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, 2006



OR



[  
]

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



For the transition period from ___________________ to ____________________



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________________________





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)



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



Title of each ClassName of each exchange on which registered




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





---









Indicate the number of outstanding shares of each of the Registrants classes of capital of common stock as of December 31, 2006:  72,287,665 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       [X]  No



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.

[X] 
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 financial statement item the registrant has elected to follow.



[X] 
Item 17    [   ]  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









2





---









SAMEX MINING CORP.

FORM 20-F



TABLE OF CONTENTS





Page



Item 1. Identity of Directors, Senior Management and Advisers

6

Item 2. Offer Statistics and Expected Timetable

6

Item 3. Key Information

6

Item 4.  Information on the Company

18

Item 5. Operating and Financial Review and Prospects

41

Item 6. Directors, Senior Management and Employees

51

Item 7. Major Shareholders and related party transactions

56

Item 8. Financial Information

59

Item 9. The Offer and Listing.

60

Item 10. Additional Information.

61

Item 11. Quantitative and Qualitative Disclosures About Market Risk.

74

Item 12. Description of Securities Other Than Equity Securities.

74

Item 13. Defaults, Dividend Arrearages and Delinquencies.

74

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.

74

Item 15A. Disclosure Controls And Procedures

74

Item 15B. Report On Internal Control Over Financial Reporting

75

Item 15C. Changes In Internal Control Over Financial Reporting

75

Item 16A. Audit Committee Financial Expert

75

Item 16B. Code of Ethics

75

Item 16C. Principal Accountant Fees and Services

76

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

76

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

76

Item 17. Financial Statements.

76

Item 18. Financial Statements.

95

Item 19. Exhibits.

95





3





---









SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Except for statements of historical fact, certain information contained herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward looking statements are usually identified by our use of certain terminology, including will, believes, may, expects, should, seeks, anticipates or intends or by discussions of strategy or intentions.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, our history of operating losses and uncertainty of future profitability; our lack of working capital and uncertainty regarding our ability to continue as a going concern; uncertainty of access to additional capital; risks inherent in mineral exploration; restrictions on foreign ownership; uncertainties relating to carrying on business in foreign countries; environmental liability claims and insurance; dependence on joint venture partners as well as those factors discussed in the section entitled Risk Factors, Information on the Company and Operating and Financial Review and Prospects.



If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected.  Forward looking statements in this document are not a prediction of future events or circumstances, and those future events or circumstances may not occur.  Given these uncertainties, users of the information included herein, including investors and prospective investors are cautioned not to place undue reliance on such forward-looking statements.  We do not assume responsibility for the accuracy and completeness of these statements.



The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce.  Information contained in this annual report related to mineralization may be strictly prohibited in SEC filings for U.S. registered companies under the SEC guidelines.  The Company is an exploration stage company and its properties have no known body of ore.  U.S. investors are cautioned not to assume that the Company has any mineralization that is economically or legally mineable.



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.







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)







4





---







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 average exchange rates (based on the average of the exchange rates on the last day of each month in such periods) and the range of high and low exchange rates for such periods.





|                       | Canadian Dollar Per U.S. Dollars
|---------------------- | --------------------------------
|                       |                                 
|                       | 2006                            
|End of period          | 1.1652                          
|Average for the period | 1.134                           
|High for the period    | 1.1726                          
|Low for the period     | 1.0989                          





|                    |                  |               |            |            |         
|------------------- | ---------------- | ------------- | ---------- | ---------- | --------
|                    | For the month of
|                    | January 2007     | February 2007 | March 2007 | April 2007 | May 2007
|High for the period | 1.1824           | 1.1852        | 1.1810     | 1.1583     | 1.1136  
|Low for the period  | 1.1647           | 1.1586        | 1.1530     | 1.1068     | 1.0701  



Exchange rates are based upon the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.  The noon rate of exchange on June 19, 2007 as reported by the United States Federal Reserve Bank of New York for the conversion of United States dollars into Canadian dollars was US$1.00 = Cdn$1.0638 .  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    
|2002          | 1 US$ = 688.94 pesos
|2003          | 1 US$ = 691.40 pesos
|2004          | 1 US$ = 609.53 pesos
|2005          | 1 US$ = 559.77 pesos
|2006          | 1 US$ = 530.28 pesos



Monthly Average of Chilean Pesos Per U.S. Dollar for Year 2006



|      |        |        |        |        |        |        |        |        |        |        |        |       
|----- | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------
|Month | Jan    | Feb    | Mar    | Apr    | May    | Jun    | Jul    | Aug    | Sep    | Oct    | Nov    | Dec   
|Pesos | 524.48 | 525.70 | 528.77 | 517.33 | 520.79 | 542.46 | 540.62 | 538.53 | 538.65 | 530.95 | 527.44 | 527.58



Monthly Average of Chilean Pesos Per U.S. Dollar for Year 2007



|      |        |        |        |        |       
|----- | ------ | ------ | ------ | ------ | ------
|Month | Jan    | Feb    | Mar    | Apr    | May   
|Pesos | 540.51 | 542.27 | 538.49 | 532.30 | 522.02





5





---







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) (the Business Corporations Act).  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 countries of Chile and Bolivia.  The Company focuses its exploration on the search for deposits of precious metal and porphyry copper-gold.  SAMEX management is motivated by a strong conviction that gold and silver are precious, valuable hard assets.   We hold a strong belief that gold prices are significantly undervalued.  Our objective is to be well-positioned to benefit from increases in the value of gold, silver and other metals.



In Chile, the Company holds an interest in the following exploration prospects: Los Zorros - gold-copper-silver, Inca -porphyry copper-gold-silver-molybdenum, Espijismo - gold, Tres Puntas/Chimbero - silver.  In Bolivia the Company holds an interest in the following exploration prospects; El Desierto - porphyry copper-gold, Eskapa - gold-silver-copper, Santa Isabel - zinc-silver-lead-indium-copper-gold, Walter - gold-silver-lead-zinc-copper-bismuth, Wara Wara - sediment-hosted zinc-silver-lead-copper, and Yaretani - shear and sediment-hosted gold (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.



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



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.  During 2005, the fiscal year-end was changed from November 30th to a new year-end of December 31st.   As a result, the financial statements for fiscal 2005 cover a period of thirteen months from December 1, 2004 to December 31, 2005 as compared to a period of twelve months for the



6





---





other fiscal years.  The following information should be read in conjunction with Item 5.  Operating and Financial Review and Prospects.



|                                                             | Fiscal Year Ended
December
31, 2006 | 13 Months 
 Ended 
      December 31, 2005 | Fiscal Year Ended
November
30, 2004 | Fiscal
      Year Ended
November 30, 2003 | Fiscal Year Ended
November 30, 2002
|------------------------------------------------------------ | ----------------------------------- | ------------------------------------------ | ----------------------------------- | ----------------------------------------- | -----------------------------------
|Income Statement Data                                        |                                     |                                            |                                     |                                           |                                    
|Net Loss From Operations                                     | (1,961,999)                         | (1,539,887)                                | (1,803,635)                         | (1,013,414)                               | (570,612)                          
|Gain On Sale of Equipment                                    | -                                   | 11,172                                     | 1,052                               | -                                         | -                                  
|Mineral Interests and Deferred Exploration Costs Written Off | (17,867)                            | (17,642)                                   | (31,296)                            | (14,600)                                  | (16,184)                           
|Net Loss for the year(1)                                     |                                     |                                            |                                     |                                           |                                    
|Canadian GAAP                                                | (1,979,866)                         | (1,546,357)                                | (1,833,879)                         | (1,028,014)                               | (586,796)                          
|US GAAP                                                      | (3,930,720)                         | (2,884,084                                 | (3,899,243)                         | (1,531,208)                               | (793,058)                          
|Net Loss per share
      (1)                                 |                                     |                                            |                                     |                                           |                                    
|Canadian GAAP                                                | (0.03)                              | (0.02)                                     | (0.03)                              | (0.02)                                    | (0.01)                             
|US GAAP                                                      | (0.06)                              | (0.04)                                     | (0.06)                              | (0.03)                                    | (0.02)                             
|                                                             |                                     |                                            |                                     |                                           |                                    
|Balance Sheet Data                                           |                                     |                                            |                                     |                                           |                                    
|Current Assets                                               | 1,406,058                           | 489,815                                    | 2,264,303                           | 3,577,146                                 | 200,181                            
|Current Liabilities                                          | 67,728                              | 35,403                                     | 90,467                              | 31,968                                    | 365,755(2)                         
|Working Capital                                              | 1,338,330                           | 454,412                                    | 2,173,836                           | 3,545,178                                 | (165,574)                          
|Total Assets                                                 | 8,605,000                           | 5,751,166                                  | 6,181,545                           | 5,394,055                                 | 1,472,856                          
|Long Term Obligations                                        | -                                   | -                                          | -                                   | -                                         | -                                  
|Shareholders Equity(1)                                       |                                     |                                            |                                     |                                           |                                    
|Canadian GAAP                                                | 8,537,272                           | 5,715,763                                  | 6,091,078                           | 5,362,087                                 | 1,107,101                          
|US GAAP                                                      | 1,451,032                           | 539,862                                    | 2,286,427                           | 3,609,365                                 | (112,336)                          
|Number of Shares                                             | 72,287,665                          | 66,423,165                                 | 65,272,415                          | 62,671,848                                | 48,823,181                         



(1)

See Note 9 to attached Consolidated Financial Statements to December 31, 2006.



There are several material differences between Canadian GAAP and U.S. GAAP as applicable to the financial information disclosed or summarized herein.  Reference is made to Note 9 in the attached financial statements for an explanation of material differences between Canadian GAAP and U.S. GAAP.  The comparative period data for the fiscal period ended December 31, 2005 is a 13 month period versus 12 month periods for the fiscal years ended December 31, 2006 and November 30, 2004, 2003, and 2002.  Consequently, comparisons of these periods may not be indicative of future results.



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.



Capitalization and indebtedness.

Not Applicable



Reasons for the offer and use of proceeds.

Not Applicable





7





---





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 $1,961,999 for the fiscal year ended December 31, 2006, $1,539,887 for the thirteen month fiscal period ended December 31, 2005 and $1,803,635 for the fiscal year ended November 30, 2004.   As of December 31, 2006, we had a cumulative net loss from operations of $13,267,465 and a cumulative deficit of $20,673,479.  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 properties or possible joint venturing of the properties, we cannot assure you that any such funds will be available for operations on acceptable terms, if at all.



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.



Our success depends on our ability to raise additional capital.

As of December 31, 2006, we had working capital of $1,338,330 (December 31, 2005:

$454,412).

  In March 2007 we completed a private placement of 5,742,500 units at a price of $0.80 per unit, raising gross proceeds of over $4.5 million.  With the proceeds of the private placement and additional proceeds from the exercise of stock options during the first quarter of 2007, we had working capital of more than $5 million at the end of the first quarter ended March 31, 2007.  While we believe our current working capital at the date of this report is sufficient to fund our ongoing operations through our 2007 fiscal year ending December 31, 2007, we will require additional capital over the next several years.  In relation to our proposed exploration programs, management will work to secure additional equity financings as required to fund continued exploration on the Los Zorros property, Inca property, Eskapa property and possibly other prospects.   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.



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 favorable to us or our shareholders.  Such financings, to the extent they are available may result in substantial dilution to our existing shareholders.



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



8





---





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.



The prices of precious metal and base metal 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, copper, and zinc), 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, copper and zinc 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, copper or zinc 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, copper, zinc and 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, copper and zinc over the last five years.







9





---







10





---











11





---





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 Bolivian and Chilean concessions held by our partners or us.  However, we do carry out all normal procedures to obtain title and make a conscientious search of mining records to confirm that the applicable joint venture party or the Company has acquired satisfactory title to the properties.  The possibility exists that title to one or more of the concessions held by our partners or us might be defective for various reasons.  Should any defect in title be disclosed to us, we would take all reasonable steps to perfect title to the particular concession(s) 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, zinc 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.  Our properties are located in Bolivia and Chile.  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 Bolivia.

The process for acquiring an interest in mineral concessions in Bolivia 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 mineral concessions in Bolivia is governed by legislation enacted under law no. 1777 on March 17, 1997 (the Bolivian Mining Code).  Under the Bolivian Mining Code, property available for mining and exploration activities is divided into mining units consisting of 25 hectares each (the Units).  A person seeking to acquire a mining concession must submit a request to the Superintendent of Mines specifying, among other things, the name of the concession and code numbers corresponding to the Units which are comprised in the concession applied for.  Each concession is limited to a maximum of 2,500 Units.  Upon receipt, the application is registered in the office of the Superintendent of Mines with date and time of filing and the application is reviewed by the Technical Mines Service to determine if the Units applied for are available.  Priority between applicants is determined in accordance with the time of filing of the application.  If the concession applied for is available, the Superintendent is then required to promptly publish the application in the National



12





---





Mining Gazette.  Persons claiming a prior interest in the subject area will then be given an opportunity to assert their rights within 30 days of publication.  Following disposition of these claims or, if such persons fail to defend their interests within the prescribed time, the Superintendent of Mines will, subject to payment of the required patent fee, grant the concessions and instruct official registration thereof at the Mining Registry.



A foreign corporation may only hold rights in mineral properties in Bolivia if the corporation has been registered in Bolivia.  In addition, properties within 50 km of any international border of Bolivia or the Frontier Zone may only be held by a Bolivian national or a corporation owned by a Bolivian national(s).  Under provisions of the Bolivian Mining Code, it is permissible for a Bolivian holder of such concessions to enter into a joint venture agreement with a foreign party.  Certain aspects of the form of joint venture and rules respecting its operation are prescribed by Bolivian law and must be complied with if the joint venture is to be effective.



We hold our property interests outside of the Frontier Zone through our Bolivian subsidiaries.  Any interests in properties within the Frontier Zone (Santa Isabel Property, Eskapa Property, El Desierto Property) are held under joint venture agreements with a Bolivian national.  For example, our interest in the Goya 1/El Bonete concessions which comprise the Santa Isabel Property is held under a joint venture agreement with the Bolivian state mining company, Corporacion Minera de Bolivia (COMIBOL), which owns the property (see Item 4  Information on the Company - Santa Isabel Property); 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 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.  Emibol S.A. paid all costs for the staking of these concessions and as part of the agreements, Emibol S.A. is required to cover 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 (see Item 4  Information on the Company - Eskapa Property and El Desierto Property).



The Bolivian Mining Code stipulates that any transfer of rights in mineral properties is not valid unless done by a duly certified and registered public deed.  We follow the policy of complying with all applicable registration requirements for our mining agreements whenever appropriate and timely to do so.



Regulatory matters could impact our ability to conduct our business in Bolivia.

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



Our potential mining processing operations and exploration activities in Bolivia 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.  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.



Legislation is in place which requires approval of a plan of operation or similar authorization and provides for the preparation of environmental assessments, environmental impact statements or similar reports prior to the commencement of, during, and upon completion of any mining operation.  These reports entail a detailed technical and scientific assessment of the site and surrounding environment 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.





13





---





Environmental legislation in Bolivia 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.  Such liability could include the cost of removal or remediation of the release and damages for injury to the natural resources or the affected party.  In addition, while the mining operation is permitted to use water flowing through or under the mining concessions, the concession grantee is required to return the water to its source with same quality as when taken.  Degradation in the quality of water used may result in liability for damages to the affected person or persons.  We are not aware of pending or threatened environmental litigation which names us as a defendant or any of our properties.  We cannot predict the potential for future environmental liability with respect to any of our properties nor can we predict the potential impact or future direction of environmental litigation.



The Bolivian Mining Code also contains certain restrictions or requirements which may result, in certain circumstances, in the loss of mineral concessions.  These include the requirement to pay an annual tax or patent on mineral concessions (currently about US$25.00 per Unit (25 hectares) during the first 5 years and thereafter, about US$50.00 while the Units are held).



Bolivian law expressly provides for free foreign currency exchange and conversion, foreign ownership of property (except where expressly limited), repatriation of dividends and profits, and free importation of goods and services (other than those affecting public health and State security) subject to applicable duties and taxes.  Bolivian mining operations are subject to a maximum tax of 25% on net annual profits and an additional variable tax of from 1% to 7% on gross sales, depending upon the substance mined and the prevailing market price, which is 100% deductible from the foregoing income tax.  In addition, certain Bolivian mining operations may be subject to a windfall profits tax equal to 25% of profits earned in any particular year after deduction, successively, of income taxes, dividend remittance taxes, and the aggregate of 33% of total investment on the project made after 1991 and 45% of net sales to a maximum of US$50 million.  The foregoing taxes may affect the future profitability of any potential mining operations on our properties.



With the new government in power in Bolivia, and the recent nationalization of hydrocarbon resources, investors are concerned about media reports that mineral resources may also be nationalized.   Our Bolivian mining consultant has reported that there does not appear to be any concrete plans to nationalize mining properties in Bolivia, but there may be changes to the mining code at a future time which could result in an increase in mining taxes and royalties.  The future changes may also require that, in addition to the current annual patent payments, verifiable work programs, exploration or exploitation must be conducted on mining properties (similar to assessment work required on claims in North America) in order to maintain the mining properties in good standing.  The mining code may also be revised to promote exploration activity on mining property in order to create additional employment and to discourage the holding of idle concessions where no exploration or exploitation is taking place.  Until more detailed information is provide by the Bolivian government, it is impossible to analyze the effect these possible changes may have on the Companys activities in Bolivia.



The Companys focus over the past several years has been on its mineral properties in Chile and as a result no exploration has been conducted on our Bolivian properties for some time.  Over the past several years, mineral interests and deferred exploration costs related to the Bolivian properties, with the exception of the Eskapa Property, have been written down annually to a nominal value of $1,000 each until exploration activity is resumed on the respective properties.  In relation to the Eskapa Property, the concessions are owned by a Bolivian company, Minera El Roble S.A. (El Roble), a company controlled by a Bolivian national, Patricio Kyllmann, who is a 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.  In April 2007 we resumed activities at the Eskapa property including construction of a new expanded exploration camp, repairing and enhancing access roads, and preparing drill pads for the next phase of drill testing at a later date.



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



14





---





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 of importance 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 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 2006 the M.T.U. was 31,444 x 1/10th = 3,144.4 Chilean Pesos per hectare which, at the average exchange rate for March 2006, equated to approximately US$5.95 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 2006 the M.T.U. was 31,444 x 1/50th = 628.88 Chilean Pesos per hectare which, at the average exchange rate for March 2006, equated to approximately US$1.19 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 Chile

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.  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.



15





---







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 17% in year 2007 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 17% as stated above.  The foregoing taxes 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 1.608% of the amount of the loan and 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.



At present there are no special taxes imposed on operations in the mining sector, other than the normal taxes paid by all productive sectors, in accordance with applicable income tax legislation.  If any 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.



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 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.  (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 Patricio Kyllmann (who is resident in Bolivia) and Robert Kell (who resides in the United States and Bolivia), 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 judgements of United States courts predicated upon civil liabilities under the United States Securities Exchange Act of 1934, as amended.  A judgement 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 judgement 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.



16





---







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 12,051,250 common shares for future issuance, which if issued may cause dilution in the value of currently issued and outstanding shares.

As of May 31, 2007, we reserved 6,970,000 common shares for issuance on the exercise of incentive stock options (at a weighted average exercise price of $0.76).  In addition we reserved 5,081,250 common shares for issuance upon the exercise of outstanding warrants (at a weighted average exercise price of $0.93).  If such options and warrants are fully exercised, such common shares would constitute 13.3% 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



We may be classified as a passive foreign investment company during 2006, which may have a material affect on U.S. holders.

We believe we were a passive foreign investment company (PFIC) during the year ended December 31, 2006, which may have a material affect on US Holders.  United States income tax legislation contains rules governing PFICs, which can have significant tax effects on US Holders of foreign corporations.  A US Holder who holds stock in a foreign corporation during any year in which such corporation qualifies as a PFIC is subject to United States federal income taxation under one of two alternative tax regimes at the election of each such US Holder.  See Item 10. Taxation  United States Federal Income Tax Consequences.

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, 2006 ranged between CDN$0.58 and CDN$1.30 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.



17





---





ITEM 4.  INFORMATION ON THE COMPANY

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                    





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) (the Former Act), was repealed and was replaced with the new Business Corporations Act (British Columbia) (the Act).  Because of this change, we were required to undertake certain transitionary 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.

During 2005, the fiscal year-end was changed from November 30th to a new year-end of December 31st.   As a result, the Companys annual financial statements for fiscal 2005 covered a period of thirteen months from December 1, 2004 to December 31, 2005 as compared to a period of twelve months for the other fiscal years.



Our total mineral interests and exploration costs were $2,161,249 for the fiscal year ended December 31, 2006 as compared to $1,491,548 for the thirteen months ended December 31, 2005, 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 $1,484,954 during fiscal 2004, $340,300 during fiscal 2005, and $3,806,800 during fiscal 2006.   Further details applicable to anticipated capital expenditures and funding sources are detailed in Item 5. Liquidity and Capital Resources.



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:







18





---









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.  Since its inception, S.A.M.E.X. Corp. has been involved principally in the acquisition and exploration of mineral properties in South America 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.  The directors and officers of SAMEX S. A. are: Jeffrey Dahl  President & Director, Edgar F. Zapata  Vice President & Director, Franz Vega  Secretary & Director, Robert Kell - Director, Aida Martinez - Alternate Director, Victor Flores - Sindico, Raul Castañeta  Alternate Sindico.  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.  Bolivian corporate law requires that the company have at least three shareholders and, accordingly, the shares of SAMEX S. A. as well as Bolivex S.A. and Emibol S.A. have been issued so that 2 shares are held by persons other than S.A.M.E.X. Corp. or SAMEX International.  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 primary asset is its interest in a portion of the Goya I/El Bonete concession which form the Santa Isabel property referred to below.

Bolivex S.A.

Minas Bolivex S.A. (Bolivex S.A.) was incorporated under the laws of the Republic of Bolivia on September 23, 1994.  The directors and officers of Bolivex S. A. are: Jeffrey Dahl  President & Director, Edgar F. Zapata  Vice President & Director, Franz Vega  Secretary & Director, Robert Kell - Director, Aida Martinez - Alternate Director, Victor Flores - Sindico, Raul Castañeta  Alternate Sindico.  Bolivex 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 S.A.M.E.X. Corp. and the remaining 2 shares are held by each of Jeffrey Dahl and Peter Dahl.  Bolivex S.A.s primary asset is the Walter property referred to below.

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.  The directors and officers of Emibol S. A. are: Jeffrey Dahl  President & Director, Edgar F. Zapata  Vice President & Director, Franz Vega  Secretary & Director, Robert Kell - Director, Aida Martinez - Alternate Director, Victor Flores - Sindico, Raul Castañeta  Alternate Sindico.  Emibol S.A. has authorized capital of 200,000 Bolivianos (Bs) and paid up



19





---





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.  Its principal assets are its interests in the El Desierto, Eskapa, Wara Wara and Yaretani properties in Bolivia.



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 in the Los Zorros and Inca properties in Chile.



Principal Expenditures And Divestitures



Since the beginning of the last three financial years, our principal capital expenditures and divestitures have been comprised of the following:



Unilateral Purchase Option Contract dated June 29, 2005 between our subsidiary, Minera Samex Chile S.A. and Compañia Minera San Estaban Primera S.A.  Pursuant to a letter of intent dated May 18, 2005, we signed the formal option contract to acquire additional mineral concessions situated within the Los Zorros district, Chile.  Under the option, SAMEX acquired concessions covering a 95-hectare-portion of the Los Zorros district 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).  (See Item 4 Information on the Company  Description of Property - Los Zorros Property).



