning to advance the development of their Inca de Oro copper-gold ore body, which could serve to further enhance the value of our INCA property.



Bolivian Properties - For several years, we have been monitoring with concern a number of changes in the political climate in Bolivia.  Over that time, the political climate for resource companies has continued to deteriorate with events such as the nationalization of Bolivias natural gas resources, a moratorium on the grant of new mineral exploration licenses, a national referendum that resulted in constitutional changes and requirements that all mining projects be conducted only in partnership with the state mining company  on economically unfavourable terms.  In light of these and other factors we decided that Bolivia currently carried a significant risk for development of future mineral projects.  Accordingly we have minimized our activities in Bolivia by suspending exploration activities, putting all of our Bolivian projects on care and maintenance status, and reducing our Bolivian office, staff, and operating expenses.  We elected to write down the value of our Eskapa project by $1,395,993 at December 31, 2008 to a nominal carrying value of $1,000.  In the first quarter of 2009, we also decided to abandon three low-priority properties  the Walter, Wara Wara and Yaretani properties.  These three properties had been inactive for a number of years and consequently had been written down in past years to a nominal carrying value of $1,000 each.  The $1,000 deferred expenditure carrying value for each of the Walter, Wara Wara and Yaretani properties was written off during the first quarter ended March 31, 2009.  While we hope we will be able to return to exploring our remaining Bolivian properties at some time in the future, we do not anticipate we will be able to do so as long as current political conditions persist.









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Over the past two years, we have experienced a number of important external changes that have an affect on our overall performance for the year and beyond.  In the latter part of 2008, commodity prices, particularly the price of copper, began a serious decline, eventually falling to a five year low.  Shortly thereafter, we found ourselves in the middle of a global economic crisis, with its actual or threatened bank failures, major international liquidity issues, and a general slowdown leading to a global recession.  These events also fed into both the decline in commodity prices and a decline in the share prices of most public companies including in particular junior resource stocks such as ours, which greatly reduced our ability to raise capital.  Since that time, world financial conditions have improved somewhat, but remain unstable and with new and growing threats such as a potential sovereign debt crisis and a growing euro-zone crisis.  Markets for junior resource companies, particularly those focused on gold, have improved somewhat also, but remain constrained.  In spite of this, we have been able to raise additional capital by private placements, but at lower prices and less favourable terms than our private placements completed in the previous several years. During the first quarter of 2009, we were able to raise additional capital in a private placement completed in March 2009, but only at significantly lower prices than our placement completed a year earlier in April 2008 ($0.10 per unit in 2009 as compared to $0.60 per unit in April, 2008), with less favourable terms (each unit comprised of one share and one full warrant in 2009 as compared to one share and 1/2 warrant in 2008), a smaller amount of proceeds and significantly higher dilution (7,830,500 units for $738,050 in gross proceeds in 2009 compared to 2,565,000 units for $1,539,000 in gross proceeds in 2008).  In June 2009, we raised additional capital through a private placement of 3,000,000 units comprised of one share and one full warrant at a price of $0.20 per unit for proceeds of $600,000 during the second quarter. During the fourth quarter the Company received proceeds totaling $1,203,000 from the exercise of warrants for the purchase of 2,265,000 shares at $0.20 per share and 2,500,000 shares at $0.30 per share.



Due to increased global economic uncertainty and fears over the continued health of the global economy and general weakness in paper financial assets, derivatives and currencies, there has been a corresponding significant increase in market interest for precious metals.   Gold prices have been volatile, but remained strong and are currently near record levels.  We believe these economic trends are likely to continue through 2010 and possibly beyond and may result in a significant increase in the demand for, and in the price of gold and silver.



Plans and Projections  SAMEX exploration activities over the next year will be focused on its high quality gold and silver projects in Chile including the Los Zorros Property.  We plan to conduct one or more equity offerings to secure the necessary financial resources to facilitate these exploration activities.  We also plan to conduct meetings and property tours with parties interested in the INCA property in an effort to arrange a joint venture or sale of all or a portion of the INCA property.  Our plans for the next year remain subject to a number of risks, uncertainties and factors which are not in our control.  See Liquidity and Capital Resources and Anticipated Capital Requirements. See Special Note Regarding Forward Looking Statements and Risk Factors.



Fiscal Year Ended December 31, 2009 compared to the Fiscal Year Ended December 31, 2008



During the first quarter of 2009 we conducted exploration work at our Los Zorros gold property in Chile including re-logging some of our previous drill core and further geologic mapping. We also conducted some preliminary sampling and assaying at our Chimberos silver/gold prospect in Chile.  We concluded the compilation and reporting of Phase I exploration results for the INCA copper-gold-moly property and conducted property visits for companies who expressed interest in possible joint-ventures on this project.   During the first quarter, we made an option payment related to the INCA property (Araya Option) and an advance royalty payment related to the Los Zorros Property.  We also completed a private placement financing raising gross proceeds of $783,050 through the private placement of 7,830,500 units at $0.10 per unit.  Our exploration/mineral interests costs for the first quarter ended March 31, 2009 totaled $594,469 as compared to $753,112 for the first quarter of 2008.  During the second quarter we continued with gold and silver exploration in the Nora and Cinchado areas, which are two of the numerous projects that comprise the Los Zorros property.  We raised gross proceeds of $600,000 through the private placement of 3,000,000 units at $0.20 per unit during the second quarter.  Second quarter exploration/mineral interests costs totaled $243,404 for the three months ended June 30, 2009 as compared to $607,082 for the second quarter of 2008.



During the third quarter we continued our focus on gold exploration at the Los Zorros gold project in Chile.  Detailed geologic mapping, re-logging of some Phase I drill core, and drafting of cross-sections and drill plans was conducted in preparation for the next phase of drilling.  We also completed the final option payment under the Araya Option to acquire the Providencia Mine concessions situated within the greater INCA project area.  Our exploration/mineral interests costs for the third  quarter ended September 30, 2009 totaled $239,275 as compared to $314,182 for the third quarter of 2008.  During the fourth quarter of 2009 we continued exploration at the Nora Project and the Cinchado Project of our Los Zorros Property in Chile.  We also conducted meetings and property tours at our Inca Property for mining companies interested in that property.  The Company received proceeds of $1,203,000 through the exercise of warrants during the fourth quarter.  Fourth quarter, exploration/mineral interests costs totaled $215,313 for the three months ended December 31, 2009 as compared to $275,029 for the fourth quarter of 2008.





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Summary for fiscal 2009 - As a result of the activities on our mineral exploration properties throughout 2009, our expenditures on mineral interests and exploration costs for the fiscal year totaled $1,292,461 at December 31, 2009 as compared to $1,949,405 for the 2008 fiscal year ended December 31, 2008.  These costs for 2009 include a stock-based compensation expense of $112,479 that was capitalized in the Statement of Mineral Interests in relation to stock options granted to geologists working on the Los Zorros Property (see Note 6.c (ii) to the Consolidated Financial Statements).  A $242,082 portion of the mineral interests and exploration costs for 2009 was expensed in the Statement of Operations and Deficit as Mineral Interests Administration and Investigation Costs.  The remaining $1,050,379 comprises the Deferred Expenditures in the Statements of Mineral Interests.



Our assets categorized in the consolidated financial statements as Mineral Interests decreased to $9,021,953 at December 31, 2009 as compared to $10,702,003 at December 31, 2008.  This decrease in Mineral Interests is due in part to the write-off of a $2,699,263 portion of the deferred expenditures on the INCA property at December 31, 2009 (see Note 3 to the Consolidated Financial Statements) and the write-off of the $1,000 deferred expenditure carrying value for each of the Walter, Wara Wara , and Yaretani properties ($3,000 in total) which the Company abandoned during 2009 (see Note 3 to the Consolidated Financial Statements).  Certain costs were also written off December 31, 2009 on the Espejismo Property ($469), the Miscellaneous Properties-Chile ($6,671), El Desierto ($698) and the Eskapa Property ($20,328) since no current exploration is being conducted on these properties. These mineral interests were written down to a nominal value of $1,000 each (see category Summary of Deferred Expenditures) until exploration activity is resumed on the respective properties.



The amount of cash on hand at December 31, 2009 was $1,020,863 compared to $207,192 at December 31, 2008.  At December 31, 2009, we were debt-free, apart from accounts payable and accrued liabilities of $73,718 as compared to $104,228 at December 31, 2008.



The following comments relate to certain categories in the consolidated financial statements to December 31, 2009:



Consolidated Balance Sheet

Contributed Surplus  The contributed surplus includes a stock-based compensation expense of $522,475 and a financing charge of $269,415 related to the extension of warrant terms resulting in an incremental increase in the fair value of the warrants of $269,415 which was expensed as a finance fee in the statement of operations and deficit (see Note 6.c Warrants and Stock Options and Note 6.d Contributed Surplus to the consolidated financial statements).



Accumulated Other Comprehensive Income - $32,705 at December 31, 2008 is the accumulated unrealized gain on the value of 2,021.703 grams of gold the Company held at December 31, 2008.  During the first quarter ended March 31, 2009, the Company sold 2,000 grams of gold leaving a balance of approximately 21 grams of gold.  See also Consolidated Statements of Comprehensive Loss and Accumulated Other Comprehensive Income.  Also see Gain On Sale Of Assets below.



Consolidated Statements of Operations and Deficit

Consulting  includes a $47,162 stock-based compensation expense in relation to stock options granted to consultants during the year (see Note 6.c (ii) to the Consolidated Financial Statements).



Finance Fees - The extension of warrant terms resulted in an incremental increase in the fair value of the warrants of $269,415 which was expensed as a finance charge in the statement of operations and deficit (see Note 6.c (i) Share Purchase Warrants to the Consolidated Financial Statements).



Mineral Interests Administration and Investigation Costs - are expensed as incurred and are not capitalized to mineral interests and include operating costs related to the Companys activities in Bolivia and Chile that are not specifically related to one of the Companys mineral properties, and include generative exploration or investigating and evaluating mineral properties not acquired by the Company.



Office, Supplies and Miscellaneous - includes rent and utilities for the Canadian corporate office, book-keeping/accounting, office supplies, telephone, postage, couriers, parking, mileage, and printing.



Salaries, Benefits and Stock-Based Compensation  the larger comparative amount of $904,313 for the fiscal year ended December 31, 2007 includes a stock-based compensation expense of $531,095 related to the grant of options during fiscal 2007.  The amount of $734,820 for fiscal 2009 includes stock-based compensation expenses of $362,834 related to stock options granted during 2009.  These stock-based compensation expenses were determined using the Black-Scholes option-pricing model.  The existing models do not necessarily provide a reliable single measure of the fair value of the Companys stock options.



Gain On Sale Of Assets  In 2004, the Company purchased approximately 2,028 grams of gold (goldgrams) which it
held in an account with GoldMoney.  The market value of the gold appreciated, resulting in an accumulated unrealized gain of $32,705 at December 31, 2008 (see Accumulated Other Comprehensive Income above).  During the first quarter of 2009, the Company sold 2,000 goldgrams for proceeds of $75,224 resulting in a $39,444 gain on sale of assets.



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Consolidated Statements of Mineral Interests

Geology, Mapping and Surveys- includes salaries for geologists, support staff and geologic consultants doing work for the respective mineral properties.  Geology, Mapping and Surveys  Los Zorros  Chile includes a stockbased compensation expense of $112,479 in relation to stock options granted during the 2009 fiscal year to geologists working on the Los Zorros Property (see Note 6.c (ii) to the Consolidated Financial Statements).



Liquidity and Capital Resources 2009 - We are an exploration company and do not have any mineral properties in production and, therefore, did not generate any revenue from operations during the fiscal year ended December 31, 2009.  We realized a net loss of $4,282,770 for the fiscal year ended December 31, 2009 or $0.05 per share compared to a net loss of $2,571,737 for the fiscal year ended December 31, 2008 or $0.03 per share.  The unusually large net loss for 2009 includes the write-off of a $2,699,263 portion of the deferred expenditures on the INCA property at December 31, 2009 (see Note 3 to the Consolidated Financial Statements). The net loss for the fiscal year ended December 31, 2009 also includes stock-based compensation expenses totaling $409,996 in relation to the grant of options during the 2009 fiscal year (see Note 6.c (ii) to the Consolidated Financial Statements).  The net loss for fiscal 2009 also includes a finance charge of $269,415 related to the extension of warrant terms resulting in an incremental increase in the fair value of the warrants of $269,415 which was expensed as a finance fee in the statement of operations and deficit (also see Note 6.c (i) and Note 6.d Contributed Surplus to the Consolidated Financial Statements). Losses are a reflection of our ongoing expenditures on our mineral properties which are all currently in the exploration stage.  We plan to focus our exploration activities over the next year on high quality gold and silver projects in Chile including several project areas at Los Zorros.  Since we have no source of operating revenues, no lines of credit and no current sources of external liquidity, our ability to continue as a going concern is dependent upon our ability to raise equity capital, enter into joint ventures or borrow to meet our working capital requirements.  Based on the funds on hand, it will be necessary to raise additional financing in order to fund our ongoing general operations and proposed exploration programs for the next year.  We intend to conduct one or more equity offerings to secure the necessary financial resources to conduct these exploration activities.  See Special Note Regarding Forward Looking Statements and Risk Factors.



In the coming years, we will require substantial additional capital to achieve our goal of discovering significant economic mineralization on one or more of our properties.  Until such time as we are able to make such a discovery and thereafter place one or more of our properties into commercial production or negotiate one or more joint venture agreements, we will be largely dependent upon our ability to raise capital from the sale of our securities to fund our operations.  We do not anticipate being able to obtain revenue from commercial operations in the short term and anticipate we will be required to raise additional financing in the future to meet our working capital and on-going cash requirements.  We intend to raise such financing through sales of our equity securities by way of private placements, and/or the exercise of warrants.  We may also secure additional exploration funding through option or joint venture agreements on our mineral properties; or through the sale of our mineral properties, royalty interests or capital assets, or borrow to meet our working capital requirements.  While we have in the past been able to raise sufficient funds to sustain our exploration programs, there is no assurance that we will continue to be able to do so.  If, for any reason, we are not able to access the capital market, our resources during this period will be limited to cash on hand and any revenues we are able to generate from joint venture or similar arrangements we may hereafter enter into. If we are unable to secure sufficient funds to pursue such proposed acquisitions and exploration to the level desired, we will adjust our proposed activities to reflect the amount of capital available to us after providing for sufficient working capital to maintain our existing operations. At present, none of our properties have a known body of ore and all our proposed exploration programs are an exploratory search for ore.See Special Note Regarding Forward Looking Statements and Risk Factors.



5.B. Liquidity and Capital Resources



Liquidity and Capital Resources 2010 - We are an exploration company and do not have any mineral properties in production and, therefore, did not generate any revenue from operations during the fiscal year ended December 31, 2010.  We realized a net loss of $1,200,162 for the fiscal year ended December 31, 2010 or $0.01 per share compared to a net loss of $4,282,770 for the fiscal year ended December 31, 2009 or $0.05 per share. The net loss for the year ended December 31, 2010 includes stock-based compensation expenses totaling $126,535 in relation to the grant of options to consultants and employees during the 2010 fiscal year (see Note 6.c (ii) to the Consolidated Financial Statements).  The unusually large net loss for fiscal 2009 included the write-off of a $2,699,263 portion of the deferred expenditures on the INCA property at December 31, 2009 (see Note 3 to the Consolidated Financial Statements).  Losses are a reflection of our ongoing expenditures on our mineral properties which are all currently in the exploration stage.  Since we have no source of operating revenues, no lines of credit and no current sources of external liquidity, our ability to continue as a going concern is dependent upon our ability to raise equity capital, enter into joint ventures or borrow to meet our working capital requirements.  Based on the funds on hand at the
date of this report, we believe we have sufficient funds to conduct our ongoing general operations and to fund our proposed exploration programs at the Los Zorros property in Chile over the next year.  The Company plans to focus its exploration activities over the next year on its high quality gold and silver projects in Chile including several project areas at Los Zorros. See Special Note Regarding Forward Looking Statements and Risk Factors.



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In the coming years, we will require substantial additional capital to achieve our goal of discovering significant economic mineralization on one or more of our properties.  Until such time as we are able to make such a discovery and thereafter place one or more of our properties into commercial production or negotiate one or more joint venture agreements, we will be largely dependent upon our ability to raise capital from the sale of our securities to fund our operations.  We do not anticipate being able to obtain revenue from commercial operations in the short term and anticipate we will be required to raise additional financing in the future to meet our working capital and on-going cash requirements.  We intend to raise such financing through sales of our equity securities by way of private placements, and/or the exercise of warrants.  We may also secure additional exploration funding through option or joint venture agreements on our mineral properties; or through the sale of our mineral properties, royalty interests or capital assets, or borrow to meet our working capital requirements.  While we have in the past been able to raise sufficient funds to sustain our exploration programs, there is no assurance that we will continue to be able to do so.  If, for any reason, we are not able to access the capital market, our resources during this period will be limited to cash on hand and any revenues we are able to generate from joint venture or similar arrangements we may hereafter enter into. If we are unable to secure sufficient funds to pursue such proposed acquisitions and exploration to the level desired, we will adjust our proposed activities to reflect the amount of capital available to us after providing for sufficient working capital to maintain our existing operations.  At present, none of our properties have a known body of ore and all our proposed exploration programs are an exploratory search for ore.  See Special Note Regarding Forward Looking Statements and Risk Factors.



Financing 2008 to 2010 - In the past, we have relied in large part on our ability to raise capital from the sale of our securities to fund the acquisition and exploration of our mineral properties.  During the second quarter of 2008 we raised proceeds of $1,539,000 from the sale of our securities through a private placement of 2,565,000 units at $0.60 per unit.  In the latter part of 2008, commodity prices, particularly the price of copper, began a serious decline, eventually falling to a five year low.  Shortly thereafter, we found ourselves in the middle of a global economic crisis, with its actual or threatened bank failures, major international liquidity issues, and a general slowdown leading to a global recession.  These events also fed into both the decline in commodity prices and a decline in the share prices of most public companies including in particular junior resource stocks such as ours.  This greatly reduced our ability to raise capital, however, we were able to raise additional capital during 2009 in private placements, but only at significantly lower prices, with less favourable terms, with smaller amount of proceeds and significantly higher dilution than our private placements completed in the previous several years.  During the first quarter of 2009 we raised gross proceeds of $783,050 from the sale of our securities through a private placement of 7,830,500 units at $0.10 per unit.  During the second quarter of 2009, we raised additional capital through a private placement of 3,000,000 units at a price of $0.20 per unit for proceeds of $600,000.  During the fourth quarter of 2009 the Company received proceeds totaling $1,203,000 from the exercise of warrants for the purchase of 2,265,000 shares at $0.20 per share and 2,500,000 shares at $0.30 per share.



2010 saw a significant increase in the demand for, and in the price of, gold and silver, and an improved market and price for shares of companies focused on precious metals.  These trends during 2010 improved our ability to raise capital at higher prices, on more favourable terms, and in greater amounts than in previous years.   For example, during 2009 we raised a total of $2,586,050 through two private placements at a price of $0.10 per unit and at $0.20 per unit and from the exercise of warrants.  By comparison, during fiscal 2010 we raised a total of $10,162,060 from two private placement at a price of $0.30 per unit and at $0.50 per unit and from the exercise of warrants as follows:



During the first quarter ended March 31, 2010, the Company received proceeds of $177,000 from the exercise of warrants for the purchase of 885,000 shares at $0.20 per share.  During the second quarter ended June 30, 2010 the Company received proceeds of $10,000 from the exercise of warrants for the purchase of 50,000 shares at $0.20 per share.  During the third quarter ended September 30, 2010, the Company completed a private placement of 3,647,334 units at a price of $0.30 per unit for gross proceeds of $1,094,200 and received proceeds of $20,000 from the exercise of warrants for the purchase of 100,000 shares at $0.20 per share.  During the fourth quarter ended December 31, 2010, the Company completed a private placement of 17,583,720 units at a price of $0.50 per unit for proceeds of $8,791,860 and received proceeds of $69,000 from the exercise of warrants for the purchase of 345,000 shares at $0.20 per share.  Subsequent to the fiscal year ended December 31, 2010, by May 31, 2011 we received additional proceeds of $4,575,500 from the exercise of warrants.



Use Of Proceeds 2008 to 2010 - During fiscal 2008, we completed a private placement and in regulatory filings disclosed that the intended use of the $1,539,000 proceeds would be $800,000 for expenditures/exploration on our mineral properties and $739,000 for general working capital. This intended use of proceeds was more than fulfilled as expenditures/exploration on our mineral properties totaled $1,949,405 for the fiscal year ended December 31, 2008.  During the first quarter of 2009, we completed a private placement and in regulatory filings disclosed that the intended use of the $783,050 proceeds would be
$400,000 for expenditures/exploration on our mineral properties and $383,050 for general working capital.



54

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This intended use of proceeds was more than fulfilled as exploration/mineral interests costs totaled $594,469 for the first quarter ended March 31, 2009.  During the second quarter of 2009 we raised proceeds of $600,000 through a private placement and disclosed in regulatory filings that the intended use of proceeds would be $350,000 for expenditures/exploration on our mineral properties and $250,000 for general working capital.  This intended use of proceeds was more than fulfilled as exploration/mineral interests costs totaled $243,404 for the second quarter ended June 30, 2009, $239,275 for the third quarter ended September 30, 2009, and $215,313 for the fourth quarter ended December 31, 2009.



In 2010 we completed a private placement in the third quarter and in regulatory filings disclosed that the intended use of the proceeds of $1,094,200 would be $800,000 for expenditures/exploration on our mineral properties and $294,200 for general working capital.   This intended use of proceeds was more than fulfilled as exploration/mineral interests costs totaled $328,197 for the first quarter ended March 31, 2010; $194,281 for the second quarter ended June 30, 2010; $286,519for the third quarter ended September 30, 2010; and $714,914 for the fourth quarter ended December 31, 2010 for a total of $1,523,911 exploration/mineral interests costs for the 2010 fiscal year.  During the fourth quarter of 2010 we completed a private placement and in regulatory filings disclosed that the intended use of the proceeds of $8,791,860 would be $5,000,000 for expenditures/exploration on our mineral properties and $3,791,860 for general working capital.  We are in the process of using these proceeds during 2011.



Anticipated Capital Requirements - Based on the funds on hand at the date of this report, we believe we have sufficient funds to conduct our ongoing general operations and to fund our proposed exploration programs at the Los Zorros property in Chile over the next year.