Corporate Finance Consulting Agreement dated January 12, 2006 between SAMEX Mining Corp. and Spartacus Ltd. - We signed a Corporate Finance Consulting Agreement with European consultants, Spartacus Ltd. (the Consultant), to assist us with respect to our corporate financing efforts in Europe and other jurisdictions.   During the 12-month term of the agreement, the Consultant provided introductions to fund managers, institutional investors and other parties, as well as assistance associated with financing activities.  In consideration of these services, the Company agreed to pay the Consultant a quarterly fee of $25,000 commencing after SAMEX completed private placements, with the assistance of the Consultant, having aggregate net proceeds of not less than $2,000,000.  These contacts helped the Company raise private placement funding during the first quarter of fiscal 2006, and as a result all four $25,000 quarterly payments (for a total of $100,000) due under the 12-month corporate finance consulting agreement were paid during fiscal 2006.



Unilateral Option Purchase Contract dated March 31, 2006 between Sociedad Contractual Minera Porvenir and our subsidiary Minera Samex Chile S. A.   We signed an option contract to acquire mineral concessions covering a 2,138-hectare portion of the Inca project in Chile by making option payments totaling the Chilean Peso-equivalent of US$2,000,000 over thee years as follows: initial payment (including US$208,677 for patentes) of US$608,677 (paid); US$191,323 on March 31, 2007 (paid); US$200,000 on March 31, 2008; and US$1,000,000 on March 31, 2009.  (See Item 4 Information on the Company  Description of Property - Inca Project).



Unilateral Option Purchase Contract dated April 4, 2006 between Malvina del Carmen Araya Santander and our subsidiary Minera Samex Chile S. A.  We signed an option contract to acquire mineral concessions covering a 45-hectare portion of the Inca project in Chile by making option payments totaling the Chilean Peso-equivalent of US$300,000 over thee years as follows: US$50,000 initial payment (paid); US$50,000 on March 31, 2007 (paid); US$100,000 on March 31, 2008; and US$100,000 on March 31, 2009.  (See Item 4 Information on the Company  Description of Property - Inca Project).



Unilateral Option Purchase Contract dated May 25, 2006 between Oscar David Rojas Garin and our subsidiary Minera Samex Chile S. A.  We signed an option contract to acquire mineral concessions covering a 20-hectare portion of the Inca project in Chile by making option payments totaling the Chilean Peso-equivalent of US$300,000 over thee years as follows: initial payment of US$25,000 (paid); US$50,000 on April 30, 2007 (paid); US$75,000 on April 30, 2008; and US$150,000 on April 30, 2009.  (See Item 4 Information on the Company  Description of Property - Inca Project).



Unilateral Option Purchase Contract dated April 9, 2007 between Jaime Ruben Parra Vasquez and our subsidiary Minera Samex Chile S. A.  We signed an option contract to acquire mineral concessions covering a 21-hectare portion of the Inca project by making option payments totaling the Chilean peso equivalent of US$180,000 over two years as follows: US$50,000 upon signing the Option Agreement (paid); US$50,000 by April 9, 2008; and US$80,000 by April 9, 2009.  (See Item 4 Information on the Company  Description of Property - Inca Project).





20





---





We have not made any material divestitures since the beginning of the last three financial years.



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/residence in La Paz, Bolivia and a field office/residence in Copiapo, Chile.



Business Overview.

During the 2006 fiscal year we were involved in exploration work on our Los Zorros gold-copper-silver prospect in Chile and in the evaluation, acquisition and exploration of our new INCA porphyry copper-gold-silver-moly prospect near Inca de Oro, Chile.  Our expenditures on mineral interests and exploration costs totaled $2,161,249 for 2006.



During the first quarter of 2006 we continued the detailed work of analyzing, compiling, evaluating and interpreting the data and assays from bulldozer trenching completed in the previous quarter on copper-gold-silver targets on the Los Zorros property.  These results will be used to select drill locations for a phase II drill program for Los Zorros (See Item 4 Information on the Company  Description of Property - Los Zorros Property).  We also began to seek financing in order to acquire rights to the Inca porphyry copper-gold prospects that had unexpectedly come to our attention.  We signed a Corporate Finance Consulting Agreement with European consultants, Spartacus Ltd. (the Consultant), to assist the Company with respect to its corporate financing efforts in Europe and other jurisdictions and as a result, during the first quarter, we raised gross proceeds of $2,604,000 through a private placement of 3,720,000 units at a price of $0.70 per unit.  This enabled us to secure rights to more than 5,000 hectares of mineral concessions at the INCA project in Chile by staking, by purchase of concessions at a government auction, and by option agreement to purchase mineral concessions.  Also during the first quarter, we prepared visual materials, maps, photos, cross-sections and drill sections for the Companys display booth at the Vancouver gold and resource conference and to be used in meetings held in Europe and Toronto.  Annual patent payments were made on our mineral properties during the first quarter.



During the second quarter, we constructed our new field camp and office facilities at the INCA project and we executed two additional option agreements for the acquisition of mineral concessions at the INCA project in Chile.



During the third quarter, we completed the construction and equipping of the camp and exploration office at the INCA project in Chile.  In addition, extensive maps were compiled from ground surveying of topographic, geologic and mining features.  We also had an airborne orthographic photo survey flown over the INCA project in order to produce orthographic air-photos and detailed topographic maps of the mineralized target areas.  The ortho-photos and topographic maps are being utilized in geologic mapping and planning of drill-hole locations for the upcoming exploration work.   We were also seeking and evaluating old reports and underground mining plans, etc. relative to the historic mining and exploration activities that have been conducted at INCA over the past 50+ years.  We were able to locate reports pertaining to geophysical IP surveys, geologic investigations, and much of the drilling including, fortuitously, some of the drill core from 1971 and 1990.  With this newly acquired information, first hand accounts from old miners, and current field studies, we were able to construct a geologic picture from the previous mining/exploration activities which is strongly supportive of the exploration targets at INCA.  Our objective is to explore beneath the oxide copper mines for substantial deposits of primary copper-sulfide ores with important gold, silver and molybdenum credits.  Detailed drill plans are being designed for each individual target area, focusing on expanding the known occurrences of primary and secondary enriched copper-sulfide mineralization which was encountered by previous mining/exploration activities.



During the fourth quarter of 2006, we completed the final option payments on two separate option agreements to acquire mineral concessions covering portions of the Los Zorros property in Chile.  We also commenced a large (30.6 line-kilometers) geophysical IP survey at the INCA Project in Chile.  The purpose of the IP survey was to aid in planning the exploration-drilling program by electrically mapping out the extent of primary copper-sulfide mineralization over the +12 square kilometer area encompassing the target zones which are mostly concealed beneath propylitic and clay-altered granodiorite cap rock.  Initial results from the first two lines were very encouraging and consequently the program was expanded to a total of six survey lines, which were finally completed in January 2007.   Based on results of the IP survey, we have significantly increased both the size of target areas and our confidence in the porphyry copper model for the property.  For more than fifty years, the INCA property has been the subject of a variety of mining and exploration activities including open-cut mines, shafts, underground workings, drilling and limited IP surveys.  This information provided SAMEX with good geological controls, which significantly improved interpretation of the IP data.  Results of the IP survey show a strong correlation between IP results and the known occurrence of primary copper-sulfide mineralization.  The survey clearly outlines the larger copper mineralized



21





---





centers at Manto Cuba-San Pedro, Delirio-Tucumana and Providencia and indicates that extensions of these zones continue laterally and to depth, significantly expanding original targets and identifying new targets concealed beneath cap-rock and gravel cover.  By integrating length and depth measurements determined from the IP data and from mapping the surface trace of the mineralized/altered zones, the dimensions of the zones are permissive for targets with volumes cumulatively totaling from 860 million to more than one billion tonnes. If grades can be shown to correspond to historic data, anticipated grades of primary copper-sulfide mineralization might range from 0.65% to 1.0% Cu, with credits of gold and molybdenum.  Although the IP pseudo sections indicate mineralized zones likely extend in places to 500 meters and are open ended at depth, these estimated target sizes are calculated based on assumed thickness/depth range of only 200 to 250 meters.  Accordingly, actual target sizes may significantly increase if further exploration shows mineralization extends to greater depths without significant changes in grade. These potential target sizes and grades are based on models developed by the Company using available geological and geophysical information which, although thought by the Company to be a reasonable explanation for the occurrence of identified mineralization in the INCA area, has yet to be proven by drilling and other exploration activities. The potential quantity and grade of the targets is based on geological models which are conceptual in nature.  There has been insufficient exploration to define a mineral resource and it is uncertain that further exploration will result in the targets being delineated as mineral resources. (See Item 4 Information on the Company  Description of Property - Inca Project



During the fourth quarter of 2006 we also paid the annual patent payments on our Bolivian mineral concessions.  The Companys focus over the past year has been on our mineral properties in Chile and as a result no exploration was conducted on our Bolivian properties.  Over the past several years, mineral interests and deferred exploration costs related to the Bolivian properties, with the exception of the Eskapa Property, have been written down annually to a nominal value of $1,000 each until exploration activity is resumed on the respective properties.



During fiscal 2005 we were principally involved in exploration work on our Los Zorros property in Chile and in generative exploration and evaluation of mineral prospects in the Inca project area near Inca de Oro, Chile.  Expenditures on mineral interests and exploration costs for fiscal 2005 totaled $1,491,548.  During the first quarter of fiscal 2005 we continued exploration work on our Los Zorros property; with drilling and trenching completed in December 2004, we then began the detailed work of analyzing, compiling, evaluating and interpreting the vast amount of data from the program of 10,800 meters of trenching and 8,617 meters of drilling that had been ongoing since July of 2004.  We also made limited expenditures related to our Bolivian properties mainly involving the payment of annual patents.



During the second and third quarters we continued with data compilation and the drafting of drill sections, cross-sections, geologic profiles and maps incorporating the vast amount of data gleaned from the trenching and drilling program at the Los Zorros property.  This information will be used to plan the phase-two exploration drill program to follow-up on targets identified in the phase-one program.  In further preparation for the phase-two exploration drill program, we constructed a drill core storage facility at our field camp at Los Zorros,  re-logged core from six Phase I drill holes, carried out further geologic mapping, and conducted a gravity geophysical survey over a large area encompassing the principal targets on the property.  We entered into an option agreement to purchase an additional 95 hectares of mineral concessions adjacent to Exploration Area IV of the Los Zorros property.  We also conducted a generative program examining quality mineral prospects within the important geologic belts both north and south of Copiapo, Chile.  For very minimal expenditures, through staking and government auctions, we acquired mineral concessions over a gold prospect and a silver prospect.  In Bolivia, administrative and planning activities were underway at our Eskapa precious metal prospect in preparation for the refurbishing and expansion of our exploration camp and the repair and expansion of access roads to facilitate the next phase of drill testing at a later date.



During the fourth quarter of fiscal 2005 we re-logged drill core, conducted bulldozer trenching, sampling, assaying and geologic mapping in several Exploration Areas at the Los Zorros property.  In Exploration Area II (Milagro) certain Phase I drill core was re-logged in order to better understand and outline gold targets in that area.  Trenching in Exploration Area III (NORA) totaled 1,865 meters in 10 trenches with 559 samples taken.  Trenching in Exploration Area IV (Cinchado East/La Socialista) totaled 3,009 meters in 14 trenches with 1,020 samples taken in the trenches and an additional 82 samples taken from old pits and vein workings.   We also carried out generative exploration and evaluation of copper, gold, silver, molybdenum prospects in the Inca project area near Inca de Oro, Chile.   During the fourth quarter, we also entered into an Area of Interest (AOI) Agreement with SilverCrest Mines Inc. (SilverCrest) to facilitate joint exploration for silver deposits in Region III of Chile.  In addition to our ongoing exploration at the Los Zorros property, we have been conducting discreet regional exploration for the past five years and have accumulated a valuable database of prospects, geological information, expertise and local connections.  This agreement will enable us to utilize and advance these assets more effectively.  We are pleased with the opportunity to compliment our own exploration efforts in Chile by working jointly with SilverCrest throughout the area of interest (approx. 70,000 square kilometers) which hosts the most important historic silver-producing areas of Chile.  (See Item 4 Information on the Company  Description of Property - Los Zorros Property, Inca Project and Area Of Interest Agreement For Silver Exploration In Chile).



During the 2004 fiscal year ended November 30, 2004, we were principally involved in exploration work on our Los Zorros



22





---





property in Chile including bulldozer trenching, core drilling with two drill rigs, core logging, sampling and assaying.  By mid-December 2004, we had completed 8,617 meters of core drilling in 26 holes, 10,800 meters of bulldozer trenching in 65 trenches and more than 3,100 trench and surface samples/assays.  Mineral interests and exploration costs for 2004 totaled $2,136,270.  Limited expenditures related to our mineral properties in Bolivia mainly involved the payment of annual patents on our mineral concessions and administrative and maintenance functions.



LOOKING FORWARD FOR 2007, we anticipate that we will be able to fund our ongoing general operations through the next year from funds on hand.  In March 2007, we completed a private placement of 5,742,500 units at $0.80 per unit raising gross proceeds of over $4.5 million. With this funding, the Company plans to conduct further exploration at the INCA project, the Los Zorros property and the Eskapa property.  Drilling at the INCA project will likely involve the larger portion of our anticipated exploration expenditures for 2007.  A phase-two drill program is also considered for the Los Zorros property.   In April 2007 we resumed activities at our Eskapa prospect in Bolivia including expanding and refurbishing the exploration camp, repairing and enhancing access roads, and preparing drill pads for the next phase of drill testing at a later date.  We are also negotiating other possible mineral property acquisitions in Chile which may be funded from current cash reserves or made subject to further private placement financings depending on circumstances at the time.  (See Item 4 Information on the Company  Description of Property - Los Zorros Property, Inca Project and Eskapa 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



INCA PROJECT

The Company has secured rights to more than 11,500 hectares of mineral concessions at the INCA project in Chile by staking, by purchase of concessions at a government auction, and by four separate agreements for options to purchase mineral concessions. The core of the concessions covers numerous small copper mines situated within a 20-square-kilometer area (2,000 hectares) near Inca De Oro, Chile.  Under the terms of the option agreements, SAMEX can acquire 100% interest in mineral concessions as follows:



Under the Unilateral Option Purchase Contract dated March 31, 2006 between Sociedad Contractual Minera Porvenir 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 by making option payments totaling the Chilean Peso-equivalent of US$2,000,000 over thee years as follows:



i)

initial payment (including US$208,677 for patentes) of US$608,677 (paid);

ii)

US$191,323 on March 31, 2007 (paid);

iii)

US$200,000 on March 31, 2008; and

iv)

US$1,000,000 on March 31, 2009.



The concessions are subject to a 1% Net Smelter Return Royalty and the owner has the right to purchase up to 50% of any oxide-copper production at cost from SAMEX (to a limit of 10,000 tonnes per month) and subject to a cumulative maximum of 1.2 million tonnes or ten years, which ever is reached first.



Under the Unilateral Option Purchase Contract dated April 4, 2006 between Malvina del Carmen Araya Santander and our subsidiary Minera Samex Chile S. A., SAMEX can acquire 100% interest in concessions covering a 45-hectare portion of the Inca project by making option payments totaling the Chilean Peso-equivalent of US$300,000 over thee years as follows:



23





---







i)

US$50,000 initial payment (paid);

ii)

US$50,000 on March 31, 2007 (paid);

iii)

US$100,000 on March 31, 2008; and

iv)

US$100,000 on March 31, 2009.



These concessions are subject to a 1% Net Smelter Return Royalty for a period of 20 years.  SAMEX has the option to buyout the Royalty at any time for US$500,000.



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 by making option payments totaling the Chilean Peso-equivalent of US$300,000 over thee years as follows:



i)

US$25,000 initial payment (paid);

ii)

US$50,000 on April 30,
2007 (paid);

iii)

US$75,000 on April 30, 2008; and

iv)

US$150,000 on April 30, 2009.



There is no royalty payable on these concessions.



Under the Unilateral Option Purchase Contract dated April 9, 2007 between Jaime Ruben Parra Vasquez and our subsidiary Minera Samex Chile S. A.,  SAMEX can acquire 100% interest in mineral concessions covering a 21-hectare portion of the Inca project by making option payments totaling the Chilean peso equivalent of US$180,000 over two years as follows:



i)

US$50,000 upon signing the Option Agreement (paid);

ii)

US$50,000 by April 9, 2008; and

iii)

US$80,000 by April 9, 2009.



There is no royalty payable on these concessions.



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 (example March 2006 M.T.U. was 31,444 x 1/10th = 3,144.4 Chilean Pesos per hectare which at the average exchange rate for March 2006, would equate to approximately US$5.95 per hectare).  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 (example March 2006  M.T.U. was 31,444 x 1/50th = 628.88 Chilean Pesos per hectare which at the average exchange rate for March 2006, would equate to approximately US$1.19 per hectare for exploitation concessions).



The INCA property is located 90 kilometers north 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 location is well-situated with good access, expansive surrounding space for large mining operation infrastructure, and bringing in water and electrical power.  SAMEX plans to carry out a concerted exploration effort at the INCA project to search for large porphyry copper-gold-silver-molybdenum deposits.  Of interest, Chilean copper company, CODELCO made an important porphyry copper discovery at Inca de Oro on their property adjacent to the INCA project.



The INCA project area has been the center of small mining activity (Cachiyuyo de Oro District) primarily for production of oxide-copper, and more recently, secondary enriched copper sulfide ores.  Most of the production has been from localized open cut workings, and in several places - shafts, positioned on tourmaline breccia, altered brecciated intrusive rock, and sheeted vein zones.  These mineralized occurrences are the typical high-level expression to deeper seated, source porphyry copper intrusions of likely much larger size with great upside exploration potential.  Very little exploration work (especially drilling) has been carried out around the small mines.  One limited part of the INCA project area at the Lower Manto Cuba mine was drilled during an Empresa Nacional Minera (ENAMI a Chilean government company) program in 1971 with important implications for exploration.  The holes not only demonstrate the position, thickness, and grade characteristics of oxide and enriched secondary sulfide ores, but reveal the presence, at depth just below and around these zones, of altered porphyry-hosted, primary (hypogene) copper-sulfide mineralization. Small miners, without capital for exploration or infrastructure (water and power) or to build a mill and plant to process secondary or primary copper sulfide ore, could only focus on mining areas of readily accessible oxide-copper ore feed for the near-by Chatal Leach Plant.  With this plant long closed, oxide ores which are hand-sorted for direct-shipping grade (>2.5% copper) oxide and some enriched ores are currently trucked several times a month in small quantities to the ENAMI heap-leach plant and smelter complex at Paipote, near Copiapo, Chile.



24





---







At the INCA Project, SAMEX has identified five important targets of copper mineralization with significant credits of molybdenum, and also locally for gold and silver.  These targets include: Upper Manto de Cuba, Lower Manto Cuba, San Pablo, Delirio, and Tucumata.  Other less-well defined smaller targets to be further evaluated have also been found to be present on the acquired property position and include: Jardinera, Concepcion, San Antonio, Puntilla, and Dos Amigos.  The area containing these targets is the typical size for centers of porphyry copper systems of the early to mid Tertiary igneous belt of the northern part of Chile (Collahuasi, Quebrada Blanca, El Abra, Chuquicamata, Radomiro Tomic, Escondida, El Salvador).  The Inca Project is positioned at the south end of this geologic belt and within a well-defined structural corridor of numerous centers of mineralization including the large El Salvador (Codelco) porphyry copper deposit (970 million metric tons  0.68% copper, 0.022% molybdenum, 0.10 g/mt gold), the Inca de Oro gold-copper vein swarm, the Tres Puntas and Chimbero silver mining district, and the previously mentioned Codelco discovery of porphyry-hosted copper-gold mineralization.  The geochemical makeup of ore and mineralization in the INCA area is illustrated in the following table of samples recently taken by SAMEX from ore stockpiles and dumps of the small active mines on the property.  These results are similar to those from earlier SAMEX reconnaissance sampling.  Note the potassium (K) enrichment and depletion of calcium (Ca) and sodium (Na) which reflects the altered porphyry host for the mineralized samples.



|           |                            |              |        |        |        |       |      |      |     
|---------- | -------------------------- | ------------ | ------ | ------ | ------ | ----- | ---- | ---- | ----
|SAMPLE
No. | Total
Cu %                 | Soluble
Cu % | Au
ppm | Ag
ppm | Mo
ppm | S
%   | Ca
% | K
%  | Na
%
|T-1        | 6.18                       | 5.510        | 1.010  | 11.3   | 117    | 0.02  | 0.35 | 5.91 | 0.52
|T-2        | 4.08                       | 3.740        | 1.275  | 20.3   | 18     | 0.06  | 0.23 | 3.78 | 1.32
|D-1        | 7.98                       | 6.910        | 1.600  | 25.2   | 326    | <0.01 | 0.55 | 6.61 | 0.42
|MCS-1      | 11.85                      | 11.450       | 0.051  | 24.8   | 13     | 0.03  | 0.09 | 0.32 | 0.32
|MCS-2      | 7.64                       | 6.800        | 0.042  | 2.1    | 102    | 0.01  | 0.05 | 2.58 | 0.07
|MCS-3      | 38.10                      | 18.600       | 0.745  | 17.6   | 48     | 4.07  | 0.02 | 0.79 | 0.30
|MCI-1      | 1.01                       | 0.082        | 0.035  | 2.6    | 46     | 2.17  | 0.22 | 3.96 | 0.04
|MCI-2      | 0.08                       | 0.039        | 0.008  | <0.5   | 2150   | 1.04  | 0.09 | 3.71 | 0.07
|MCI-3      | 1.90                       | 0.010        | 0.071  | 3.1    | 20     | 3.82  | 0.18 | 3.88 | 0.03
|MCI-4      | 5.70                       | 0.629        | 0.031  | 2.3    | 54     | 3.46  | 0.03 | 4.36 | 0.05
|SPB-1      | 1.72                       | 0.534        | 0.601  | 14.3   | 20     | 1.80  | 1.48 | 2.49 | 0.12
|SPB-2      | 1.92                       | 1.715        | 0.013  | 1.0    | 7      | 0.04  | 0.06 | 1.99 | 0.15
|SPB-3      | 8.03                       | 7.000        | 0.041  | 17.8   | 21     | 0.08  | 0.04 | 0.91 | 0.10
|SA-1       | 10.10                      | 1.080        | 0.299  | 9.0    | 21     | 1.80  | 0.10 | 3.82 | 0.08
|SA-2       | 3.31                       | 2.560        | 0.210  | 2.6    | 10     | 0.15  | 0.11 | 4.29 | 0.06
|C-1        | 0.25                       | 0.013        | 0.168  | 1.5    | 5      | 3.47  | 0.41 | 2.83 | 0.05
|C-2        | 0.80                       | 0.029        | 0.041  | 4.2    | 8      | 3.64  | 0.30 | 3.57 | 0.05
|C-3        | 2.63                       | 0.005        | 0.311  | 8.1    | 9      | 2.84  | 0.17 | 3.84 | 0.07
|C-4        | 0.16                       | 0.008        | 0.024  | 0.8    | 3      | 3.70  | 0.32 | 3.31 | 0.05
|C-5        | 5.19                       | 0.012        | 0.482  | 24.9   | 10     | 4.64  | 0.25 | 3.51 | 0.07
|C-6        | 0.03                       | 0.012        | 0.006  | <0.5   | 9      | 0.06  | 3.00 | 2.78 | 2.90
|J-1        | 27.60                      | 13.000       | 0.599  | 55.0   | >10000 | >10.0 | 0.08 | 3.73 | 0.12
|J-2        | 10.70                      | 6.670        | 2.930  | 27.7   | 7570   | 2.00  | 0.08 | 4.53 | 0.11
|J-3        | 7.15                       | 2.450        | 1.040  | 20.1   | 476    | 1.58  | 0.06 | 4.08 | 0.13
|J-4        | 0.07                       | 0.041        | 0.015  | 0.6    | 32     | 0.01  | 3.77 | 2.10 | 2.77
|           | Typical Whole Rock Content
|2.8  3.0  | 2.2  2.5                  | 2.4  2.5   



Initial field review of all the targets at the INCA Project by SAMEX, which outlined the extent of small mine workings, speculatively suggests that historic production may have cumulatively reached to approximately 2.5 million metric tons of oxide-copper ore and less than 1.5 million metric tons of enriched secondary copper-sulfide ore.  Although oxide ore may be exhausted at several mines (Lower Manto Cuba, San Pablo), important resources may remain especially at three mine areas (Delirio, Tucumata, and Jardinera).  Enriched secondary copper-sulfide ores may have been largely mined out at Lower Manto Cuba; but have just been reached by small miners at deeper levels at San Pablo and Jardinera and remain intact (untouched) at Upper Manto Cuba, Delirio and Tucumata).  Based on surface measurements made around open cut mine workings and along the exposed trace of mineralized zones during reconnaissance evaluation of the property, SAMEX conservatively estimates a possible target cumulative potential of 5.2 to 8.0 million metric tons of oxide-copper ore (0.75% to 1.5% soluble copper,



25





---





average grade), and 15.6 to 20.0 million metric tons of enriched secondary copper sulfide ore (2.5% to 4.5% total copper, average grade) to be present at shallow depths at the various target sites.  At Delirio, Tucumata and Jardinera, a significant gold credit of 1.00 to 2.93 grams/metric ton may also be present with both the oxide and enriched copper ores.  Ranges of grade were determined from sampling of ore stockpiles at currently active small mines (San Pablo, San Antonio, Upper Manto Cuba, and Jardinera) and dumps of inactive mines (Lower Manto Cuba, Concepcion, Delerio, and Tucamana).  Thicknesses typical for the oxide and enriched ores is estimated based on exposed workings and importantly from drill information from the 1971 ENAMI drill program.  The drilling suggests that primary mineralization has an unknown depth extent in excess of 100 meters.  The potential target size 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 INCA area, has yet to be proven by drilling and other exploration activities. The potential quantity and grade of the target is conceptual in nature.  There has been insufficient exploration to define a mineral resource and it is uncertain that further exploration will result in the target being delineated as a mineral resource.