While we have in the past been able to raise sufficient funds to sustain our exploration programs, there is no assurance that we will continue to be able to do so.  If, for any reason, we are not able to secure equity financings, our resources during this period will be limited to cash on hand and any revenues we are able to generate from joint venture or similar arrangements we may hereafter enter into.  If we are unable to secure sufficient funds to pursue exploration to the level desired, we will adjust our proposed activities to reflect the amount of capital available to us after providing for sufficient working capital to maintain our existing operations.  Since we own our interests in the majority of our mineral properties, we do not have any significant capital obligations to third parties to maintain our property interests other than the payment of periodic patent and other government fees and the payments listed under the Tabular Disclosure of Contractual Obligations (see below).  Our anticipated cash requirements for the year are primarily comprised of the anticipated costs of conducting our exploration programs, our administrative overhead and the obligations listed under the Tabular disclosure of Contractual Obligations (see below) and other operating expenses in the normal course of business. See Special Note Regarding Forward Looking Statements and Risk Factors.



Tabular Disclosure of Contractual Obligations - The following table summarizes our contractual obligations at May 31, 2011 and the effect these obligations are expected to have on our liquidity and cash flows in future periods.



|                                              |                                                             |                                                             |           |           |              
|--------------------------------------------- | ----------------------------------------------------------- | ----------------------------------------------------------- | --------- | --------- | -------------
|Contractual Obligations                       | Payment Due By Period                                      
|                                              | Total                                                       | Less than a year                                            | 1-3 Years | 4-5 Years | After 5 Years
|Porvenir Option (1)
Optional Payment          | US$1,000,000                                                | US$1,000,000                                                |           |           |              
|Rojas Option (2)
Optional Payment             | US$150,000                                                  | US$150,000                                                  |           |           |              
|Hochschild Purchase (3)
Advance Royalty       | US$100,000                                                  | US$100,000                                                  |           |           |              
|Capital  (Finances)
Lease Obligations         | NIL                                                         |                                                             |           |           |              
|Lon-term Debt
Obligations                     | NIL                                                         |                                                             |           |           |              
|Operating Lease
Obligations                   | NIL                                                         |                                                             |           |           |              
|Purchase Obligations
Equipment                | NIL                                                         |                                                             |           |           |              
|Other Long-term
Liabilities                   | NIL                                                         |                                                             |           |           |              
|Total Contractual
Obligations and
Commitments | Option Payments
US$1,150,000
Advance Royalty
US$100,000 (3) | Option Payments
US$1,150,000
Advance Royalty
US$100,000 (3) |           |           |              



(1) This is an option payment pursuant to an option to purchase mineral property forming a 2,138-hectare portion of our INCA Property under the Unilateral Option Purchase Contract dated March 31, 2006 and as revised March 31, 2008 between Sociedad Contractual Minera Porvenir and our subsidiary Minera Samex Chile S. A.  While we are not obliged to make this payment, it will be necessary to do so if we wish to preserve our interest in this portion of the property (see Note 3 Mineral Interests to the Consolidated Financial Statements) (see Mineral Property Summaries  INCA Project for details).



(2) This is an option payment pursuant to an option to purchase mineral property forming a 20-hectare portion of our INCA Property under the Unilateral Option Purchase Contract dated May 25 2006 between Oscar David Rojas Garin and our subsidiary, Minera Samex Chile S.A.  While we are not obliged to make this payment, it will be necessary to do so if we wish to preserve our interest in this portion of the property (see Note 3 Mineral Interests to the Consolidated Financial Statements) (see Mineral Property Summaries  INCA Project for details).



(3) Pursuant to the exercise of an option and the related Purchase Contract dated October 27, 2006 between our subsidiary, Minera Samex Chile S.A. and Compañia Minera y Comercial Sali Hochschild S.A., SAMEX holds 100% interest (subject to an NSR royalty) in concessions covering a 209-hectare portion (Milagro area) of our Los Zorros Property.  Pursuant to the option/purchase agreement, if the concessions are not in production by December 31, 2007, advance royalty payments of US$100,000 per year are required for five years (by February 29, 2008 (paid), by March 1, 2009 (paid), by March 1, 2010 (paid), by March 1, 2011 (which has been paid), and by March 1, 2012) to a maximum of US$500,000, or until the commencement of commercial exploitation.  The advance royalty payments are recoverable from future royalty payments.  SAMEX is not obligated to pay the advance royalty if it elects to return the concessions to the previous owner (see Mineral Property Summaries  Los Zorros Property for details).



5.C. Research and Development, patents and licenses, etc.



We are a mineral exploration company and we do not carry on any research and development activities.



5.D. Trend Information



We anticipate that the price of gold, silver, and copper will continue to be volatile, but will generally increase over the next year due in large part to prevailing global economic imbalances and other continuing economic conditions which should enable us to secure additional equity financing.  Metal prices cannot be predicted with accuracy and our plans will be largely dependent upon the timing and outcome of metal markets, particularly the price of gold, silver and copper which is entirely outside of our control.  See Special Note Regarding Forward Looking Statements and Risk Factors.



The prices of precious metals and base metals fluctuate widely and are affected by numerous factors beyond our control, including expectations with respect to the rate of inflation, relative strength of the U.S. dollar, Chilean Peso and of other currencies as against the Canadian Dollar, interest rates, and global or regional political or economic crisis.  The demand for and supply of precious metals and base metals may affect precious metals and base metals prices but not necessarily in the same manner as supply and demand affect the prices of other commodities.  If metal prices are weak, it is more difficult to raise financing for our exploration projects.  There is no assurance our attempts to attract capital will be successful.  Failure to attract sufficient capital may significantly affect our ability to conduct our planned exploration activities. Conversely, when metal prices are strong, competition for possible mineral properties increases as does the corresponding prices for such prospective acquisitions and the cost of drilling and other resources required to conduct exploration activities.



We have followed the policy of, at year end, writing down to nominal value any of our mineral properties on which we have not conducted any significant exploration activities during that fiscal year and do not plan to conduct exploration activities within the current year, regardless of our long term view of the prospects of the particular property.  Since our future exploration activities are dependent upon a number of uncertainties including our ability to raise the necessary capital (which is in turn affected by external factors such the prices of precious and base metals), we may be required, by application of this accounting policy, to write down other properties now shown as an asset in our consolidated financial statements to nominal value, even though we may intend to conduct future exploration activities on them after the current fiscal period.



As a junior exploration company, our operations are significantly affected by a number of external factors, particularly those that affect the price of the commodities we explore for or those that affect the market for our securities.  In the latter part of
2008, commodity prices, particularly the price of copper, began a serious decline, eventually falling to a five year low.









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Shortly thereafter, we found ourselves in the middle of a global economic crisis, with its actual or threatened bank failures, major international liquidity issues, and a general slowdown leading to a global recession.  These events also fed into both the decline in commodity prices and a decline in the share prices of most public companies including in particular junior resource stocks such as ours, which greatly reduced our ability to raise capital.  During that time, we were able to raise additional capital by private placements, but at lower prices and less favourable terms than our private placements completed in the previous several years.  While many parts of the world - particularly developing countries - had largely recovered from the financial crisis by 2010, many countries - particularly the US and Euro-zone countries - were still experiencing slow growth, high unemployment and other factors.  In addition, due in part to excess government funded stimulus measures, institutional bailouts, and expansionist monetary policies effected in response to the financial crisis, the many countries were left with extraordinarily high levels of government debt, weakened currencies and, in the Euro-zone, a growing sovereign debt crisis.  In the US, expansionist monetary policies have resulted in a weakening of the US dollar as a reserve currency and inflationary concerns.  These and other factors have led to a price resurgence for many commodities, particularly gold and sliver, which are trading at successively new historic highs, and appear to be showing further strength. Along with this, the market for the shares of junior precious metal explorers has also significantly improved, offering us greatly improved access to capital to fund our gold and silver exploration projects.  We believe these economic trends are likely to continue through the next year and possibly beyond and may result in a significant increase in the demand for, and in the price of, gold and silver, and an improved market and price for shares of companies focused on precious metals.  See Special Note Regarding Forward Looking Statements and Risk Factors.



5.E. Off Balance Sheet Arrangements



We do not have any material off-balance sheet arrangements out of the ordinary course of business other than verbal employment or consulting agreements with our executives.



No Exposure to Non-Recourse Loans, Derivatives or Liquidity Problems  Our working capital, excess cash, and gold and silver bullion holdings are redeemable at any time and are not exposed to the liquidity problems associated with certain short-term investments such as asset-backed securities.  The Company does not have any joint venture agreements on any of its mineral properties whereby the Company is exposed to non-recourse loans.  SAMEX Mining Corp. is not a party to, nor bound by any agreement, document or instrument whereby the Companys interest in mineral properties may be reduced or diluted, or whereby the Company may incur any other liabilities or obligation as a direct or indirect result of any derivative embedded in any agreement, document or instrument.



Employees, Salaries, Payments to Related Parties  During 2010 we had from 18 to 23 employees, the majority of which were involved in activity related to our mineral properties in Chile.  By comparison, we had from 18 to 21 employees during 2009.  Employees who are also directors or officers of the Company were paid a total of $466,691 during the year ended December 31, 2010, a $137,791 portion of which was capitalized to mineral interests (2009 - $434,000, of which $130,400 was capitalized).  Allen D. Leschert, one of our directors, provides legal services to us through Leschert & Company Law Corporation.  Leschert & Company charged $28,387 for legal services during the fiscal year ended December 31, 2010.



Audit Committee & Compensation Committee - The Audit Committee is governed by the Companys Audit Committee Charter. The Audit Committee is composed of director, Larry McLean, Vice President, Operations and Chief Financial Officer of the Company who is not independent, and independent directors, Allen Leschert and Malcolm Fraser, who the Board of Directors have determined to be independent in accordance with the requirements of our Audit Committee Charter. Larry McLean and Allen Leschert have been directors of the Company since 1995 and Malcolm Fraser was appointed to the Board on January 6, 2011, and all three have, in the course of their duties, engaged in the review and analysis of - and/or have actively supervised persons engaged in the preparation, auditing and analysis of - numerous interim and annual financial statements for the Company, as well as for other public companies for which they have served as directors or officers.  Allen Leschert, who serves as committee chairman, also has more than 20 years experience as a securities lawyer.  In addition to holding a law degree, he also holds a B. Comm. (with distinction), specializing in Corporate Finance and Accounting.  All three of the Audit Committee members are financially literate.  The Audit Committees primary function is to review the annual audited financial statements with the Companys auditor prior to presentation to the Board.  The audit committee also reviews the Companys interim un-audited quarterly financial statements prior to finalization and publication.



Our Compensation Committee is composed of independent directors of the Company, Allen Leschert and Malcolm Fraser, and executive director, Larry McLean.  The Compensation Committee was established to assist and advise the Board of Directors with respect to any and all matters relating to the compensation of the executive officers of the Company or other such persons as the Board may request from time to time.











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Item 6. Directors, Senior Management And Employees

6.A. Directors and Senior Management.

The following table sets out the names of our directors, management and employees we depend on, and their positions and offices after our annual general meeting on June 7, 2011.  All our directors are residents of Canada, with the exception of Robert Kell, a resident of the United States and Chile.  None of our directors serve as directors for other public issuers.



|                                                                                                                     |                                                                                             |                                                |                                      
|-------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ---------------------------------------------- | -------------------------------------
|Name, Age, Municipality of Residence and Position                                                                    | Present and Principal Occupation During the Last Five Years                                 | Date of First Appointment as Executive Officer | Date of First Appointment as Director
|Jeffrey P. Dahl, 49
Abbotsford, British Columbia
President and Director
(son of Peter Dahl)                          | Our President, Chief Executive Officer, Investor Relations                                  | November 3, 1995                               | November 3, 1995                     
|Peter J. Dahl, 70
Abbotsford, British Columbia
Chairman and Director
(father of Jeffrey Dahl)                        | Consultant;
Counselor for Garden Ministries Society from 1997 to present                    | August 7, 2001                                 | November 3, 1995                     
|Robert Kell, 60
Missoula, MT & La Paz, Bolivia
Vice President - Exploration and Director                             | Geologist, our Exploration Manager from November 1995 to present;                           | November 3, 1995                               | June 11, 1996                        
|Allen D. Leschert, 54
West Vancouver, British Columbia
Director                                                      | Barrister and Solicitor with Leschert & Company Law Corporation                             | N/A                                            | November 3, 1995                     
|Larry D. McLean, 61
Abbotsford, British Columbia
Vice President - Operations and Director
(husband of Brenda McLean) | Our Operations/Administration Manager/Chief Financial Officer from November 1995 to present | November 3, 1995                               | November 3, 1995                     
|Malcolm B. Fraser, 73
Gibsons, British Columbia
Director                                                             | Management Consultant for various public and private natural resource companies             | N/A                                            | January 6, 2011                      
|Brenda McLean, 59
Abbotsford, British Columbia
Corporate Secretary
(wife of Larry McLean)                            | Our Corporate Secretary from 1995 to present                                                | November 3, 1995                               | N/A                                  



Executive officers are appointed by the Board of Directors to serve until their successors are appointed.



6.B. Compensation.

During the year ended December 31, 2010, employees who are also directors or officers of the Company were paid a total of $466,691 including $160,875 to Jeffrey Dahl, our President and Chief Executive Officer, $137,791 to Robert Kell, our Vice President-Exploration, and $103,675 to Larry McLean our Vice PresidentOperations and Chief Financial Officer.



Allen D. Leschert, one of our directors, provides legal services to us through Leschert & Company Law Corporation.  Leschert & Company charged $28,387 for legal services during the fiscal year ended December 31, 2010.



Except as otherwise disclosed herein, we have not entered into any employment or management agreements with any of our directors or executive officers.  In addition, we do not currently have any retirement, pension, bonus, profit-sharing or similar plans and none are proposed at this time.



Incentive Stock Options

In order to attract and retain highly qualified personnel, we provide incentives in the form of stock options to certain of our qualified employees, directors, officers and consultants on terms and conditions which are in accordance the Companys Stock Option Plan and the prevailing rules and policies of the TSX Venture Exchange, and our Board of Directors.











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At our Annual General Meetings held on May 29, 2008, May 26, 2009, May 26, 2010, and June 7, 2011 the shareholders passed ordinary resolutions giving annual approval to the Companys rolling stock option plan.  Under the terms of the Companys Stock Option Plan (the Plan), our Board of Directors are authorized to grant options to any person who is an employee, director, officer, or consultant for us or one of our subsidiaries and who is not otherwise prevented from receiving the Option under the terms of applicable policy of the TSX-V or a company which is owned by one or more such individuals (an Eligible Person).  The maximum number of Common Shares which may be reserved for issuance under the Plan is 10% of the Common Shares outstanding at the time of the grant (on a non-diluted basis) less the aggregate number of Common Shares reserved for issuance under any other existing stock options or similar share compensation arrangement and the maximum number which may be reserved for issuance to any one person under the Plan is 5% (unless otherwise approved by a majority of disinterested shareholders, which approval has not been sought or granted).  Our Board of Directors is entitled, subject to the requirements of applicable TSX-V policy, to set the exercise price of each option (provided it is greater than the minimum prescribed under TSX-V Policy), the term during which it may be exercised (to a maximum of 10 years) and any vesting provisions as they may deem appropriate and as are in compliance with TSX-V policy.  Any options granted under the Plan are exercisable only while the holder remains an Eligible Person or the time period determined by the Board of Directors after ceasing to be an Eligible Person, and are not assignable or transferable other than by will or the laws of descent and distribution.



Subsequent to the 2010 fiscal year, during the first quarter of fiscal 2011 the Company granted a stock option to a new director on a total of 200,000 shares at $0.70 per share, and during the second quarter of 2011 the Company granted options on 525,000 shares at $1.50 per share to consultants and employees of the Company, and options to directors and officers of the Company on 1,900,000 shares at a price of $1.50 per share.



During the fiscal year ended December 31, 2010 the Company granted stock options to employees and consultants on a total of 540,000 shares at $0.35 per share with a fair value on the grant dates of $126,535 based on the Black-Scholes option-pricing model.  A $76,530 portion of this stock-based compensation expense was expensed in the statement of operations in the category Salaries, Benefits and Stock-Based Compensation and $50,005 was expensed in the category Consulting.  No stock options were exercised during 2010.



During the 2009 fiscal year ended December 31, 2009, the Company granted stock options to consultants, employees, directors and officers of the Company on a total of 3,615,000 shares at $0.20 per share with a fair value on the grant dates of $522,475 based on the Black-Scholes option-pricing model.  Of this stock-based compensation expense, a $362,834 portion was expensed in the statement of operations and deficit in the category Salaries, Benefits and Stock-Based Compensation, $47,162 was expensed in the category Consulting, and $112,479 was capitalized to mineral interests in the category Geology, Mapping and Surveys in relation to grants to geologists working on the Los Zorros Property.  No options were exercised during the 2009 fiscal year.



During the 2008 fiscal year ended December 31, 2008, stock options were granted under the Companys Stock Option Plan as follows: in the second quarter of 2008 the Company granted stock options to a geologic consultant working on the INCA project, on 150,000 shares at a price of $0.65 per share with a fair value of $55,745 based on the Black-Scholes option-pricing model.  This stock-based compensation expense of $55,745 was capitalized to mineral expenses included in the category, Geology, Mapping and Surveys for the INCA project in the Statements of Mineral Interests.  During the third quarter of 2008 the Company granted a consultant a stock option on 60,000 shares at a price of $0.50 per share with a fair value of $5,873 based on the Black-Scholes option-pricing model.  This stock-based compensation expense of $5,873 was included in the category, Consulting in the Statements of Operations and Deficit.  This grant was to a Chilean consultant contracted to assist in brokering a potential joint venture/investment for the INCA project.



At May 31, 2011 options were outstanding to acquire 11,555,000 shares as shown in the table below.  They consist of options to purchase an aggregate of 9,470,000 common shares granted to our directors and/or officers and options to purchase an aggregate of 2,085,000 common shares granted to our employees or consultants as follows:



|                  |                                                                 |                                         |                               |                                                                
|----------------- | --------------------------------------------------------------- | --------------------------------------- | ----------------------------- | ---------------------------------------------------------------
|Optionee          | Date of Option                                                  | # of Shares                             | Price                         | Expiry Date                                                    
|Jeffrey Dahl      | April 20, 2005
May 2, 2006
Feb 23, 2007
Sep 4, 2009
May 2, 2011 | 350,000
300,000
270,000
625,000
375,000 | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Peter Dahl        | April 20, 2005
May 2, 2006
Feb 23, 2007
Sep 4, 2009
May 2, 2011 | 350,000
150,000
150,000
400,000
225,000 | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Robert Kell       | April 20, 2005
May 2, 2006
Feb 23, 2007
Sep 4, 2009
May 2, 2011 | 350,000
300,000
275,000
625,000
375,000 | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Larry McLean      | April 20, 2005
May 2, 2006
Feb 23, 2007
Sep 4, 2009
May 2, 2011 | 350,000
300,000
250,000
625,000
375,000 | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Allen Leschert    | April 20, 2005
May 2, 2006
Feb 23, 2007
Sep 4, 2009
May 2, 2011 | 350,000
150,000
150,000
400,000
225,000 | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Malcolm Fraser    | Jan 6, 2011
May 2, 2011                                         | 200,000
225,000                         | $0.70
$1.50                   | Jan 6, 2021
May 2, 2021                                        
|Brenda McLean     | April 20, 2005
May 2, 2006
Feb 23, 2007
Sep 4, 2009
May 2, 2011 | 175,000
150,000
75,000
250,000
100,000  | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Philip Southam    | April 20, 2005
May 2, 2006
Sep 4, 2009
Sep 16, 2010
May 2, 2011 | 30,000
70,000
150,000
150,000
100,000   | $0.40
$0.85
$0.20
$0.35
$1.50 | April 20, 2015
May 2, 2016
Sep 4, 2019
Sep 16, 2015
May 2, 2021
|Francisco Vergara | May 2, 2006
Sep 4, 2009
Sep 16, 2010
May 2, 2011                | 50,000
150,000
100,000
100,000          | $0.85
$0.20
$0.35
$1.50       | May 2, 2016
Sep 4, 2019
Sep 16, 2015
May 2, 2021               
|Manuel Avalos     | May 2, 2006
Sep 4, 2009
Sep 16, 2010
May 2, 2011                | 100,000
150,000
150,000
100,000         | $0.85
$0.20
$0.35
$1.50       | May 2, 2016
Sep 4, 2019
Sep 16, 2015
May 2, 2021               
|Jorge Humphreys   | May 2, 2006                                                     | 20,000                                  | $0.85                         | May 2, 2016                                                    
|Jean Nicholl      | May 2, 2006
Sep 4, 2009
Sep 16, 2010
May 2, 2011                | 20,000
50,000
30,000
25,000             | $0.85
$0.20
$0.35
$1.50       | May 2, 2016
Sep 4, 2019
Sep 16, 2015
May 2, 2021               
|Jorge Espinoza    | May 2, 2006                                                     | 30,000                                  | $0.85                         | May 2, 2016                                                    
|Gerald Rayner     | Sep 24, 2007                                                    | 50,000                                  | $0.80                         | Sep 24, 2012                                                   
|Adrian Douglas    | Dec 20, 2007
Jan 15, 2009
Sep 4, 2009
Jan 29, 2010
May 2, 2011  | 60,000
60,000
30,000
110,000
200,000    | $0.70
$0.20
$0.20
$0.35
$1.50 | Dec 20, 2012
Jan 15, 2014
Sep 4, 2019
Jan 29, 2015
May 2, 2021 



6.C. Board Practices.

Our board of directors consists of six members, the terms of which expire at the general meeting of shareholders to be held each year.  Directors are elected by a majority of the votes of our common shares present in person or represented by proxy at our annual meeting of shareholders and entitled to vote at such election.  Each director will hold office until his or her term expires and his or her successor has been elected and qualified.  Executive officers serve at the discretion of the board of
directors.  Officers are elected at the annual meeting of the directors held immediately after the annual general meeting of shareholders.



58

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We have granted and intend to continue to grant incentive stock options to employees, directors, officers and consultants on terms and conditions established by the Companys Stock Option Plan and in accordance with prevailing policy of the TSX Venture Exchange, as summarized in Item 6. Directors, Senior Management and Employees; Compensation  Incentive Stock Options.