Of importance, at two mine areas (Lower Manto Cuba and Concepcion), deeper workings have encountered primary copper sulfide ore hosted by altered porphyritic intrusive rock which has been stockpiled or discarded on dumps.  This material, which was sampled by SAMEX during initial reconnaissance sampling, contains 0.41% to >2.0% copper, locally with credits in molybdenum (0.05% to 0.08%), and gold (0.3 grams/metric ton at Concepcion).  There has never been a plant to process primary sulfide ore and produce concentrate on, or near, the property.  So, although encountered in places by deeper mine workings, this material was historically, and to this day, ignored by the small miners.  Some 35 years ago, a core drill hole, which was included as part of a 1971 ENAMI churn drilling program at Lower Manto Cuba, encountered the top of the primary copper sulfide zone at a depth of approximately 84 meters and is open-ended to the bottom of the hole (140 meters depth).  Grades range from 0.20% to 2.65% total copper over the one meter sample widths; most samples contain >0.50% copper; and the average grade is 0.83% total copper (although SAMEX has not verified the grades in this drill hole, these grades are consistent with grades reported above from SAMEX sampling of primary copper sulfide ore hosted by altered porphyritic intrusive rock discarded on dumps or stockpiles).  Some of the near-by, shallow, churn drill holes from the same program also encountered primary copper sulfide mineralization at depths as shallow as 48 meters with average grades of 0.8% to just over 1.0% total copper.  Assuming that, with depth, the primary copper sulfide mineralization does not expand outward much beyond the surface widths, a cumulative target is conservatively estimated at from 120 to 180 million metric tons with an average grade ranging between >0.65% to 1.0% total copper as a discovery objective for exploring the target areas.  Should the primary copper sulfide mineralization expand outward at depth the target potential would be dramatically increased.  The estimate of this target size and grade is based upon grades and widths from the ENAMI drilling, from results of SAMEX sampling of primary copper sulfide mineralization from mine ore stockpiles and dumps, and from surface measurements made around open cut mine workings and along the exposed trace of mineralized zones during reconnaissance evaluation of the property.  The potential target size 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 INCA area, has yet to be proven by drilling and other exploration activities.  The potential quantity and grade of the target is conceptual in nature.  There has been insufficient exploration to define a mineral resource and it is uncertain that further exploration will result in the target being delineated as a mineral resource.



During the third quarter of 2006 we completed the construction and equipping of a camp and exploration office at the INCA project.  In addition extensive maps were compiled from ground surveying of topographic, geologic and mining features.  A contract was also completed to produce orthographic air-photos (covering approx. 45 sq. kms.) and detailed topographic maps over the mineralized target areas on the INCA property.  The ortho-photos and topographic maps are being utilized in geologic mapping and planning of drill-hole locations for the upcoming exploration work.   We were also seeking and evaluating old reports and underground mining plans, etc. relative to the historic mining and exploration activities that have been conducted at INCA over the past 50+ years.  We were able to locate reports pertaining to geophysical IP surveys, geologic investigations, and much of the drilling including, fortuitously, some of the drill core from 1971 and 1990.  With this newly acquired information, first hand accounts from old miners, and current field studies, we have been able to construct a geologic picture from the previous mining/exploration activities which is strongly supportive of the exploration targets at INCA.



IP Geophysical Survey Significantly Expands Target Areas - During the fourth quarter of 2006, SAMEX commenced a large (30.6 line-kilometers) geophysical IP survey at the INCA Project.  The purpose of the IP survey was to aid in planning the exploration-drilling program by electrically mapping out the extent of primary copper-sulfide mineralization over the +12 square kilometer area encompassing the target zones which are mostly concealed beneath propylitic and clay-altered granodiorite cap rock.   Initial results from the first two lines were very encouraging and consequently the program was expanded to a total of six survey lines, which were finally completed in January 2007.  Based on results of the IP survey, SAMEX has significantly increased both the size of target areas and its confidence in its porphyry copper model for the Property.



For more than fifty years, the INCA property has been the subject of a variety of mining and exploration activities including



26





---





open-cut mines, shafts, underground workings, drilling and limited IP surveys.  This information provided SAMEX with good geological controls, which significantly improved interpretation of the IP data.  Results of the IP survey show a strong correlation between IP results and the known occurrence of primary copper-sulfide mineralization.  The survey clearly outlines the larger copper mineralized centers at Manto Cuba-San Pedro, Delirio-Tucumana and Providencia and indicates that extensions of these zones continue laterally and to depth, significantly expanding original targets and identifying new targets concealed beneath cap-rock and gravel cover.



By integrating length and depth measurements determined from the IP data and from mapping the surface trace of the mineralized/altered zones, the dimensions of the zones are permissive for targets with volumes cumulatively totaling from 860 million to more than one billion tonnes. If grades can be shown to correspond to historic data, anticipated grades of primary copper-sulfide mineralization might range from 0.65% to 1.0% Cu, with credits of gold and molybdenum.  Although the IP pseudo sections indicate mineralized zones likely extend in places to 500 meters and are open ended at depth, these estimated target sizes are calculated based on assumed thickness/depth range of only 200 to 250 meters.  Accordingly, actual target sizes may significantly increase if further exploration shows mineralization extends to greater depths without significant changes in grade.



These potential target sizes and grades are based on models developed by the Company using available geological and geophysical information which, although thought by the Company to be a reasonable explanation for the occurrence of identified mineralization in the INCA area, has yet to be proven by drilling and other exploration activities. The potential quantity and grade of the targets is based on geological models which are conceptual in nature.  There has been insufficient exploration to define a mineral resource and it is uncertain that further exploration will result in the targets being delineated as mineral resources.



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



LOS ZORROS PROPERTY

We, through our Chilean subsidiary, Minera Samex Chile S.A., have more than 7,800 hectares of mineral concessions in the Los Zorros district situated 60 kilometers south of Copiapo, Chile.  The exploration objective at Los Zorros is discovery of high-grade gold deposits and bulk-tonnage gold, copper-gold, and/or gold-silver-copper deposits.



Geologic interpretation of the Los Zorros district suggests that multiple mineralizing events are possibly related to a porphyry intrusion underlying parts of the area. The bulk tonnage-style targets are geologically diverse and include: porphyry-hosted copper-gold, gold-silver-copper mantos and altered sill-hosted vein/veinlet/disseminated mineralization, gold-silver-copper-mineralized breccia bodies, and epithermal mantos-hosted gold.



Target identification/delineation at Los Zorros has been facilitated by the completion of an airborne orthographic photo survey over the entire property, ground topographic surveys, continuing detailed geological mapping, rock chip sampling/assaying, surveying/mapping of old workings, mines and prospect pits, and reviews of limited previous drilling by earlier parties.  Whole-rock geochemical analyses and thin section examination of the various rock types was also undertaken to help interpret the mineralization.   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.   Norex Drilling Limitada, a Chilean subsidiary of a Canadian company, Norex Drilling International, conducted the drilling using two drill rigs. The exploration work during 2004 was focused in Exploration Areas I, II, and III which are only a portion of the seven target/project areas that we have identified to-date.



Our exploration at Los Zorros has identified seven Exploration Areas to-date within the Companys land holdings which cover more than 78 square kilometers.  Exploration Areas II through VII encompass numerous old, small gold, silver, copper and barite mines and prospects in low hills (elevations ranging from 700-900 meters) situated along a six-kilometer trend adjacent to a central pampa (plain) where a quartz porphyry intrusion hosts copper-gold mineralization (Exploration Area I).  Due to the number of targets within the Los Zorros property, the extensive size, and character of the alteration and mineralization of each individual area, each Exploration Area is being explored as an individual project.  Below are summaries/histories of each of the Exploration Areas identified thus far:



EXPLORATION AREA I  Exploration Area I 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 has 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.





27





---



Trench
	Length
	Average Copper
	Average Gold
	Average MolybdenumIn Meters
	%
	ppm*
	ppmP-1
	106.0
	0.105
	0.039
	20P-2
	219.0
	0.252
	0.103
	13P-3
	213.4
	0.186
	0.212
	33P-5
	67.0
	0.266
	0.189
	20P-6
	110.8
	0.145
	0.256
	12P-9b
	104.3
	0.066
	0.069
	18P-9c
	89.0
	0.077
	0.018
	51P-16
	129.4
	0.277
	0.149
	12P-18
	207.3
	0.102
	0.081
	<2C-1
	199.0
	0.069
	0.100
	<6LR1-17
	51.0
	0.051
	0.580
	17Weighted 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 Exploration Area I.  Conclusive interpretations of the geologic features and geochemical results of Exploration Area I are not yet complete.  Further work within Exploration Area I will focus on searching for other areas of higher grade oxide and secondary sulfide mineralization which are advantageously positioned at shallow depths and for protore zones of combined high copper/gold grade with significant width.

EXPLORATION AREA II Exploration Area II is comprised of an area where gold was previously mined on a small scale via open cut methods and which is marked by strong clay alteration and silicification with abundant iron-oxide minerals over an area about 500 meters long by 200 meters wide.  The gold mineralization occurs in mantos-like layers (intervals of altered tuff units) in a package of andesite flows and diorite sills which are gently dipping and positioned at shallow depths.  PIMA analyses of altered tuff samples from the mine area show mineral assemblages typical of high-level epithermal gold-mineralized systems (opaline, silica, silica-jarosite, alunite-halloysite-montmorillonite, smectite-kaolinite, serecite-pyrophyllite, illite-silica, gypsum-silica and jarosite silica).  The gold mineralization within the small local mine workings occurs with distinct clay alteration and silicification and may be much-more extensive beneath surrounding areas to the previous mining activity.







28





---





The phase-one reconnaissance drilling and trenching program during 2004 in Exploration Area II identified four important
prospective targets (A through D) for gold (-silver) and copper-gold mineralization.  Further work during 2005 provided a better understanding of these targets: A gravity geophysical survey, detailed geologic mapping, and re-logging of certain Phase I drill core has helped to better understand and outline gold targets in Exploration Area II of the Los Zorros property.  Three of these targets, Target A (Milagro Mine), Target C (Milagro Pampa) and Target D (La Florida), will be included for drilling as part of the proposed Phase II exploration program to follow-up numerous gold, copper-gold and silver targets on the Los Zorros property.  Target B is not currently being considered for follow up, but may be pursued at a later date depending upon further results in the area.  The three targets are summarized as follows:



Target A (Milagro Mine)is an area where Phase I drilling intersected gold-mineralized mantos and underlying thick hydrothermal breccia that may be part of an important gold zone.  The mantos zone was intersected between drilling depths of 27.0 to 31.7 meters.  The gold content ranges from 1.240 grams/metric tonne to 4.140g/mt and averages 2.579 g/mt gold with a silver average credit of 15.9 g/mt over a true width of 4.4 meters.  Of importance, the gold-mineralized mantos occurs within a very wide halo of strongly anomalous gold values.  The gold mineralization (mantos) of the Milagro Mine area is fortuitously located in an uplifted (horst) block and occurs just below the floor of a gabbro body.  The gravity expression of the dense gabbro body masks the presence of the low-gravity character of the underlying altered rocks which host the gold mineralization.  The surface extent and indications of gold mineralization in the horst block defines a target size of 300 to 400 meters across by 800 meters down dip (easterly).  The mantos interval and better mineralized upper part of the underlying breccia are together approximately 50-meters thick.  If better grade gold-mineralized intervals can be found by drilling, the target dimensions are permissive for 25 million to 35 million metric tons within the uplifted (horst) block.  The spatial extent of the gold-mantos and underlying breccia zone in down-dropped blocks to the north and south flanking the horst block of the target area are unknown at this stage, and may be the focus of later explorations efforts. Two or three core holes are planned to drill the projected down-dip continuation of the gold mineralized mantos interval and underlying breccia to the east.



Target C (Milagro Pampa)is a stockwork-veined, sericite-clay-quartz-altered/pyritized gabbro sill with strongly anomalous copper-gold-silver and mercury content which is concealed beneath pampa cover and was discovered during Phase I drilling in hole ML-04-03.   The strong alteration, anhydrite and quartz-pyrite stockwork veining, and highly anomalous copper content intersected suggests that Milagro Pampa is near the center of the intrusive porphyry source of the mineralizing system.  The typical gravity high expression of the gabbro over the region is considerabley diminished by the alteration/mineralization effects at Milagro Pampa.  The hole did not quite reach and penetrate through the floor of an altered and mineralized gabbro body, but garnet skarn xenolith blocks comprising the last twenty meters suggest that the hole was stopped near the floor contact with underlying rock.  The strong alteration, pyritization and variable anomalous copper over the entire length of the hole may comprise the outer halo to substantial gold-copper mineralization hosted in altered porphyry and layered skarnoid sedimentary and volcaniclastic rocks that likely underlie the gabbro body.



In light of the gold mineralization being concentrated just below the floor of the gabbro unit at the Milagro Mine (Target A), exploration results make a strong case to test for copper-gold mineralization underlying the gabbro in the Milagro Pampa area.  The fault-bounded prospective area of Milagro Pampa measures 1000 meters by 500 meters with the top of the target becoming progressively deeper in a down-dip direction to the east (ranging approximately 400 to 500 meters vertical depth).  One to two core drill holes are proposed to test this target during Phase II.



Target D (La 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.  One to two core drill holes are proposed to test this target during Phase II.



EXPLORATION AREA III- Exploration Area IIIis 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 carried out during 2004 in Exploration Area III included: geologic mapping and surface outcrop rock-chip sampling mostly across principal vein structures (193 samples), approximately 2000 meters of trenching (14 trenches/520 channel samples), and 3,799.5 meters of core drilling in 10 holes.  The phase-one reconnaissance drilling and trenching program identified five targets (A through E) prospective for gold ore-bodies.  Further work during 2005 provided a better understanding of the targets in Exploration Area III - Update On Exploration Area III (NORA High-Grade Gold Target) - A Phase II exploration drilling program is in the process of being planned for the Los Zorros property in Chile.  In preparation, SAMEX has re-logged so far, core from six Phase I drill holes, carried out further geologic mapping, and conducted a gravity geophysical survey over a large area encompassing the principal targets on the property.  The new



29





---





information is being compiled, critically evaluated, and merged with the results from the Phase I exploration drilling program and as a resultthe geologic setting of several of the numerous targets on the property are now much better understood.  The first technical update, presented here, is focused on the high-grade goldmineralization encountered by drilling within Exploration Area III atwhat is now called theNORAtarget.  The NORA High-Grade Gold Target now encompasses Target zones A, B, C, D, & E.  Based on information gleaned from re-logging of Phase I drill core and further geologic mapping it was determined that these five target zones were inter-related and best explored and described as a single comprehensive target, namely, the NORA target which is described below:



NORA High-Grade Gold Target, Exploration Area III - During the Phase I drilling program, 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. If the gold-rich mantos layer should prove to be extensive beneath much of the NORA prospective area that measures 1,200 meters by 1,000 meters (See Figures A, C & D) and maintains the average thickness intersected, a large target could be present.  The potential 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 NORA target area, has yet to be proven by drilling and other exploration activities.  Phase I drilling in Exploration Area III (DDH-N-04-01 to 06 and 08 to 10) indicated that grades of up to 16 g/t (grams/tonne) gold over significant thicknesses are present in the target area.  This target potential is conceptual in nature, there has been insufficient exploration to define a mineral resource within Exploration Area III and it is uncertain if further exploration will result in discovery of a mineral resource within the NORA target.



The intersected gold mineralization occurs in a complicated package of volcaniclastic detritalrocks, 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.  Follow-up drilling (DDH-N-04-08, -09, and -10) though did not encounter this distinctly layered interval and gold-mineralized black breccia, and the reasons for this were evaluated via re-logging the core of all these holes.  The gold-mineralized mantos interval in DDH-N-04-05 was intersected intact and without fault complications.  The gold-mineralized interval has a moderate (+/-30o) eastward dip similar to the general dip of layering of the volcaniclastic section.  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.



In follow-up drill holes, parts of this alteration and geochemical expression were also intersected toward the bottom of DDH-N-04-08 and the top part of DDH-N-04-09, but neither of these holes encountered the distinct high-grade, gold-bearing interval.  Fault zones were also observed in the holes and, based on the difficulty of projecting thicker stratigraphic units between the drill holes, the faults bounding the intersected high-grade gold-mineralized mantos interval have minor to moderate amounts of dip-slip normal displacement.  A fault of significant dip-slip displacement must be present between DDH-N-04-5, -8, -9 (fanned from the same pad) and DDH-N-04-10 located 70 meters to the west.  From this review it appears that DDH-N-04-08 was not drilled deep enough to make an intersection and DDH-N-04-09 penetrated through a fault gap, which may explain why these holes missed the gold-mineralized zone.



The results of DDH-N-04-10 suggest that the gold-mineralized zone is significantly down-dropped by faulting to the west to greater depths beneath the NORA area.  Hence, DDH-N-04-05 made an intersection in the up-thrown block, east of the fault, and DDH-N-04-10 was positioned in the down-thrown block and was not drilled deep enough to encounter the alteration halo and enclosed gold-mineralized interval.  DDH-N-04-10 though, did encounter intervals of gold, silver, and copper in highly interesting anomalous values over the final 60 meters of the hole.  A north-south-trending, west-dipping fault of substantial normal displacement was found to the south and traced northward until its offset position was lost beneath covered pampa.  This fault is now believed to extend along the east side of the target area and is the fault positioned between DDH-N-04-10 and the fan set of holes DDH-N-04-05, -08, and -09.



Importantly, the high-grade, gold-mineralized interval is possibly widespread beneath the NORA target 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 could represent leakage up from the deeper seated, high-grade, gold-mineralized mantos.  The area of veins and anomalous gold zones measures 1,200 meters by 1,000 meters and if the gold-rich mantos layer extends beneath much of this prospective area, a large target could be present. This target potential is conceptual in nature, there has been insufficient exploration to define a mineral resource within Exploration Area III and it is uncertain if further exploration will
result in discovery of a mineral resource within the NORA target.



30





---









To pursue this target, recommendations are that drilling first should be carried out north and south of DDH-N-04-05 in the up-thrown block where depths to reach the high-grade gold-mineralized zone should range between 200 to 250 meters.  Then, drilling would be moved westward to test for the high-grade, gold-mineralized zone at greater depths (300 to >600 meters) within the large area encompassing the barite veins and broad anomalous gold zones in the down-thrown block.  Within the large area of the down-dropped block, where a moderate (250 to 350) eastward dip of layered rocks prevails, the targeted gold-mineralized zone should come closer to the surface in a westward direction and much explorationdrilling could be accomplished at depths of between 350 to 450 meters.



The high-grade gold mineralization atNORArepresents a very exciting exploration target, with substantial upside potential, that was discovered through the patient and diligent efforts of the SAMEX team.  Should the geologic model hold together through Phase II drilling a major discovery could result and be a tremendous success for the Company.  This is only one of several quality targets that are coming together at Los Zorros and management is pleased with the progress and potential resulting from these efforts.  Further target information will be announced when all applicable data is complete.



Update On Exploration Area III -SAMEX commenced trenching and sampling in early October 2005 within Exploration Area III at Los Zorros, focusing first on the area overlying the NORA high-grade gold target.  The purpose of this exploration work was to expose and sample parts of zone A along the western side and zones C, D & E in the northeastern part of Exploration Area III.   These prospective zones have been historically prospected with numerous small mine workings and consist of multiple narrow veins and mantos intervals containing interesting gold and copper mineralization that may represent leakage up off a well-mineralized system at depth. The eastern-most anomalous gold zone, and the other zones, may prove to comprise an important guide to deeper seated high-grade gold mineralization.  Hence, the trench results will be important in planning Phase II exploration core drilling in the Nora target area.  (This trenching program in Exploration Area III (NORA) totaled 1,865 meters in 10 trenches with 559 samples taken.)



EXPLORATION AREAS IV, V, VI and VII - As indicated above, the drilling and trenching program from July to December 2004 was focused in Exploration Areas I, II and III, which are only a portion of the seven Exploration Areas that have been identified to-date on the Los Zorros property.  Following are brief summaries of Exploration Areas IV, V, VI and VII that have yet to be explored by drilling.



EXPLORATION AREA IV - Exploration Area IV includes a gold-bearing, iron-oxide cemented breccia body cross-cutting the contact between limestone and underlying volcanic/volcaniclastic rocks with diorite sill.  A small open-pit gold mine within the breccia body (formerly identified as the San Pedro prospect) was worked in the early 1990s.  According to the operator, 150,000 metric tons was mined with an average grade of just over 3 g/mt gold.  The breccia is comprised of clasts that are up to several meters in diameter.  The controls of the breccia are in part structural and perhaps locally stratigraphic.  Breccia and related alteration features of silicification and barite deposition have been traced for 1,200 meters with thicknesses from several meters (distal) to over 40-meters at deepest depths observed.  Overlying alteration features, in places, are locally well-over 150 meters across.



Gold mineralization in the open-pit occurs in breccia which has been strongly affected by supergene leaching.  SAMEX sampling of the breccia exposed in the open-pit, show gold values ranging from 0.05 to 9.5 grams per tonne in 151 rock-chip samples.  The geochemical character of the breccia suggests that primary mineralization (breccia intra-clast cement) may have been comprised of gold-bearing, iron-copper+/-zinc sulfides with an epithermal character (overprint) of additional gold with associated anomalous arsenic and antimony.  The common presence of elevated to anomalous molybdenum values (up to 180 ppm) suggests that the source of the breccia-hosted mineralization may be a porphyry-copper intrusion.  Our drilling will be designed to test for possible extensions of the mineralized breccia body where mining has been historically focused, and, to determine whether the exposed parts of the breccia are actually the margin of a concealed, large central breccia pipe that could comprise a sizeable ore-body.