Our directors do not receive any monies for serving in their capacity as directors and there is currently no arrangement for the payment of any compensation in the future.



Except as disclosed herein, we have not entered into any service or employment agreements with any of our directors or officers.  We do not have any retirement, pension, profit-sharing or such similar plans and none are proposed at the present time.



Our Audit Committee is composed of director, Larry McLean, Vice President, Operations and Chief Financial Officer of the Company who is not independent, and independent directors, Allen Leschert and Malcolm Fraser, who the Board of Directors have determined to be independent in accordance with the requirements of our Audit Committee Charter.  The Audit Committee functions under a Charter adopted by the Board of Directors.  The Audit Committees primary function is to review the annual audited financial statements with the Companys external auditor (the Auditor) prior to presentation to the Board and to make recommendations thereon, together with recommendations to the Board with respect to such financial statements and compensation payable to the Auditor.  The Audit Committee also reviews the Companys interim un-audited quarterly financial statements prior to finalization and publication.  The Audit Committee also provides review oversight with respect to pre-approval of all non-audit services to be provided by the Auditor to the Company and a number of other related matters including issues related to a change of auditors and establishing procedures for treatment of complaints regarding accounting, internal accounting controls or auditing matters.  The Audit Committee meets as a separate committee of the board as and when needed to carry out its functions and keeps formal minutes of its proceedings.



Our Compensation Committee is composed of independent directors of the Company, Allen Leschert and Malcolm Fraser, and executive director, Larry McLean.  The Compensation Committee was established during fiscal year 2003 to assist and advise the Board of Directors with respect to any and all matters relating to the compensation of the executive officers of the Company or other such persons as the Board may from time to time request.  The Compensation Committee meets as a separate committee of the board as and when needed to carry out its functions and keeps formal minutes of its proceedings.



6.D. Employees.

We had from 18 to 23 employees during 2010 with 21 employees at the year-end of December 31, 2010.  At May 31, 2011, we had 21 employees, four of which are also our directors or officers.  A summary of employees over the last three fiscal years is set out below.  The majority of our employees during 2010 were involved in activities related to our mineral exploration properties in Chile.  None of our employees are represented by unions or covered by collective bargaining agreements.



|                  |                       |          |                                                               |   |   
|----------------- | --------------------- | -------- | ------------------------------------------------------------- | - | --
|Year ending       | Category of Activity  | Location | Total Number of  Employees per Category and Total at Year End
|Canada            | Chile                 | Bolivia 
|December 31, 2010 | Exploration           | -        | 16                                                            | - | 16
|                  | Administrative/Office | 4        | 1                                                             | - | 5 
|                  | Total:                | 4        | 17                                                            | - | 21
|December 31, 2009 | Exploration           | 1        | 12                                                            | - | 13
|                  | Administrative/Office | 4        | 1                                                             | - | 5 
|                  | Total:                | 5        | 13                                                            | - | 18
|December 31, 2008 | Exploration           | 1        | 16                                                            | - | 17
|                  | Administrative/Office | 4        | 1                                                             | - | 5 
|                  | Total:                | 5        | 17                                                            | - | 22



Share ownership.

The following table sets forth the shareholdings, to our knowledge, owned beneficially, directly or indirectly, by our directors and members of our administrative, supervisory or management bodies as of May 31, 2011.  There were 126,208,719 common shares issued and outstanding as of May 31, 2011.





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|                                                                                   |                                 |                                         |                                         |                               |                                                                
|---------------------------------------------------------------------------------- | ------------------------------- | --------------------------------------- | --------------------------------------- | ----------------------------- | ---------------------------------------------------------------
|Name and Position                                                                  | Number of Shares of SAMEX Owned | Percentage of Shares Owned at
May 31/11 | Incentive Stock Options Owned          
|                                                                                   |                                 |                                         | Number of Shares under Option           | Exercise Price                | Expiry Date                                                    
|Jeffrey P. Dahl
President and Chief Executive Officer/Director                     | 1,030,000                       | .82%                                    | 350,000
300,000
270,000
625,000
375,000 | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Peter J. Dahl
Chairman/Director                                                    | 826,600                         | .65%                                    | 350,000
150,000
150,000
400,000
225,000 | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Robert E. Kell
Vice President Exploration /
Director                               | 545,000                         | .43%                                    | 350,000
300,000
275,000
625,000
375,000 | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Larry D. McLean
Vice President  Operations and Chief Financial Officer /
Director | 511,525                         | .41%                                    | 350,000
300,000
250,000
625,000
375,000 | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Allen D. Leschert
Director                                                         | 331,812                         | .27%                                    | 350,000
150,000
150,000
400,000
225,000 | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021
|Malcolm B. Fraser
Director                                                         | -                               | -                                       | 200,000
225,000                         | $0.70
$1.50                   | January 6, 2021
May 2, 2021                                    
|Brenda McLean
Corporate Secretary                                                  | 303,975                         | .24%                                    | 175,000
150,000
75,000
250,000
100,000  | $0.40
$0.85
$0.84
$0.20
$1.50 | April 20, 2015
May 2, 2016
Feb 23, 2017
Sep 4, 2019
May 2, 2021



Statements as to securities beneficially owned by directors, or as to securities over which they exercise control or direction, are based upon information obtained from such directors and from records available to the Company.  For particulars on outstanding stock options, see Item 6. Directors, Senior Management and Employees  Compensation  Incentive Stock Options.



Item 7. Major Shareholders And Related Party Transactions

7.A. Major Shareholders.

As at May 31, 2011, 126,208,719 common shares of the Company were issued and outstanding.  At that date, we had 153 shareholders of record with addresses in the United States holding an aggregate of 41,614,444 common shares representing 32.97 % of our common shares.  A further 38,627,754 shares are beneficially held by seven shareholders known by management to be U.S. residents, with shares representing an additional 30.61% of our common shares. To our knowledge, no person beneficially owns, directly or indirectly or exercises control or direction over, or has a combination of direct or indirect beneficial ownership of and control or direction over, shares carrying more than 5% of the voting rights attached to our issued and outstanding common shares at May 31, 2011 except as follows:



|                                                                                     |                  |                            
|------------------------------------------------------------------------------------ | ---------------- | ---------------------------
|Name and Address                                                                     | Number of Shares | Percentage of Issued Shares
|SASAN SADEGHPOUR, Suite 1107  2001 Kirby Drive, Houston, Texas 77019                | 29,484,368(1)    | 23.4%                      
|CDS & CO, NCI Account, 25 The Esplanade
PO Box 1038, Station A, Toronto, ON, M5W 1G5 | 36,114,581(2)    | 29.53%                     
|CEDE & CO, PO Box 20, Bowling Green Stn, New York, NY 10274, United States           | 38,332,525(2)    | 31.35%                     

(1) 11,887,668 shares are held directly and 17,596,700 shares are held by Sasco Partners, LP, which is indirectly controlled by Sasan Sadeghpour.  A further 11,025,834 share purchase warrrants are held by Mr. Sadeghpour which, if exercised would increase his direct and indirect holdings to 40,510,202 shares representing 29.5% of the shares of the Company then outstanding.

(2)This holder acts as a depository for brokerage firms and other intermediaries.  Management of the Company is unaware of the beneficial owners of these shares, other than 17,596,700 of such shares beneficially held by Sasco Partners, LP.



The above information was supplied by the Companys transfer agent, Computershare Investor Services.  All of our common shares have identical voting rights.



7.B. Related Party Transactions.

Except where described elsewhere in this Annual Report, we have not, during the three fiscal years ended December 31, 2010 and the subsequent period to May 31, 2011, entered into transactions or loans with any (a) enterprises that are directly or indirectly controlled by or under common control with us; (b) our associates; (c) individuals directly or indirectly owning voting right which give them significant influence over us or close members of their respective families, (d) our directors, senior management or close members of their respective families or (e) enterprises in which a significant voting is held or significantly influenced by any of the foregoing individuals (a Related Party), except as follows:



Stock Options Granted to Related Parties:



|                                                        |                         |                     |                      |                        
|------------------------------------------------------- | ----------------------- | ------------------- | -------------------- | -----------------------
|Related Party Name/Position                             | Date Option Granted     | # of Shares Granted | Exercise
Price/Share | Expiry Date            
|Jeffrey Dahl
Director, President, CEO                   | Sep 4, 2009
May 2, 2011 | 625,000
375,000     | $0.20
$1.50          | Sep 4, 2019
May 2, 2021
|Peter Dahl
Director and Chairman                        | Sep 4, 2009
May 2, 2011 | 400,000
225,000     | $0.20
$1.50          | Sep 4, 2019
May 2, 2021
|Robert Kell
Director, Vice President - Exploration      | Sep 4, 2009
May 2, 2011 | 625,000
375,000     | $0.20
$1.50          | Sep 4, 2019
May 2, 2021
|Larry McLean
Director, Vice President  Operations, CFO | Sep 4, 2009
May 2, 2011 | 625,000
375,000     | $0.20
$1.50          | Sep 4, 2019
May 2, 2021
|Allen Leschert
Director                                 | Sep 4, 2009
May 2, 2011 | 400,000
225,000     | $0.20
$1.50          | Sep 4, 2019
May 2, 2021
|Malcolm B. Fraser
Director                              | Jan 6, 2011
May 2, 2011 | 200,000
225,000     | $0.70
$1.50          | Jan 6, 2021
May 2, 2021
|Brenda McLean
Corporate Secretary                       | Sep 4, 2009
May 2, 2011 | 250,000
100,000     | $0.20
$1.50          | Sep 4, 2019
May 2, 2021
|Patricio Kyllmann
Former Director                       | Sep 4, 2009             | 100,000             | $0.20                | Sep 4, 2019            



Stock Options Exercised by Related Parties:



|                                  |                       |                       |                      |         
|--------------------------------- | --------------------- | --------------------- | -------------------- | --------
|Related Party Name/Position       | Date Option Exercised | # of Shares
Exercised | Exercise
Price/Share | Proceeds
|Patricio Kyllmann
Former Director | May 2, 2011           | 100,000               | $0.20                | $20,000 



Extension Of Warrant Terms  In January 2009, the Company extended the term of warrants exercisable for the purchase of 1,744,000 shares at a price of $0.78 per share.  The warrants were originally issued with a three year term expiring February 13, 2009, but the term of the warrant was extended for a period of two years until expiry on February 13, 2011.  Warrants for the purchase of 190,000 of the shares were held by related parties.  In January 2009, the Company also extended the term of warrants exercisable for the purchase of 2,871,250 shares at a price of $1.00 per share.  The warrants were originally issued with a two year term expiring March 16, 2009, but the term of the warrant was extended for a period of two years until expiry on March 16, 2011.  The expiry date of these warrants was extended again in the first quarter of 2011 when the term of these 2,871,250 warrants at $1.00 per share was extended by one additional year to an expiry date of March 16, 2012.  Warrants for the purchase of 100,000 of the shares were held by related parties.



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Private Placement Participation by Related Parties:



Private Placement  On March 24, 2009 we issued an aggregate of 2,051,000 units, comprised of one common share and one warrant to purchase an additional common share, to directors/officers and to close family members of directors/officers at a price of $0.10 per unit under a private placement of 7,830,500 units sold.  The Related Party subscribers were as follows:



|                                                                                                |                           |         
|----------------------------------------------------------------------------------------------- | ------------------------- | --------
|Related Party Name/Position                                                                     | Number of Units Purchased | Proceeds
|Jody Carson  daughter of Larry McLean, Vice President-Operations & Director                    | 50,000                    | $5,000  
|Rick Carson  son-in-law of Larry McLean, Vice President -Operations & Director                 | 50,000                    | $5,000  
|Aaron Dahl  son of Jeffrey Dahl, President & Director                                          | 5,000                     | $500    
|Cindy Dahl  daughter-in-law of Peter Dahl, Chairman & Director                                 | 100,000                   | $10,000 
|Heidi Dahl   wife of Peter Dahl, Chairman & Director                                           | 100,000                   | $10,000 
|Jeffrey Dahl - President & Director                                                             | 700,000                   | $70,000 
|John M. Dahl  son of Peter Dahl, Chairman & Director                                           | 100,000                   | $10,000 
|Joshua Dahl  son of Peter Dahl, Chairman & Director                                            | 50,000                    | $5,000  
|Kenneth & Janice Dahl  brother of Peter Dahl, Chairman & Director                              | 165,000                   | $16,500 
|Linda Dahl - wife of Jeffrey Dahl, President & Director                                         | 55,000                    | $5,500  
|Lisa Dahl - daughter-in-law of Peter Dahl, Chairman & Director                                  | 50,000                    | $5,000  
|Melanie Dahl - daughter-in-law of Peter Dahl, Chairman & Director                               | 150,000                   | $15,000 
|Peter Dahl - Chairman & Director                                                                | 176,000                   | $17,600 
|Walter & Alida Dahl  brother of Peter Dahl, Chairman & Director                                | 100,000                   | 10,000  
|Brenda McLean  Corporate Secretary, wife of Larry McLean, Vice President-Operations & Director | 50,000                    | $5,000  
|Jeff McLean - son of Larry McLean, Vice President-Operations & Director                         | 50,000                    | $5,000  
|Kristi McLean  daughter-in-law of Larry McLean, Vice President-Operations & Director           | 50,000                    | $5,000  
|Larry McLean - Vice President-Operations & Director                                             | 50,000                    | $5,000  



Other Related Party Transactions



Allen D. Leschert, one of our directors, provides legal services to us through Leschert & Company Law Corporation.  Leschert & Company charged $28,387 for legal services during the fiscal year ended December 31, 2010, $17,650 for legal services during the 2009 fiscal year ended December 31, 2009, and $17,230 for legal services during the 2008 fiscal year ended December 31, 2008.



In the second quarter of fiscal 2011, upon the review and recommendations of the Compensation Committee, the Company paid a one time bonus of $150,000 to Jeffrey Dahl, our President and Chief Executive Officer, as recognition of exceptional performance in putting the Company on a sound financial basis during 2010; the Company paid a one time payment of $20,000 to Robert Kell, our Vice President-Exploration, as a performance bonus for 2010 and an adjustment for United States medical cost allowance; the Company paid a one time payment of $10,00 to Larry McLean our Vice PresidentOperations and Chief Financial Officer as a performance bonus for 2010; the Company paid a one time bonus of $5,000 to Brenda McLean, the  Corporate Secretary of the Company, for extra services provided.



Other than disclosed above, no Related Party is or has been indebted to us or our subsidiaries since December 31, 2010.  There are no management, consulting, lease or other agreements in which our management, directors or subsidiaries are parties.



7.C. Interests of Experts and Counsel.

Not Applicable.



Item 8. Financial Information

8.A. Consolidated Statements and Other Financial Information.

Attached hereto, in Item 17 Financial Statements, are our audited consolidated financial statements, consisting of balance sheets as at December 31, 2010 and December 31, 2009, and the consolidated statements of operations and deficit and cash flows for each of the fiscal years in the three-year period ended December 31, 2010 together with related notes and schedules and the report of our Auditor.  See Item 17 Financial Statements.





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Legal Proceedings

To our knowledge, there are no currently pending or threatened legal proceedings that could have a material effect on our business, results of operations or financial condition.



Dividend Policy

We have never declared or paid any cash dividends on our common shares.  As we do not have any earnings, we do not anticipate paying cash dividends on the common shares for the foreseeable future.  Future dividends on the commons shares will be determined by the Board of Directors in light of circumstances existing at the time, including our earnings and financial condition.  There is no assurance that dividends will ever be paid.  See Special Note Regarding Forward Looking Statements.



8.B. Significant Changes.

No significant changes have occurred since the date of the annual financial statements.



Item 9. The Offer And Listing.

9.A. Offer and Listing Details.

The following sets forth the price history of our common shares for the period indicated, as reported by the TSX Venture Exchange.  They reflect inter-dealer prices, without retail markup, markdown or commissions, and may not represent actual transactions.



|                       |              |            
|---------------------- | ------------ | -----------
|Period                 | High (CDN $) | Low (CDN $)
|Most Recent Six Months |              |            
|May 2011               | 1.36         | 1.21       
|April, 2011            | 1.35         | 0.67       
|March, 2011            | 0.88         | 0.65       
|February, 2011         | 0.95         | 0.65       
|January, 2011          | 0.73         | 0.61       
|December 2010          | 0.82         | 0.66       
|Financial Year 2010    | 0.82         | 0.225      
|Fourth Quarter         | 0.82         | 0.35       
|Third Quarter          | 0.40         | 0.225      
|Second Quarter         | 0.34         | 0.24       
|First Quarter          | 0.52         | 0.27       
|Financial Year 2009    | 0.485        | 0.11       
|Fourth Quarter         | 0.485        | 0.16       
|Third Quarter          | 0.20         | 0.11       
|Second Quarter         | 0.20         | 0.115      
|First Quarter          | 0.21         | 0.11       
|Financial Year 2008    | 0.78         | 0.115      
|Fourth Quarter         | 0.24         | 0.115      
|Third Quarter          | 0.43         | 0.165      
|Second Quarter         | 0.66         | 0.37       
|First Quarter          | 0.78         | 0.50       
|Financial Year 2007    | 1.45         | 0.51       
|Financial Year 2006    | 1.30         | 0.58       



The closing price of our common shares on the TSX Venture Exchange on June 27, 2011 was $1.17.



The following sets forth the price history of our common shares quoted on the OTC Bulletin Board (SMXMF) for the period indicated, as reported by Yahoo Finance, which receives its financial information from the OTC Bulletin Board.



|                       |            |          
|---------------------- | ---------- | ---------
|Period                 | High (US$) | Low (US$)
|Most Recent Six Months |            |          
|May, 2011              | 1.47       | 1.2      
|April, 2011            | 1.5        | 0.68     
|March, 2011            | 0.93       | 0.62     
|February, 2011         | 1.03       | 0.64     
|January, 2011          | 0.8        | 0.59     
|December, 2010         | 0.83       | 0.6      
|Financial Year 2010    | 0.83       | 0.2      
|Fourth Quarter         | 0.83       | 0.33     
|Third Quarter          | 0.39       | 0.2      
|Second Quarter         | 0.36       | 0.21     
|First Quarter          | 0.5        | 0.23     
|Financial Year 2009    | 0.5        | 0.09     
|Fourth Quarter         | 0.5        | 0.14     
|Third Quarter          | 0.19       | 0.1      
|Second Quarter         | 0.19       | 0.09     
|First Quarter          | 0.17       | 0.09     
|Financial Year 2008    | 0.82       | 0.09     
|Fourth Quarter         | 0.25       | 0.09     
|Third Quarter          | 0.42       | 0.14     
|Second Quarter         | 0.68       | 0.35     
|First Quarter          | 0.82       | 0.47     
|Financial Year 2007    | 1.64       | 0.5      
|Financial Year 2006    | 1.18       | 0.5      





9.B Plan of distribution.

Not Applicable.



9.C. Markets.

Our Common Shares are quoted in Canada on the TSX Venture Exchange under the trading symbol SXG and in the United States on the OTC Bulletin Board under the trading symbol SMXMF.



9.D. Selling shareholders.

Not Applicable.



9.E Dilution.

Not Applicable.



9.F. Expenses of the Issue.

Not Applicable.



Item 10. Additional Information.

10.A. Share capital.

Not Applicable.



10.B. Memorandum and Articles of Association



Corporate Legislation.

We are organized as a corporation under, and operate subject to the Business Corporations Act (British Columbia).   See Item 4 Information On the Company.



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Notice of Articles and Articles of association.

Our Articles and Notice of Articles (our Constating Documents) are attached as exhibits hereto as noted in Item 19.  Our Articles and Notice of Articles do not contain any limitations on our objects or purposes.



The following is a summary of certain provisions of our Constating Documents:



Director's Power To Vote On Matters In Which The Director Is Materially Interested

Our Articles provide that it is the duty of any of our directors who are directly or indirectly interested in an existing or proposed contract or transaction with us to declare the nature of their interest at a meeting of our Board of Directors.  In the case of a proposed contract or transaction, the declaration must be made at the meeting of our Board of Directors at which the question of entering into the contract or transaction is first taken into consideration, or if the interested directors are not present at that meeting, our directors are required to declare their interest at the next meeting.  If an interested Director votes in favour of such contract or transaction, he or she may be liable to account for any profit obtained therefrom.



Director's Power To Vote On Compensation To Themselves



Subject to the Business Corporations Act (British Columbia), our Articles provide that the directors may determine the amount to be paid out of our funds or capital as remuneration for their service.  The directors may also determine the proportions and manner that the remuneration will be divided among them.  The Directors have, by resolution, formed a Compensation Committee (composed of non-executive directors) to assist and advise the Board of Directors with respect to any and all matters relating to the compensation of the executive officers of the Company or other such persons as the Board may from time to time request.



Director's Borrowing Powers

Our Articles provide that the directors, on our behalf, may:



(a) raise or borrow money for our purposes upon such terms and conditions as they think fit;



(b) guarantee obligations of any other person;



(c) issue debt obligations as security for loans; and



(d) mortgage or charge any part of our property and assets.





Retirement Of Directors Under An Age Limit Requirement



Our Articles do not require directors to retire prior to a specified age.



Number Of Shares Required For A Director's Qualification

Our Articles do not provide for a requirement of share ownership for a director's qualification.



Changes In Our Capital

Our Articles provide that we may, subject to the Business Corporations Act (British Columbia) and, by special resolution, increase our authorized capital by:



(a) creating shares with par value or shares without par value, or both;



(b) increasing the number of shares with par value or shares without par value, or both; or



(c) increasing the par value of a class of shares with par value, if no shares of that class are issued.



Subject to the Business Corporations Act (British Columbia), the new shares may be issued upon such terms and conditions and with such rights, privileges, limitations, restrictions and conditions attached to them as the special resolution of our shareholders determines.



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In addition, subject to the Business Corporations Act (British Columbia), we may also by special resolution subdivide or consolidate our shares;



At the meeting, at least two persons holding at least five percent (5%) of the outstanding shares must be present in person or represented by proxy in accordance with our Articles.



Our Articles require similar approval of the holders of Preferred Shares in the event of changes analogous to the ones described above to the Preferred Shares.  In addition, if the deletion, variation, modification, amendment or amplification of the provisions contained especially affects the rights of the holders of our Preferred Shares of any series, in a manner different from which the rights of the holders of our Preferred Shares of any other series are affected, then amendments must, in addition to being approved by the holders of our Preferred Shares, be approved by the holders of our Preferred Shares of the series especially affected.  This approval may be given in writing by the holders of 3/4 of our Preferred Shares of the series or by resolution passed by 3/4 of the votes cast on a poll at the meeting of the holders of our Preferred Shares of the series. At a meeting of the holders of our Preferred Shares as a class or as a series, each holder of our Preferred Shares is entitled to one vote in respect of each Preferred Share held by the holder.



Furthermore, the Act provides a holder of shares of any class or series of shares, the right to vote separately as a class or series upon amendments to our Constating Documents, which amendments may affect voting rights.



General Meeting

We must hold an ordinary general meeting of our shareholders at least once every calendar year at a time and place determined by our directors and not later than 15 months after the preceding ordinary general meeting, unless extended by the Registrar of Companies upon application made under the Act.  Our Chair, President and Chief Executive Officer, Chief Financial Officer or directors may at any time convene a special general meeting, and our directors, upon the requisition of shareholders in accordance with the Act, shall proceed to convene the meeting or meetings to be held at such time and place as the directors determine. The requisition shall state the objects of the meeting requested, be signed by the requisitionists and deposited at our registered office.



At least twenty one days' notice, or any longer period of notice as may be required by the Act, of every general meeting, specifying the place, day and hour of the meeting and, when special business is to be considered, the general nature of such business, must be given to our shareholders entitled to be present at our meeting by notice given as permitted by our Articles. With the consent in writing of all our shareholders entitled to vote at the meeting, a meeting may be convened by a shorter notice and in any manner they think fit, or notice of the time, place and purpose of the meeting may be waived by all of our shareholders. The accidental omission to give notice to a shareholder, or non-receipt of notice by a shareholder, will not invalidate any resolution passed at any general meeting.



No business will be transacted at any general meeting unless the requisite quorum is present at the commencement of the business. Subject to the Act, if we have two or more shareholders, a quorum for the transaction of business at a general meeting shall be two persons present in person, or by proxy and holding or representing by proxy, not less than five percent (5%) of the shares entitled to vote at the general meeting.



Holders of our Common Shares are entitled to attend meetings. However, holders of our Preferred Shares as a class will not be entitled to attend meetings, unless the rights of a particular class provide otherwise. Any of our corporate shareholders that have an authorized agent or representative present at any of the meeting will be deemed to be personally present at the meeting.



Limitations On The Rights To Own Securities

Our Articles do not provide for any limitations on the rights to own our securities. See also Item 10.  Exchange Controls.



Change In Control Provisions

Our Articles do not contain any change in control limitations with respect to a merger, acquisition or corporate restructuring involving us.



Shareholder Ownership Disclosure

Our Articles do not contain any provision governing the ownership threshold above which shareholder ownership must be disclosed.





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Share Rights, Preferences and Restrictions

The following is a summary of the rights and restrictions pertaining to our two classes of shares:



Common Shares

All Common Shares are of the same class and have the same rights, preferences and limitations.

Holders of Common Shares are entitled to one vote per share at any meeting of our shareholders except meetings at which only shareholders of a specified class of shares (other than the Common Shares) are entitled to vote.  Subject to the preference of any outstanding Preferred Shares (described below), the holders of Common Shares are entitled to participate equally in any dividends our Board of Directors declares out of funds legally available for the payment of dividends. There are no limitations on the payment of dividends if we are liquidated, dissolved or wound up, holders of Common Shares are entitled to share ratably in all assets remaining after payment of our liabilities and any liquidation preferences of any outstanding Preferred Shares. There are no pre-emptive rights, subscription rights, conversion rights and redemption provisions relating to our Common Shares and none of our Common Shares carry any liability for further calls.



The rights of holders of Common Shares may not be modified other than in accordance with our Articles and the Business Corporations Act(British Columbia) which generally requires the favorable votes of 3⁄4 of the Common Shares voting on such modification.  Because a quorum for a general meeting of shareholders can exist with only two shareholders (proxy-holders) personally present, the rights of holders of Common Shares may be modified by less than a majority of the issued Common Shares.

Shareholders may apply to the Supreme Court of British Columbia for various remedies on the ground that our affairs are being conducted in a manner oppressive to one or more of the shareholders or that some resolution of shareholders has been passed or is proposed that is unfairly prejudicial to one or more of the shareholders.  That Court may, with a view to bringing it to an end or to remedying the matters complained of, make an interim or final order if it considers appropriate, including the following:

a)

direct or prohibit any act or cancel or vary any transaction or resolution;

b)

regulate the conduct of our affairs in the future;

c)

provide for the purchase of the Common Shares of any shareholder of the Company by another shareholder of the Company, or by us;

d)

in the case of a purchase by us, reduce our capital or otherwise;

e)

appoint a receiver or receiver manager;

f)

order that we be wound up;

g)

authorize or direct that proceedings be commenced in our name against any party on the terms the Court directs;

h)

require us to produce financial statements;

i)

order us to compensate an aggrieved person; and

j)

direct rectification of any of our records.

There are no restrictions on the purchase or redemption of Common Shares by us while there is any arrearage in the payment of dividends or sinking fund installments.

Preferred Shares

Our Board of Directors is authorized, without further action by the shareholders, to issue Preferred Shares in one or more series and to set the number of shares constituting any such series and the designation, rights, privileges, restrictions and conditions attaching to the shares of such series including dividend rights and rates, redemption provisions (including sinking fund provisions), rights of conversion or exchange, liquidation preferences and voting rights, if any.  The Preferred Shares as a class are entitled to priority over the Common Shares if our Board of Directors decides to pay any dividends, and, if we are
dissolved, liquidated or wound up, the Preferred Shares are entitled as a class to priority in respect of return of capital. Except as required by law or the provisions of any designated series of Preferred Shares, the holders of Preferred Shares as a class is not entitled to receive notice of, attend or vote at any meeting of our shareholders.



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There were no Preferred Shares allotted or issued as at the date of this Annual Report.



10.C. Material contracts.

The following are the material contracts which we, or any of our subsidiaries, have entered into in the last two years immediately prior to the date of this report:



|1. | Our Company Stock Option Plan which received annual approval by our shareholders at our Annual General Meetings on May 29, 2008, May 26, 2009, May 26, 2010, and June 7,
2011.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  



10.D. Exchange controls.

There are no governmental laws, decrees or regulations in Canada that restrict the export or import of capital (including, without limitation, foreign exchange controls), or that affect the remittance of dividends, interest or other payments to non-resident holders of our Common Shares. However, any such remittance to a resident of the United States may be subject to a withholding tax pursuant to the reciprocal tax treaty between Canada and the United States.  For further information concerning such withholding tax, see Item 10.E.  Taxation.



There are no limitations under the laws of Canada, the Province of British Columbia, or in our charter or other constituent documents with respect to the right of non-resident or foreign owners to hold and/or vote our common shares.  However, the Investment Canada Act (the Act), enacted on June 20, 1985, as amended, requires the prior notification and, in certain cases, advance review and approval by the Government of Canada of the acquisition by a non-Canadian of control of a Canadian business, all as defined in the Act.  For the purposes of the Act, control can be acquired through the acquisition of all or substantially all of the assets used in the Canadian business, or the direct or indirect acquisition of interests in an entity that carries on a Canadian business or which controls the entity which carries on the Canadian business.  Under the Act, control of a corporation is deemed to be acquired through the acquisition of a majority of the voting shares of a corporation, and is presumed to be acquired where more than one-third, but less than a majority, of the voting shares of a corporation are acquired, unless it can be established that the corporation is not controlled in fact through the ownership of voting shares.  Other rules apply with respect to the acquisition of non-corporate entities.

Investments requiring review and approval include direct acquisition of Canadian businesses with assets with a gross book value of $5,000,000 or more; indirect acquisitions of Canadian businesses with assets of $50,000,000 or more; and indirect acquisitions of Canadian businesses where the value of assets of the entity or entities carrying on business in Canada, control of which is indirectly being acquired, is greater than $5,000,000 and represents greater than 50% of the total value of the assets of all of the entities, control of which is being acquired.

Pursuant to the World Trade Organization Agreement Implementation Act, the Act was amended to provide that the value of the business acquisition threshold (the Threshold) above described is increased from those levels outlined where the acquisition is by a World Trade Organization Investor or by a non-Canadian other than a World Trade Organization Investor where the Canadian business that is the subject of the investment is immediately before the investment controlled by a World Trade Organization Investor.  The Threshold is to be determined yearly in accordance with a formula set forth in the Act.  For
2010, the Threshold was determined to be CDN$299,000,000.

A World Trade Organization Investor includes an individual, other than a Canadian, who is a national of a World Trade Organization Member, or who has the right of permanent residence in relation to that World Trade Organization Member.

Different provisions and considerations apply with respect to investment to acquire control of a Canadian business that, as defined in the Act or regulations:

a)

engages in production of uranium and owns an interest in a producing uranium property in Canada;

b)

provides financial services;

c)

provides transportation services;

d)

is a cultural business.



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If an investment is reviewable, an application for review in the form prescribed by regulation is normally required to be filed with the Ministry of Industry, Director of Investment prior to the investment taking place and the investment may not be consummated until the review has been completed and ministerial approval obtained.  Applications for review concerning indirect acquisitions may be filed up to 30 days after the investment is consummated.  Applications concerning reviewable investments in culturally sensitive and other specified activities referred to in the preceding paragraph are required upon receipt of a notice for review.  There is, moreover, provision for the Minister (a person designated as such under the Act) to permit an investment to be consummated prior to completion of review if he is satisfied that delay would cause undue hardship to the acquirer or jeopardize the operation of the Canadian business that is being acquired.

10.E. Taxation.

Certain U.S. Federal Income Tax Considerations

The following is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of common shares.



This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder arising from and relating to the acquisition, ownership, and disposition of common shares.  In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holder under an applicable tax treaty.  Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder.  Each U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local tax, and foreign tax consequences relating to the acquisition, ownership and disposition of common shares.



No legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the IRS) has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares.  This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions taken in this summary.  In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.

Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations (whether final, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, U.S. court decisions, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the Canada-U.S. Tax Convention), and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date of this document.  Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis which could affect the U.S. federal income tax considerations described in this summary.  This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.

U.S. Holders

For purposes of this summary, the term "U.S. Holder" means a beneficial owner of common shares that is for U.S. federal income tax purposes:



·

an individual who is a citizen or resident of the U.S.;

·

a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S., any state thereof or the District of Columbia;

·

an estate whose income is subject to U.S. federal income taxation regardless of its source; or

·

a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.



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Non-U.S. Holders

For purposes of this summary, a non-U.S. Holder is a beneficial owner of common shares that is not a U.S. Holder.  This summary does not address the U.S. federal income tax consequences to non-U.S. Holders arising from and relating to the acquisition, ownership, and disposition of common shares.  Accordingly, a non-U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local tax, and foreign tax consequences (including the potential application of and operation of any income tax treaties) relating to the acquisition, ownership, and disposition of common shares.

U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed

This summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including the following U.S. Holders:  (a) U.S. Holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) U.S. Holders that are dealers in securities or currencies or U.S. Holders that are traders in securities that elect to apply a mark-to-market accounting method; (d) U.S. Holders that have a functional currency other than the U.S. dollar; (e) U.S. Holders that own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquired common shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) U.S. Holders that hold common shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); (h) partnerships and other pass-through entities (and investors in such partnerships and entities); or (j) U.S. Holders that own or have owned  (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding shares of the Company.  This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are (a) U.S. expatriates or former long-term residents of the U.S. subject to Section 877 of the Code, (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for purposes of the Canadian Act (as defined below); (c) persons that use or hold, will use or hold, or that are or will be deemed to use or hold common shares in connection with carrying on a business in Canada; (d) persons whose common shares constitute taxable Canadian property under the Canadian Act; or (e) persons that have a permanent establishment in Canada for the purposes of the Canada-U.S. Tax Convention.  U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local tax, and foreign tax consequences relating to the acquisition, ownership and disposition of common shares.



If an entity that is classified as a partnership for U.S. federal income tax purposes holds common shares, the U.S. federal income tax consequences to such partnership and the partners of such partnership generally will depend on the activities of the partnership and the status of such partners.  This summary does not address the tax consequences to any such partner.  Partners of entities that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisor regarding the U.S. federal income tax consequences arising from and relating to the acquisition, ownership, and disposition of common shares.



Tax Consequences Not Addressed

This summary does not address the U.S. state and local, U.S. federal estate and gift, U.S. federal alternative minimum tax or foreign tax consequences to U.S. Holders of the acquisition, ownership, and disposition of common shares.  Each U.S. Holder should consult its own tax advisor regarding the U.S. state and local, U.S. federal estate and gift, U.S. federal alternative minimum tax and foreign tax consequences of the acquisition, ownership, and disposition of common shares.



Passive Foreign Investment Company Rules

If the Company is considered a passive foreign investment company under the meaning of Section 1297 of the Code (a PFIC) at any time during a U.S. Holders holding period, the following sections will generally describe the U.S. federal income tax consequences to the U.S. Holder of the acquisition, ownership, and disposition of common shares.



PFIC Status of the Company

The Company generally will be a PFIC if, for a tax year, (a) 75% or more of the gross income of the Company for such tax year is passive income or (b) 50% or more of the value of the Companys assets either produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such assets.  Gross income generally includes sales revenues less the cost of goods sold, and passive income generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.



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Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all of a foreign corporations commodities are stock in trade of such foreign corporation or other property of a kind which would properly be included in inventory of such foreign corporation, or property held by such foreign corporation primarily for sale to customers in the ordinary course of business and certain other requirements are satisfied.



For purposes of the PFIC income test and asset test described above, if the Company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation.  In addition, for purposes of the PFIC income test and asset test described above, passive income does not include any interest, dividends, rents, or royalties that are received or accrued by the Company from a related person (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.



In addition, under certain attribution rules, if the Company is a PFIC, U.S. Holders will be deemed to own their proportionate share of any subsidiary of the Company which is also a PFIC (a Subsidiary PFIC), and will be subject to U.S. federal income tax on their proportionate share of (i) a distribution on the shares of a Subsidiary PFIC and (ii) a disposition or deemed disposition  of shares of a Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC.



The Company believes that it qualified as a PFIC during the tax year ended December 31, 2010 and may qualify as a PFIC for the current taxable year and subsequent taxable years.  The determination of whether a corporation was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations.  In addition, whether a corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of each such tax year and, as a result, cannot be predicted with certainty as of the date of this document.  Accordingly, there can be no assurance that the IRS will not challenge any determination made by the Company (or a Subsidiary PFIC) concerning its PFIC status or that the Company (and each Subsidiary PFIC) was not, or will not be, a PFIC for any tax year.  Each U.S. Holder should consult its own tax advisor regarding the PFIC status of the Company and each subsidiary.

Default PFIC Rules Under Section 1291 of the Code

If the Company is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of common shares will depend on whether such U.S. Holder makes an election to treat the Company as a qualified electing fund or QEF under Section 1295 of the Code (a QEF Election) or a mark-to-market election under Section 1296 of the Code (a Mark-to-Market Election).  A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election will be referred to in this summary as a Non-Electing U.S. Holder.



A Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale or other taxable disposition of common shares and (b) any excess distribution received on the common shares.  A distribution generally will be an excess distribution to the extent that such distribution (together with all other distributions received in the current tax year) exceeds 125% of the average distributions received during the three preceding tax years (or during a U.S. Holders holding period for the common shares, if shorter).



Under Section 1291 of the Code, any gain recognized on the sale or other taxable disposition of common shares, and any excess distribution received on common shares, must be ratably allocated to each day in a Non-Electing U.S. Holders holding period for the respective common shares.  The amount of any such gain or excess distribution allocated to the tax year of disposition or distribution of the excess distribution and to years before the entity became a PFIC, if any, would be taxed as ordinary income.  The amounts allocated to any other tax year would be subject to U.S. federal income tax at the highest tax applicable to ordinary income in each such year, and an interest charge would be imposed on the tax liability for each such year, calculated as if such tax liability had been due in each such year.  A Non-Electing U.S. Holder that is not a corporation must treat any such interest paid as personal interest, which is not deductible.



If the Company is a PFIC for any tax year during which a Non-Electing U.S. Holder holds common shares, the Company will continue to be treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether the Company ceases to be a PFIC in one or more subsequent tax years.  A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such common shares were sold on the last day of the last tax year for which the Company was a PFIC.



QEF Election

A U.S. Holder that makes a QEF Election for the first tax year in which its holding period of its common shares begins,
generally, will not be subject to the rules of Section 1291 of the Code discussed above with respect to its common shares.



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However, a U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such U.S. Holders pro rata share of (a) the net capital gain of the Company, which will be taxed as long-term capital gain to such U.S. Holder, and (b) and the ordinary earnings of the Company, which will be taxed as ordinary income to such U.S. Holder.  Generally, net capital gain is the excess of (a) net long-term capital gain over (b) net short-term capital loss, and ordinary earnings are the excess of (a) earnings and profits over (b) net capital gain.  A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such amounts for each tax year in which the Company is a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder by the Company.  However, for any tax year in which the Company is a PFIC and has no net income or gain, U.S. Holders that have made a QEF Election would not have any income inclusions as a result of the QEF Election.  If a U.S. Holder that made a QEF Election has an income inclusion, such a U.S. Holder may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge.  If such U.S. Holder is not a corporation, any such interest paid will be treated as personal interest, which is not deductible.

A U.S. Holder that makes a QEF Election generally (a) may receive a tax-free distribution from the Company to the extent that such distribution represents earnings and profits of the Company that were previously included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holders tax basis in the common shares to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election.  In addition, a U.S. Holder that makes a QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of common shares.

The procedure for making a QEF Election, and the U.S. federal income tax consequences of making a QEF Election, will depend on whether such QEF Election is timely.  A QEF Election will be treated as timely if such QEF Election is made for the first year in the U.S. Holders holding period for the common shares in which the Company was a PFIC.  A U.S. Holder may make a timely QEF Election by filing the appropriate QEF Election documents at the time such U.S. Holder files a U.S. federal income tax return for such year.

A QEF Election will apply to the tax year for which such QEF Election is made and to all subsequent tax years, unless such QEF Election is invalidated or terminated or the IRS consents to revocation of such QEF Election.  If a U.S. Holder makes a QEF Election and, in a subsequent tax year, the Company ceases to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during those tax years in which the Company is not a PFIC.  Accordingly, if the Company becomes a PFIC in another subsequent tax year, the QEF Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any subsequent tax year in which the Company qualifies as a PFIC.

U.S. Holders should be aware that there can be no assurance that we will satisfy record keeping requirements that apply to a QEF, or that we will supply U.S. Holders with information that such U.S. Holders require to report under the QEF rules, in event that we are a PFIC and a U.S. Holder wishes to make a QEF Election.  Thus, U.S. Holders may not be able to make a QEF Election with respect to their common shares.  Each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the availability of, and procedure for making, a QEF Election.  .

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market Election only if the common shares are marketable stock.  The common shares generally will be marketable stock if the common shares are regularly traded on (a) a national securities exchange that is registered with the Securities and Exchange Commission, (b) the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934, or (c) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located, provided that (i) such foreign exchange has trading volume, listing, financial disclosure, and other requirements and the laws of the country in which such foreign exchange is located, together with the rules of such foreign exchange, ensure that such requirements are actually enforced and (ii) the rules of such foreign exchange ensure active trading of listed stocks.  If such stock is traded on such a qualified exchange or other market, such stock generally will be regularly traded for any calendar year during which such stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.

A U.S. Holder that makes a Mark-to-Market Election with respect to its common shares generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to such common shares.  However, if a U.S. Holder does not make a Mark-to-Market Election beginning in the first tax year of such U.S. Holders holding period for the common shares or such U.S. Holder has not made a timely QEF Election, the rules of Section 1291 of the Code discussed above will apply to certain dispositions of, and distributions on, the common shares.

A U.S. Holder that makes a Mark-to-Market Election will include in ordinary income, for each tax year in which the Company is a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the common shares, as of the close of such tax year over (b) such U.S. Holders tax basis in such common shares.  A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an amount equal to the excess, if any, of (i) such U.S. Holders adjusted tax basis in the common
shares, over (ii) the fair market value of such common shares (but only to the extent of the net amount of previously included income as a result of the Mark-to-Market Election for prior tax years).



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A U.S. Holder that makes a Mark-to-Market Election generally also will adjust such U.S. Holders tax basis in the common shares to reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election.  In addition, upon a sale or other taxable disposition of common shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or ordinary loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market Election for prior tax years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior tax years).

A Mark-to-Market Election applies to the tax year in which such Mark-to-Market Election is made and to each subsequent tax year, unless the common shares cease to be marketable stock or the IRS consents to revocation of such election.  Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.

Although a U.S. Holder may be eligible to make a Mark-to-Market Election with respect to the common shares, no such election may be made with respect to the stock of any Subsidiary PFIC that a U.S. Holder is treated as owning, because such stock is not marketable.  Hence, the Mark-to-Market Election will not be effective to eliminate the interest charge described above with respect to deemed dispositions of Subsidiary PFIC stock or distributions from a Subsidiary PFIC.

Other PFIC Rules

Under Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would cause a U.S. Holder that had not made a timely QEF Election to recognize gain (but not loss) upon certain transfers of common shares that would otherwise be tax-deferred (e.g., gifts and exchanges pursuant to corporate reorganizations).  However, the specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in which common shares are transferred.

Certain additional adverse rules will apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder makes a QEF Election.  For example under Section 1298(b)(6) of the Code, a U.S. Holder that uses common shares as security for a loan will, except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such common shares.

Special rules also apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC.  Subject to such special rules, foreign taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit.  The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complicated, and a U.S. Holder should consult with their own tax advisor regarding the availability of the foreign tax credit with respect to distributions by a PFIC.

In addition, a U.S. Holder who acquires common shares from a decedent will not receive a step up in tax basis of such common shares to fair market value.

The PFIC rules are complex, and each U.S. Holder should consult its own tax advisor regarding the PFIC rules and how the PFIC rules may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares.

U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Common Shares

The following discussion is subject to the rules described above under the heading Passive Foreign Investment Company Rules.