Update On Exploration Area IV- Detailed geologic mapping was  conducted in Exploration Area IV including on the 95 hectares of additional concessions acquired under an option to purchase agreement signed in June 2005.  The mapping in Exploration Area IV was followed by bulldozer trenching totaling 3,009 meters in 14 trenches with 1,020 samples taken in the trenches for assaying and an additional 82 samples taken from old pits and vein workings.   Results have been incorporated into the existing project database and will assist in the selection of drill locations for Phase II drilling.



EXPLORATION AREA V - Exploration Area V 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.  SAMEX has mapped and sampled the vein sets and is planning 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 a bulk-tonnage target comprised of spaced major veins with intervening rocks containing abundant minor veins/veinlets.



31





---









EXPLORATION AREA VI  Initial geologic mapping defined 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 Target VI 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 started.  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 continue to 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.



EXPLORATION AREA VII An additional area of exploration interest on the Los Zorros property is located 2.0 kilometers further north of Exploration Area VIalong the same range front 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 Exploration Area VI.  Future work will be focused on further evaluating the outlying pampa to the west of the mine for alteration/geochemical indications of a target of deeper seated, epithermal, gold-silver-copper mineralization similar in size and characteristics to Exploration Area VI.



In summary, the Los Zorros property contains numerous large-sized copper-gold and gold-silver-copper targets on a single property holding and thus represents a very important, strategic opportunity for SAMEX.  The prospect 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 target(s) on the property remains strong.  The Phase II drilling program being planned for Los Zorros is expected to entail approximately 5,000 meters of core drilling at an estimated cost of $1,500,000.



We hold an interest in approximately 7,895 hectares of mineral concessions in the Los Zorros district of which 1,464 hectares cover exploitation concessions, and the balance cover exploration concessions.  We have acquired our interest in these mineral concessions by a combination of: staking (approximately 4,662 hectares), by purchase at government auction (approximately



32





---





1,500 hectares), by a purchase agreement (1,429 hectares), and by two purchase option contracts (209 hectares and 95 hectares).  Details of the purchase agreement and the two purchase option contracts are described as follows:



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.



Puchase of Mineral Concessions Completed -  Re: Unilateral 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.  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).



Pursuant to the exercise of the option to purchase on October 27, 2006, we now hold 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.  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 March 1st of 2008, 2009, 20010, 20011, and 2012) to a maximum of US$500,000.  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.



Puchase 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.



The Los Zorros Property is without a known body of commercial ore and our activities to date have been exploratory in nature.  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 (example March 2006 M.T.U. was 31,444 x 1/10th = 3,144.4 Chilean Pesos per hectare which at the average exchange rate for March 2006, would equate to approximately US$5.95 per hectare).  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 (example March 2006  M.T.U. was 31,444 x 1/50th = 628.88 Chilean Pesos per hectare which at the average exchange rate for March 2006, would equate to approximately US$1.19 per hectare for exploitation concessions).



ESPEJISMO PROSPECTS

The Company has acquired rights to approximately 463 hectares of mineral concessions covering gold prospects in the Inca de
Oro region of Chile by purchasing concessions at a government auction and by staking.  No exploration programs are planned on these gold prospects until additional concessions are acquired.



33





---









TRES PUNTAS/CHIMBERO PROSPECTS

The Company has acquired rights to approximately 824 hectares of mineral concessions covering silver prospects in the Inca de Oro region of Chile by purchasing concessions at a government auction and by staking.  No exploration programs are planned on these silver prospects until additional concessions are acquired.



MISCELLANEOUS PROPERTIES, CHILE

The Company staked mineral concessions (approximately 1,000 hectares in aggregate) over several separate areas in Chile for possible future evaluation.  No exploration is currently planned.





AREA OF INTEREST AGREEMENT FOR SILVER EXPLORATION IN CHILE

In addition to the Mineral Properties summarized above, during 2005, we entered into an Area of Interest (AOI) Agreement with SilverCrest Mines Inc. (SilverCrest) to facilitate joint exploration for silver deposits in Region III of Chile (as bounded; to the north by Chiles Region III northern boundary; as to the south by 30 degrees south latitude; as to the east by Chiles international border with Argentina; and to the west by the Pacific Ocean).  In addition to our ongoing exploration at the Los Zorros property, we have been conducting discreet regional exploration for the past five years and have accumulated a valuable database of prospects, geological information, expertise and local connections.  This agreement (dated November 7, 2005) will enable SAMEX to utilize and advance these assets more effectively.  This provides an opportunity to compliment our own exploration efforts in Chile by working jointly with SilverCrest throughout the area of interest (approx. 70,000 square kilometers) which hosts the most important historic silver-producing areas of Chile.



Under the terms of this three-year agreement, SAMEX will help initiate and support SilverCrests exploration efforts in Chile by presenting three properties of merit per year to SilverCrest for consideration (SAMEX has fulfilled this condition for the first year of the agreement).  In return, SilverCrest will pay SAMEX US$150,000 consisting of four equal payments of US$37,500 over three-years.  SilverCrest made the first payment of US$37,500 on December 5, 2005.  (At May 31, 2007, the second payment had not been received, as SilverCrest has requested the opportunity to possibly re-negotiate certain terms of the agreement).   SilverCrest will have the right to earn up to a 51% interest in any property presented by SAMEX by entering into an Option Agreement and spending US$500,000 over three years on each respective property it elects to option.   Within six months of earning a 51% working interest, or, upon SAMEX expending $125,000 as part of its 49% interest, which ever comes first, SilverCrest will have a further right to increase its working interest to 70% by paying SAMEX US$250,000.   SAMEX may elect to convert its remaining 30% interest into a 3.5% net smelter return royalty (NSR), 1.5% of which, SilverCrest may purchase for US$1,000,000.



Under the Area of Interest Agreement, SAMEX will also have a back-in right to earn a 25% working interest in any property generated by SilverCrest on which they have spent US$250,000, by paying 25% of SilverCrests expenses to that point.  At SAMEXs discretion, this 25% working interest may be convertible to a 2.5% NSR, 1% of which SilverCrest may purchase for US$1,000,000.



BOLIVIAN PROPERTIES



ESKAPA PROPERTY

The information herein respecting the Eskapa property is based on a technical report prepared by Robert E. Kell, Vice President Exploration and a Director of SAMEX Mining Corp., who is a certified professional geologist and a qualified person pursuant to the requirements of Canadian Securities Administrators National Instrument 43-101.  A copy of such report has been filed with the British Columbia Securities Commission and Alberta Securities Commission and is available for review by interested persons at SEDAR.com.  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 and situated 150 km by road southwest of Uyuni, and 20 km southeast of the rail station of Chiguana.  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.  The property is readily accessible from Uyuni, Bolivia or Calama, Chile.  We explored the 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 has expended over a million dollars on exploring the Eskapa property with cumulative Deferred Mineral Interest costs since 1995 totaling $1,305,420 at December 31, 2006.







34





---





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.  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.





35





---





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.  A drill program involving 4,500 meters of core drilling in up to 12 holes is proposed to test at depths of up to 400 meters along Zones I-II, III, IV, V, IX, and X at a cost of approximately US $1,000,000.  In April 2007 we plan to resume activities at our Eskapa precious metal prospect in Bolivia including refurbishing and expanding the exploration camp, repairing and enhancing access roads, and preparing drill pads for the next phase of drill testing at a later date.



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, who is one of our Directors.  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.



36





---







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 between approximately US$1.00 to $2.00 per hectare (depends upon US$/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.





SANTA ISABEL PROPERTY

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 was written off in fiscal 2000 due to inactivity on the property.



The remaining portion of 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 Corporation Minera de Bolivia (Comibol) and our subsidiary, Samex S.A.  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.



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



37





---





retained).  This payment, which was due April 11, 2000, has not been made, however, Comibol has not made any demand for payment or given Samex S.A. any notice of default under the Comibol agreement with respect to such non-payment.  Samex S.A. has 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 has confirmed to Samex S.A. that a portion of the Santa Isabel property is 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 is taking legal proceedings to resolve the dispute and asked Samex S.A to wait for it to do so.  Comibol has advised that it is taking active steps to assert its legal rights to the disputed area and anticipates it will be successful in doing so.  Samex has in turn formally advised Comibol that it considers Comibol to be in default of its obligations under the Comibol Agreement because of the dispute, but that it is presently awaiting the results of the ongoing legal proceedings before taking further action. While Samex anticipates Comibol will be successful in its efforts, the outcome of the legal proceeding is dependant on factors outside of Samexs control and therefore there can be no assurance as to the actual outcome of the proceedings.  Samex has not yet analyzed the effect that a loss of the disputed area (34 hectares), if Comibol is not successful, would have on it, nor has it yet considered the existence and type of remedies which might be available to it in such event.



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 1000 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.



Provided the issue with Comibol is resolved and we are able to re-negotiate our obligations under the Comibol Agreement on satisfactory terms, we intend to seek to enter a joint venture with a major company which is established in zinc, silver, indium and lead mining, refining and marketing in order to facilitate further exploration on the Santa Isabel Property.   The Santa Isabel Property is without a known body of commercial ore and activities to date have been exploratory in nature.



EL DESIERTO PROPERTY

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 along trend of a geologic belt that is renowned for some of the worlds largest porphyry copper-gold mines.  The exploration objective at El Desierto is to delineating targets for porphyry copper-gold deposits.



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, who is one of our Directors.  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.



During 1997, we conducted reconnaissance IP surveys, sampling and mapping on the property.  No exploration was conducted during 1998, but additional mineral concessions were staked to expand the property.



In 1999, we granted International Chalice Resources Inc. (Chalice) an option to earn up to a 35% joint venture interest in the El Desierto property by expending a total of US $500,000 on the property (El Desierto Property Option Agreement dated September 30, 1999).  SAMEX/Chalice exploration during 2000 involved road construction, geologic mapping, trenching, sampling, geochemical analysis and geophysical surveys on a portion of the property.  After two phases of exploration, SAMEX/Chalice decided the results on this portion of the property were not sufficient to warrant drilling at the time.  Since no immediate exploration was planned, Chalice agreed to fund annual property holding costs and we granted Chalice a three year extension on their option.   Effective February 26, 2002, Chalice decided to drop their option, relinquishing all rights under the El Desierto Property Option Agreement.  SAMEX had received a total of US$216,147 in option payments from Chalice up until the time the option was dropped.



No exploration has been conducted on the El Desierto property since the SAMEX/Chalice program in 2000.  In 2006 we reduced our landholdings in the area, but we continue to maintain concessions covering approximately 1,469 hectares for further evaluation.  Patent fees ranging between approximately US$1.00 to $2.00 per hectare 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.



38





---









WALTER PROPERTY

The Walter property is located in Quijarro Province, Department of Potosi in Bolivia approximately 10 km north of the old El Asiento silver mining property.  It lies in the south-central part of the Bolivian Altiplano on the southern end of Frailes Mountains at elevations between 4,700 and 5,000 meters (15,400 to 16,400 feet).  The property is accessible by dirt roads from Potosi (145 kilometers) and Uyuni (80 kilometers).  In addition, the railroad between La Paz, Bolivia and Antofagasto, Chile passes within 80 kilometers of the Walter property through the town of Rio Mulatos.  Electric power is available from the Planta Killpani about 30 kilometers northeast of the property.  Water is available for mining purposes from small lakes on or near the property.

We have not conducted exploration on the property since 1997 and are seeking a buyer or a joint venture to further explore and exploit the Walter Project.  Located in the Altiplano of Bolivia, the Walter property is situated along a regional trend of deep-seated faults that served as conduits for the emplacement of veins and dacite porphyry intrusions.  The exploration objective is defining mineable reserves of gold, silver, lead, zinc, copper, arsenic and bismuth hosted within Bolivian-style polymetallic veins.  By June 1997, we had completed a total of 2,842 meters of drilling and 1,700 meters of underground drifting in the Walter South zone.  The surface trace of veins combined with the lateral and vertical extent of the drilling and drifting indicates vein mineralization of approximately 2 million tonnes within the limited dimensions explored (see table below).



|                  |                 |                                                                        |        |      |      |       |      
|----------------- | --------------- | ---------------------------------------------------------------------- | ------ | ---- | ---- | ----- | -----
|Mineralized
Block | Approx. Tonnage | Gold, Silver, Copper, Lead, Zinc, Bismuth Mineralization
Average Grade
|Vein              | Tonnes          | Au g/t                                                                 | Ag g/t | Cu % | Pb % | Zn %  | Bi % 
|Potosi            | 1,003,000       | 3.972                                                                  | 299.65 | 0.82 | 0.35 | 3.17  | 0.24 
|Pupusani v4       | 234,000         | 1.529                                                                  | 77.0   | 0.13 | 0.43 | 16.19 | 0.02 
|Pupusani v3       | 278,000         | 1.125                                                                  | 437.0  | 0.14 | 2.07 | 4.86  | 0.08 
|Pupusani v2       | 132,000         | 2.107                                                                  | 66.1   | 0.11 | 0.09 | 4.90  | trace
|Mercurio          | 190,000         | 2.200                                                                  | 228.0  | 0.48 | 1.30 | 24.65 | 0.06 
|Rica              | 67,000          | 10.174                                                                 | -      | -    | -    | -     | -    
|Huancarani        | 63,000          | 12.650                                                                 | -      | -    | -    | -     | -    



Additional potential exists along the open-ended lateral and down-dip extents of these veins and other structures. The Walter property is without a known body of commercial ore and our activities to date have been exploratory in nature.



During fiscal 2002, claim holdings on the Walter Property were reduced from 4,710 hectares down to the 910 hectares presently held 100% by our subsidiary, Bolivex S.A.   The Walter Mining Group concessions (910 hectares) were acquired by Bolivex from Minera Walter S.A. under a deed of transfer dated November 1, 1994, for a purchase price of US$500,000 (final payment completed in August 1998).  Patricio Kyllmann, our director, is also the President and a shareholder of Minera Walter S.A.  The Walter property is subject to a royalty payable to Minera Walter S.A. as follows: a 2% net sales royalty (defined as gross sales less the cost of smelting and sale) if the price of gold is up to US$500.00/ounce and 3% if the price of gold exceeds US$500.00.  Patent fees of approximately US$1.00 per hectare must be paid annually to maintain the mining concessions.



WARA WARA PROPERTY

The Wara Wara Property is located in the Altiplano region of southwestern Bolivia, at an elevation of 3,800 m (12,500 ft) and approximately 80 km east of the city of Potosi, where the worlds largest silver deposit, Cerro Rico is situated.  Our exploration objective is to identify bulk-tonnage zinc-lead-silver mantos or sedex type ore bodies within the old Wara Wara mining district.   The property is positioned in a geologic/metallogenic belt that extends into Bolivia from northern Argentina.



Sampling the dumps of old workings on the Wara Wara property revealed that the grade of ore mined probably ranged between 15-25% zinc, 5-25% lead, 70-300 grams/metric ton silver, along with 2-5% copper from several mines where chalcopyrite locally occurs.  The workings are generally associated with narrow irregular veins, veined zones, and related localized mantos replacement within favorable stratigraphic intervals. The vein and mantos zinc-lead-silver mineralization occurs in a Silurian-Ordovician sequence of gray siltite and shale with prominent quartzite layers.  These prominent quartzite layers within the stratigraphic sequence are strongly altered (silicified with calc-silicate minerals) and mineralized with sphalerite and galena.



From 1996 through 2000, we conducted small exploration programs involving surveying, geologic mapping, sampling, geochemical analysis and 26 line-kilometers of IP geophysical surveys to advance the Wara Wara prospect.  A large IP chargeability anomaly, 3,000 meters long by 600 to 1,200 meters across, discovered within the concessions possibly represents significant zinc-lead-silver sulfide mineralization at depth.  No exploration has been conducted on the Wara Wara property since 2000.



39





---







The numerous drill targets on the Wara Wara property need to be further evaluated to better understand the depth position/dimensional extent of sulfide mineralization and possible complicating post-mineral faults.  This will also help in prioritizing the targets in order of importance.  We are eager to advance the Wara Wara prospect through a ten hole drill program, therefore a joint venture or private placement funding is being sought with major mining companies.  The Wara Wara Property is without a known body of commercial ore and our activities to date have been exploratory in nature.



The Wara Wara property consists of 3,875 hectares owned 100% by our subsidiary, Emibol S.A.  The El Dorado concession (500 hectares) was acquired for US$500 pursuant to a Purchase and Sale Agreement dated April 8, 1996 between Eduardo Martinez et al and Emibol S.A.  The Salvadora concession (46 hectares) was acquired from Careaga et al for US$9,000 pursuant to sale/transfer contract dated September 30, 1996.  The balance of the property was acquired by staking.  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.  Patent fees of between approximately US$1.00 and $2.00 per hectare must be paid annually to maintain the mining concessions.



YARETANI PROPERTY

The Yaretani Property is located in the Altiplano region of southern Bolivia.  The prospect is approximately 10 airline kilometers south-southwest of Atocha and 11 airline kilometers west of the railroad station of Escoriani.  Access to the property from Potosi takes seven hours via dirt road through Uyuni and Atocha.  Surface elevations of the prospect area range from 13,590 feet (4140 m.) to 14,440 feet (4400 m.).  Wide mineralized/altered fault zones trend northwestward across the property at elevations below 14,440 feet (4,400m.).  The relatively gentle nature of the prospect area is well-situated for development of a large mine.  The surrounding area is more than adequate for necessary infrastructure for a large mining operation.  Adequate water for a mining operation is available from nearby rivers and basins.  High-tension electric power lines of the Bolivian national grid are 11 kilometers from the property.  The national railroad line from Uyuni to Tupiza is only 15 kilometers by road from the property to the rail station of Escoriani.



The exploration target at the Yaretani Property is sediment- and shear-hosted gold and antimony.  Gold and antimony are stratabound in folded units of black shale and siltite.  Shear-hosted gold and antimony occurs in two distinct structures as stockwork veining and disseminated in black shale. This gold-antimony sulfide bearing zone comes to surface as two parallel zones, the Salamanca Zone and the Triunfo Zone.  Veins and stockwork veining in this sulfide-rich shear were exploited for their high grade gold (10 to >30 grams/tonne) in numerous old shafts, tunnels and pits which are scattered along the 2.5+ kilometer surface trace of the zone.



In 1996, we completed a 2,288 meter drill program on the Yaretani property.  Stratabound (sediment-hosted) gold mineralization was discovered in two drill holes and in the old 100 meter-long Condor #2 Tunnel where samples of the shale/siltite from the tunnels dump grade from 2.5 to 3.5 grams of gold per tonne.  Drill Hole 1A on the Salamanca Zone intersected stratabound mineralization at a drill depth between 187.7 and 200.8 meters.  The interval averaged 0.684 grams of gold/tonne over a true width of 10.3 meters including 1.735 grams per tonne over 2.83 meters.  Approximately 2000 meters northwest of Drill Hole 1A, Hole 4A intersected three closely spaced zones of sediment-hosted sulfides between a drilling depth of 31 to 67 meters.  This 37 meter interval averaged 0.61 grams gold per tonne including a 10 meter interval from 43 to 52 meters averaging 1.65 grams gold per tonne (0.052 oz./t).  We have not conducted any exploration on the Yaretani property since 1996.



Additional drilling is required to test for near surface, shear-hosted or stratabound gold exploitable by open-pit methods.  This program is subject to the availability of financing and/or an agreement with a joint venture partner.  The Yaretani Property is without a known body of commercial ore and our activities to date have been exploratory in nature.



The Yaretani property consists of approximately 2,280 hectares held 100% by our subsidiary, Emibol S.A.  We paid a total of US$79,600.00 in option and purchase payments under the Montano Option (dated October 20, 1994) to acquire the Yaretani Mining Group concessions, covering a 425 hectare portion of the property.  Three additional concessions comprising approximately 295 hectares (San Alberto, Sucesivas San Alberto and Segundas Sucesivas San Alberto) were purchased for the sum of US$50,000.00 from A. Sivila et al by registered deed signed October 27, 1995 and registered December 7, 1995.   The balance of the property (1,600 hectares) was acquired pursuant to a Purchase and Sale Agreement dated April 8, 1996 between Eduardo Martinez et al and Emibol S.A. for the purchase of the Rosario concessions for the sum of US$1,600.  The Yaretani 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.  Patent fees ranging between approximately US$1.00 to $2.00 per hectare must be paid annually to maintain the mining concessions.







40





---





Organizational Structure

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



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 which we rent on a month-to-month basis at a monthly cost of $1,430 in rent plus taxes and operating costs approximating $500.  We have a field-office/residence in La Paz, Bolivia which is also a South American residence for our Vice-President, Exploration, Robert Kell, which we rent on a month to month basis at a cost of US$500 per month.  We also have a field-office/residence in Copiapo, Chile which we rent on a month to month basis at a cost of approximately US$725 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 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, 2006 and the thirteen-month fiscal period ended December 31, 2005 compared to the prior fiscal year ended November 30, 2004.  The discussion should be read in conjunction with the consolidated financial statements to December 31, 2006 and the related notes included in Item 17 of this report.  Note that during 2005, the fiscal year-end was changed from November 30th to a new year-end of December 31st.  As a result of this change, the financial statements for fiscal 2005 (the transition year) cover a period of thirteen months from December 1, 2004 to December 31, 2005 as compared to fiscal 2006 which covers the year (twelve months) ended December 31, 2006.  Consequently, comparisons of the 2006 fiscal year to the 2005 fiscal period may not be indicative of future results.  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 accounting principles generally accepted in Canada ("Canadian GAAP"), which differ in significant respects from accounting principles generally accepted in the United States ("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 9 to our consolidated financial statements for the fiscal year ended December 31, 2006.



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;



41





---





(d)

the costs associated with exploration activities; and

(e)

the cost of acquiring and maintaining our mineral properties.

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 dependant upon factors which are largely out of our control including:

a)

market prices for gold and other precious metals and minerals;

b)

the market for our securities; and

c)

the results from our exploration activities.

The most significant factors affecting our operations during the past year were related to continued strength in the demand for, and in the prices of precious and base metals and a corresponding favourable market for shares of junior exploration companies.  These factors are expected to have a significant effect on our future financial operations during the next fiscal year and thereafter so long as we continue in our present business of mineral exploration.  During 2006, the prices of gold, silver, copper and zinc dramatically increased over their prices in the previous five years from 2000 to 2005, and although these metals experienced significant price volatility during 2006, they all maintained prices substantially higher than the previous five years, which effectively improved the general market for the shares of junior exploration companies.  There has also been a significant increase in general mineral exploration activity, resulting in greater competition for mineral properties and the resources employed in mineral exploration, and a corresponding increase in the prices demanded for suitable exploration properties and the costs associated with mineral exploration.  We anticipate the market for precious and other metals will continue to increase in the short and medium term, resulting in continued favourable outlook for our ability to raise equity capital, but also increased exploration costs and increased costs for acquiring new exploration properties.  Accordingly, we anticipate our operating results will be most significantly affected by the results of our exploration activities on our existing properties.  See Special Note Regarding Forward Looking Statements and Risk Factors.

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 enclosed audited 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 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 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 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.



42





---









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 which is described in note 6(d) to our consolidated financial statements. We now record any stock options granted after December 1, 2002 as a compensation expense.  Prior to this change, we accounted for all stock-based compensation using the settlement method.  Under the settlement method, no compensation cost is required to be recorded for stock-based employee compensation awards when the options were granted at market prices.  Consideration paid by employees on the exercise of stock options is recorded as share capital.  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 fiscal 2006, we granted options on 1,850,000 shares at $0.85 per share resulting in a stock-based compensation expense totaling $1,094,575. Of that amount, $886,014 was included in the category Salaries, Benefits and Stock-based Compensation of the Statement of Operations, and $208,561 was capitalized to mineral expenses included in the categories Geology, Mapping and Surveys in the Statements of Mineral Interests.



During fiscal 2005, a stock-based compensation expense of $830,742 was recorded in the statement of operations in relation to the grant of 2,255,000 options during the second quarter.  These were new options, granted in-part to replace 2,175,000 share options that expired during the second quarter of 2005.  In prior years, Stock-Based Compensation expenses of $1,077,916 were recorded for the fiscal year ending November 30, 2004 and $408,400 for the fiscal year ending November 30, 2003.



Operating results

Fiscal Year Ended December 31, 2006 compared to the Thirteen-Month Fiscal Period Ended December 31, 2005

During the first quarter of 2006 we were principally involved in continuing exploration program on our Los Zorros property in Chile; the evaluation and acquisition of our new INCA project in Chile; financing activities; and preparation of visual materials, maps, photos, cross-sections and drill sections for the Companys display booth at the Vancouver gold and resource conference and for meetings held in Europe and Toronto.  Annual patent payments were made on our mineral properties.





43





---





During the second quarter, we constructed our new field camp and office facilities at the INCA project and we executed two additional option agreements for the acquisition of mineral concessions at the INCA project in Chile and.  We completed our Annual Report and Audited Financial Statements for fiscal 2005 and held the Companys Annual General Meeting.  We also completed and filed our Form 20F Annual Report, a detailed disclosure document the Company files annually with the United States Securities and Exchange Commission.



During the third quarter, we completed the construction and equipping of the camp and exploration office at the INCA project in Chile.  In addition, extensive maps were compiled from ground surveying of topographic, geologic and mining features.  A contract was also completed to produce orthographic air-photos (covering approx. 45 sq. kms.) and detailed topographic maps over the mineralized target areas on the INCA property.  The ortho-photos and topographic maps are being utilized in geologic mapping and planning of drill-hole locations for the upcoming exploration work.   We were also seeking and evaluating old reports and underground mining plans, etc. relative to the historic mining and exploration activities that have been conducted at INCA over the past 50+ years.  So far, we have been able to locate reports pertaining to geophysical IP surveys, geologic investigations, and much of the drilling including, fortuitously, some of the drill core from 1971 and 1990.  With this newly acquired information, first hand accounts from old miners, and current field studies, we have been able to construct a geologic picture from the previous mining/exploration activities which is strongly supportive of the exploration targets at INCA.  The Companys objective is to explore beneath the oxide copper mines for substantial deposits of primary copper-sulfide ores with important gold, silver and molybdenum credits.  Detailed drill plans are being designed for each individual target area, focusing on expanding the known occurrences of primary and secondary enriched copper-sulfide mineralization which was encountered by previous mining/exploration activities.



During the fourth quarter, we completed the final option payments on two separate option agreements to acquire mineral concessions covering portions of the Los Zorros property in Chile.  We also commenced a large (30.6 line-kilometers) geophysical IP survey at the INCA Project in Chile.  The purpose of the IP survey was to aid in planning the exploration-drilling program by electrically mapping out the extent of primary copper-sulfide mineralization over the +12 square kilometer area encompassing the target zones which are mostly concealed beneath propylitic and clay-altered granodiorite cap rock.  Initial results from the first two lines were very encouraging and consequently the program was expanded to a total of six survey lines, which were finally completed in January 2007.



Summary for fiscal 2006 - As a result of our activities throughout fiscal 2006, our expenditures on mineral interests and exploration costs for the year totaled $2,161,249 at December 31, 2006, as compared to $1,491,548 for fiscal 2005.  These costs for 2006 include $208,561 of Stock-Based Compensation expense capitalized in the Statement of Mineral Interests in relation to stock options granted during the fiscal year to our geologists who work on our mineral properties.



A $233,043 portion of the mineral interests and exploration costs for 2006 was expensed in the Statement of Operations and Deficit as Mineral Interests Investigation Costs. The remaining $1,928,206 is recorded as Expenditures in the Statement of Mineral Interests.  As a result of these Expenditures, our assets categorized in the consolidated financial statements as Mineral Interests increased to $7,086,240 at December 31, 2006 from $5,175,901 at December 31, 2005.



At the end of fiscal 2006, certain costs were written off on the El Desierto ($5,879), Walter ($1,045), Wara Wara ($6,488) and Yaretani ($4,455) properties since no current exploration is being conducted on these properties.  These costs written off, relate to the category Property Patent Payments, which are the annual patent fees paid to maintain the property concessions.  At the 2006 year-end, these properties were written down to a nominal value of $1,000 each until exploration activity is resumed on the respective properties.



The amount of cash on hand at December 31, 2006 was $1,339,761 compared to $424,287 at December 31, 2005.   At December 31, 2006, we were debt-free, apart from $67,728 of accounts payable and accrued liabilities compared to $35,403 at December 31, 2005



The following comments are related to certain categories in the consolidated financial statements for the fiscal year ended December 31, 2006:



Consolidated Balance Sheet

Other Current Assets - includes $36,187 which reflects the booked value of 2,025.727 grams of gold the Company held at December 31, 2006.



Accounts Payable And Accrued Liabilities  consists of general accounts payable and $20,000 audit fee accrual.



Accounting & Audit  increase in costs during 2006 compared to 2005 is due in-part to increased accounting fees, increased audit requirements/cost for the audit of financial statements filed with the US Securities and Exchange



44





---





Commission, and to costs for the preparation/filing of controlled foreign affiliate tax information documents for multiple years (one time cost) related to our foreign subsidiaries.



Consolidated Statements of Operations and Deficit

Mineral Interests Investigation Costs - includes operating costs related to the Companys activities in Bolivia and Chile that are not allocated to one of the Companys specific mineral properties, and generative exploration or investigating and evaluating mineral properties not acquired by the Company.  Increases in this category over 2005, are due mainly to increased generative exploration and investigation/evaluation of mineral properties, and increased activity related to general and administrative functions at our Bolivian and Chilean operations.



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



Salaries, Benefits and Stock-Based Compensation  includes salaries and benefits of $362,665 and also includes a stock-based compensation expense of $886,014 related to the following:  During 2006, the Company granted options on 1,850,000 shares at $0.85 per share resulting in a stock-based compensation expense totaling $1,094,575. Of that amount, GAAP requires a stock-based compensation expense of $886,014 to be included in the category Salaries, Benefits and Stock-based Compensation of the Statement of Operations, and $208,561 to be capitalized as mineral expenses included in the categories Geology, Mapping and Surveys in the Statements of Mineral Interests.    These stock-based compensation expenses have been 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 (See Note 6. d of the Financial Statements).



Travel and Promotion  The increase during fiscal 2006 is related to the Companys exhibiting in the Vancouver gold and resource conference during the first quarter and again during the second quarter.  Additional costs were also incurred throughout the year related to travel/introductions/meetings with shareholders, brokers and fund managers in London, Paris, Geneva, Zurich, Amsterdam, San Francisco, New York, Toronto and Vancouver.



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.  These categories also include $208,561 (in aggregate) of Stock-Based Compensation expense capitalized in the Statement of Mineral Interests in relation to stock options granted during the fiscal year to our geologists who work on our mineral properties (See Note 6. d of the Financial Statements).



Liquidity and Capital Resources - 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, 2006.  We realized a net loss of $1,979,866 for the fiscal year ended December 31, 2006 or $0.03 per share compared to a net loss of $1,546,357 for the 13-month period ended December 31, 2005 or $0.02 per share (the size of the net losses for both these periods is due in-part to stock-based compensation expenses of $1,094,575 related to stock options granted during the second quarter of 2006 and stock-based compensation expenses of $830,742 related to stock options granted during the second quarter of 2005).   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.



We intend to pursue both the acquisition of mineral properties which we consider to be highly prospective for gold, silver, copper and other metals and to aggressively explore our current properties.  In March 2007, the Company completed a private placement of 5,742,500 units at $0.80 per unit raising gross proceeds of over $4.5 million.  With this funding, the Company plans to conduct further exploration at the INCA project, the Los Zorros property and the Eskapa property.  Drilling at the INCA project will likely involve the larger portion of our anticipated exploration expenditures for 2007.  A phase-two drill program is also considered for the Los Zorros property.   In April 2007 we resumed activities at our Eskapa precious metal prospect in Bolivia including refurbishing and expanding the exploration camp, repairing and enhancing access roads, and preparing drill pads for the next phase of drill testing at a later date.  SAMEX is also negotiating other possible mineral property acquisitions in Chile which may be funded from current cash reserves or made subject to further financings depending on circumstances at the time.  See Special Note Regarding Forward Looking Statements.



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 dependant upon our ability to raise capital from the sale of our securities to fund our operations.  We believe that our current



45





---





capital resources are sufficient to fund our general operations as currently anticipated for the remainder of the 2007 fiscal year.  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.



Operating Results for the Thirteen-Month Fiscal Period Ended December 31, 2005 compared to Fiscal Year Ended November 30, 2004

During fiscal 2005 we were principally involved in exploration work on our Los Zorros property in Chile and in generative exploration and evaluation of mineral prospects in the Inca project area near Inca de Oro, Chile.  Expenditures on mineral interests and exploration costs for the thirteen-month period ended December 31, 2005 totaled $1,491,548.  During the first quarter of fiscal 2005 we continued exploration work on our Los Zorros property; with drilling and trenching completed in December 2004, we then began the detailed work of analyzing, compiling, evaluating and interpreting the vast amount of data from the program of 10,800 meters of trenching and 8,617 meters of drilling that had been ongoing since July of 2004.  We also made limited expenditures related to our Bolivian properties mainly involving the payment of annual patents.



During the second and third quarters we continued with data compilation and the drafting of drill sections, cross-sections, geologic profiles and maps incorporating the vast amount of data gleaned from the trenching and drilling program at the Los Zorros property.  This information will be used to plan the phase-two exploration drill program to follow-up on targets identified in the phase-one program.  In further preparation for the phase-two exploration drill program, we constructed a drill core storage facility at our field camp at Los Zorros,  re-logged core from six Phase I drill holes, carried out further geologic mapping, and conducted a gravity geophysical survey over a large area encompassing the principal targets on the property.  We entered into an option agreement to purchase an additional 95 hectares of mineral concessions adjacent to Exploration Area IV of the Los Zorros property.  We also conducted a generative program examining quality mineral prospects within the important geologic belts both north and south of Copiapo, Chile.  For very minimal expenditures, through staking and government auctions, we acquired mineral concessions over a gold prospect and a silver prospect.  In Bolivia, administrative and planning activities were underway at our Eskapa precious metal prospect in preparation for the refurbishing and expansion of our exploration camp and the repair and expansion of access roads to facilitate the next phase of drill testing at a later date.



During the fourth quarter of fiscal 2005 we re-logged drill core, conducted bulldozer trenching, sampling, assaying and geologic mapping in several Exploration Areas at the Los Zorros property.  In Exploration Area II (Milagro) certain Phase I drill core was re-logged in order to better understand and outline gold targets in that area.  Trenching in Exploration Area III (NORA) totaled 1,865 meters in 10 trenches with 559 samples taken.  Trenching in Exploration Area IV (Cinchado East/La Socialista) totaled 3,009 meters in 14 trenches with 1,020 samples taken in the trenches and an additional 82 samples taken from old pits and vein workings.   We also carried out generative exploration and evaluation of copper, gold, silver, molybdenum prospects in the Inca project area near Inca de Oro, Chile.   During the fourth quarter, we also entered into an Area of Interest (AOI) Agreement with SilverCrest Mines Inc. (SilverCrest) to facilitate joint exploration for silver deposits in Region III of Chile (as bounded; to the north by Chiles Region III northern boundary; as to the south by 30 degrees south latitude; as to the east by Chiles international border with Argentina; and to the west by the Pacific Ocean).  In addition to our ongoing exploration at the Los Zorros property, we have been conducting discreet regional exploration for the past five years and have accumulated a valuable database of prospects, geological information, expertise and local connections.  This agreement will enable us to utilize and advance these assets more effectively.  We are pleased with the opportunity to compliment our own exploration efforts in Chile by working jointly with SilverCrest throughout the area of interest (approx. 70,000 square kilometers) which hosts the most important historic silver-producing areas of Chile.  (See Item 4 Information on the Company  Description of Property - Los Zorros Property, Inca Project and Area Of Interest Agreement For Silver Exploration In Chile).





46





---





Mineral interests and exploration costs for the thirteen-month period ended December 31, 2005 totaled $1,491,548 as compared to $2,136,270 during fiscal 2004.  A $102,656 portion of the costs for 2005 was expensed as Mineral Interests Administration, Investigation and Evaluation costs. The remaining $1,388,892 is recorded as Mineral Interests Expenditures For the Period.  As a result of these expenditures, our assets categorized in the consolidated financial statements as Mineral Interests increased to $5,175,901 at December 31, 2005 from $3,804,651 at November 30, 2004.



At the end of fiscal 2005, certain costs were written off on the El Desierto ($5,880), Wara Wara ($6,260), Walter ($1,045), and Yaretani ($4,457) properties since no current exploration is being conducted on these properties.  These costs written off, relate to the category Property Claims, which are the annual patent fees paid to maintain the property concessions.  At the 2005 year-end, these properties were written down to a nominal value of $1,000 each until exploration activity is resumed on the respective properties.



The amount of cash on hand at December 31, 2005 was $424,287 compared to $2,175,308 at November 30, 2004.   At December 31, 2005, we were debt-free, apart from $35,403 accounts payable compared to accounts payable of $90,467 at November 30, 2004.



The following comments are related to certain categories in the consolidated financial statements for the fiscal period ending December 31, 2005:



Consolidated Balance Sheet

Other Current Assets - includes $36,205 which reflects the booked value of 2,026.927 grams of gold the Company held at December 31, 2005.



Accounts Payable consists of general trade payables and includes $4,508 to reimburse directors or officers of the Company for routine expense accounts.



Share Capital  Authorized, Unlimited - effective June 13, 2005 the authorized share structure of the Company was altered by eliminating the maximum number of common shares and preferred shares the Company is authorized to issue (see Management Discussion for the Second Quarter  Changes to the Articles and the Authorized Share Structure of the Company).



Consolidated Statements of Operations and Deficit

Accounting and Audit - the increase to $31,803 in 2004 as compared to $535 in 2003 is partially due to accrual adjustments related to over accrual or under accrual estimates for auditing, as compared to the actual audit charges.  The increase is also due in part to the change of auditor for the 2004 fiscal year and the increased requirements/costs for the audit of financial statements filed with the US Securities and Exchange Commission.



Mineral Interests Investigation Costs - includes operating costs related to the Companys activities in Bolivia and Chile that are not allocated to one of the Companys specific mineral properties and 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.



Consolidated Statements of Mineral Interests

Geology, Mapping and Surveys  includes salaries for geologists, support staff and geologic consultants working on the mineral properties.



Los Zorros - Chile - Recovery of Costs  $(43,538) - the CDN $ value of the US$37,500 payment received from SilverCrest Mines Inc. pursuant to the Area of Interest Agreement For Silver Exploration In Chile.



Liquidity and Capital Resources (for fiscal 2005) - We are an exploration company and do not have any mineral properties in production and, therefore, did not generate any material revenue from operations during the fiscal period (13-month) ended December 31, 2005.  We realized a net loss of $1,546,357 for the fiscal period ended December 31, 2005 or $0.02 per share compared to a net loss of $1,833,879 for the fiscal year ended November 30, 2004 or $0.03 per share.  Losses are a reflection of our ongoing expenditures on our mineral properties which are all currently in the exploration stage.  Since we have no material source of operating revenues, no lines of credit and no current sources of



47





---





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.



We intend to aggressively pursue both the acquisition of mineral properties which we consider to be highly prospective for gold, silver, copper and other metals and to aggressively explore our current properties, particularly the Los Zorros, Eskapa, and Inca properties, subject to the availability of funds.  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 dependant upon our ability to raise capital from the sale of our securities to fund our operations.  We believe that our current capital resources will be sufficient to fund our general operations as currently anticipated for the remainder of the 2006 fiscal year.  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 - 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 2003 and 2004, increasing precious metal and base metal prices and revived market interest in mineral exploration companies enhanced our ability to raise funding for precious metal exploration.  For example, during fiscal 2003, we raised a total of $4,699,600 from the sale of our securities through private placements and exercise of warrants and options.  During fiscal 2004, we raised $1,484,954 from the sale of our securities through a private placement and exercise of warrants and options.  During fiscal 2005, proceeds of $330,300 were raised from the exercise of warrants.  During the 2006 fiscal year we raised $2,604,000 from the sale of our securities through a private placement of 3,720,000 units at $0.70 per unit and additional proceeds of $1,202,800 were raised from the exercise of warrants and options.  A cash cost of $100,000 has been recorded as Financing Costs in Note 6.b of the financial statements pursuant to the four $25,000 quarterly payments made under the 12-month corporate finance consulting agreement with European consultants, Spartacus Ltd.



During the first quarter of fiscal 2007, we raised gross proceeds of $4,594,000 from the sale of our securities through a private placement of 5,742,500 units at a price of $0.80 per unit and additional proceeds of $100,000 were realized from the exercise of options.



Use Of Proceeds For Fiscal 2003, 2004, 2005 and 2006 - During fiscal 2003, we completed five private placement financings which raised gross proceeds totaling $3,474,600 ($500,000 in the third quarter and $2,974,600 in the fourth quarter).  As required in the filing of the respective private placement details with regulatory authorities, we disclosed that the intended use of the private placement proceeds would be in aggregate: $1,574,600 for general working capital, $1,800,000 for expenditures/exploration on our mineral properties, and $100,000 for mineral property acquisition.



During fiscal 2003, our expenditures/exploration on mineral properties totaled $648,633 including mineral property acquisition costs of $123,905.   During fiscal 2004, our expenditures/exploration on our mineral properties totaled $2,136,270 for the year ending November 30, 2004.   As required in the filing of private placement details with regulatory authorities, we disclosed that the intended use of the $880,000 proceeds from the private placement completed during the third quarter 2004, would be $440,000 for general working capital and $440,000 for expenditures/exploration on our mineral properties (including $25,000 on the Eskapa property to refurbish and expand the camp, repair and enhance access roads and prepare drill pads for the next phase of drill testing at a later date). The disclosed use of proceeds of $2,340,000 for expenditures/exploration on our mineral properties during fiscal 2003 and 2004 was more than fulfilled as actual expenditures/exploration on our mineral properties was $648,633 during 2003 and $2,136,270 during 2004, for a total of $2,784,903.  In addition, during fiscal 2005, cumulative expenditures on mineral properties totaled $1,491,548 to December 31, 2005.  In fiscal 2006, during the first quarter ended March 31, 2006 we completed a private placement and in regulatory filings disclosed that the intended use of the $$2,604,000 proceeds would be $1,600,000 for expenditures/exploration on our mineral properties and $1,004,000 for general working capital.  The intended use of proceeds was more than fulfilled as expenditures/exploration on our mineral properties during
fiscal 2006 totaled $2,161,249 at December 31, 2006.



48





---









Anticipated Capital Requirements - We anticipate that we will be able to fund our ongoing general operations over the next year from funds on hand.  In March 2007, the Company completed a private placement of 5,742,500 units at $0.80 per unit raising gross proceeds of over $4.5 million. With this funding, the Company plans to conduct further exploration at the INCA project, the Los Zorros property, the Eskapa property, and possibly other SAMEX prospects.



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 option payments listed under the Table 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 option obligations listed under the Table 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.



Table of Contractual Obligations - The following table summarizes our contractual obligations at May 31, 2007 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)
Option Payments               | US$1,200,000                            | US$200,000                            | US$1,000,000                            |                            |              
|Araya Option (2)
Option Payments                  | US$200,000                              | US$100,000                            | US$100,000                              |                            |              
|Rojas Option (3)
Option Payments                  | US$225,000                              | US$75,000                             | US$150,000                              |                            |              
|Parra Option (4)
Option Payments                  | US$130,000                              | US$50,000                             | US$80,000                               |                            |              
|Hochschild Purchase (5)
Advance Royalty (italics) | US$500,000                              | US$100,000                            | US$300,000                              | US$100,000                 |              
|Capital  (Finances)
Lease Obligations             | NIL                                     |                                       |                                         |                            |              
|Operating Lease
Obligations                       | NIL                                     |                                       |                                         |                            |              
|Purchase Obligations
Equipment                    | NIL                                     |                                       |                                         |                            |              
|Other Long-term
Liabilities                       | NIL                                     |                                       |                                         |                            |              
|Total Contractual
Obligations and
Commitments     | US$1,755,000
Advance Royalty
US$500,000 | US$425,000
Advance Royalty
US$100,000 | US$1,330,000
Advance Royalty
US$300,000 | Advance Royalty
US$100,000 |              



(1) These are option payments 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 between Sociedad Contractual Minera Porvenir and our subsidiary Minera Samex Chile S. A.  While we are not obliged to make these payments, it will be necessary to do so if we wish to preserve our interest in this portion of the property.  (See Item 4 Information on the Company  Description of Property - Inca Project)



(2) These are option payments pursuant to an option to purchase mineral property forming a 45-hectare portion of our INCA Property under the Unilateral Option Purchase Contract dated April 4, 2006 between Malvina del Carmen Araya Santander and our subsidiary Minera Samex Chile S. A.  While we are not obliged to make these payments, it will be necessary to do so if we wish to preserve our interest in this portion of the property.  (See Item 4 Information on the Company  Description of Property - Inca Project).



(3) These are option payments 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 these payments, it will be necessary to do so if we wish to preserve our interest in this portion of the property.  (See Item 4 Information on the Company  Description of Property - Inca Project)



(4) These are option payments pursuant to an option to purchase mineral property forming a 21-hectare portion of our INCA property under



49





---





the Unilateral Option Purchase Contract dated April 9, 2007 between Jaime Ruben Parra Vasquez and our subsidiary Minera Samex Chile S. A. While we are not obliged to make these payments, it will be necessary to do so if we wish to preserve our interest in this portion of the property.  (See Item 4 Information on the Company  Description of Property - Inca Project).



(5) Pursuant to the exercise of the Unilateral Purchase Option Contract dated November 6, 2003 between our subsidiary, Minera Samex Chile S.A. and Compañia Minera y Comercial Sali Hochschild S.A., we now hold 100% interest (subject to an NSR royalty) in concessions covering a 209-hectare portion of our Los Zorros Property.  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 March 1st of 2008, 2009, 20010, 20011, and 2012) to a maximum of US$500,000.  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 Item 4 Information on the Company  Description of Property  Los Zorros Property).





Research and Development, patents and licenses, etc. - We are a mineral exploration company and we do not carry on any research and development activities.



Trend Information - Market interest in mineral exploration companies has improved significantly over the past year as a result of an increase in precious metal and base metal prices.  We anticipate that the price of gold, silver, copper and other metals will remain strong and possibly increase over the next year which should enable us to secure additional equity financing.  We anticipate that a continuing strength in metal prices will also make the acquisition of quality exploration prospects more expensive, as well as increase the costs of exploration generally.  Metal prices cannot be predicted with accuracy and our plans will be largely dependant 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.



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 will likely be 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 typically 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.



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.



Employees, Salaries, Payment to Related Party  During fiscal 2006, we had from 20 to 21 employees, the majority of which were involved in the exploration activity on our properties in Chile.  By comparison, during fiscal 2005 we had from 19 to 21 employees.  Salaries, for employees who are also directors or officers of the Company, totaled $418,884 during fiscal 2006, a $124,484 portion of which was capitalized as mineral interests (compared to the 2005 fiscal period of 13-months when their salaries totaled $432,494, a $133,494 portion of which was capitalized).   Allen D. Leschert, one of our directors, provides legal services to us through Leschert & Company Law Corporation.  Leschert & Company charged $25,965 for legal services during fiscal 2006 (2005 - $31,918).



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 director, Peter Dahl and Allen Leschert (non-executive directors of the Company) who the Board of Directors have determined to be independent in accordance with the requirements of our Audit Committee Charter.  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 non-executive directors, Peter Dahl, Allen Leschert and Patricio Kyllmann.  The Compensation Committee was established to assist and



50





---





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.



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management.