General Taxation of Distributions

Subject to the PFIC rules discussed above, a U.S. Holder that receives a distribution, including a constructive distribution, with respect to a Common Share will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated earnings and profits of the Company, as computed for U.S. federal income tax purposes.  A dividend generally will be taxed to a U.S. Holder at ordinary income tax rates.  To the extent that a distribution exceeds the current and accumulated earnings and profits of the Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder's tax basis in the common shares and thereafter as gain from the sale or exchange of such common shares.  (See  Sale or Other Taxable Disposition of common shares below).  However, the Company may not maintain the calculations of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should therefore assume that any
distribution by the Company with respect to the common shares will constitute ordinary dividend income.



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Dividends received on common shares generally will not be eligible for the dividends received deduction.  In addition, the Company does not anticipate that its distributions will be eligible for the preferential tax rates applicable to long-term capital gains.  The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.

Sale or Other Taxable Disposition of Common Shares

Subject to the PFIC rules discussed above, upon the sale or other taxable disposition of common shares, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount of cash plus the fair market value of any property received and such U.S. Holder's tax basis in such common shares sold or otherwise disposed of.  Subject to the PFIC rules discussed above, gain or loss recognized on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or other disposition, the common shares have been held for more than one year.



Preferential tax rates apply to long-term capital gain of a U.S. Holder that is an individual, estate, or trust.  There are currently no preferential tax rates for long-term capital gain of a U.S. Holder that is a corporation.  Deductions for capital losses are subject to significant limitations under the Code.

Receipt of Foreign Currency

The amount of any distribution paid to a U.S. Holder in foreign currency, or on the sale, exchange or other taxable disposition of common shares, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time).  If the foreign currency received is not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt.  Any U.S. Holder who receives payment in foreign currency and engages in a subsequent conversion or other disposition of the foreign currency may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes.  Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.

Foreign Tax Credit

Subject to the PFIC rules discussed above, a U.S. Holder who pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the common shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid.  Generally, a credit will reduce a U.S. Holders U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holders income subject to U.S. federal income tax.  This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.



Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holders U.S. federal income tax liability that such U.S. Holders foreign source taxable income bears to such U.S. Holders worldwide taxable income.  In applying this limitation, a U.S. Holders various items of income and deduction must be classified, under complex rules, as either foreign source or U.S. source.  In addition, this limitation is calculated separately with respect to specific categories of income.  Dividends paid by the Company generally will constitute foreign source income and generally will be categorized as passive category income.  Gain or loss recognized by a U.S. Holder on the sale or other taxable disposition of common shares generally will be treated as U.S. source for purposes of applying the U.S. foreign tax credit rules unless the gain is subject to tax in Canada and is resourced as foreign source under the Canada-U.S. Tax Convention and such U.S. Holder elects to treat such gain or loss as foreign source.  The foreign tax credit rules are complex, and each U.S. Holder should consult its own tax advisor regarding the foreign tax credit rules.

Backup Withholding and Information Reporting

Under U.S. federal income tax law and Treasury regulations, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation.  Penalties for failure to file certain of these information returns are substantial.  U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns, and, if applicable mark-to-market and QEF elections.



Payments made within the U.S. or by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of, common shares generally may be subject to information reporting and backup withholding tax, at the rate of 28%, (and increasing to 31% for payments made after December 31, 2012) if a U.S. Holder (a) fails to furnish such U.S.  Holders correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to
backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding
tax.



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However, certain exempt persons, such as corporations, generally are excluded from these information reporting and backup withholding rules.  Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holders U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.  Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.





Certain Canadian Federal Income Tax Consequences

The following discussion summarizes the principal Canadian federal income tax considerations generally applicable to a person who owns one or more common shares of the Company (the "Shareholder"), and who at all material times for the purposes of the Income Tax Act (Canada)  (the  "Canadian  Act") deals at arm's length with the Company,  holds all common shares solely as capital property, is a  non-resident  of Canada,  and does not, and is not deemed to, use or hold any Common  share in or in the course of  carrying  on  business  in  Canada.  It is assumed that the common shares will at all material times be listed on a stock exchange that is designated for the purposes of the Canadian Act.



This summary is based on the current provisions of the Canadian Act, including the regulations thereunder, and the Canada-United States Income Tax Convention (1980) (the "Treaty") as amended.  This summary takes into account all specific proposals  to amend the Canadian Act and the  regulations  thereunder  publicly announced  by the  government  of Canada to the date  hereof  and the  Company's understanding of the current published administrative and assessing practices of the Canada Revenue Agency.  It is assumed that all such amendments will be enacted substantially as currently proposed, and that there will be no other material change to any such law or practice, although no assurances can be given in these respects. Except to the extent otherwise expressly set out herein, this summary does not take into account any provincial, territorial or foreign income tax law or treaty.



This summary is not, and is not to be construed as, tax advice to any particular Shareholder. Each prospective and current Shareholder is urged to obtain independent advice as to the Canadian income tax consequences of an investment in common shares applicable to the Shareholder's particular circumstances.



A Shareholder generally will not be subject to tax pursuant to the Canadian Act on any capital gain realized by the Shareholder on a disposition of a Common share unless the Common share constitutes "taxable Canadian property" to the Shareholder for purposes of the Canadian Act and the Shareholder is not eligible for relief pursuant to an applicable bilateral tax treaty.  A Common share that is disposed of by a Shareholder will constitute taxable Canadian property of the Shareholder and will thus be subject to Canadian tax, if the Shareholder alone or together with one or more persons with whom the Shareholder did not deal at arm's length owned, or owned any right to acquire, 25% or more of the issued shares of any class of the capital stock of the Company in the five years immediately preceding the disposition.  However, the Treaty will generally exempt a Shareholder who would otherwise be liable to pay Canadian income tax in respect of any capital gain realized by the Shareholder on the disposition of a Common Share that is Taxable Canadian Property, who is a resident of the United States for the purposes of the Treaty and who is not excluded from the benefits of the Treaty because of the application of the Limitation of Benefits provision in the Treaty, from such liability provided that the value of the  Common  share is not  derived  principally  from real  property  (including resource property) situated in Canada or that the Shareholder does not have, and has not had within the 12-month period preceding the  disposition,  a "permanent establishment"  or "fixed  base," as those terms are defined for the purposes of the  Treaty,  available  to the Shareholder  in  Canada.

Any dividend on a Common share, including a stock dividend, paid or credited, or deemed to be paid or credited, by the Company to a Shareholder  will be subject to  Canadian  withholding  tax at the  rate of 25% on the gross  amount  of the dividend, or such lesser rate as may be available under an applicable income tax treaty.  Pursuant to the Treaty, the rate of withholding tax applicable to a dividend paid on a Common share to a Shareholder who is a resident of the United States for the purposes of the Treaty will be reduced to 5% if the beneficial owner of the dividend is a company that owns at least 10% of the voting stock of the Company, and in any other case will be reduced to 15%, of the gross amount of the dividend.  The Company will be required to withhold any such tax from the dividend, and remit the tax directly to Canada Revenue Agency on behalf of the Shareholder.

The Fifth Protocol to the Treaty signed in 2007 between Canada and the US extended, in some cases, the benefits of the Treaty to US shareholders who are otherwise resident in the United States and who are considered to derive income or gain in respect of a Common share through a fiscally transparent entity (other than a Canadian resident entity) under US tax law.  Consequently, such persons may be entitled to the benefits of the Treaty to reduce Canadian taxes in respect of dividends or gains on Common shares.



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

10.F. Dividends and Paying Agents.

Not Applicable.



10.G. Statement by Experts.

Not Applicable.



10.H. Documents on Display.

We have filed with the Securities and Exchange Commission this annual report on Form 20-F, including exhibits, under the Securities and Exchange Act of 1934.



We are subject to the informational requirements of the Securities Exchange Act of 1934 and file reports and other information with the Securities and Exchange Commission.  Reports and other information which we file with the Securities and Exchange Commission, including this Annual Report on Form 20-F, may be inspected and copied at the public reference facilities of the Securities and Exchange Commission at:



100 F Street, NE

Washington D.C.  20549



You can also obtain copies of this material by mail from the Public Reference Section of the Securities and Exchange Commission, 100 F Street, NE, Washington, D.C. 20549, at prescribed rates.  Additionally, copies of this material may also be obtained from the Securities and Exchange Commission's internet site at http://www.sec.gov.  The Commission's telephone number is 1-800-SEC-0330.



Copies of the above material contracts may be inspected at the offices of Leschert & Company Law Corporation, #2760  200 Granville Street, Vancouver, British Columbia, Canada, during normal business hours.



10.I. Subsidiary Information.

As of May 31, 2011 we have the following subsidiaries:



a)

South American Mining & Exploration Corp. (British Columbia, Canada)



b)

SAMEX International Ltd. (Bahamas)



c)

Minas Bolivex S.A. (Bolivex S.A.) (Bolivia)



d)

SAMEX S.A. (Bolivia)



e)

Empresa Minera Boliviana S. A. (Emibol S.A.) (Bolivia)



f)

Minera Samex Chile S. A. (Chile)



Item 11. Quantitative And Qualitative Disclosures About Market Risk.

We were incorporated under the laws of British Columbia, Canada and our financial results are quantified in Canadian dollars.  We raise equity funding through the sale of securities denominated in Canadian dollars, whereas the majority of our obligations and expenditures with respect to our properties will be incurred in Chilean Pesos, US Dollars, and Bolivian Bolivianos.  Variations in the exchange rate may give rise to foreign exchange gains or losses that may be significant.  Market risks relating to our operations, if we begin production, are anticipated to result primarily from changes in interest rates, foreign exchange rates and commodity prices, as well as credit risk concentrations.  We do not use financial instruments for trading purposes and are not parties to any leverage derivatives.  We do not currently engage in hedging transactions.  See Currency and Exchange Rates and Item 4  Information on the Company.





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Item 12. Description Of Securities Other Than Equity Securities.

Not Applicable.

PART II

Item 13. Defaults, Dividend Arrearages And Delinquencies.

Not Applicable.



Item 14. Material Modifications To The Rights Of Security Holders And Use Of Proceeds.

Not Applicable

Item 15. Controls And Procedures

(a) Disclosure Controls and Procedures



The Company maintains disclosure controls and procedures that are designed to ensure that the information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to management, including the Companys Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  After evaluating the effectiveness of the Companys disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d  14(c)) as of the end of the period covered by this report, the Chief Executive Officer and Chief Financial Officer have concluded that as of such date, the Companys disclosure controls and procedure were adequate and effective to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities.



(b) Managements annual report on internal control over financial reporting:



Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act of 1934, as amended. The Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that:



·

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and asset dispositions;

·

provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our financial statements in accordance with generally accepted accounting principles;

·

provide reasonable assurance that receipts and expenditures are made only in accordance with authorizations of our management and board of directors (as appropriate); and

·

provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.



Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



Management conducted an assessment of the effectiveness of our internal control over financial reporting as of the fiscal year ended December 31, 2010 based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework.   Based on this evaluation, management concluded that, as of the fiscal year ended December 31, 2010, the Companys internal controls over our financial reporting were adequate.   Management will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to implementing additional improvements as necessary.



(c) Attestation report of the registered public accounting firm



This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by our registered public accounting firm pursuant
the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which permits the Company to provide only managements report in this Annual Report. The Dodd-Frank Act permits a non-accelerated filer to provide only managements report on internal control over financial reporting in an Annual Report and omit an attestation report of the Companys registered public accounting firm regarding managements report on internal control over financial reporting



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(d) changes in internal control over financial reporting



There were no significant changes during the period covered by this Annual Report in the Companys internal controls or in other factors that have materially adversely affected, or are reasonably likely to materially adversely affect, the Companys internal control over financial reporting.

Item 16. [Reserved]

Item 16A. Audit Committee Financial Expert

Our board of directors has determined that Larry McLean, our Chief Financial Officer, satisfies the requirements of an audit committee financial expert serving on our audit committee as defined in the instructions to Item 16A of Form 20-F.  Mr. McLean is not an independent director, as defined under the audit committee independent director requirements of the NYSE - AMEX Exchange.



Item 16b. Code Of Ethics

We have not adopted a formal code of ethics.  We have concluded that a written code of ethics would serve little practical purpose for us in deterring wrongdoing and promoting ethical conduct and full, fair and accurate public disclosure and compliance with applicable laws and regulatory requirements.  Since our operations are currently relatively small, most of our important activities are conducted directly by or under the direct supervision of our directors and senior officers.  All of our current directors and officers have held their positions for a number of years and are familiar with our operations and our informal requirements for conduct.  In light of the lack of perceived benefit from adopting a formal code considered against the time and cost for management to consider and implement a code, we have decided not to do so at the present time.  We will continue to monitor the possible benefits of adopting a formal code of ethics, particularly as our operations and the number of our employees expand and will consider whether we should adopt a formal code of ethics at a future date



Item 16C. Principal Accountant Fees And Services

(a) Audit Fees



The aggregated audit fees billed for each of the past two fiscal years by our auditor, Dale Matheson Carr-Hilton LaBonte, Chartered Accountants, for professional services rendered for the audit of our annual financial statements or services that are normally provide in connection with statutory and regulatory filings were: $36,720 during the fiscal year ended December 31, 2010; and $43,688 during the fiscal year ended December 31, 2009.



(b) Audit-Related Fees



The aggregated audit related fees billed by our auditor, Dale Matheson Carr-Hilton LaBonte, Chartered Accountants, for professional services rendered were: $2,000 during the fiscal year ended December 31, 2010; and $2,000 during the fiscal year ended December 31, 2009.



(c) Tax Fees



The aggregate of tax fees billed by our auditor, Dale Matheson Carr-Hilton LaBonte, Chartered Accountants, for the preparation of all necessary Canadian tax returns for the Company and its subsidiaries was: $4,000 during the fiscal year ended December 31, 2010; and $4,000 during the fiscal year ended December 31, 2009.



(d) All Other Fees



Our auditor, Dale Matheson Carr-Hilton LaBonte, Chartered Accountants has not billed us for any other services during the past two fiscal years, than the audit fees, audit-related fees and tax fees noted above.



Audit Committees Pre-approval Policies and Procedures



The Audit Committee nominates and engages the independent auditors to audit the financial statements, and approves all
audits, audit-related services, tax services and other services provided by the auditor.



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Any services provided by our independent auditor that are not specifically included within the scope of the audit must be pre-approved by the Audit Committee prior to any engagement.  The Audit Committee is permitted to approve certain fees for audit-related services, tax services and other services pursuant to a de minimusexception before the completion of the engagement.



Item 16D. Exemptions From The Listing Standards For Audit Committees

Not Applicable



Item 16E. Purchase Of Equity Securities By The Issuer And Affiliated Purchases

There were no known purchases of the Companys securities by or on behalf of the Company or any affiliated purchaser during the period covered by this Annual Report.



Item 17. Financial Statements

We are furnishing the following financial statements and reports:



·

Auditors Report dated April 28, 2011

·

Consolidated Balance Sheets at December 31, 2010 and December 31, 2009

·

Consolidated Statements of Operations and Deficit for the year ended December 31, 2010, the year ended December 31, 2009 and the year ended December 31, 2008

·

Consolidated Statements of Comprehensive Loss and Accumulated Other Comprehensive Income for the year ended December 31, 2010, the year ended December 31, 2009 and the year ended December 31, 2008

·

Consolidated Statements of Mineral Interests for the year ended December 31, 2010, the year ended December 31, 2009 and the year ended December 31, 2008

·

Consolidated Statements of Cash Flow for the year ended December 31, 2010, the year ended December 31, 2009 and the year ended December 31, 2008

·

Notes to the Consolidated Financial Statements



All financial statements herein, unless otherwise stated, have been prepared in accordance with Canadian GAAP.  These principles, as they pertain to our consolidated financial statements, differ from U.S. GAAP in a number of material respects, which are set out elsewhere herein.  See Note 11 to the attached consolidated financial statements.





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[samex20f06292011009.jpg]



INDEPENDENT AUDITOR'S REPORT



To the Shareholders of Samex Mining Corp.



We have audited the accompanying consolidated financial statement of Samex Mining Corp., which comprise the consolidated balance sheets as at December 31, 2010 and 2009, and the consolidated statements of operations and deficit, comprehensive loss and accumulated other comprehensive income and cash flows for the years ended December 31, 2010, 2009 and 2008, and a summary of significant accounting policies and other explanatory information.



Managements Responsibility for the Financial Statements



Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.



Auditors Responsibility



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 comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.



An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.  The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.  In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.



We believe that the audit evidence that we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion.



Emphasis of Matter



We draw attention to note 1 to the consolidated financial statements, which describe certain conditions that give rise to substantial doubt about the entitys ability to continue as a going concern.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.  Our opinion is not qualified in respect of this matter.



Opinion



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Samex Mining Corp. as at December 31, 2010 and 2009 and the results of its operations, and its cash flows for the years ended December 31, 2010, 2009 and 2008 in accordance with Canadian generally accepted accounting principles.





DMCL



DALE MATHESON CARR-HILTON LABONTE LLP

CHARTERED ACCOUNTANTS



Vancouver, Canada

April 28, 2011





[samex20f06292011010.jpg]











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CONSOLIDATEDFINANCIAL STATEMENTS





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED BALANCE SHEETS



|                                         |  |   |                   |  |   |                  
|---------------------------------------- |  | - | ----------------- |  | - | -----------------
|                                         |  |   | DECEMBER 31,
2010 |  |   | DECEMBER 31,
2009
|ASSETS                                   |  |   |                   |  |   |                  
|                                         |  |   |                   |  |   |                  
|CURRENT                                  |  |   |                   |  |   |                  
|CASH                                     |  | $ | 4,870,337         |  | $ | 1,020,863        
|GOLD AND SILVER BULLION                  |  |   | 4,107,333         |  |   | 757              
|OTHER CURRENT ASSETS                     |  |   | 32,551            |  |   | 39,983           
|                                         |  |   |                   |  |   |                  
|                                         |  |   | 9,010,221         |  |   | 1,061,603        
|                                         |  |   |                   |  |   |                  
|MINERAL INTERESTS (NOTE 3)               |  |   | 10,299,789        |  |   | 9,021,953        
|EQUIPMENT (NOTE 4)                       |  |   | 56,445            |  |   | 70,482           
|                                         |  |   |                   |  |   |                  
|                                         |  | $ | 19,366,455        |  | $ | 10,154,038       
|                                         |  |   |                   |  |   |                  
|LIABILITIES AND SHAREHOLDERS EQUITY     |  |   |                   |  |   |                  
|                                         |  |   |                   |  |   |                  
|LIABILITIES                              |  |   |                   |  |   |                  
|                                         |  |   |                   |  |   |                  
|CURRENT                                  |  |   |                   |  |   |                  
|ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |  | $ | 91,890            |  | $ | 73,718           
|                                         |  |   |                   |  |   |                  
|                                         |  |   |                   |  |   |                  
|SHAREHOLDERS' EQUITY                     |  |   |                   |  |   |                  
|                                         |  |   |                   |  |   |                  
|SHARE CAPITAL (NOTE 6)                   |  |   | 44,702,328        |  |   | 34,543,268       
|                                         |  |   |                   |  |   |                  
|CONTRIBUTED SURPLUS (NOTE 6)             |  |   | 5,094,793         |  |   | 4,968,258        
|                                         |  |   |                   |  |   |                  
|ACCUMULATED OTHER COMPREHENSIVE INCOME   |  |   | 109,275           |  |   | 463              
|                                         |  |   |                   |  |   |                  
|DEFICIT                                  |  |   | (30,631,831)      |  |   | (29,431,669)     
|                                         |  |   |                   |  |   |                  
|                                         |  |   | 19,274,565        |  |   | 10,080,320       
|                                         |  |   |                   |  |   |                  
|                                         |  | $ | 19,366,455        |  | $ | 10,154,038       



CONTINGENCY (NOTES 1 AND 3)



COMMITMENTS (NOTE 3)













APPROVED BY THE DIRECTORS



Jeffrey P. Dahl



Jeffrey P. Dahl



Larry D. McLean



Larry D. McLean







THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS



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SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

FOR THE YEARS ENDED





|                                                                |  |  |  |                   |                   |                   |   |            |  |   |           
|--------------------------------------------------------------- |  |  |  | ----------------- | ----------------- | ----------------- | - | ---------- |  | - | ----------
|                                                                |  |  |  | DECEMBER 31,
2010 | DECEMBER 31,
2009 | DECEMBER 31,
2008
|GENERAL AND ADMINISTRATIVE
EXPENSES                             |  |  |  |                   |                   |                   |   |            |  |   |           
|                                                                |  |  |  |                   |                   |                   |   |            |  |   |           
|ACCOUNTING AND AUDIT                                            |  |  |  | $                 | 42,805            |                   | $ | 60,098     |  | $ | 59,422    
|AMORTIZATION                                                    |  |  |  |                   | 38,769            |                   |   | 35,944     |  |   | 44,902    
|BANK CHARGES (INTEREST INCOME)                                  |  |  |  |                   | 5,169             |                   |   | 2,469      |  |   | (38,535)  
|CONSULTING (NOTE 6)                                             |  |  |  |                   | 71,380            |                   |   | 67,126     |  |   | 105,764   
|FINANCE FEE (NOTE 6)                                            |  |  |  |                   | -                 |                   |   | 269,415    |  |   | -         
|FOREIGN EXCHANGE LOSS (GAIN)                                    |  |  |  |                   | (10,310)          |                   |   | (30,447)   |  |   | 44,211    
|LEGAL (NOTE 5)                                                  |  |  |  |                   | 82,224            |                   |   | 63,111     |  |   | 46,644    
|MINERAL INTERESTS ADMINISTRATION
AND INVESTIGATION COSTS        |  |  |  |                   | 208,939           |                   |   | 242,082    |  |   | 328,444   
|OFFICE, SUPPLIES, AND MISCELLANEOUS                             |  |  |  |                   | 102,474           |                   |   | 82,577     |  |   | 85,808    
|REGULATORY FEES                                                 |  |  |  |                   | 55,150            |                   |   | 22,831     |  |   | 24,975    
|SALARIES, BENEFITS AND STOCK-
BASED COMPENSATION (NOTE 5 AND 6) |  |  |  |                   | 487,938           |                   |   | 734,820    |  |   | 375,853   
|TRANSFER AGENT                                                  |  |  |  |                   | 11,906            |                   |   | 10,069     |  |   | 13,234    
|TRAVEL AND PROMOTION                                            |  |  |  |                   | 66,582            |                   |   | 31,690     |  |   | 64,223    
|                                                                |  |  |  |                   |                   |                   |   |            |  |   |           
|NET LOSS FROM OPERATIONS                                        |  |  |  |                   | 1,163,026         |                   |   | 1,591,785  |  |   | 1,154,945 
|                                                                |  |  |  |                   |                   |                   |   |            |  |   |           
|GAIN ON SALE OF ASSETS                                          |  |  |  |                   | -                 |                   |   | (39,444)   |  |   | -         
|MINERAL INTERESTS WRITTEN OFF
(NOTE 3)                          |  |  |  |                   | 37,136            |                   |   | 2,730,429  |  |   | 1,416,792 
|                                                                |  |  |  |                   |                   |                   |   |            |  |   |           
|NET LOSS                                                        |  |  |  |                   | 1,200,162         |                   |   | 4,282,770  |  |   | 2,571,737 
|                                                                |  |  |  |                   |                   |                   |   |            |  |   |           
|DEFICIT, BEGINNING                                              |  |  |  |                   | 29,431,669        |                   |   | 25,148,899 |  |   | 22,577,162
|                                                                |  |  |  |                   |                   |                   |   |            |  |   |           
|DEFICIT, ENDING                                                 |  |  |  | $                 | 30,631,831        |                   | $ | 29,431,669 |  | $ | 25,148,899
|                                                                |  |  |  |                   |                   |                   |   |            |  |   |           
|                                                                |  |  |  |                   |                   |                   |   |            |  |   |           
|BASIC AND DILUTED NET LOSS PER SHARE                            |  |  |  | $                 | 0.01              |                   | $ | 0.05       |  | $ | 0.03      





|                                              |  |  |  |  |             |  |  |            |  |  |           
|--------------------------------------------- |  |  |  |  | ----------- |  |  | ---------- |  |  | ----------
|WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING |  |  |  |  | 102,615,952 |  |  | 89,367,606 |  |  | 80,612,960















THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS





80

---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS AND

ACCUMULATED OTHER COMPREHENSIVE INCOME

FOR THE YEARS ENDED





|                                     |  |  |  |                   |                   |                   |   |             |  |   |            
|------------------------------------ |  |  |  | ----------------- | ----------------- | ----------------- | - | ----------- |  | - | -----------
|                                     |  |  |  | DECEMBER 31,
2010 | DECEMBER 31,
2009 | DECEMBER 31,
2008
|                                     |  |  |  |                   |                   |                   |   |             |  |   |            
|NET LOSS FOR THE YEAR                |  |  |  | $                 | (1,200,162)       |                   | $ | (4,282,770) |  | $ | (2,571,737)
|                                     |  |  |  |                   |                   |                   |   |             |  |   |            
|OTHER COMPREHENSIVE INCOME           |  |  |  |                   |                   |                   |   |             |  |   |            
|                                     |  |  |  |                   |                   |                   |   |             |  |   |            
|UNREALIZED FINANCIAL
INSTRUMENT GAIN |  |  |  |                   | 108,812           |                   |   | 33          |  |   | 14,978     
|                                     |  |  |  |                   |                   |                   |   |             |  |   |            
|COMPREHENSIVE LOSS FOR THE YEAR      |  |  |  | $                 | (1,091,350)       |                   | $ | (4,282,737) |  | $ | (2,556,759)







|                                                              |  |  |  |   |         |  |   |          |  |   |       
|------------------------------------------------------------- |  |  |  | - | ------- |  | - | -------- |  | - | ------
|ACCUMULATED OTHER COMPREHENSIVE
INCOME, BEGINNING OF THE YEAR |  |  |  | $ | 463     |  | $ | 32,705   |  | $ | 17,727
|                                                              |  |  |  |   |         |  |   |          |  |   |       
|UNREALIZED FINANCIAL
INSTRUMENT GAIN                          |  |  |  |   | 108,812 |  |   | 33       |  |   | 14,978
|REALIZED FINANCIAL
INSTRUMENT (LOSS)                          |  |  |  |   | -       |  |   | (32,275) |  |   | -     
|                                                              |  |  |  |   |         |  |   |          |  |   |       
|ACCUMULATED OTHER COMPREHENSIVE
INCOME, END OF THE YEAR       |  |  |  | $ | 109,275 |  | $ | 463      |  | $ | 32,705

































































THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS











81

---







SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF MINERAL INTERESTS

FOR THE YEARS ENDED





|                                 |                   |                   |                   |   |             |  |   |            
|-------------------------------- | ----------------- | ----------------- | ----------------- | - | ----------- |  | - | -----------
|                                 | DECEMBER 31,
2010 | DECEMBER 31,
2009 | DECEMBER 31,
2008
|DEFERRED EXPENDITURES            |                   |                   |                   |   |             |  |   |            
|                                 |                   |                   |                   |   |             |  |   |            
|CHIMBEROS - CHILE                | $                 | 32,937            |                   | $ | 34,143      |  | $ | 31,516     
|ESPEJISMO - CHILE                |                   | 4,016             |                   |   | 469         |  |   | 5,611      
|INCA - CHILE                     |                   | 157,494           |                   |   | 351,889     |  |   | 1,283,770  
|LOS ZORROS - CHILE               |                   | 1,087,405         |                   |   | 636,181     |  |   | 266,122    
|MISCELLANEOUS PROPERTIES - CHILE |                   | 2,547             |                   |   | 6,671       |  |   | 15,188     
|EL DESIERTO - BOLIVIA            |                   | 1,282             |                   |   | 698         |  |   | -          
|ESKAPA - BOLIVIA                 |                   | 29,291            |                   |   | 20,328      |  |   | 18,754     
|                                 |                   |                   |                   |   |             |  |   |            
|EXPENDITURES                     |                   | 1,314,972         |                   |   | 1,050,379   |  |   | 1,620,961  
|                                 |                   |                   |                   |   |             |  |   |            
|WRITTEN OFF                      |                   |                   |                   |   |             |  |   |            
|                                 |                   |                   |                   |   |             |  |   |            
|ESPEJISMO  CHILE                |                   | (4,016)           |                   |   | (469)       |  |   | (5,611)    
|INCA - CHILE                     |                   | -                 |                   |   | (2,699,263) |  |   | -          
|MISCELLANEOUS PROPERTIES  CHILE |                   | (2,547)           |                   |   | (6,671)     |  |   | (15,188)   
|EL DESIERTO - BOLIVIA            |                   | (1,282)           |                   |   | (698)       |  |   | -          
|ESKAPA - BOLIVIA                 |                   | (29,291)          |                   |   | (20,328)    |  |   | (1,395,993)
|WALTER - BOLIVIA                 |                   | -                 |                   |   | (1,000)     |  |   | -          
|WARA WARA - BOLIVIA              |                   | -                 |                   |   | (1,000)     |  |   | -          
|YARETANI - BOLIVIA               |                   | -                 |                   |   | (1,000)     |  |   | -          
|                                 |                   | 1,277,836         |                   |   | (1,680,050) |  |   | 204,169    
|                                 |                   |                   |                   |   |             |  |   |            
|BALANCE, BEGINNING               |                   | 9,021,953         |                   |   | 10,702,003  |  |   | 10,497,834 
|                                 |                   |                   |                   |   |             |  |   |            
|BALANCE, ENDING                  | $                 | 10,299,789        |                   | $ | 9,021,953   |  | $ | 10,702,003 
|                                 |                   |                   |                   |   |             |  |   |            
|SUMMARY OF DEFERRED EXPENDITURES |                   |                   |                   |   |             |  |   |            
|                                 |                   |                   |                   |   |             |  |   |            
|CHILE                            |                   |                   |                   |   |             |  |   |            
|CHIMBEROS                        | $                 | 168,185           |                   | $ | 135,248     |  | $ | 101,105    
|ESPEJISMO                        |                   | 1,000             |                   |   | 1,000       |  |   | 1,000      
|INCA                             |                   | 3,657,494         |                   |   | 3,500,000   |  |   | 5,847,374  
|LOS ZORROS                       |                   | 6,469,110         |                   |   | 5,381,705   |  |   | 4,745,524  
|MISCELLANEOUS PROPERTIES         |                   | 1,000             |                   |   | 1,000       |  |   | 1,000      
|BOLIVIA                          |                   |                   |                   |   |             |  |   |            
|EL DESIERTO                      |                   | 1,000             |                   |   | 1,000       |  |   | 1,000      
|ESKAPA                           |                   | 1,000             |                   |   | 1,000       |  |   | 1,000      
|SANTA ISABEL                     |                   | 1,000             |                   |   | 1,000       |  |   | 1,000      
|WALTER                           |                   | -                 |                   |   | -           |  |   | 1,000      
|WARA WARA                        |                   | -                 |                   |   | -           |  |   | 1,000      
|YARETANI                         |                   | -                 |                   |   | -           |  |   | 1,000      
|                                 |                   |                   |                   |   |             |  |   |            
|                                 | $                 | 10,299,789        |                   | $ | 9,021,953   |  | $ | 10,702,003 











THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS



82

---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF MINERAL INTERESTS (CONTINUED)

FOR THE YEARS ENDED



|                                     |                   |                   |                   |   |         |  |   |          
|------------------------------------ | ----------------- | ----------------- | ----------------- | - | ------- |  | - | ---------
|                                     | DECEMBER 31,
2010 | DECEMBER 31,
2009 | DECEMBER 31,
2008
|DETAILS OF EXPENDITURES - CHILE      |                   |                   |                   |   |         |  |   |          
|                                     |                   |                   |                   |   |         |  |   |          
|CHIMBEROS  CHILE                    |                   |                   |                   |   |         |  |   |          
|DRILLING AND SUB-CONTRACTS           | $                 | 12,473            |                   | $ | 12,753  |  | $ | 4,160    
|FIELD SUPPLIES                       |                   | -                 |                   |   | 96      |  |   | -        
|GEOLOGY, MAPPING, AND SURVEYS        |                   | -                 |                   |   | 10,073  |  |   | -        
|MINERAL INTERESTS ACQUISITION COSTS  |                   | 2,260             |                   |   | 3,216   |  |   | 1,442    
|PROPERTY PATENT PAYMENTS             |                   | 12,092            |                   |   | 1,599   |  |   | 17,835   
|SITE ADMINISTRATION                  |                   | 6,112             |                   |   | 6,406   |  |   | 8,079    
|                                     | $                 | 32,937            |                   | $ | 34,143  |  | $ | 31,516   
|                                     |                   |                   |                   |   |         |  |   |          
|ESPEJISMO - CHILE                    |                   |                   |                   |   |         |  |   |          
|DRILLING AND SUB-CONTRACTS           | $                 | 206               |                   | $ | -       |  | $ | -        
|MINERAL INTEREST ACQUISITION COSTS   |                   | -                 |                   |   | -       |  |   | 66       
|PROPERTY PATENT PAYMENTS             |                   | 3,810             |                   |   | -       |  |   | 3,829    
|SITE ADMINISTRATION                  |                   | -                 |                   |   | 469     |  |   | 1,716    
|                                     | $                 | 4,016             |                   | $ | 469     |  | $ | 5,611    
|                                     |                   |                   |                   |   |         |  |   |          
|INCA - CHILE                         |                   |                   |                   |   |         |  |   |          
|DRILLING AND SUB-CONTRACTS           | $                 | 47,588            |                   | $ | 102,359 |  | $ | 318,576  
|FIELD SUPPLIES                       |                   | 15,236            |                   |   | 20,234  |  |   | 42,434   
|FOOD AND LODGING                     |                   | -                 |                   |   | -       |  |   | 254      
|GEOLOGY, MAPPING, AND SURVEYS        |                   | -                 |                   |   | 42,901  |  |   | 353,984  
|LEGAL                                |                   | 3,958             |                   |   | 6,734   |  |   | 24,000   
|MINERAL INTERESTS ACQUISITION COSTS  |                   | 4,734             |                   |   | 109,983 |  |   | 392,653  
|PROPERTY PATENT PAYMENTS             |                   | 59,884            |                   |   | 6,870   |  |   | 70,314   
|SITE ADMINISTRATION                  |                   | 26,094            |                   |   | 32,738  |  |   | 64,728   
|TRAVEL                               |                   | -                 |                   |   | 919     |  |   | 5,263    
|VALUE ADDED TAXES                    |                   | -                 |                   |   | 29,151  |  |   | 11,564   
|                                     | $                 | 157,494           |                   | $ | 351,889 |  | $ | 1,283,770
|                                     |                   |                   |                   |   |         |  |   |          
|LOS ZORROS - CHILE                   |                   |                   |                   |   |         |  |   |          
|ADVANCE NET SMELTER ROYALTY PAYMENTS | $                 | 106,203           |                   | $ | 122,429 |  | $ | 99,574   
|DRILLING AND SUB-CONTRACTS           |                   | 446,025           |                   |   | 47,046  |  |   | 62,995   
|FIELD SUPPLIES                       |                   | 26,678            |                   |   | 17,987  |  |   | 16,717   
|GEOLOGY, MAPPING, AND SURVEYS        |                   | 263,573           |                   |   | 311,608 |  |   | -        
|LEGAL                                |                   | 4,068             |                   |   | -       |  |   | -        
|MINERAL INTERESTS ACQUISITION COSTS  |                   | 14,759            |                   |   | 1,725   |  |   | 11,812   
|PROPERTY PATENT PAYMENTS             |                   | 57,982            |                   |   | 65,508  |  |   | 55,491   
|SITE ADMINISTRATION                  |                   | 43,589            |                   |   | 19,604  |  |   | 19,533   
|TRAVEL                               |                   | -                 |                   |   | 4,756   |  |   | -        
|VALUE ADDED TAXES                    |                   | 124,528           |                   |   | 45,518  |  |   | -        
|                                     | $                 | 1,087,405         |                   | $ | 636,181 |  | $ | 266,122  
|                                     |                   |                   |                   |   |         |  |   |          
|MISCELLANEOUS PROPERTIES  CHILE     |                   |                   |                   |   |         |  |   |          
|DRILLING AND SUB-CONTRACTS           | $                 | 199               |                   | $ | 171     |  | $ | 3,795    
|FIELD SUPPLIES                       |                   | -                 |                   |   | -       |  |   | 121      
|MINERAL INTERESTS ACQUISITION COSTS  |                   | 1,935             |                   |   | 273     |  |   | 1,151    
|PROPERTY PATENT PAYMENTS             |                   | 413               |                   |   | 6,173   |  |   | 9,759    
|SITE ADMINISTRATION                  |                   | -                 |                   |   | 54      |  |   | 362      
|                                     | $                 | 2,547             |                   | $ | 6,671   |  | $ | 15,188   
|                                     |                   |                   |                   |   |         |  |   |          



|                     |   |           |  |   |           |  |   |          
|-------------------- | - | --------- |  | - | --------- |  | - | ---------
|EXPENDITURES - CHILE | $ | 1,284,399 |  | $ | 1,029,353 |  | $ | 1,602,207





THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS



83

---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF MINERAL INTERESTS (CONTINUED)

FOR THE YEARS ENDED





|                                  |                   |                   |                   |   |        |  |   |       
|--------------------------------- | ----------------- | ----------------- | ----------------- | - | ------ |  | - | ------
|                                  | DECEMBER 31,
2010 | DECEMBER 31,
2009 | DECEMBER 31,
2008
|DETAILS OF EXPENDITURES - BOLIVIA |                   |                   |                   |   |        |  |   |       
|                                  |                   |                   |                   |   |        |  |   |       
|EL DESIERTO - BOLIVIA             |                   |                   |                   |   |        |  |   |       
|PROPERTY PATENT PAYMENTS          | $                 | 1,282             |                   | $ | 698    |  | $ | -     
|                                  |                   |                   |                   |   |        |  |   |       
|ESKAPA  BOLIVIA                  |                   |                   |                   |   |        |  |   |       
|AMORTIZATION                      | $                 | 5,287             |                   | $ | 5,286  |  | $ | 5,287 
|DRILLING AND SUB-CONTRACTS        |                   | -                 |                   |   | 1,319  |  |   | -     
|FUEL                              |                   | 46                |                   |   | -      |  |   | 1,893 
|LEGAL                             |                   | 97                |                   |   | 773    |  |   | 2,373 
|PROPERTY PATENT PAYMENTS          |                   | 23,861            |                   |   | 12,875 |  |   | -     
|REPAIRS AND MAINTENANCE           |                   | -                 |                   |   | -      |  |   | 887   
|TRAVEL                            |                   | -                 |                   |   | 75     |  |   | 8,314 
|                                  |                   |                   |                   |   |        |  |   |       
|                                  | $                 | 29,291            |                   | $ | 20,328 |  | $ | 18,754
|                                  |                   |                   |                   |   |        |  |   |       



|                       |   |        |  |   |        |  |   |       
|---------------------- | - | ------ |  | - | ------ |  | - | ------
|EXPENDITURES - BOLIVIA | $ | 30,573 |  | $ | 21,026 |  | $ | 18,754





|                       |   |           |  |   |           |  |   |          
|---------------------- | - | --------- |  | - | --------- |  | - | ---------
|EXPENDITURES - CHILE   | $ | 1,284,399 |  | $ | 1,029,353 |  | $ | 1,602,207
|                       |   |           |  |   |           |  |   |          
|EXPENDITURES - BOLIVIA |   | 30,573    |  |   | 21,026    |  |   | 18,754   
|                       |   |           |  |   |           |  |   |          
|TOTAL EXPENDITURES     | $ | 1,314,972 |  | $ | 1,050,379 |  | $ | 1,620,961







THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS





84

---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE YEARS ENDED



|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|------------------------------------------------------------ |  |  |  | ----------------- | ----------------- | ----------------- | - | ----------- |  | - | -----------
|                                                             |  |  |  | DECEMBER 31,
2010 | DECEMBER 31,
2009 | DECEMBER 31,
2008
|CASH FLOWS FROM OPERATING ACTIVITIES                         |  |  |  |                   |                   |                   |   |             |  |   |            
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|NET LOSS                                                     |  |  |  | $                 | (1,200,162)       |                   | $ | (4,282,770) |  | $ | (2,571,737)
|ADD NON-CASH ITEMS                                           |  |  |  |                   |                   |                   |   |             |  |   |            
|AMORTIZATION                                                 |  |  |  |                   | 38,769            |                   |   | 35,944      |  |   | 44,902     
|FINANCE FEES                                                 |  |  |  |                   | -                 |                   |   | 269,415     |  |   |            
|GAIN ON SALE OF ASSETS                                       |  |  |  |                   | -                 |                   |   | (39,444)    |  |   | -          
|MINERAL INTERESTS AND
DEFERRED EXPLORATION
COSTS WRITTEN OFF |  |  |  |                   | 37,136            |                   |   | 2,730,429   |  |   | 1,416,792  
|STOCK-BASED COMPENSATION                                     |  |  |  |                   | 126,535           |                   |   | 409,996     |  |   | 5,873      
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|CHANGES IN NON-CASH WORKING
CAPITAL ITEMS                    |  |  |  |                   |                   |                   |   |             |  |   |            
|OTHER CURRENT ASSETS                                         |  |  |  |                   | 7,432             |                   |   | (4,335)     |  |   | 32,987     
|ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES                     |  |  |  |                   | 18,172            |                   |   | (30,510)    |  |   | (2,235)    
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|NET CASH USED IN
OPERATING ACTIVITIES                        |  |  |  |                   | (972,118)         |                   |   | (911,275)   |  |   | (1,073,418)
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|CASH FLOWS FROM FINANCING ACTIVITIES                         |  |  |  |                   |                   |                   |   |             |  |   |            
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|COMMON SHARES  FOR CASH                                     |  |  |  |                   | 10,159,060        |                   |   | 2,582,550   |  |   | 1,539,000  
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|NET CASH PROVIDED

BY FINANCING ACTIVITIES                   |  |  |  |                   | 10,159,060        |                   |   | 2,582,550   |  |   | 1,539,000  
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|CASH FLOWS FROM INVESTING ACTIVITIES                         |  |  |  |                   |                   |                   |   |             |  |   |            
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|MINERAL INTERESTS                                            |  |  |  |                   | (1,309,685)       |                   |   | (937,900)   |  |   | (1,565,216)
|EQUIPMENT                                                    |  |  |  |                   | (30,019)          |                   |   | 5,077       |  |   | (666)      
|GOLD AND SILVER BULLION                                      |  |  |  |                   | (3,997,764)       |                   |   | 75,219      |  |   | (17,678)   
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|NET CASH USED IN

INVESTING ACTIVITIES                       |  |  |  |                   | (5,337,468)       |                   |   | (857,604)   |  |   | (1,583,560)
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|NET CHANGE IN CASH                                           |  |  |  |                   | 3,849,474         |                   |   | 813,671     |  |   | (1,117,978)
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|CASH, BEGINNING                                              |  |  |  |                   | 1,020,863         |                   |   | 207,192     |  |   | 1,325,170  
|                                                             |  |  |  |                   |                   |                   |   |             |  |   |            
|CASH, ENDING                                                 |  |  |  | $                 | 4,870,337         |                   | $ | 1,020,863   |  | $ | 207,192    





|                                    | 
|----------------------------------- | 
|SUPPLEMENTARY CASH FLOW
INFORMATION | 



|                       |  |  |  |   |   |  |   |   |  |   |  
|---------------------- |  |  |  | - | - |  | - | - |  | - | -
|CASH PAID FOR INTEREST |  |  |  | $ | - |  | $ | - |  | $ | -



|                           |  |  |  |   |   |  |   |   |  |   |  
|-------------------------- |  |  |  | - | - |  | - | - |  | - | -
|CASH PAID FOR INCOME TAXES |  |  |  | $ | - |  | $ | - |  | $ | -











THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL STATEMENTS.





85

---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009



1.

BASIS OF PRESENTATION



These consolidated financial statements include the accounts of SAMEX Mining Corp. (the Company) and its subsidiaries.  The Company is incorporated in British Columbia and trades on the TSX Venture Exchange (the Exchange). The Company is engaged in the acquisition and exploration of mineral properties.  The Companys subsidiaries are:



NAME

LOCATION

OWNERSHIP

South American Mining & Exploration Corp. (S.A.M.E.X.)

Canada

100%

Samex International Ltd.

Bahamas

100%

Samex S.A.

Bolivia

98%

Minas Bolivex S.A. (Bolivex)

Bolivia

98%

Empresa Minera Boliviana S.A. (Emibol)

Bolivia

98%

Minera Samex Chile S.A.

Chile

99.9%



These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) and are presented in Canadian dollars.