The following table sets out the names of our directors, management and employees we depend on, their positions and offices at May 31, 2007.  All our directors are residents of Canada, with the exception of Patricio Kyllmann, a resident of Bolivia, and Robert Kell, a resident of the United States and Bolivia.  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, 45
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, 66
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, 56
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                        
|Patricio G. Kyllmann, 55
La Paz, Bolivia
Director                                                                    | Director, Hanasa Ltda. (commercial, industrial firm) our Former President, Manager of our South American office from Nov 1995 to Aug 2001 | November 3, 1995
to
August 2001                | November 3, 1995                     
|Allen D. Leschert, 50
West Vancouver, British Columbia
Director                                                      | Barrister and Solicitor with Leschert & Company Law Corporation                                                                           | N/A                                            | November 3, 1995                     
|Larry D. McLean, 57
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                     
|Brenda McLean, 55
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.



Compensation.

Salaries, for employees who are also our directors or officers, totaled $418,884 for the 2006 fiscal year ended December 31, 2006 including $144,000 to Jeffrey Dahl, our President and Chief Executive Officer, US$102,000 to Robert Kell, our Vice President-Exploration, and $92,800 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 us $25,965 for legal services during the fiscal year ended December 31, 2006.



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.





51





---





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.



At our Annual General Meetings held on May 20, 2004, May 5, 2005, June 1, 2006, and May 31, 2007 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 exerciseable 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.



During the 2006 fiscal year ended December 31, 2006 and in the subsequent period to May 31, 2007, stock options were exercised or were granted under the Companys Stock Option Plan as follows:



Stock Options Exercised  On January 3, 2006, a director/officer of the Company exercised stock options for the purchase of 50,000 shares at a price of $0.20 per share.  On March 2, 2006, a director of the Company exercised stock options for the purchase of 100,000 shares at a price of $0.40 per share.  On May 4, 2006 a director/officer of the Company exercised stock options for the purchase of 50,000 shares at a price of $0.20 per share.  On May 16, 2006, a director/officer of the Company exercised stock options for the purchase of 100,000 shares at a price of $0.20 per share.  June 5, 2006 a director of the Company exercised stock options for the purchase of 100,000 shares at a price of $0.40 per share.  October 10, 2006 a director of the Company exercised stock options for the purchase of 100,000 shares at a price of $0.40 per share.  October 30, 2006 a director/officer of the Company exercised stock options for the purchase of 50,000 shares at a price of $0.20 per share. November 9, 2006 a director and officer of the Company exercised stock options for the purchase of 150,000 shares at a price of $0.20 per share.  December 21, 2006 a director/officer of the Company exercised stock options for the purchase of 50,000 shares at a price of $0.20 per share.  On February 23, 2007 directors/officers of the Company exercised stock options for the purchase of 275,000 shares at a price of $0.20 per share.  On March 12, 2007 a consultant of the Company exercised stock options for the purchase of 100,000 shares at a price of $0.20 per share.  On March 15, 2007 a director/officer of the Company exercised stock options for the purchase of 125,000 shares at a price of $0.20 per share.  On April 17, 2007 a director/officer of the Company exercised stock options for the purchase of 50,000 shares at a price of $0.20 per share.



Options Granted - On May 2, 2006 options were granted on an aggregate of 1,850,000 shares at a price of $0.85 per share consisting of 350,000 shares granted to employees and consultants of the Company and 1,500,000 shares granted to directors/officers of the Company.  The options have a ten-year term expiring May 2, 2016.  On February 23, 2007 options were granted to directors/officers of the Company on an aggregate of 1,295,000 shares at a price of $0.84 per share.  The options have a ten-year term expiring February 23, 2017.



As a result of the stock options exercised or granted, at May 31, 2007 there were 7,020,000 options outstanding with expiry dates as shown in the table below.  They consist of options to purchase an aggregate of 6,075,000 common shares granted to our directors and/or officers and options to purchase an aggregate of 945,000 common shares granted to our employees or consultants as follows:







52





---



|Optionee          | Date of Option | # of Shares |   | Price | Expiry Date   
|----------------- | -------------- | ----------- | - | ----- | --------------
|Jeffrey Dahl      | Sept. 12, 2002 | 50,000      | $ | 0.20  | Sept. 12, 2007
|                  | Nov. 17, 2003  | 125,000     | $ | 1.00  | Nov. 17, 2008 
|                  | Aug 6, 2004    | 125,000     | $ | 1.10  | Aug. 6, 2009  
|                  | April 20, 2005 | 350,000     | $ | 0.40  | April 20, 2015
|                  | May 2, 2006    | 300,000     | $ | 0.85  | May 2, 2016   
|                  | Feb 23, 2007   | 270,000     | $ | 0.84  | Feb 23, 2017  
|Peter Dahl        | Nov. 17, 2003  | 75,000      | $ | 1.00  | Nov. 17, 2008 
|                  | Aug 6, 2004    | 100,000     | $ | 1.10  | Aug. 6, 2009  
|                  | April 20, 2005 | 350,000     | $ | 0.40  | April 20, 2015
|                  | May 2, 2006    | 150,000     | $ | 0.85  | May 2, 2016   
|                  | Feb 23, 2007   | 150,000     | $ | 0.84  | Feb 23, 2017  
|Robert Kell       | Nov. 17, 2003  | 125,000     | $ | 1.00  | Nov. 17, 2008 
|                  | Aug 6, 2004    | 125,000     | $ | 1.10  | Aug. 6, 2009  
|                  | April 20, 2005 | 350,000     | $ | 0.40  | April 20, 2015
|                  | May 2, 2006    | 300,000     | $ | 0.85  | May 2, 2016   
|                  | Feb 23, 2007   | 275,000     | $ | 0.84  | Feb 23, 2017  
|Larry McLean      | Nov. 17, 2003  | 125,000     | $ | 1.00  | Nov. 17, 2008 
|                  | Aug 6, 2004    | 125,000     | $ | 1.10  | Aug. 6, 2009  
|                  | April 20, 2005 | 350,000     | $ | 0.40  | April 20, 2015
|                  | May 2, 2006    | 300,000     | $ | 0.85  | May 2, 2016   
|                  | Feb 23, 2007   | 250,000     | $ | 0.84  | Feb 23, 2017  
|Allen Leschert    | Nov. 17, 2003  | 50,000      | $ | 1.00  | Nov. 17, 2008 
|                  | Aug 6, 2004    | 100,000     | $ | 1.10  | Aug. 6, 2009  
|                  | April 20, 2005 | 350,000     | $ | 0.40  | April 20, 2015
|                  | May 2, 2006    | 150,000     | $ | 0.85  | May 2, 2016   
|                  | Feb 23, 2007   | 150,000     | $ | 0.84  | Feb 23, 2017  
|Patricio Kyllmann | Nov. 17, 2003  | 50,000      | $ | 1.00  | Nov. 17, 2008 
|                  | Aug 6, 2004    | 100,000     | $ | 1.10  | Aug. 6, 2009  
|                  | May 2, 2006    | 150,000     | $ | 0.85  | May 2, 2016   
|                  | Feb 23, 2007   | 125,000     | $ | 0.84  | Feb 23, 2017  
|Brenda McLean     | Nov. 17, 2003  | 40,000      | $ | 1.00  | Nov. 17, 2008 
|                  | Aug 6, 2004    | 40,000      | $ | 1.10  | Aug. 6, 2009  
|                  | April 20, 2005 | 175,000     | $ | 0.40  | April 20, 2015
|                  | May 2, 2006    | 150,000     | $ | 0.85  | May 2, 2016   
|                  | Feb 23, 2007   | 75,000      | $ | 0.84  | Feb 23, 2017  
|Philip Southam    | Oct. 15, 2003  | 30,000      | $ | 0.63  | Oct. 15, 2008 
|                  | Feb 3, 2004    | 55,000      | $ | 1.00  | Feb. 3, 2009  
|                  | Aug 6, 2004    | 50,000      | $ | 1.10  | Aug. 6, 2009  
|                  | April 20, 2005 | 30,000      | $ | 0.40  | April 20, 2015
|                  | May 2, 2006    | 70,000      | $ | 0.85  | May 2, 2016   
|Stephen Scammell  | Aug 6, 2004    | 25,000      | $ | 1.10  | Aug. 6, 2009  
|Francisco Vergara | Nov. 12, 2002  | 50,000      | $ | 0.20  | Nov. 12, 2007 
|                  | Aug. 13, 2003  | 50,000      | $ | 0.40  | Aug. 13, 2008 
|                  | Aug 6, 2004    | 50,000      | $ | 1.10  | Aug. 6, 2009  
|                  | May 2, 2006    | 50,000      | $ | 0.85  | May 2, 2016   
|Dale Dobson       | Feb 3, 2004    | 50,000      | $ | 1.00  | Feb. 3, 2009  
|                  | Aug 6, 2004    | 25,000      | $ | 1.10  | Aug 6, 2009   
|Manuel Avalos     | Feb 3, 2004    | 50,000      | $ | 1.00  | Feb. 3, 2009  
|                  | Aug 6, 2004    | 50,000      | $ | 1.10  | Aug. 6, 2009  
|                  | May 2, 2006    | 100,000     | $ | 0.85  | May 2, 2016   
|Jorge Humphreys   | Feb 3, 2004    | 25,000      | $ | 1.00  | Feb. 3, 2009  
|                  | Aug 6, 2004    | 15,000      | $ | 1.10  | Aug. 6, 2009  
|                  | May 2, 2006    | 20,000      | $ | 0.85  | May 2, 2016   
|Jean Nicholl      | Feb 3, 2004    | 25,000      | $ | 1.00  | Feb. 3, 2009  
|                  | Aug 6, 2004    | 15,000      | $ | 1.10  | Aug. 6, 2009  
|                  | May 2, 2006    | 20,000      | $ | 0.85  | May 2, 2016   
|Edgar Zapata      | May 2, 2006    | 30,000      | $ | 0.85  | May 2, 2016   
|Raul Castaneta    | May 2, 2006    | 30,000      | $ | 0.85  | May 2, 2016   
|Jorge Espinoza    | May 2, 2006    | 30,000      | $ | 0.85  | May 2, 2016   







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.



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.





53





---





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 directors Larry McLean (the Vice-President, Operations and Chief Financial Officer of the Company) and Peter Dahl and Allen Leschert (non-executive directors of the Company).  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 non-executive directors, Peter Dahl, Allen Leschert and Patricio Kyllmann.  The Compensation Committee was established during fiscal 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.



Employees.

At December 31, 2006 we had 21 employees.  By May 31, 2007, that number had increased to 24 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 2006 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, 2006 | Exploration           | 1        | 14                                                            | 1 | 16
|                  | Administrative/Office | 4        |                                                               | 1 | 5 
|                  | Total:                |          |                                                               |   | 21
|December 31, 2005 | Exploration           | 1        | 13                                                            | 1 | 15
|                  | Administrative/Office | 4        |                                                               | 1 | 5 
|                  | Total:                |          |                                                               |   | 20
|November 30, 2004 | Exploration           | 1        | 14                                                            | 1 | 16
|                  | Administrative/Office | 4        |                                                               | 1 | 5 
|                  | Total:                |          |                                                               |   | 21



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, 2007.  There were 78,580,165 common shares issued and outstanding as of May 31, 2007.





54





---







|                                                                                   |                                 |                                         |                                                |                                     |                                                                                    
|---------------------------------------------------------------------------------- | ------------------------------- | --------------------------------------- | ---------------------------------------------- | ----------------------------------- | -----------------------------------------------------------------------------------
|Name and Position                                                                  | Number of Shares of SAMEX Owned | Percentage of Shares Owned at
May 31/06 | Incentive Stock Options Owned                 
|                                                                                   |                                 |                                         | Number of Shares under Option                  | Exercise Price                      | Expiry Date                                                                        
|Jeffrey P. Dahl
President and Chief Executive Officer/Director                     | 425,000                         | 0.54%                                   | 50,000
125,000
125,000
350,000
300,000
270,000 | $0.20
$1.00
$1.10
$0.40
$0.85
$0.84 | Sept. 12, 2007
Nov. 17, 2008
August 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017
|Peter J. Dahl
Chairman/Director                                                    | 648,600                         | 0.83%                                   | 75,000
100,000
350,000
150,000
150,000         | $1.00
$1.10
$0.40
$0.85
$0.84       | Nov. 17, 2008
August 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017               
|Robert E. Kell
Vice President Exploration /
Director                               | 569,500                         | 0.73%                                   | 125,000
125,000
350,000
300,000
275,000        | $1.00
$1.10
$0.40
$0.85
$0.84       | Nov. 17, 2008
August 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017               
|Larry D. McLean
Vice President  Operations and Chief Financial Officer /
Director | 481,525                         | 0.61%                                   | 125,000
125,000
350,000
300,000
250,000        | $1.00
$1.10
$0.40
$0.85
$0.84       | Nov. 17, 2008
August 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017               
|Allen D. Leschert
Director                                                         | 422,012                         | 0.54%                                   | 50,000
100,000
350,000
150,000
150,000         | $1.00
$1.10
$0.40
$0.85
$0.84       | Nov. 17, 2008
August 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017               
|Patricio G. Kyllmann
Director                                                      | 156,200                         | 0.20%                                   | 50,000
100,000
150,000
125,000                 | $1.00
$1.10
$0.85
$0.84             | Nov. 17, 2008
August 6, 2009
May 2, 2016
Feb 23, 2017                              
|Brenda McLean
Corporate Secretary                                                  | 268,975                         | 0.34%                                   | 40,000
40,000
175,000
150,000
75,000           | $1.00
$1.10
$0.40
$0.85
$0.84       | Nov. 17, 2008
August 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017               



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

Major Shareholders.

As at May 31, 2007, 78,580,165 common shares of the Company were issued and outstanding.  At that date, we had 74 shareholders of record with addresses in the United States holding an aggregate of 9,608,617 common shares representing 12.2% 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, as at May 31, 2007.





55





---





All of our common shares have identical voting rights.



Related Party Transactions.

Except where described elsewhere in this Annual Report, we have not, during the three fiscal years ended December 31, 2006 and the subsequent period to May 31, 2007, 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                   | Aug 6, 2004
April 20, 2005
May 2, 2006
Feb 23, 2007 | 125,000
350,000
300,000
270,000 | $1.10
$0.40
$0.85
$0.84 | Aug. 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017
|Peter Dahl
Director and Chairman                        | Aug 6, 2004
April 20, 2005
May 2, 2006
Feb 23, 2007 | 100,000
350,000
150,000
150,000 | $1.10
$0.40
$0.85
$0.84 | Aug. 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017
|Robert Kell
Director, Vice President - Exploration      | Aug 6, 2004
April 20, 2005
May 2, 2006
Feb 23, 2007 | 125,000
350,000
300,000
275,000 | $1.10
$0.40
$0.85
$0.84 | Aug. 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017
|Larry McLean
Director, Vice President  Operations, CFO | Aug 6, 2004
April 20, 2005
May 2, 2006
Feb 23, 2007 | 125,000
350,000
300,000
250,000 | $1.10
$0.40
$0.85
$0.84 | Aug. 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017
|Allen Leschert
Director                                 | Aug 6, 2004
April 20, 2005
May 2, 2006
Feb 23, 2007 | 100,000
350,000
150,000
150,000 | $1.10
$0.40
$0.85
$0.84 | Aug. 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017
|Patricio Kyllmann
Director                              | Aug 6, 2004
April 20, 2005
May 2, 2006
Feb 23, 2007 | 100,000
300,000
150,000
125,000 | $1.10
$0.40
$0.85
$0.84 | Aug. 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017
|Brenda McLean
Corporate Secretary                       | Aug 6, 2004
April 20, 2005
May 2, 2006
Feb 23, 2007 | 40,000
175,000
150,000
75,000   | $1.10
$0.40
$0.85
$0.84 | Aug. 6, 2009
April 20, 2015
May 2, 2016
Feb 23, 2017



Options Expire  New Options Granted - On April 19, 2005, five-year-old stock options expired that had been granted to acquire an aggregate of 2,175,000 shares at a price of $0.40 per share.  The expired options of seven directors/officers and of one employee were replaced as part of the grant of new options on April 20, 2005 as follows: a new option was granted to an employee for the purchase of 30,000 shares at a price of $0.40 per share and new options were granted to directors/officers for the purchase of 2,225,000 shares at a price of $0.40 per share until expiry April 20, 2015 (see table above).



Stock Options Exercised by Related Parties:



|                                      |                                                                |                                    |                               |                                        
|------------------------------------- | -------------------------------------------------------------- | ---------------------------------- | ----------------------------- | ---------------------------------------
|Related Party Name/Position           | Date Option Exercised                                          | # of Shares
Exercised              | Exercise
Price/Share          | Proceeds                               
|Jeffrey Dahl
Director, President, CEO | Sep 21, 2005
Jan 3, 2006
May 4, 2006
Dec 21, 2006
Apr 17, 2007 | 50,000
50,000
50,000
50,000
50,000 | $0.20
$0.20
$0.20
$0.20
$0.20 | $10,000
$10,000
$10,000
$10,000
$10,000



56





---







|                                                                        |                                                                           |                                                |                                     |                                                
|----------------------------------------------------------------------- | ------------------------------------------------------------------------- | ---------------------------------------------- | ----------------------------------- | -----------------------------------------------
|Peter Dahl
    Director and Chairman                                    | Dec 10, 2003
May 16, 2006                                                 | 100,000
100,000                                | $0.20
$0.20                         | $20,000
$20,000                                
|Robert Kell
Director, Vice President - Exploration                      | Feb 23, 2007
Mar 15, 2007                                                 | 75,000
125,000                                 | $0.20
$0.20                         | $15,000
$25,000                                
|Larry McLean
Director, Vice President  Operations, CFO                 | Oct 30, 2006
Nov 9, 2006
Feb 23, 2007                                     | 50,000
100,000
50,000                          | $0.20
$0.20
$0.20                   | $10,000
$20,000
$10,000                        
|Patricio Kyllmann
Director                                              | Dec 9, 2003
Feb 26, 2004
Apr 8, 2004
Mar 2, 2006
Jun 5, 2006
Oct 10, 2006 | 50,000
100,000
100,000
100,000
100,000
100,000 | $0.20
$0.40
$0.40
$0.40
$0.40
$0.40 | $10,000
$40,000
$40,000
$40,000
$40,000
$40,000
|Allen Leschert - Director                                               | Feb 23, 2007                                                              | 100,000                                        | $0.20                               | $20,000                                        
|Brenda McLean
Corporate Secretary                                       | Nov 9, 2006
Feb 23, 2007                                                  | 50,000
50,000                                  | $0.20
$0.20                         | $10,000
$10,000                                
|Linda Dahl, Consultant - wife of Jeffrey Dahl, Director, President, CEO | Jul 7, 2004                                                               | 30,000                                         | $0.20                               | $6,000                                         



Warrants Exercised by Related Parties:



|                                                                  |                                                      |                             |                         |                             
|----------------------------------------------------------------- | ---------------------------------------------------- | --------------------------- | ----------------------- | ----------------------------
|Related Party Name/Position                                       | Date Warrant
Exercised                               | # of Shares
Exercised       | Exercise Price/Share    | Proceeds                    
|Jeffrey Dahl
Director, President, Chief Executive Officer         | Feb. 19, 2004
Mar 31, 2004                           | 25,000
25,000               | $0.40
$0.40             | $10,000
$10,000             
|Peter Dahl
Chairman & Director                                    | Feb.9, 2004
Aug 1, 2006                              | 40,000
92,500               | $0.25
$0.40             | $10,000
$37,000             
|Robert Kell
Director, Vice President  Exploration                | Jan 19, 2006
May 18, 2006                            | 50,000
50,000               | $0.40
$0.40             | $20,000
$20,000             
|Allen Leschert - Director                                         | Sep 8, 2006                                          | 55,000                      | $0.40                   | $22,000                     
|Heidi Dahl   wife of Peter Dahl, Chairman & Director             | Nov 27, 2006                                         | 10,000                      | $0.80                   | $8,000                      
|John Michael Dahl  son of Peter Dahl, Chairman & Director        | Nov 6, 2006                                          | 10,000                      | $0.80                   | $8,000                      
|Melanie Dahl  - daughter-in-law of Peter Dahl, Chairman, Director | Oct. 23, 2003
Feb. 25, 2004
Jul 12, 2006
Nov 7, 2006 | 15,000
40,000
22,500
10,000 | $0.12
$0.25
$0.40
$0.80 | $1,800
$10,000
$9,000
$8,000
|Cindy Dahl  - daughter-in-law of Peter Dahl, Chairman & Director  | Feb. 11, 2004
Jul 12, 2006                           | 40,000
22,500               | $0.25
$0.40             | $10,000
$9,000              
|Lisa Dahl  - daughter-in-law of Peter Dahl, Chairman, Director    | Aug 21, 2006
Nov 27, 2006                            | 12,000
5,000                | $0.40
$0.80             | $4,800
$4,000               
|Linda Dahl, - wife of Jeffrey Dahl, Director, President, CEO      | Apr 2, 2004
Nov 27, 2006                             | 5,000
25,000                | $0.40
$0.80             | $2,000
$20,000              
|Walter & Alida Dahl  brother of Peter Dahl, Chairman & Director  | Nov 2, 2006                                          | 10,000                      | $0.40                   | $8,000                      



Extension Of Warrant Terms  On August 31, 2005, the Company extended the term of warrants exercisable for the purchase of 304,500 shares at a price of $0.40 per share.  The warrants were originally issued with a two year term expiring September 15, 2005, but the term of the warrant was extended for a period of one year until September 15, 2006.  Warrants for the purchase of



57





---





247,500 of the shares were held by directors of SAMEX.



Private Placement Participation by Related Parties:



Private Placement  On February 13, 2006 we issued an aggregate of 330,000 units, comprised of one common share and one-half of a warrant to purchase an additional common share, to directors/officers and to close family members of directors/officers at a price of $0.70 per unit under a private placement of 3,720,000 units sold.  The Related Party subscribers were as follows:



|                                                                  |                           |         
|----------------------------------------------------------------- | ------------------------- | --------
|Related Party Name/Position                                       | Number of Units Purchased | Proceeds
|Cindy Dahl  daughter-in-law of Peter Dahl, Chairman & Director   | 50,000                    | $35,000 
|Melanie Dahl - daughter-in-law of Peter Dahl, Chairman & Director | 50,000                    | $35,000 
|Graham Dahl  son of Peter Dahl - Chairman & Director             | 20,000                    | $14,000 
|Jeffrey Dahl - President & Director                               | 50,000                    | $35,000 
|Peter Dahl - Chairman & Director                                  | 100,000                   | $70,000 
|Linda Dahl - wife of Jeffrey Dahl, President & Director           | 30,000                    | $21,000 
|Robert Kell  Vice President  Exploration & Director             | 30,000                    | $21,000 
|Allen Leschert - Director                                         | 50,000                    | $35,000 



Private Placement  On March 16, 2007 we issued 200,000 units, comprised of one common share and one-half of a warrant to purchase an additional common share, to a director/officer at a price of $0.80 per unit under a private placement of 5,742,500 units sold.  The Related Party subscriber was:



|                                 |                           |         
|-------------------------------- | ------------------------- | --------
|Related Party Name/Position      | Number of Units Purchased | Proceeds
|Peter Dahl - Chairman & Director | 200,000                   | $160,000





Other Related Party Transactions



During fiscal 2004, the Compensation Committee recommended to the Board of Directors, that a bonus be paid in December 2003 to Senior Officers of the Company who have also been employees of SAMEX since 1995.  It was resolved that in recognition of the continued efforts and long-term service of the Senior Officers/employees of the Company, the Company pay cash bonuses, on a one-time basis and in lieu of any Christmas or other bonus, equal to one months salary for each of the individual Senior Officers as follows: Jeffrey Dahl, President - $7,000; Robert Kell, Vice President, Exploration - US$7,250; Larry McLean, Vice President, Operations - $6,250; Brenda McLean, Corporate Secretary - $4,375. See Item 6. Compensation.