Going Concern - These financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations.  As at December 31, 2010, the Company had incurred losses since inception totalling $30,631,831.  Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future.  As at December 31, 2010, the Company had not advanced its projects to commercial production and is not able to finance day-to-day activities through operations.



The Companys continued existence as well as the recovery of amounts capitalized as mineral property interests, is dependent upon the Company raising additional funds through issuance of its common stock, obtaining debt financing, selling a portion of its mineral property interests, or entering into joint venture agreements with other parties.  Management is currently evaluating other sources of financing, but there is no assurance that additional financing will be available, if needed, on terms acceptable to the Company. These uncertainties represent liquidity risks and may impact the Companys ability to continue as a going concern in the future.



2.

SIGNIFICANT ACCOUNTING POLICIES



a.

Principles of Consolidation  These consolidated financial statements include the accounts of the Company and its subsidiaries.  All inter-company transactions and balances have been eliminated upon consolidation.



b.

Use of Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, including fair value of financial instruments, stock-based compensation, determination of impairment of assets, carrying value of mineral interests and estimating future income tax rates, that affect the amounts reported in the financial statements and accompanying disclosures.  Although these estimates are based on management's best knowledge of current events and actions the Company may undertake in the future, actual results ultimately may differ from the estimates.



c.

Financial Instruments  The Company follows Canadian Institute of Chartered Accountants (CICA) Handbook Sections 3855, Financial Instruments - Recognition and Measurement.  Under Section 3855, financial instruments must be classified into one of five categories: held-for-trading, held-to-maturity, loans and receivables, available-for-sale financial assets, or other financial liabilities.  All financial instruments, including derivatives, are measured at the balance sheet date at fair value except for loans and receivables, held-to-maturity investments, and otherfinancial liabilities which are measured at amortized cost.  The Companys financial instruments consist of cash, gold and silver bullion and accounts payable.  Cash, which is measured at its face value, representing fair value, is classified as held for trading.  Gold and silver bullion, which are measured at fair value, are classified as available-for-sale financial assets.  Accounts payable, which are measured at amortized cost, are classified as other financial liabilities.  The Company has determined that it does not have derivatives or embedded derivatives.



The CICA Handbook Section 3862, Financial Instruments  Disclosure, requires an entity to classify fair value measurements in accordance with an established hierarchy that prioritizes the inputs in valuation techniques used to measure fair value. The levels and inputs which may be used to measure fair value are as follows:

Level 1  fair values are based on quoted prices in active markets for identical assets or liabilities;

Level 2  fair values are based on inputs other than quoted prices that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); or

Level 3  applies to assets and liabilities for inputs that are not based on observable market data, which are unobservable inputs.

Financial instruments classified as level 1 include cash and gold and silver bullion.



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d.

Mineral Interests - The Company is engaged in the exploration of mineral interests and records its investment in mineral interests at the lower of acquisition and capitalized mineral exploration expenditures or estimated recoverable value.  Where specific exploration programs are planned and budgeted by management, mineral exploration costs are capitalized until the properties are placed into commercial production, sold, abandoned or determined by management to be impaired in value.  Costs incurred for acquisition, including where applicable, lease and option payments made on properties that are held under lease and option agreements, are capitalized until such time as the related interest is placed into production, sold, abandoned, or management has determined that impairment in value has occurred.  Mineral Property Acquisition Costs include the following: third party acquisition costs, property option payments and third party staking costs.



In addition, the Company incurs certain value added taxes in connection with its Chilean exploration activities.  These costs are initially capitalized.  When the recoverability of these amounts has been established, the amount determined to be recoverable is recorded as a reduction of the carrying value of the related property.



Management evaluates each mineral interest on a reporting period basis or as events and circumstances warrant; and makes a determination based on exploration activity and results, estimated future cash flows and availability of funding as to whether costs are capitalized or impaired.  Mineral interests, where future cash flows are not reasonably determinable, are evaluated for impairment based on managements intentions and determination of the extent to which future exploration programs are warranted and likely to be funded.



Capitalized expenditures as reported on the balance sheet represent acquisition and capitalized mineral exploration expenditures incurred to date or estimated recoverable value if lower than cost.  The carrying values of Mineral Interests are not reflective of current or future values of the interests.  Recovery of carrying value is dependent upon future commercial success or proceeds from disposition of the mineral interests.



Upon the establishment of commercial production, carrying values of deferred acquisition and exploration expenditures will be amortized over the estimated life of the mine on the units of production method.



Mineral Interest Investigation Costs are expensed as incurred and are not capitalized to mineral interests, and include operating costs related to the Companys exploration activities that do not specifically relate to one of the Companys mineral interests and include generative exploration or investigating and evaluating mineral interests not acquired by the Company.



e.

Foreign Currency Translation  These financial statements are presented in Canadian dollars. Foreign denominated monetary assets and liabilities are translated to their Canadian dollar equivalents using foreign exchange rates in effect at the balance sheet date. Non-monetary items are translated at historical exchange rates. Expenses are translated at average rates of exchange during the year. Exchange gains and losses arising on foreign currency translation are included in the determination of operating results for the year.



f.

Loss Per Share  The Company uses the treasury stock method to determine the dilutive effect of stock options and other dilutive instruments.  The treasury stock method assumes that proceeds received from in-the-money stock options and other dilutive instruments are used to repurchase common shares at the prevailing market rate.



Basic loss per share figures have been calculated using the weighted average number of shares outstanding during the respective years.  Diluted loss per share figures are equal to those of basic loss per share for each year since the effects of the stock options and share purchase warrants have been excluded as they are anti-dilutive.



g.

Equipment - Equipment is recorded at cost.  The cost, less the salvage or residual value, is charged to operations or exploration activities over the useful life of the asset on a straight line basis: Office equipment - 4 to 10 years; Exploration equipment - 4 to 8 years; Vehicles - 5 years.



h.

Stock-Based Compensation  The fair value of stock options granted is determined using the Black-Scholes option pricing model and recorded as stock-based compensation expenses over the vesting period of the stock options.



i.

Future Income Taxes  The Company follows CICA Section 3465 Income Taxes in accounting for income taxes.  The Company accounts for income taxes whereby the cost (benefit) of current and future income taxes is recognized as income tax expense in the determination of results of operations for the year.  Future income tax liabilities (assets) are the amount of income taxes arising from taxable temporary differences between the tax base of an asset or liability and its carrying amount in the balance sheet.  Income tax liabilities and assets are recognized when they are more likely than not to be realized and are measured using the income tax rates and laws that are expected to apply at the time of settlement or realization.



j.

Asset Retirement Obligations - The Company follows the accounting guidelines of the CICA Handbook Section 3110, relating to the recognition and disclosure of liabilities for long lived asset retirement obligations and associated asset retirement costs. A liability for future site reclamation costs, or other obligation, would be recorded at its fair value when determinable and a corresponding increase to the asset carrying value would be amortized over the useful life of the asset. Management has reviewed the anticipated obligations and retirement costs of long lived assets for known
obligations under contract, common practice, or laws and regulations in effect or anticipated and has concluded that the Company has no material obligations relating to asset retirement obligations.



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k.

Impairment of Long-Lived Assets - The carrying value of long-lived assets with fixed or determinable lives are reviewed for impairment whenever events or changes in circumstances indicate the recoverable value may be less than the carrying amount. Recoverable value determinations are based on managements estimates of undiscounted future net cash flows expected to be recovered from specific assets or groups of assets through use or future disposition. Impairment charges are recorded in the period in which determination of impairment is made by management.



Assets with indefinite or indeterminable lives are not amortized and are reviewed for impairment on a reporting basis using fair value determinations through managements estimate or recoverable value.



l.

Comprehensive Income  The Company adopted CICA Handbook Section 1530, Comprehensive Income.  Section 1530 establishes standards for the reporting and presenting of comprehensive income which is defined as the change in equity from transaction and other events from non-owner sources.  Other comprehensive income refers to items recognized in comprehensive income that are excluded from net loss.



m.

Comparative Figures  Certain accounts in the prior years financial statements have been re-classified for comparative purposes to conform with the presentation in the current financial statements.



n.

Recent Accounting Policies, Not Yet Adopted - For interim and annual financial statements relating to fiscal years commencing on or after January 1, 2011, the Company will be required to adopt new CICA Section 1582 Business Combinations, Section 1601 Consolidated Financial Statements and Section 1602 Non-Controlling Interests.  Section 1582 replaces existing Section 1581 Business Combinations, and Sections 1601 and 1602 together replace Section 1600 Consolidated Financial Statements.  The adoption of Sections 1582 and collectively, 1601 and 1602 provides the Canadian equivalent to IFRS 3 Business Combinations and International Accounting Standard (IAS) 27 Consolidated and Separate Financial Statements respectively.  Management does not consider that the adoption of these standards will have a significant impact on the Companys financial statements.



In January 2006, the CICA Accounting Standards Board (AcSB) adopted a strategic plan for the direction of accounting standards in Canada. As part of that plan, accounting standards in Canada for public companies will converge with International Financial Reporting Standards (IFRS) by the end of 2011. The transition date of January 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company for the year ended December 31, 2010.  The Company is currently evaluating the impact of adopting IFRS on its consolidated financial statements. The Company will address the design, planning, solution development and implementation of the conversion in in the first quarter of 2011.



Other pronouncements issued by the CICA or other authoratitive standards groups with future effective dates are neither applicable or are not expected to be significant to the financial statements of the Company.



3.

MINERAL INTERESTS



The Company has invested in various mineral interests located in Chile and Bolivia. The mineral interests have been acquired by purchase agreements, staking, option agreements, purchase at government auctions, or by earning a percentage interest in certain properties pursuant to a joint venture or other type of agreement.  Government patent fees must be paid each year in order to keep the mineral concessions valid and in effect.



CHILE



i.

Los Zorros Property  The Company has 100% interest in approximately 7,782 hectares of mineral concessions acquired by staking, purchase at government auction, purchase agreement, and by two purchase option contracts:



Minera Ojos del Salado Purchase  The Company acquired 100% interest in 1,429 hectares of mineral interests for US$50,000 (paid).  The vendor retained a back-in option to earn a 30% to 51% interest in the event that the Company discovers a deposit containing not less than 2,000,000 tonnes of contained equivalent copper on the property.



Hochschild Option  The Company acquired 100% interest in 209 hectares of mineral interests for consideration of option payments totaling US$230,000 (paid). The concessions are subject to an NSR of up to 2%.  The Company has the option to buyout the NSR at any time for US$1,800,000.  As the concessions where not in production as at December 31, 2007, the Company is required to pay annual advance NSR payments of US$100,000 per year from February 29, 2008 to March 1, 2012 to a maximum of US$500,000 (US$300,000 paid). The advance NSR payments are recoverable from future NSR payments.  The Company is not obligated to make the advance NSR payments if it elects to return the concessions to the previous owner.



San Estaban Option - The Company acquired 100% interest in 95 hectares of mineral interests for consideration of option payments totaling US$200,000 (paid).  A 1.5% NSR retained by the vendor.



Geosupply Servicios Bonus and Royalty - Pursuant to a consulting agreement dated September 25, 2002 the concessions comprising the Los Zorros property are subject to a bonus of US$150,000 payable within one year from the date of commencement of commercial production on the concessions; and to a 0.25% NSR.



ii.

Chimberos Property (formerly Tres Puntas/Chimbero) The Company has 100% interest in approximately 1,672 hectares of mineral concessions acquired by staking and purchasing concessions at government auction.







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iii.INCA Property  The Company has a 100% interest in approximately 3,493 hectares of mineral concessions acquired by staking, purchase at government auction, a purchase agreement, and exercise of an option agreement:



Araya Option  The Company acquired 100% interest in 45 hectares of mineral interests (the Providencia Mine concessions situated within the greater INCA project area) for consideration of option payments totaling US$300,000 (paid).  A 1% NSR retained by the vendor for a period of 20 years.  The Company has the option to buyout the NSR at any time for US$500,000.



The Company also has the option to acquire additional concessions of mineral interests in the INCA project area pursuant to the Minera Porvenir Option and the Rojas Option agreements:



Minera Porvenir Option - Option to acquire 2,138 hectares of mineral interests for consideration of US$2,000,000 (US$1,000,000 paid).  Option payment due: US$1,000,000 comprised of US$38,500 (has not been paid) payable on behalf of the optionor to a third party when they resolve certain title issues on a 85-hectare portion of the property, and US$961,500 that was due March 31, 2009 (has not been paid).  A 1% NSR has been retained by the vendor and the vendor has the right to purchase up to 50% of any oxide-copper production at cost from the Company (to a limit of 10,000 tonnes per month) and subject to a cumulative maximum of 1,200,000 tonnes or ten years, which ever is reached first.



Rojas Option - Option to acquire 20 hectares of mineral interests for consideration of US$300,000 (US$150,000 paid).  The option payment was due: April 30, 2009 - US$150,000 (has not been paid).



The Company has not made the option payment of US$1,000,000 that was due March 31, 2009 pursuant to the Minera Porvenir Option, therefore the owner may terminate the option by giving 30 days written notice.  Also, the Company has not made the option payment of US$150,000 that was due April 30, 2009 pursuant to the Rojas Option, therefore the owner may terminate the option by giving 30 days written notice.  The Company has not received written notice of default with respect to non-payment of the option payments that were due under the Minera Porvenir Option and the Rojas Option. The Company has determined that, in light of economic and market conditions, exploration results to date on these concessions and other factors, expenditures on these option payments are not justified at this time.  As a result, these options may be terminated and the Company may be required to relinquish these portions of the INCA property.  Accordingly, the recoverability of the carrying value on these portions of the INCA property is dependent on the outcome of the above contingencies. Due to the possibility of relinquishing these portions of the INCA property, the Company wrote-off a $2,699,263 portion of the deferred expenditures on the INCA property at December 31, 2009.



iv.

Espejismo Prospects The Company has 100% interest in approximately 817 hectares of mineral concessions acquired by staking and purchasing concessions at government auction.  The property is currently inactive and consequently the interest has been written down at December 31, 2010 to a nominal value of $1,000.



v.

Miscellaneous Property Interests- The Company holds mineral concessions (approximately 25 hectares) for possible future evaluation.  The property is inactive and no exploration is currently planned, consequently the interest has been written down at December 31, 2010 to a nominal value of $1,000.



BOLIVIA



i.

Eskapa Property  The Company has a 99% interest in 3,700 hectares of mineral concessions.  The concessions are owned by Empresa Minera El Roble S.A. (El Roble S.A.), a company controlled by a Bolivian national, Patricio Kyllmann, a former director of the Company.  Emibol earned a 99% interest in any mining operations that may be established on the concessions pursuant to an agreement dated April 16, 1996, and as amended November 23, 1998 with El Roble S.A.   The property is subject to a 0.06% NSR and to a US$2,000,000 cash royalty, to be paid out of production on the property in eight equal quarterly payments of US$250,000 beginning after the ninth month of continuous commercial mining operations on the property.  The property is currently inactive and consequently the interest has been written down at December 31, 2010 to a nominal value of $1,000.



ii.

El Desierto Property - The Company has a 99% interest in 319 hectares of mineral concessions.  The concessions are owned by El Roble S.A.  Emibol earned a 99% interest in any mining operations which may be established on the concessions pursuant to an agreement dated April 16, 1996 and as amended November 23, 1998 with El Roble S.A.  The property is subject to an NSR of 0.6%.  The property is currently inactive and consequently the interest has been written down at December 31, 2010 to a nominal value of $1,000.



iii. Santa Isabel Property  The Company has an interest in 1,803 hectares of mineral concessions covering a portion of the Goya I and El Bonete concessions pursuant to an agreement between Corporation Minera de Bolivia (Comibol) and the Companys Bolivian subsidiary, Samex S.A.  Comibol owns the Goya I and Bonete concessions and pays the annual patents on theses concessions.  The concessions are subject to a royalty payable to Comibol, equal to 5.5% of net positive cash flow until recovery of capital investment and thereafter 16% of net positive cash flow.  The concessions are also subject to a 1.2% Net Profits interest based on Samex S.A.s net profits interest in the property.  Subsequent to 1998, the Company suspended its activities on the property due to certain legal proceedings between Comibol and a third party.  Comibol confirmed that a 10-hectare and a 24-hectare portion of the property was subject to a claim by a third party.  Samex S.A. advised Comibol that it considered Comibol to be in default of its obligations under the Comibol Agreement because of the dispute, but agreed to await the results of legal proceedings before taking further action.  Issues concerning the Agreement between Comibol and Samex S.A. have not yet been resolved.  Due to the inactivity on the property, the
interest has been written down to a nominal value of $1,000 pending resolution of these issues.



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iv.

Walter Property, Wara Wara Property, and Yaretani Property Abandoned In 2009 - the Company abandoned these three low-priority, inactive properties in Bolivia in 2009. The $1,000 deferred expenditure carrying value for each of the Walter, Wara Wara and Yaretani properties was written off during the year ended December 31, 2009.



4.

EQUIPMENT





|                      |                      |                          |                |           |                          |               
|--------------------- | -------------------- | ------------------------ | -------------- | --------- | ------------------------ | --------------
|                      | AT DECEMBER 31, 2010 | AT DECEMBER 31, 2009    
|                      |                      |                         
|                      | COST                 | ACCUMULATED
AMORTIZATION | NET BOOK
VALUE | COST      | ACCUMULATED
AMORTIZATION | NET BOOK
VALUE
|                      |                      |                          |                |           |                          |               
|Office equipment      | $
132,321            | $
113,053                | $
19,268       | $
128,379 | $
104,838                | $
23,541      
|Exploration equipment | 61,329               | 59,544                   | 1,785          | 61,169    | 47,476                   | 13,693        
|Vehicles              | 150,225              | 114,833                  | 35,392         | 124,308   | 91,060                   | 33,248        
|                      |                      |                          |                |           |                          |               
|                      | $
343,875            | $
287,430                | $
56,445       | $
313,856 | $
243,374                | $
70,482      





5.

RELATED PARTY TRANSACTIONS



During the year ended December 31, 2010, a director charged the Company $28,387 for legal services (2009 - $17,650).  Employees who are also directors or officers of the Company were paid a total of $466,691 during the year ended December 31, 2010, of which $137,791 was capitalized to mineral interests (2009 - $434,000 of which $130,400 was capitalized).





6.

SHARE CAPITAL



a.

Authorized



Unlimited Common Shares without par value.

Unlimited Preferred Shares



b.

Issued



Common Shares





|                             |  |                  |             |  |       |           
|---------------------------- |  | ---------------- | ----------- |  | ----- | ----------
|                             |  | NUMBER OF SHARES |             |  | VALUE
|                             |  |                  |             |  |       |           
|Balance at December 31, 2008 |  |                  | 81,261,165  |  |       | 31,960,718
|                             |  |                  |             |  |       |           
|Private Placement            |  |                  |             |  |       |           
|At $0.10 per share           |  |                  | 7,830,500   |  |       | 783,050   
|At $0.20 per share           |  |                  | 3,000,000   |  |       | 600,000   
|Financing Costs              |  |                  |             |  |       |           
|Cash                         |  |                  | -           |  |       | (3,500)   
|Warrants exercised           |  |                  |             |  |       |           
|At $0.20 per share           |  |                  | 2,265,000   |  |       | 453,000   
|At $0.30 per share           |  |                  | 2,500,000   |  |       | 750,000   
|                             |  |                  |             |  |       |           
|Balance at December 31, 2009 |  |                  | 96,856,665  |  |       | 34,543,268
|                             |  |                  |             |  |       |           
|Private Placement            |  |                  |             |  |       |           
|At $0.30 per share           |  |                  | 3,647,334   |  |       | 1,094,200 
|At $0.50 per share           |  |                  | 17,583,720  |  |       | 8,791,860 
|Financing Costs              |  |                  |             |  |       |           
|Cash                         |  |                  | -           |  |       | (3,000)   
|Warrants exercised           |  |                  |             |  |       |           
|At $0.20 per share           |  |                  | 1,380,000   |  |       | 276,000   
|                             |  |                  |             |  |       |           
|Balance at December 31, 2010 |  |                  | 119,467,719 |  | $     | 44,702,328





Preferred Shares



In addition to common shares, the Companys authorized share capital includes preferred shares without par value, none of which are issued.  The board of directors is authorized, without further action by the shareholders, to issue preferred shares in one or more series and to set the number of shares constituting any such series and the designation, rights, privileges, restrictions and conditions attaching to the shares of such series including dividend rights and rates, redemption provisions (including sinking fund provisions), rights of conversion or exchange, liquidation preferences and voting rights, if any.  The preferred shares as a class are entitled to priority over the common shares if the board of directors decides to pay any dividends, and, if the Company is dissolved, liquidated or wound up, the preferred shares are entitled as a class to priority in respect of return of capital. Except as required by law or the provisions of any designated series of preferred shares, the holders of preferred shares as a class is not entitled to



90

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receive notice of, attend or vote at any meeting of the Companys shareholders.



c.

Warrants and Stock Options



(i)

Share Purchase Warrants



BALANCE
DEC 31, 2008ISSUED(EXERCISED)
OR {EXPIRED}BALANCE
DEC 31, 2009ISSUED
(EXERCISED)BALANCE
DEC 31, 2010EXERCISE PRICETERM TO400,000-{400,000}---$1.10Aug 25, 20091,744,000--1,744,000-1,744,000$0.78Feb 13, 20112,871,250--2,871,250-2,871,250$1.00Mar 16, 20111,282,500--1,282,500-1,282,500$0.70Apr 15, 2011----1,823,6681,823,668$0.35Jul 8, 2012-7,830,500(2,265,000)5,565,500(1,380,000)4,185,500$0.20Mar 24, 2014-3,000,000(2,500,000)500,000-500,000$0.30Jun 29, 2014----17,583,72017,583,720$0.60
or
0.65
or
0.70Dec 31, 2010
to Nov 1, 2011
to Nov 1, 20126,297,75010,830,500(5,165,000)11,963,25018,027,38829,990,638




As at December 31, 2010, the weighted average remaining life of the share purchase warrants is 1.71 years and the weighted average exercise price is $0.61.



During the year ended December 31, 2009, the Company extended the term of 4,615,250 warrants by two years.  This resulted in an incremental increase in the fair value of the warrants of $269,415 which was expensed as a finance charge in the statement of operations and deficit.