The Compensation Committee recommended salary increases effective January 1, 2004 for senior officers/employees.  The Compensation Committee recommended these salary increases to the Board of Directors to bring salaries up to current competitive levels of those in the exploration/mining industry.



Allen D. Leschert, one of our directors, provides legal services to us through Leschert & Company Law Corporation.  Leschert & Company charged us $25,965 for legal services during the 2006 fiscal year ended December, 31, 2006; $31,918 for legal services during the 13-month period ended December 31, 2005, and $33,386 during the fiscal year ended November 30, 2004.



In May 2006, the Compensation Committee recommended 10% salary increases for employees who are senior executive officers of the Company: Jeffrey Dahl, President & CEO; Robert Kell, Vice President, Exploration; Larry McLean, Vice President, Operations & CFO; and Brenda McLean, Corporate Secretary.  The Compensation Committee recommended these salary increases to the Board of Directors to bring salaries up to current competitive levels of those in the exploration/mining industry.



Other than disclosed above, no Related Party is or has been indebted to us or our subsidiaries since December 31, 2006.  There are no management, consulting, lease or other agreements in which our management, directors or subsidiaries are parties.



Interests of Experts and Counsel.

Not Applicable.





58





---





ITEM 8. FINANCIAL INFORMATION

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, 2006 and December 31, 2005, and the consolidated statements of operations and deficit and cash flows for each of the fiscas years in the three-year period ended December 31, 2006 together with related notes and schedules and the report of our Auditor.  See Item 17 Financial Statements.



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.



Significant Changes.

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



ITEM 9. THE OFFER AND LISTING.

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 (formerly Canadian Venture Exchange Inc.).  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 2007                  | 0.99         | 0.70       
|April, 2007               | 1.05         | 0.77       
|March, 2007               | 0.92         | 0.60       
|February, 2007            | 0.99         | 0.61       
|January, 2007             | 0.83         | 0.62       
|December 2006             | 0.90         | 0.65       
|Financial Year 2006       | 1.30         | 0.58       
|Fourth Quarter            | 1.02         | 0.65       
|Third Quarter             | 1.22         | 0.84       
|Second Quarter            | 1.30         | 0.65       
|First Quarter             | 0.98         | 0.58       
|Financial Year 2005       | 0.89         | 0.34       
|Fourth Quarter (4 months) | 0.70         | 0.38       
|Third Quarter             | 0.56         | 0.37       
|Second Quarter            | 0.63         | 0.34       
|First Quarter             | 0.89         | 0.52       
|Financial Year 2004       | 1.65         | 0.65       
|Fourth Quarter            | 1.20         | 0.74       
|Third Quarter             | 1.25         | 0.65       
|Second Quarter            | 1.42         | 0.80       
|First Quarter             | 1.65         | 0.86       
|Financial Year 2003       | 1.63         | 0.16       
|Financial Year 2002       | 0.42         | 0.03       



59





---







|                    |      |     
|------------------- | ---- | ----
|Financial Year 2001 | 0.17 | 0.04
|Financial Year 2000 | 0.25 | 0.09



The closing price of our common shares on the TSX Venture Exchange on May 31, 2007 was $0.79.



Plan of distribution.

Not Applicable.



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.



Selling shareholders.

Not Applicable.



Dilution.

Not Applicable.



Expenses of the issue.

Not Applicable.



ITEM 10. ADDITIONAL INFORMATION.

Share capital.

Not Applicable.



Changes To Corporate Legislation.

On March 29, 2004, the corporate legislation under which we were incorporated, the Company Act (British Columbia) (the Former Act), was repealed and was replaced with the new Business Corporations Act (British Columbia) (the Act).   Because of this change, we were required to undertake certain transitionary steps set out under the 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 Act known as the Pre-existing Company Provisions.  This step was completed on February 11, 2005.  We also amended our Articles to conform to the new legislation and changed 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.  We a changed the Companys fiscal year-end from November 30th to December 31stduring fiscal 2005.  See Item 4 Information On the Company.



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



60





---





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 Act, 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 Act 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 Act, 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.



In addition, subject to the Act, 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



61





---





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.



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.





62





---





The rights of holders of Common Shares may not be modified other than in accordance with our Articles and the Act 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.



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



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 date of this report:



1.

Our Company Stock Option Plan which received annual approval by our shareholders at our Annual General Meetings on May 5, 2005, June 1, 2006 and May 31, 2007

2.

Unilateral Purchase Option Contract dated June 29, 2005 between Compañia Minera San Estaban Primera S.A. and our subsidiary Minera Samex Chile S.A. concerning option to purchase concessions covering a 95-hectare-portion of the Los Zorros property.



63





---





3.

Area of Interest Agreement dated November 7, 2005 between SAMEX Mining Corp. and SilverCrest Mines Inc. (SilverCrest) to facilitate joint exploration for silver deposits in Region III of Chile.

4.

Corporate Finance Consulting Agreement dated January 12, 2006 between SAMEX Mining Corp. and Spartacus Ltd. concerning assistance with respect to our corporate financing efforts in Europe and other jurisdictions.

5.

Unilateral Option Purchase Contract dated March 31, 2006 between Sociedad Contractual Minera Porvenir and our subsidiary Minera Samex Chile S. A. concerning option to purchase concessions covering a 2,138-hectare-portion of the Inca project.

6.

Unilateral Option Purchase Contract dated April 4, 2006 between Malvina del Carmen Araya Santander and our subsidiary Minera Samex Chile S. A. concerning option to purchase concessions covering a 45-hectare-portion of the Inca project.

7.

Unilateral Option Purchase Contract dated May 25, 2006 between Oscar David Rojas Garin and our subsidiary Minera Samex Chile S. A. concerning option to purchase concessions covering a 20-hectare-portion of the Inca project.

8.

Unilateral Option Purchase Contract dated April 9, 2007 between Jaime Ruben Parra Vasquez and our subsidiary Minera Samex Chile S. A. concerning an option to purchase mineral concessions covering a 21-hectare portion of the Inca project



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 2006, the Threshold was determined to be $265,000,000.

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.



64





---





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.

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.

Taxation.

U.S. Federal Income Tax Consequences

The following is a summary of certain material U.S. federal income tax consequences to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of common shares of the Company (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 consequences that may apply to a U.S. Holder as a result of 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 of the acquisition, ownership, and disposition of Common Shares.  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 income, U.S. state and local, and foreign tax consequences of the acquisition, ownership, and disposition of Common Shares.



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 Internal Revenue Service (the IRS), published administrative positions of the IRS, 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 Annual Report.  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 basis.  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 basis.



U.S. Holders



For purposes of this summary, a U.S. Holder is a beneficial owner of Common Shares that, for U.S. federal income tax purposes, is (a) an individual who is a citizen or resident of the U.S., (b) a corporation, or any other entity classified as a corporation for U.S. federal income tax purposes, that is created or organized in or under the laws of the U.S., any state in the U.S., or the District of Columbia, (c) an estate if the income of such estate is subject to U.S. federal income tax regardless of the source of such income, or (d) a trust if (i) such trust has validly elected to be treated as a U.S. person for U.S. federal income tax purposes or (ii) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of such trust.





65





---





Non-U.S. Holders



For purposes of this summary, a non-U.S. Holder is a beneficial owner of Common Shares other than a U.S. Holder.  This summary does not address the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares to non-U.S. Holders.  Accordingly, a non-U.S. Holder should consult its own tax advisor regarding the U.S. federal income, U.S. state and local, and foreign tax consequences (including the potential application of and operation of any income tax treaties) of 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 consequences of the acquisition, ownership, and disposition of Common Shares 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, 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 are liable for the alternative minimum tax under the Code; (f) 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; (g) U.S. Holders that acquired Common Shares in connection with the exercise of employee stock options or otherwise as compensation for services; (h) U.S. Holders that hold Common Shares other than as a capital asset within the meaning of Section 1221 of the Code; or (i) U.S. Holders that own (directly, indirectly, or constructively) 10% or more of the total combined voting power of all classes of shares of the Company entitled to vote.  U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisors regarding the U.S. federal income tax consequences of 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 of the acquisition, ownership, and disposition of Common Shares to such partnership and the partners of such partnership generally will depend on the activities of the partnership and the status of such partners.  Partners of entities that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.



Tax Consequences Other than U.S. Federal Income Tax Consequences Not Addressed



This summary does not address the U.S. state and local, U.S. federal estate and gift, 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, and foreign 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

Distributions on Common Shares



General Taxation of Distributions



Subject to the passive foreign investment company rules discussed below, a U.S. Holder that receives a distribution, including a constructive distribution, with respect to the Common Shares 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.  To the extent that a distribution exceeds the current and accumulated earnings and profits of the Company, such distribution will be treated (a) first, as a tax-free return of capital to the extent of a U.S. Holders tax basis in the Common Shares and, (b) thereafter, as gain from the sale or exchange of such Common Shares.  (See Disposition of Common Shares below).



Reduced Tax Rates for Certain Dividends



For taxable years beginning or before January 1, 2011, a dividend paid by the Company generally will be taxed at the preferential tax rates applicable to long-term capital gains if (a) the Company is a qualified foreign corporation (as defined below), (b) the U.S. Holder receiving such dividend is an individual, estate, or trust, and (c) such dividend is paid on Common Shares that have been held by such U.S. Holder for at least 61 days during the 121-day period beginning 60 days before the ex-dividend date.





66





---





The Company generally will be a qualified foreign corporation under Section 1(h)(11) of the Code (a QFC) if (a) the Company is eligible for the benefits of the Canada-U.S. Tax Convention, or (b) the Common Shares are readily tradable on an established securities market in the U.S.  However, even if the Company satisfies one or more of such requirements, the Company will not be treated as a QFC if the Company is a passive foreign investment company (as defined below) for the taxable year during which the Company pays a dividend or for the preceding taxable year.  In 2003, the U.S. Department of the Treasury (the Treasury) and the IRS announced that they intended to issue Treasury Regulations providing procedures for a foreign corporation to certify that it is a QFC.  Although these Treasury Regulations have not yet been issued, the Treasury and the IRS have confirmed their intention to issue these Treasury Regulations.  It is expected that these Treasury Regulations will obligate persons required to file information returns to report a dividend paid by a foreign corporation as a dividend from a QFC if the foreign corporation has, among other things, certified under penalties of perjury that the foreign corporation was not a passive foreign investment company for the taxable year during which the foreign corporation paid the dividend or for the preceding taxable year.



As discussed below, the Company believes that it was a passive foreign investment company for the taxable year ended December 31, 2006, and expects that it will be a passive foreign investment company for the taxable year ending December 31, 2007.  (See Additional Rules that May Apply to U.S. HoldersPassive Foreign Investment Company below).  Accordingly, the Company does not expect to be a QFC for the taxable year ending December 31, 2007.



If the Company is not a QFC, a dividend paid by the Company to a U.S. Holder, including a U.S. Holder that is an individual, estate, or trust, generally will be taxed at ordinary income tax rates (and not at 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 dividend rules.



Distributions Paid in Foreign Currency



The amount of a distribution received on the Common Shares in foreign currency generally will be equal to the U.S. dollar value of such distribution based on the exchange rate applicable on the date of receipt.  A U.S. Holder that does not convert foreign currency received as a distribution into U.S. dollars on the date of receipt generally will have a tax basis in such foreign currency equal to the U.S. dollar value of such foreign currency on the date of receipt.  Such a U.S. Holder generally will recognize ordinary income or loss on the subsequent sale or other taxable disposition of such foreign currency (including an exchange for U.S. dollars).



Dividends Received Deduction



Dividends received on the Common Shares generally will not be eligible for the dividends received deduction.  The availability of the dividends received deduction is subject to complex limitations that are beyond the scope of this summary, and a U.S. Holder that is a corporation should consult its own tax advisor regarding the dividends received deduction.



Disposition of Common Shares



A U.S. Holder will recognize gain or loss on the sale or other taxable disposition of Common Shares in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. Holders adjusted tax basis in the Common Shares sold or otherwise disposed of.  Subject to the passive foreign investment company rules discussed below, any such gain or loss generally will be capital gain or loss, which will be long-term capital gain or loss if the Common Shares are held for more than one year.



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



Foreign Tax Credit



A U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends received 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 taxable year.



Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the



67





---





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.  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 foreign tax credit rules.  Dividends received on the Common Shares generally will be treated as foreign source and generally will be categorized as passive income.  The foreign tax credit rules are complex, and each U.S. Holder should consult its own tax advisor regarding the foreign tax credit rules.



Information Reporting; Backup Withholding Tax



Payments made within the U.S., or by a U.S. payor or U.S. middleman, of dividends on, or proceeds arising from the sale or other taxable disposition of, Common Shares generally will be subject to information reporting and backup withholding tax, at the rate of 28%, 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.  However, U.S. Holders that are corporations generally are excluded from these information reporting and backup withholding tax 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.  Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding tax rules.



Additional Rules that May Apply to U.S. Holders



If the Company is a controlled foreign corporation or a passive foreign investment company (each as defined below), the preceding sections of this summary may not describe the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of Common Shares.



Controlled Foreign Corporation



The Company generally will be a controlled foreign corporation under Section 957(a) of the Code (a CFC) if more than 50% of the total voting power or the total value of the outstanding shares of the Company is owned, directly or indirectly, by citizens or residents of the U.S., domestic partnerships, domestic corporations, domestic estates, or domestic trusts (each as defined in Section 7701(a)(30) of the Code), each of which own, directly or indirectly, 10% or more of the total voting power of the outstanding shares of the Company (a 10% Shareholder).



If the Company is a CFC, a 10% Shareholder generally will be subject to current U.S. federal income tax with respect to (a) such 10% Shareholders pro rata share of the subpart F income (as defined in Section 952 of the Code) of the Company and (b) such 10% Shareholders pro rata share of the earnings of the Company invested in United States property (as defined in Section 956 of the Code).  In addition, under Section 1248 of the Code, any gain recognized on the sale or other taxable disposition of Common Shares by a U.S. Holder that was a 10% Shareholder at any time during the five-year period ending with such sale or other taxable disposition generally will be treated as a dividend to the extent of the earnings and profits of the Company that are attributable to such Common Shares.  If the Company is both a CFC and a passive foreign investment company (as defined below), the Company generally will be treated as a CFC (and not as a passive foreign investment company) with respect to any 10% Shareholder.



The Company does not believe that it has previously been, or currently is, a CFC.  However, there can be no assurance that the Company will not be a CFC for the current or any subsequent taxable year.



Passive Foreign Investment Company



The Company generally will be a passive foreign investment company under Section 1297(a) of the Code (a PFIC) if, for a taxable year, (a) 75% or more of the gross income of the Company for such taxable year is passive income or (b) on average, 50% or more of the assets held by the Company either produce passive income or are held for the production of passive income, based on the fair market value of such assets (or on the adjusted tax basis of such assets, if the Company is not publicly traded and either is a controlled foreign corporation or makes an election).  Passive income includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.  However, for transactions entered into after December 31, 2004, active business gains arising from the sale or exchange of commodities by the Company generally are excluded from passive income if substantially all of the



68





---





Companys commodities are (a) stock in trade of the Company or other property of a kind that would properly be included in inventory of the Company, or property held by the Company primarily for sale to customers in the ordinary course of business, (b) property used in the trade or business of the Company that would be subject to the allowance for depreciation under section 167 of the Code, or (c) supplies of a type regularly used or consumed by the Company in the ordinary course of its trade or business.



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 foreign corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other foreign corporation and (b) received directly a proportionate share of the income of such other foreign 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.



The Company believes that it was a PFIC for the taxable year ended December 31, 2006, and based on current business plans and financial projections, expects that it will be a PFIC for the taxable year ending December 31, 2007.  The determination of whether the Company was, or will be, a PFIC for a taxable year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to various interpretations.  In addition, whether the Company will be a PFIC for the taxable year ending December 31, 2007 and each subsequent taxable year depends on the assets and income of the Company over the course of each such taxable year and, as a result, cannot be predicted with certainty as of the date of this Annual Report.  Accordingly, there can be no assurance that the IRS will not challenge the determination made by the Company concerning its PFIC status or that the Company was not, or will not be, a PFIC for any taxable year.



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 taxable year) exceeds 125% of the average distributions received during the three preceding taxable 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 the Common Shares, must be ratably allocated to each day in a Non-Electing U.S. Holders holding period for the Common Shares.  The amount of any such gain or excess distribution allocated to prior years of such Non-Electing U.S. Holders holding period for the Common Shares (other than years prior to the first taxable year of the Company beginning after December 31, 1986 for which the Company was not a PFIC) will be subject to U.S. federal income tax at the highest tax rate applicable to ordinary income in each such prior year.  A Non-Electing U.S. Holder will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year.  Such a Non-Electing U.S. Holder that is not a corporation must treat any such interest paid as personal interest, which is not deductible.  The amount of any such gain or excess distribution allocated to the current year of such Non-Electing U.S. Holders holding period for the Common Shares will be treated as ordinary income in the current year, and no interest charge will be incurred with respect to the resulting tax liability for the current year.



If the Company is a PFIC for any taxable 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 taxable 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 taxable year for which the Company was a PFIC.



In addition, if the Company is a PFIC and owns shares of another foreign corporation that also is a PFIC, under certain indirect ownership rules, a disposition by the Company of the shares of such other foreign corporation or a distribution received by the Company from such other foreign corporation generally will be treated as an indirect disposition by a U.S. Holder or an indirect distribution received by a U.S. Holder, subject to the rules of Section 1291 of the Code discussed above.  To the extent that gain recognized on the actual disposition by a U.S. Holder of Common Shares or income recognized by a U.S. Holder on
an actual distribution received on the Common Shares was previously subject to U.S. federal income tax under these indirect ownership rules, such amount generally should not be subject to U.S. federal income tax.



69





---









QEF Election



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 generally will be timely if it is made for the first year in a U.S. Holders holding period for the Common Shares in which the Company is a PFIC.  In this case, a U.S. Holder may make a timely QEF Election by filing the appropriate QEF Election documents with such U.S. Holders U.S. federal income tax return for such first year.  However, if the Company was a PFIC in a prior year in a U.S. Holders holding period for the Common Shares, then in order to be treated as making a timely QEF Election, such U.S. Holder must elect to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if the Common Shares were sold on the qualification date for an amount equal to the fair market value of the Common Shares on the qualification date.  The qualification date is the first day of the first taxable year in which the Company was a QEF with respect to such U.S. Holder.  In addition, under very limited circumstances, a U.S. Holder may make a retroactive QEF Election if such U.S. Holder failed to file the QEF Election documents in a timely manner.



A QEF Election will apply to the taxable year for which such QEF Election is made and to all subsequent taxable 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 taxable year, the Company ceases to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during those taxable years in which the Company is not a PFIC.  Accordingly, if the Company becomes a PFIC in another subsequent taxable year, the QEF Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any such subsequent taxable year in which the Company qualifies as a PFIC.  In addition, the QEF Election will remain in effect (although it will not be applicable) with respect to a U.S. Holder even after such U.S. Holder disposes of all of such U.S. Holders direct and indirect interest in the Common Shares.  Accordingly, if such U.S. Holder reacquires an interest in the Company, such U.S. Holder will be subject to the QEF rules described above for each taxable year in which the Company is a PFIC.



A U.S. Holder that makes a timely QEF Election generally will not be subject to the rules of Section 1291 of the Code discussed above.  For example, a U.S. Holder that makes a timely QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of Common Shares.



However, for each taxable year in which the Company is a PFIC, 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 taxable 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, a U.S. Holder that makes a QEF Election 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.



U.S. Holders should be aware that there can be no assurance that the Company will satisfy record keeping requirements that apply to a QEF, or that the Company will supply U.S. Holders with information that such U.S. Holders require to report under the QEF rules, in the event that the Company is a PFIC and a U.S. Holder wishes to make a QEF Election.   Each U.S. Holder should consult its own tax advisor 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 qualified exchange or other market.  For this purpose, a qualified exchange or other market includes (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



70





---





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, surveillance, and other requirements designed to prevent fraudulent and manipulative acts and practices, remove impediments to and perfect the mechanism of a free, open, fair, and orderly market, and protect investors (and the laws of the country in which the foreign exchange is located and the rules of the foreign exchange ensure that such requirements are actually enforced) and (ii) the rules of such foreign exchange effectively promote active trading of listed stocks.  If the Common Shares are traded on such a qualified exchange or other market, the Common Shares generally will be regularly traded for any calendar year during which the Common Shares are traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.



A Mark-to-Market Election applies to the taxable year in which such Mark-to-Market Election is made and to each subsequent taxable 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.



A U.S. Holder that makes a Mark-to-Market Election generally will not be subject to the rules of Section 1291 of the Code discussed above.  However, if a U.S. Holder makes a Mark-to-Market Election after the beginning of such U.S. Holders holding period for the Common Shares and 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 taxable 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 taxable year over (b) such U.S. Holders adjusted 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 lesser of (a) 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 as of the close of such taxable year or (b) the excess, if any, of (i) the amount included in ordinary income because of such Mark-to-Market Election for prior taxable years over (ii) the amount allowed as a deduction because of such Mark-to-Market Election for prior taxable years.



A U.S. Holder that makes a Mark-to-Market Election generally 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 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 taxable years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior taxable years).



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 (such as gifts and exchanges pursuant to tax-deferred reorganizations under Section 368 of the Code).  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.



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.



Canadian Federal Income Tax Consequences

The following is a general discussion of all material Canadian federal income tax consequences, under current law, generally applicable to (a Holder) of one or more common shares of the Company who for the purposes of the Income Tax Act (Canada) (the Act) is a non-resident of Canada, does not hold his shares in the course of carrying on a business in Canada, holds his common shares as capital property and deals at arms length with the Company and is restricted to such circumstances.



71





---





Dividends

A Holder will be subject to Canadian withholding tax (Part XIII Tax) equal to 25%, or such lower rate as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on the common shares.  Under the 1995 Protocol amending the Canada-U.S. Income Tax Convention (1980) (the Treaty) the rate of Part XIII Tax applicable to a dividend on common shares paid to a Holder who is a resident of the United States is reduced from the 25% rate.  Under the Treaty, the Company will be required to withhold Part XIII Tax at a rate of15% from each dividend so paid andwill be required toremit the withheld amount directly to the Receiver General for Canada for the account of the Holder. The 15% rate is further reduced to 5% if the Holder is a company owning at least 10% of the outstanding common shares of the Company.

Disposition Of Common Shares

A Holder who disposes of a common share, including by deemed disposition on death, will not be subject to Canadian tax on any capital gain (or capital loss) thereby realized unless the common share constituted taxable Canadian property as defined by the Act. Generally, a common share will not constitute taxable Canadian property of a Holder unless he held the common shares as propertyused by him in carrying on a business (other than an insurance business) in Canada, or he or persons with whom he did not deal at arms length alone or together held or held options to acquire, at any time within the five years preceding the disposition, 25% or more of the shares of any class of the capital stock of the Company.  The disposition of a common share that constitutes taxable Canadian property of a Holder could also result in a capital loss, which cannot be used to reduce all taxable income (only that portion of taxable income derived from a capital gain on the disposition of othertaxable Canadian property, which is not treaty protected property).   Treaty protected property is defined to mean property any income or gain from the disposition of which would, because of a tax treaty with another country, be exempt from Canadian tax.

A capital gain occurs when proceeds from the disposition of a share or other capital property exceeds the original costof the property and the reasonable costs of disposition.  A capital loss occurs when the proceeds from the disposition of a share are less than the original costand  the reasonable costs of disposition.  Under the Act,a capital gain is effectively taxed at a lower rate as only 50% of the capitalgain is effectively included in the Holders taxable income(the taxable capital gain).