(ii)

Stock Options





The Company has adopted a stock option plan for which options to acquire up to 10% of the common shares outstanding at the time of the grant may be granted to eligible optionees.  The exercise price may not be less than the discounted market price, as prescribed by the policies of the Exchange.



|                     |  |                                              |  |                      |  |                                              |  |                      |  |   |                |  |             
|-------------------- |  | -------------------------------------------- |  | -------------------- |  | -------------------------------------------- |  | -------------------- |  | - | -------------- |  | ------------
|BALANCE
DEC 31, 2008 |  | GRANTED
(EXERCISED)
(EXPIRED) OR
(CANCELLED) |  | BALANCE
DEC 31, 2009 |  | GRANTED
(EXERCISED)
(EXPIRED) OR
(CANCELLED) |  | BALANCE
DEC 31, 2010 |  |   | EXERCISE PRICE |  | TERM TO     
|                     |  |                                              |  |                      |  |                                              |  |                      |  |   |                |  |             
|205,000              |  | (205,000)                                    |  | -                    |  | -                                            |  | -                    |  | $ | 1.00           |  | Feb 3, 2009 
|60,000               |  | (60,000)                                     |  | -                    |  | -                                            |  | -                    |  | $ | 0.50           |  | Aug 5, 2009 
|945,000              |  | (945,000)                                    |  | -                    |  | -                                            |  | -                    |  | $ | 1.10           |  | Aug 6, 2009 
|50,000               |  | -                                            |  | 50,000               |  | -                                            |  | 50,000               |  | $ | 0.80           |  | Sep 24, 2012
|60,000               |  | -                                            |  | 60,000               |  | -                                            |  | 60,000               |  | $ | 0.70           |  | Dec 20, 2012
|150,000              |  | -                                            |  | 150,000              |  | (150,000)                                    |  | -                    |  | $ | 0.65           |  | May 1, 2013 
|-                    |  | 60,000                                       |  | 60,000               |  | -                                            |  | 60,000               |  | $ | 0.20           |  | Jan 15, 2014
|-                    |  | -                                            |  | -                    |  | 110,000                                      |  | 110,000              |  | $ | 0.35           |  | Jan 29, 2015
|1,955,000            |  | -                                            |  | 1,955,000            |  | -                                            |  | 1,955,000            |  | $ | 0.40           |  | Apr 20, 2015
|-                    |  | -                                            |  | -                    |  | 430,000                                      |  | 430,000              |  | $ | 0.35           |  | Sep 16,2015 
|1,820,000            |  | (180,000)                                    |  | 1,640,000            |  | -                                            |  | 1,640,000            |  | $ | 0.85           |  | May 2, 2016 
|1,295,000            |  | (125,000)                                    |  | 1,170,000            |  | -                                            |  | 1,170,000            |  | $ | 0.84           |  | Feb 23, 2017
|-                    |  | 3,555,000                                    |  | 3,555,000            |  | -                                            |  | 3,555,000            |  | $ | 0.20           |  | Sep 2, 2019 
|                     |  |                                              |  |                      |  |                                              |  |                      |  |   |                |  |             
|6,540,000            |  | 2,100,000                                    |  | 8,640,000            |  | 390,000                                      |  | 9,030,000            |  |   |                |  |             



As at December 31, 2010, the weighted average remaining contractual life of the options is 6.43 years and the weighted average exercise price is $0.46.   All options have fully vested as at December 31, 2010.



Stock-Based Compensation - During the year ended December 31, 2010, the Company granted stock options to employees and consultants on a total of 540,000 shares at $0.35 per share with a fair value on the grant dates of $126,535.  A $76,530 portion of this stock-based compensation expense was expensed in the statement of operations in the category Salaries, Benefits and Stock-Based Compensation and $50,005 was expensed in the category Consulting.  The following assumptions were used for the Black-Scholes valuation of the stock options granted during 2010:  Expected dividend yield  0%; Expected stock price volatility  varying from 81 to 89%; Risk-free interest rate  varying from 2.25 to 3.00%; Expected life of options  5 years.



By comparison, during the year ended December 31, 2009, the Company granted stock options to consultants, employees, directors and officers of the Company on a total of 3,615,000 shares at $0.20 per share with a fair value on the grant dates of $522,475.  Of this stock-based compensation expense, a $362,834 portion was expensed in the statement of operations and deficit in the category Salaries, Benefits and Stock-Based Compensation, $47,162 was expensed in the category Consulting, and $112,479 was capitalized to mineral
interests in the category Geology, Mapping and Surveys in relation to grants to geologists working on the Los Zorros Property. The following assumptions were used for the Black-Scholes valuation of the stock options granted during 2009:  Expected dividend yield  0%; Expected stock price volatility  varying from 104 to 109%; Risk-free interest rate  varying from 0.50 to 1.25%; Expected life of options  varying from 5 to 10 years.



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d.

Contributed Surplus



|                                       |                                 |                                 |  |   |           | 
|-------------------------------------- | ------------------------------- | ------------------------------- |  | - | --------- | 
|                                       | FOR THE YEAR ENDED
DEC 31, 2010 | FOR THE YEAR ENDED
DEC 31, 2009
|                                       |                                 |                                 |  |   |           | 
|Contributed surplus balance, beginning | $                               | 4,968,258                       |  | $ | 4,176,368 | 
|Stock based compensation               |                                 | 126,535                         |  |   | 522,475   | 
|Warrant extension                      |                                 | -                               |  |   | 269,415   | 
|                                       |                                 |                                 |  |   |           | 
|Contributed surplus balance, ending    | $                               | 5,094,793                       |  | $ | 4,968,258 | 



7.

SEGMENTED INFORMATION



The Company is in the business of exploring and developing mineral resource properties located in South America. The Company has operations and incurs costs associated with assets in different geographic locations.Segmented information on the Company's sole industry segment reported by geographic area is as follows:



|                                                             |   |           |  |   |               |  |   |           
|------------------------------------------------------------ | - | --------- |  | - | ------------- |  | - | ----------
|At December 31, 2010                                         |   | CANADA    |  |   | SOUTH AMERICA |  |   | TOTAL     
|                                                             |   |           |  |   |               |  |   |           
|Operating expenses                                           |   |           |  |   |               |  |   |           
|Amortization                                                 | $ | 6,128     |  | $ | 32,641        |  | $ | 38,769    
|Foreign exchange gain                                        |   | -         |  |   | (10,310)      |  |   | (10,310)  
|Mineral interests administration
and investigation costs     |   | -         |  |   | 208,939       |  |   | 208,939   
|Salaries, benefits and stock-based compensation              |   | 487,938   |  |   | -             |  |   | 487,938   
|Administration and general                                   |   | 354,235   |  |   | 83,455        |  |   | 437,690   
|                                                             |   |           |  |   |               |  |   |           
|Net loss from operations                                     |   | 848,301   |  |   | 314,725       |  |   | 1,163,026 
|                                                             |   |           |  |   |               |  |   |           
|Mineral interests and deferred exploration costs
written off |   | -         |  |   | 37,136        |  |   | 37,136    
|                                                             |   |           |  |   |               |  |   |           
|Net loss                                                     | $ | 848,301   |  |   | 351,861       |  |   | 1,200,162 
|                                                             |   |           |  |   |               |  |   |           
|Expenditure for equipment and mineral interests              | $ | 3,297     |  | $ | 26,722        |  | $ | 30,019    
|                                                             |   |           |  |   |               |  |   |           
|Equipment and mineral interests                              | $ | 14,456    |  | $ | 10,341,778    |  | $ | 10,356,234
|                                                             |   |           |  |   |               |  |   |           
|Total assets                                                 | $ | 8,918,599 |  | $ | 10,447,856    |  | $ | 19,366,455



|                                                             |   |           |  |   |               |  |   |           
|------------------------------------------------------------ | - | --------- |  | - | ------------- |  | - | ----------
|At December 31, 2009                                         |   | CANADA    |  |   | SOUTH AMERICA |  |   | TOTAL     
|                                                             |   |           |  |   |               |  |   |           
|Operating expenses                                           |   |           |  |   |               |  |   |           
|Amortization                                                 | $ | 6,228     |  | $ | 29,716        |  | $ | 35,944    
|Foreign exchange gain                                        |   | -         |  |   | (30,447)      |  |   | (30,447)  
|Mineral interests administration
and investigation costs     |   | -         |  |   | 242,082       |  |   | 242,082   
|Salaries, benefits and stock-based compensation              |   | 734,820   |  |   | -             |  |   | 734,820   
|Administration and general                                   |   | 544,764   |  |   | 64,622        |  |   | 609,386   
|                                                             |   |           |  |   |               |  |   |           
|Net loss from operations                                     |   | 1,285,812 |  |   | 305,973       |  |   | 1,591,785 
|                                                             |   |           |  |   |               |  |   |           
|Gain on sale of assets                                       |   | (39,444)  |  |   | -             |  |   | (39,444)  
|Mineral interests and deferred exploration costs
written off |   | -         |  |   | 2,730,429     |  |   | 2,730,429 
|                                                             |   |           |  |   |               |  |   |           
|Net loss                                                     | $ | 1,246,368 |  |   | 3,036,402     |  |   | 4,282,770 
|                                                             |   |           |  |   |               |  |   |           
|Expenditure for equipment and mineral interests              | $ | -         |  | $ | 1,050,588     |  | $ | 1,050,588 
|                                                             |   |           |  |   |               |  |   |           
|Equipment and mineral interests                              | $ | 17,287    |  | $ | 9,075,148     |  | $ | 9,092,435 
|                                                             |   |           |  |   |               |  |   |           
|Total assets                                                 | $ | 1,055,926 |  | $ | 9,098,112     |  | $ | 10,154,038



















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8.

INCOME TAXES



The Company has incurred resource-related expenditures and operating losses which are available to reduce future years taxable income in Canada.  As of December 31, 2010, the Company had Canadian operating losses of approximately $4,325,825. These operating losses expire as follow: 2014 - $560,000; 2026 - $720,000; 2027 - $720,000; 2028 - $1,050,000; 2029 - $405,000; 2030 - $870,835.  Resource-related expenditures available for carry-forward in Canada amount to approximately $6,648,000.  No future tax benefits have been recognized in the accounts for these Canadian losses and resource related expenditures and they are not transferable to the Companys corporate entities in foreign tax jurisdictions.  The Company also has resource-related expenditures and operating losses which are available to reduce future years taxable income in Chile and Bolivia.  No future tax assets have been recognized due to the Company taking full valuation allowances in the accounts for these operating and foreign losses and resource-related expenditures.



9.

FINANCIAL INSTRUMENTS



Financial Risk Management - The Company is exposed in varying degrees to a variety of financial instrument related risks.



Credit Risk  Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Companys primary exposure to credit risk is on its bank accounts.  The Companys bank accounts are held with a major bank in Canada, a major bank in Chile which is a subsidiary of a major Canadian bank, and a bank in Bolivia.  The Companys cash is held by the major bank in Canada, and specific amounts are transferred to the bank in Chile or Bolivia as and when required to fund the Companys budgeted exploration activities in these countries.  As the majority of the Companys cash is held by one bank in Canada, there is a concentration of credit risk.  This risk is managed by using a major bank that is a high credit quality financial institution as determined by rating agencies. The Company is not exposed to credit risk.



Currency Risk - The Company operates in Canada, Chile and Bolivia and is consequently exposed to foreign exchange risk arising from transactions denominated in foreign currency.  The Companys functional currency is the Canadian dollar, and it has obligations and commitments in other currencies including United States dollars, Chilean Pesos and Bolivian Bolivianos.  Fluctuations in foreign currency exchange rates may affect the Companys results of operations and the value of the Companys foreign assets.  The Company manages currency risk by closely monitoring relevant exchange rates and when possible, executes currency exchange transactions at times when exchange rates are most advantageous for the Company.  The Company does not use hedging to manage its currency risk.



Liquidity Risk - Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. The Companys objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements at any point in time. The Company achieves this by maintaining sufficient cash and gold and silver bullion holdings.



Commodity Risk - Commodity price risk is the risk that market values and future incomes will fluctuate because of changes in commodity prices.  The Company is exposed to significant commodity price risk through its gold and silver bullion holdings.



Interest Rate Risk - Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates.  The Company is not exposed to significant interest rate risk.





10.

CAPITAL MANAGEMENT



The Company identifies capital as cash and share capital.  The Company raises capital through private placement and public share offerings.  Capital is managed in a manner consistent with the risk criteria and policies provided by the board of directors and followed by management.  All sources of financing are analyzed by management and approved by the board of directors. To maintain or adjust its capital structure, the Company may issue new shares, acquire or dispose of assets or adjust the amount of cash and cash equivalents.



The Companys primary objectives when managing capital is to safeguard and maintain the Companys financial resources for continued operations and to fund expenditure programs to further advance mineral interests.  The Company is able to scale its expenditure programs and the use of capital to address market conditions by reducing expenditures and the scope of operations during periods of commodity pricing decline and economic downturn.  There are no externally imposed capital restrictions.





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11.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING

PRINCIPLES AND PRACTICES



The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada (CDN GAAP) which differ in certain material respects from those principles and practices that the Company would have followed had its consolidated financial statements been prepared in accordance with United States generally accepted accounting principles (US GAAP).  Had the Company followed US GAAP, certain items on the consolidated statements of operations and cash flow and consolidated balance sheets would have been reported as follows:



Gains and losses on inter-company foreign currency transactions are excluded from net income and deferred as Other Comprehensive Income.



Mineral interests acquisition costs are accounted for in accordance with CDN GAAP as disclosed in Note 2.d.  For US GAAP, mineral interest acquisition costs are capitalized in accordance with EITF 04-2 when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures.  Mineral property acquisition costs are impaired if the criteria for capitalization are not met.  For US GAAP, mineral property exploration costs are expensed as incurred.  When mineral properties are acquired under option agreements with future acquisition payments to be made at the sole discretion of the Company, those future payments are recorded only when the Company has made or is obliged to make the payment or issue the shares.  Because the Company has not yet earned the legal rights to its mineral interests under option agreements, all option payments have been expensed to date for US GAAP purposes. When it has been determined that a mineral interest can be economically developed as a result of establishing proven and probable reserves and pre feasibility, the costs incurred to develop such property are capitalized.  As of the date of these financial statements, the Company has incurred only acquisition and exploration costs. To date the Company has not established any proven or probable reserves on its mineral interests.



Under US GAAP the Company needs to complete an analysis which involves determining whether it is more likely than not that a tax position would be sustained on audit based solely on its technical merits.  The amount of benefit recognized in the financial statements is the maximum amount which is more likely than not to be realized based on a cumulative probability approach.  FIN 48 became effective for the Company on January 1, 2007.  The Companys Bolivian and Chilean subsidiaries have not filed income tax returns for several years. Upon filing there could be penalties and interest assessed. Such penalties vary by jurisdiction and by assessing practices and authorities. As the Companys Bolivian and Chilean subsidiaries have incurred losses since inception there are no known or anticipated exposure to corporate income taxes. However, certain jurisdictions may assess penalties for failing to file returns and other disclosures and for failing to file other supplementary information associated with foreign ownership, debt and equity positions.  Inherent uncertainties arise over tax positions taken with respect to intercompany charges and allocations, fees, related party transactions, and stock based transactions.  Management has considered the likelihood and significance of possible penalties, based on their assessment, any such penalties, if any, would not be expected to be material.



CONSOLIDATED BALANCE SHEETS20102009AssetsCDN GAAPUS GAAPCDN GAAPUS GAAPCurrent$9,010,221$9,010,221$1,061,603$1,061,603Mineral interests10,299,789-9,021,953-Equipment56,44556,44570,48270,482$19,366,455$9,066,666$10,154,038$1,132,085LiabilitiesCurrent$91,890$91,890$73,718$73,718Shareholders equity19,274,5658,974,77610,080,3201,058,367$19,366,455$9,066,666$10,154,038$1,132,085






CONSOLIDATED STATEMENTS OF OPERATIONS201020092008Net loss as shown on the financial
statements  CDN GAAP$(1,200,162)$(4,282,770)$(2,571,737)Deferral of translation (gain) loss on inter-company
transactions of a long-term investment nature118,189135,14844,142Mineral interests costs expensed(1,277,836)1,680,050(204,169)Net loss  US GAAP(2,359,809)(2,198,157)(2,731,764)Other Comprehensive income (loss)(118,189)(135,148)(44,142)Comprehensive loss$(2,477,998)$(2,333,305)$(2,775,906)Basic and diluted loss per share  US GAAP$(0.02)$(0.02)$(0.03)Weighted average number of
common shares outstanding102,615,95289,367,60680,619,915






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CONSOLIDATED STATEMENTS OF CASH FLOW201020092008Net cash flows from operating activities under
Canadian GAAP$(972,118)$(911,275)$(1,073,418)Mineral Interest Expenditures(1,309,685)(937,900)(1,565,216)Net cash used in operating activities under US GAAP(2,281,803)(1,849,175)(2,638,634)Net cash flows from financing activities under
CDN GAAP and US GAAP10,159,0602,582,5501,539,000Net cash flows used in investing activities under
CDN GAAP(5,337,468)(857,604)(1,583,560)Mineral Interest Expenditures1,309,685937,9001,565,216Net cash provided by (used in) investing activities
under US GAAP(4,027,783)80,296(18,344)Net change in cash3,849,474813,671(1,117,978)Cash, beginning1,020,863207,1921,325,170Cash, ending$4,870,337$1,020,863$207,192






US Recent Accounting Pronouncements



The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it.  The Company does not expect the adoption of these pronouncements to have a material impact on its financial position, results of operations or cash flows.





12.

SUBSEQUENT EVENTS



Warrants Exercised - Subsequent to the year ended December 31, 2010, the Company received proceeds of $2,157,300 from the exercise of warrants for the purchase of: 195,000 shares at $0.20 per share; 500,000 shares at $0.30 per share; 1,282,500 shares at $0.70 per share; and 1,372,500 shares at $0.78 per share.









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ITEM 18. FINANCIAL STATEMENTS.

Not applicable as our consolidated financial statements have been prepared in accordance with Item 17.



ITEM 19. EXHIBITS.

The following exhibits are filed as part of this Annual Report:

1.1.

*Altered Memorandum of SAMEX (*previously filed as exhibit to Form 20F Annual Report for the period ended November 30, 1995 (our 1995 Annual Report on Form 20F filed with the SEC);

1.2.

*Change of Name Certificate for SAMEX (*previously filed with our 1995 Annual Report on Form 20F filed with the SEC);

1.3.

*Altered Articles of SAMEX (*previously filed as exhibit to Form 20F Annual Report for the period ended November 30, 1998 (our 1998 Annual Report on Form 20F filed with the SEC);

1.4.

*Altered Memorandum of SAMEX respecting the increase of authorized share capital (*previously filed with our 1998 Annual Report on Form 20F filed with the SEC);

1.5.

*Form of Notice of Articles of SAMEX issued by the Registrar of Companies for British Columbia on February 11, 2005 (*previously filed with our 2004 Annual Report on Form 20F filed with the SEC);

1.6.

*New Articles of SAMEX effective June 13, 2005 (*previously filed with our 2005 Annual Report on Form 20F filed with the SEC);

1.7.

*Form of Notice of Articles of SAMEX issued by the Registrar of Companies for British Columbia on June 13, 2005 (*previously filed with our 2005 Annual Report on Form 20F filed with the SEC);

8.1

Our subsidiaries.  See also Item 4. A.  History and Development Of The Company;

12.1

Certification of Chief Executive Officer under Rule 13a-4(a);

12.2

Certification of Chief Financial Officer under Rule 13a-4(a);

13.1

Sarbanes Oxley 906 Certification of Chief Executive Officer;

13.2

Sarbanes Oxley 906 Certification of Chief Financial Officer

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 annual report on its behalf.

Date: June 28, 2011



SAMEX Mining Corp.



Jeffrey P. Dahl

Larry D. McLean

Jeffrey P. Dahl, Chief Executive Officer

Larry D. McLean, Chief Financial Officer







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Exhibit 8.1





LIST OF SUBSIDIARIES





The following companies are subsidiaries of SAMEX Mining Corp. as of May 31, 2011:





|                                          |                               |          
|----------------------------------------- | ----------------------------- | ---------
|NAME OF SUBSIDIARY                        | JURISDICTION OF INCORPORATION | OWNERSHIP
|                                          |                               |          
|South American Mining & Exploration Corp. | British Columbia, Canada      | 100%     
|SAMEX International Ltd.                  | Bahamas                       | 100%     
|SAMEX S.A.                                | Bolivia                       | 98%      
|Minas Bolivex S.A. (BOLIVEX )           | Bolivia                       | 98%      
|Empresa Minera Boliviana S.A. (EMIBOL)  | Bolivia                       | 98%      
|Minera Samex Chile S.A  (Samex Chile)   | Chile                         | 99.9%    





For details see Item 4 - Information On The Company





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Exhibit 12.1

CERTIFICATION



I, Jeffrey Peter Dahl, certify that:



1.

I have reviewed this annual report on Form 20-F of Samex Mining Corp.;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;



4.

The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



(c)

Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d)

Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and



5.

The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.





|                    |  |                                                       
|------------------- |  | ------------------------------------------------------
|Date: June 28, 2011 |  | Jeffrey P. Dahl                                     
|                    |  | Jeffrey P. Dahl, President and Chief Executive Officer







98

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Exhibit 12.2

CERTIFICATION



I, Larry Dennis McLean, certify that:



1.

I have reviewed this annual report on Form 20-F of Samex Mining Corp.;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;



4.

The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



(c)

Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d)

Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and



5.

The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.





|                    |  |                                         
|------------------- |  | ----------------------------------------
|Date: June 28, 2011 |  | Larry D. McLean                       
|                    |  | Larry D. McLean, Chief Financial Officer







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Exhibit 13.1







CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002







In connection with the Annual Report of Samex Mining Corp. (the Company) on Form 20-F for the fiscal year ended December 31, 2010 as filed with the Securities and Exchange Commission on the date here of (the Report), I, Jeffrey P. Dahl, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.









Jeffrey P. Dahl

Jeffrey P. Dahl

President and Chief Executive Officer

June 28, 2011











100

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Exhibit 13.2











CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002







In connection with the Annual Report of Samex Mining Corp. (the Company) on Form 20-F for the fiscal year ended December 31, 2010 as filed with the Securities and Exchange Commission on the date here of (the Report), I, Larry D. McLean, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.









Larry D. McLean

Larry D. McLean

Chief Financial Officer

June 28, 2011









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