A Holder who is a resident of the United States and realizes a capital gain on thedisposition of a common share that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the common share is derived from, or forms an interest in, Canadian real estate, including rights to explore for or exploit Canadian mineral deposits and rights to amounts computed by reference to the amount or value of production from such resources, (b) the common share formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 months preceding thedisposition, or (c) the Holder (i) was a resident of Canada at any time within the ten years immediately, and for a total of 120 months during the 20 years, preceding the disposition, and (ii) owned the common share when he ceased to be resident in Canada.

A Holder who is subject to Canadian tax in respect of a capital gain realized on disposition of a common share must include one half of the capital gain (taxable capital gain) in computing his taxable income earned in Canada.  This Holder may, subject to certain limitations, deduct one half of any capital loss (allowable capital loss) arising on thedisposition of othertaxable Canadian property(other than treaty protected property)realized in the year of disposition in respect of other taxable Canadian propertyandmay deduct the capital loss (after taking into account any differenceininclusion rates between the particular yearand year of disposition) realized in anypreceding year or any of the threesubsequent years from dispositions of taxable Canadian property (other than treaty protected property)to the extent the capital loss was not deducted in any other year.

Dividends and paying agents.

Not Applicable.



Statement by experts.

Not Applicable.



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 with respect to our common shares.



We are subject to the informational requirements of the Exchange Act and file reports and other information with the Securities



72





---





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.



Subsidiary Information.

As of May 31, 2007 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 US Dollars, Chilean Pesos, 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.



ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

Not Applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

Not Applicable.





73





---





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

Modification of Instruments Defining Rights of Security Holders.Not Applicable.

Modification or Issuance of Other Class of Securities.Not Applicable

Withdrawal or Substitution of Security. Not Applicable.

Change of Trustee or Paying Agent.   Not Applicable

Use of Proceeds.Not Applicable

ITEM 15A. 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.



ITEM 15B. REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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.



Under an extension, we are not required to provide managements report on internal control over financial reporting until we file an annual report for our first fiscal year ending after December 15, 2007.  This annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting.  Managements report will not be subject to attestation by the Companys registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission until we are required to file an annual report for our first fiscal year ending after December 15, 2008.  These temporary rules (i) permits a non-accelerated filer to omit managements report on internal control over financial reporting until it is required to file an annual report for its first fiscal year ending after December 15, 2007 and  (ii) 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 issuers registered public accounting firm regarding managements report on internal control over financial reporting until it is required to file an annual report for its first fiscal year ending after December 15, 2008.





74





---





ITEM 15C. 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 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 American Stock 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 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 expands and will consider whether we should adopt a formal code of ethics at a future date



ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees



The aggregated fees billed for each of the past two fiscal year 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: $37,028 for the 13-month fiscal period ended December 31, 2005; and $39,624 for the fiscal year ended December 31, 2006.



Audit-Related Fees



Our auditor, Dale Matheson Carr-Hilton LaBonte, Chartered Accountants has not billed us for any assurance and related services rendered during the past two fiscal years that are reasonably related to the performance of the audit or review of our financial statements or services that are not reported under the caption Audit Fees above.



Tax Fees



The aggregate of fees billed by our auditor, Dale Matheson Carr-Hilton LaBonte, Chartered Accountants, for the preparation of all necessary Canadian tax returns for 2004 for the Company and its subsidiaries was $8,000 for the fiscal year ending November 30, 2004 (included 32 tax information forms for the Companys controlled foreign affiliates for the years 1997  2004).  This $8,000 fee was billed in May 2006.



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 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.  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.





75





---





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 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 3, 2007

Consolidated Balance Sheets at December 31, 2006 and December 31, 2005

Consolidated Statements of Operations and Deficit for the year ended December 31, 2006 and the 13 month period ended December 31, 2005 and the year ended November 30, 2004

Consolidated Statements of Mineral Interests for the year ended December 31, 2006 and the 13 month period ended December 31, 2005 and the year ended November 30, 2004

Consolidated Statements of Cash Flow for the year ended December 31, 2006 and the 13 month period ended December 31, 2005 and the year ended November 30, 2004

Notes to the Consolidated Financial Statements



All financial statements herein, unless otherwise stated, have been prepared in accordance with generally accepted accounting principles in Canada (Canadian GAAP).  These principles, as they pertain to our consolidated financial statements, differ from United States generally accepted accounting principles (U.S. GAAP) in a number of material respects, which are set out elsewhere herein.  See Note 9 to the attached consolidated financial statements.



76





---







[samex20f062707001.jpg]





AUDITORS REPORT



To the Shareholders of Samex Mining Corp.



We have audited the consolidated balance sheets of Samex Mining Corp. (an exploration stage company) as at December 31, 2006 and December 31, 2005 and the consolidated statements of operations and deficit, and cash flows for the year ended December 31, 2006, the thirteen month period ended December 31, 2005, and the year ended November 30, 2004.  These financial statements are the responsibility of the company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.



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



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2006 and 2005 and the results of its operations and its cash flows for the year ended December 31, 2006, the thirteen month period ended December 31, 2005, and the year ended November 30, 2004 in accordance with Canadian generally accepted accounting principles.



DMCL



DALE MATHESON CARR-HILTON LABONTE LLP

DMCL CHARTERED ACCOUNTANTS





Vancouver, Canada

April 3, 2007







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



In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Companys ability to continue as a going concern, such as those described in Note 1 to the financial statements.  Our report to the shareholders dated April 3, 2007 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors report when these are adequately disclosed in the financial statements.



DMCL



DALE MATHESON CARR-HILTON LABONTE LLP

DMCL CHARTERED ACCOUNTANTS



Vancouver, Canada

April 3, 2007







[samex20f062707002.jpg]





77





---







FINANCIAL STATEMENTS





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED BALANCE SHEETS



|                                         |  |   |                   |  |   |                  
|---------------------------------------- |  | - | ----------------- |  | - | -----------------
|                                         |  |   | DECEMBER 31,
2006 |  |   | DECEMBER 31,
2005
|ASSETS                                   |  |   |                   |  |   |                  
|                                         |  |   |                   |  |   |                  
|CURRENT                                  |  |   |                   |  |   |                  
|CASH                                     |  | $ | 1,339,761         |  | $ | 424,287          
|OTHER CURRENT ASSETS                     |  |   | 66,297            |  |   | 65,528           
|                                         |  |   |                   |  |   |                  
|                                         |  |   | 1,406,058         |  |   | 489,815          
|                                         |  |   |                   |  |   |                  
|MINERAL INTERESTS (NOTE 3)               |  |   | 7,086,240         |  |   | 5,175,901        
|EQUIPMENT (NOTE 4)                       |  |   | 112,702           |  |   | 85,450           
|                                         |  |   |                   |  |   |                  
|                                         |  | $ | 8,605,000         |  | $ | 5,751,166        
|                                         |  |   |                   |  |   |                  
|LIABILITIES AND SHAREHOLDERS EQUITY     |  |   |                   |  |   |                  
|                                         |  |   |                   |  |   |                  
|LIABILITIES                              |  |   |                   |  |   |                  
|                                         |  |   |                   |  |   |                  
|CURRENT                                  |  |   |                   |  |   |                  
|ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |  | $ | 67,728            |  | $ | 35,403           
|                                         |  |   |                   |  |   |                  
|                                         |  |   |                   |  |   |                  
|SHAREHOLDERS' EQUITY                     |  |   |                   |  |   |                  
|                                         |  |   |                   |  |   |                  
|SHARE CAPITAL (NOTE 6)                   |  |   | 25,799,118        |  |   | 22,092,318       
|                                         |  |   |                   |  |   |                  
|CONTRIBUTED SURPLUS (NOTE 6)             |  |   | 3,411,633         |  |   | 2,317,058        
|                                         |  |   |                   |  |   |                  
|DEFICIT                                  |  |   | (20,673,479)      |  |   | (18,693,613)     
|                                         |  |   |                   |  |   |                  
|                                         |  |   | 8,537,272         |  |   | 5,715,763        
|                                         |  |   |                   |  |   |                  
|                                         |  | $ | 8,605,000         |  | $ | 5,751,166        



GOING CONCERN (NOTE 1)



COMMITMENTS (NOTE 3)



SUBSEQUENT EVENTS (NOTE 10)





APPROVED BY THE DIRECTORS



Jeffrey P. Dahl

Jeffrey P. Dahl



Larry D. McLean

Larry D. McLean







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



78





---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT



|                                                            |  |                         |                                          |                         |            |  |   |            |  |   |           
|----------------------------------------------------------- |  | ----------------------- | ---------------------------------------- | ----------------------- | ---------- |  | - | ---------- |  | - | ----------
|                                                            |  | YEAR ENDED
DECEMBER 31, | THIRTEEN
MONTH PERIOD
ENDED
DECEMBER 31, | YEAR ENDED
NOVEMBER 30,
|                                                            |  |                         |                                          |                         | 2006       |  |   | 2005       |  |   | 2004      
|GENERAL AND ADMINISTRATIVE
EXPENSES                         |  |                         |                                          |                         |            |  |   |            |  |   |           
|                                                            |  |                         |                                          |                         |            |  |   |            |  |   |           
|ACCOUNTING AND AUDIT                                        |  |                         |                                          | $                       | 80,356     |  | $ | 25,509     |  | $ | 31,803    
|AMORTIZATION                                                |  |                         |                                          |                         | 36,301     |  |   | 30,457     |  |   | 20,552    
|BANK CHARGES & INTEREST (INCOME)                            |  |                         |                                          |                         | (20,925)   |  |   | (16,307)   |  |   | (25,920)  
|CONSULTING                                                  |  |                         |                                          |                         | 15,480     |  |   | 21,490     |  |   | 2,000     
|FOREIGN EXCHANGE LOSS (GAIN)                                |  |                         |                                          |                         | 31,846     |  |   | (37,321)   |  |   | (4,058)   
|LEGAL                                                       |  |                         |                                          |                         | 59,978     |  |   | 77,768     |  |   | 83,833    
|MINERAL INTERESTS
INVESTIGATION COSTS                       |  |                         |                                          |                         | 233,043    |  |   | 102,656    |  |   | 53,045    
|OFFICE, SUPPLIES, MISCELLANEOUS                             |  |                         |                                          |                         | 84,499     |  |   | 76,365     |  |   | 99,205    
|PRINTING                                                    |  |                         |                                          |                         | 3,380      |  |   | 2,845      |  |   | 7,562     
|REGULATORY FEES                                             |  |                         |                                          |                         | 25,976     |  |   | 20,845     |  |   | 28,414    
|SALARIES, BENEFITS AND STOCK-
BASED COMPENSATION (NOTE 6.d) |  |                         |                                          |                         | 1,248,679  |  |   | 1,175,415  |  |   | 1,447,734 
|SHARE TRANSFER AGENT                                        |  |                         |                                          |                         | 15,040     |  |   | 11,816     |  |   | 13,806    
|TRAVEL AND PROMOTION                                        |  |                         |                                          |                         | 148,346    |  |   | 48,349     |  |   | 45,659    
|                                                            |  |                         |                                          |                         |            |  |   |            |  |   |           
|NET LOSS FROM OPERATIONS                                    |  |                         |                                          |                         | 1,961,999  |  |   | 1,539,887  |  |   | 1,803,635 
|                                                            |  |                         |                                          |                         |            |  |   |            |  |   |           
|GAIN ON SALE OF EQUIPMENT                                   |  |                         |                                          |                         | -          |  |   | (11,172)   |  |   | (1,052)   
|MINERAL INTERESTS WRITTEN OFF
(NOTE 3)                      |  |                         |                                          |                         | 17,867     |  |   | 17,642     |  |   | 31,296    
|                                                            |  |                         |                                          |                         |            |  |   |            |  |   |           
|NET LOSS                                                    |  |                         |                                          |                         | 1,979,866  |  |   | 1,546,357  |  |   | 1,833,879 
|                                                            |  |                         |                                          |                         |            |  |   |            |  |   |           
|DEFICIT, BEGINNING                                          |  |                         |                                          |                         | 18,693,613 |  |   | 17,147,256 |  |   | 15,313,377
|                                                            |  |                         |                                          |                         |            |  |   |            |  |   |           
|DEFICIT, ENDING                                             |  |                         |                                          | $                       | 20,673,479 |  | $ | 18,693,613 |  | $ | 17,147,256
|                                                            |  |                         |                                          |                         |            |  |   |            |  |   |           
|                                                            |  |                         |                                          |                         |            |  |   |            |  |   |           
|BASIC AND DILUTED NET LOSS PER    SHARE                     |  |                         |                                          | $                       | 0.03       |  | $ | 0.02       |  | $ | 0.03      





|                                                                  |  |  |  |  |            |  |  |            |  |  |           
|----------------------------------------------------------------- |  |  |  |  | ---------- |  |  | ---------- |  |  | ----------
|WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC
AND DILUTED |  |  |  |  | 70,264,207 |  |  | 65,915,415 |  |  | 64,153,516











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



79





---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF MINERAL INTERESTS



|                                    |   |                         |  |   |                                          |  |   |                        
|----------------------------------- | - | ----------------------- |  | - | ---------------------------------------- |  | - | -----------------------
|SUMMARY OF EXPENDITURES             |   | YEAR ENDED
DECEMBER 31, |  |   | THIRTEEN
MONTH PERIOD
ENDED
DECEMBER 31, |  |   | YEAR ENDED
NOVEMBER 30,
|                                    |   | 2006                    |  |   | 2005                                     |  |   | 2004                   
|                                    |   |                         |  |   |                                          |  |   |                        
|ESPEJISMO - CHILE                   | $ | 3,529                   |  | $ | -                                        |  | $ | -                      
|INCA - CHILE                        |   | 1,379,900               |  |   | -                                        |  |   | -                      
|LOS ZORROS - CHILE                  |   | 456,748                 |  |   | 1,141,542                                |  |   | 2,277,924              
|TRES PUNTAS/CHIMBERO - CHILE        |   | 14,306                  |  |   | -                                        |  |   | -                      
|EL DESIERTO - BOLIVIA               |   | 5,879                   |  |   | 5,880                                    |  |   | 6,402                  
|ESKAPA - BOLIVIA                    |   | 46,223                  |  |   | 14,547                                   |  |   | 10,335                 
|SANTA ISABEL                        |   | -                       |  |   | -                                        |  |   | 337                    
|WALTER - BOLIVIA                    |   | 1,045                   |  |   | 1,045                                    |  |   | 1,155                  
|WARA WARA - BOLIVIA                 |   | 6,488                   |  |   | 6,260                                    |  |   | 18,477                 
|YARETANI - BOLIVIA                  |   | 4,455                   |  |   | 4,457                                    |  |   | 4,925                  
|EXPLORATION ADVANCES / (RECOVERIES) |   | 9,633                   |  |   | 215,161                                  |  |   | (236,330)              
|                                    |   |                         |  |   |                                          |  |   |                        
|EXPENDITURES                        |   | 1,928,206               |  |   | 1,388,892                                |  |   | 2,083,225              
|                                    |   |                         |  |   |                                          |  |   |                        
|WRITTEN OFF                         |   |                         |  |   |                                          |  |   |                        
|                                    |   |                         |  |   |                                          |  |   |                        
|EL DESIERTO - BOLIVIA               |   | (5,879)                 |  |   | (5,880)                                  |  |   | (6,402)                
|SANTA ISABEL - BOLIVIA              |   | -                       |  |   | -                                        |  |   | (337)                  
|WALTER - BOLIVIA                    |   | (1,045)                 |  |   | (1,045)                                  |  |   | (1,155)                
|WARA WARA - BOLIVIA                 |   | (6,488)                 |  |   | (6,260)                                  |  |   | (18,477)               
|YARETANI - BOLIVIA                  |   | (4,455)                 |  |   | (4,457)                                  |  |   | (4,925)                
|                                    |   |                         |  |   |                                          |  |   |                        
|BALANCE, BEGINNING                  |   | 5,175,901               |  |   | 3,804,651                                |  |   | 1,752,722              
|                                    |   |                         |  |   |                                          |  |   |                        
|BALANCE, ENDING                     | $ | 7,086,240               |  | $ | 5,175,901                                |  | $ | 3,804,651              
|                                    |   |                         |  |   |                                          |  |   |                        
|SUMMARY OF DEFERRED COSTS           |   |                         |  |   |                                          |  |   |                        
|                                    |   |                         |  |   |                                          |  |   |                        
|CHILE                               |   |                         |  |   |                                          |  |   |                        
|ESPEJISMO                           | $ | 3,529                   |  | $ | -                                        |  | $ | -                      
|INCA                                |   | 1,379,900               |  |   | -                                        |  |   | -                      
|LOS ZORROS                          |   | 4,327,633               |  |   | 3,870,885                                |  |   | 2,729,343              
|TRES PUNTAS/CHIMBERO                |   | 14,306                  |  |   | -                                        |  |   | -                      
|BOLIVIA                             |   |                         |  |   |                                          |  |   |                        
|EL DESIERTO                         |   | 1,000                   |  |   | 1,000                                    |  |   | 1,000                  
|ESKAPA                              |   | 1,305,420               |  |   | 1,259,197                                |  |   | 1,244,650              
|SANTA ISABEL                        |   | 1,000                   |  |   | 1,000                                    |  |   | 1,000                  
|WALTER                              |   | 1,000                   |  |   | 1,000                                    |  |   | 1,000                  
|WARA WARA                           |   | 1,000                   |  |   | 1,000                                    |  |   | 1,000                  
|YARETANI                            |   | 1,000                   |  |   | 1,000                                    |  |   | 1,000                  
|                                    |   |                         |  |   |                                          |  |   |                        
|UNALLOCATED ADVANCES*               |   | 50,452                  |  |   | 40,819                                   |  |   | (174,342)              
|                                    |   |                         |  |   |                                          |  |   |                        
|                                    | $ | 7,086,240               |  | $ | 5,175,901                                |  | $ | 3,804,651              



*UNALLOCATED ADVANCES:The fiscal
quarter year end (September 30th) of the Bolivian subsidiaries is three months earlier than the fiscal quarter/year end (December 31st) of the parent company.  Consequently, funds transferred from SAMEX Mining Corp. to these subsidiaries during the three-month accounting stub period are recorded as Unallocated Advances which will subsequently be allocated to the appropriate property/category in the following quarter, based on the financial statements of the respective subsidiary.





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



80





---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF MINERAL INTERESTS (CONTINUED)



|                                   |   |                         |  |   |                                          |  |   |                        
|---------------------------------- | - | ----------------------- |  | - | ---------------------------------------- |  | - | -----------------------
|DETAILS OF EXPENDITURES - CHILE    |   | YEAR ENDED
DECEMBER 31, |  |   | THIRTEEN MONTH PERIOD ENDED
DECEMBER 31, |  |   | YEAR ENDED
NOVEMBER 30,
|                                   |   | 2006                    |  |   | 2005                                     |  |   | 2004                   
|ESPEJISMO - CHILE                  |   |                         |  |   |                                          |  |   |                        
|PROPERTY PATENT PAYMENTS           | $ | 3,529                   |  | $ | -                                        |  | $ | -                      
|                                   |   |                         |  |   |                                          |  |   |                        
|INCA - CHILE                       |   |                         |  |   |                                          |  |   |                        
|DRILLING AND SUB-CONTRACTS         | $ | 188,373                 |  | $ | -                                        |  | $ | -                      
|FIELD SUPPLIES                     |   | 29,501                  |  |   | -                                        |  |   | -                      
|FOOD AND LODGING                   |   | 5,545                   |  |   | -                                        |  |   | -                      
|GEOLOGY, MAPPING AND SURVEYS       |   | 281,812                 |  |   | -                                        |  |   | -                      
|LEGAL                              |   | 32,837                  |  |   | -                                        |  |   | -                      
|MINERAL INTEREST ACQUISITION COSTS |   | 818,417                 |  |   | -                                        |  |   | -                      
|SITE ADMINISTRATION                |   | 11,491                  |  |   | -                                        |  |   | -                      
|TRAVEL                             |   | 11,924                  |  |   | -                                        |  |   | -                      
|                                   |   |                         |  |   |                                          |  |   |                        
|                                   | $ | 1,379,900               |  | $ | -                                        |  | $ | -                      
|                                   |   |                         |  |   |                                          |  |   |                        
|LOS ZORROS - CHILE                 |   |                         |  |   |                                          |  |   |                        
|DRILLING AND SUB-CONTRACTS         | $ | 62,276                  |  | $ | 375,447                                  |  | $ | 1,430,481              
|FIELD SUPPLIES                     |   | 11,525                  |  |   | 72,076                                   |  |   | 26,838                 
|FOOD AND LODGING                   |   | 13                      |  |   | 55,187                                   |  |   | 112,912                
|GEOLOGY, MAPPING AND SURVEYS       |   | 38,165                  |  |   | 281,775                                  |  |   | 257,991                
|MINERAL INTEREST ACQUISITION COSTS |   | 236,215                 |  |   | 205,249                                  |  |   | 87,230                 
|PROPERTY PATENT PAYMENTS           |   | 46,978                  |  |   | -                                        |  |   | -                      
|RECOVERY OF COSTS                  |   | -                       |  |   | (43,538)                                 |  |   | -                      
|SITE ADMINISTRATION                |   | 29,066                  |  |   | 106,351                                  |  |   | 79,625                 
|TRAVEL                             |   | 8,477                   |  |   | 26,044                                   |  |   | 71,684                 
|VALUE ADDED TAXES                  |   | 24,033                  |  |   | 62,951                                   |  |   | 211,163                
|                                   |   |                         |  |   |                                          |  |   |                        
|                                   | $ | 456,748                 |  | $ | 1,141,542                                |  | $ | 2,277,924              
|                                   |   |                         |  |   |                                          |  |   |                        
|TRES PUNTAS/CHIMBERO - CHILE       |   |                         |  |   |                                          |  |   |                        
|DRILLING AND SUB-CONTRACTS         | $ | 509                     |  | $ | -                                        |  | $ | -                      
|PROPERTY PATENT PAYMENTS           |   | 13,797                  |  |   | -                                        |  |   | -                      
|                                   |   |                         |  |   |                                          |  |   |                        
|                                   | $ | 14,306                  |  | $ | -                                        |  | $ | -                      





|                     |   |           |  |   |           |  |   |          
|-------------------- | - | --------- |  | - | --------- |  | - | ---------
|EXPENDITURES - CHILE | $ | 1,854,483 |  | $ | 1,141,542 |  | $ | 2,277,924





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



81





---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF MINERAL INTERESTS (CONTINUED)



|                                  |   |                         |  |   |                                          |  |   |                        
|--------------------------------- | - | ----------------------- |  | - | ---------------------------------------- |  | - | -----------------------
|DETAILS OF EXPENDITURES - BOLIVIA |   | YEAR ENDED
DECEMBER 31, |  |   | THIRTEEN MONTH PERIOD ENDED
DECEMBER 31, |  |   | YEAR ENDED
NOVEMBER 30,
|                                  |   | 2006                    |  |   | 2005                                     |  |   | 2004                   
|EL DESIERTO - BOLIVIA             |   |                         |  |   |                                          |  |   |                        
|PROPERTY PATENT PAYMENTS          | $ | 5,879                   |  | $ | 5,880                                    |  | $ | 6,402                  
|                                  |   |                         |  |   |                                          |  |   |                        
|ESKAPA  BOLIVIA                  |   |                         |  |   |                                          |  |   |                        
|AMORTIZATION                      | $ | 12,420                  |  | $ | 1,867                                    |  | $ | 2,601                  
|DRILLING AND SUB-CONTRACTS        |   | 139                     |  |   | -                                        |  |   | -                      
|FOOD AND LODGING                  |   | 1,651                   |  |   | 1,245                                    |  |   | -                      
|FUEL                              |   | 161                     |  |   | 383                                      |  |   | -                      
|GEOLOGY, MAPPING AND SURVEYS      |   | 23,143                  |  |   | 732                                      |  |   | -                      
|LEGAL                             |   | 391                     |  |   | 1,262                                    |  |   | -                      
|PROPERTY PATENT PAYMENTS          |   | 7,922                   |  |   | 8,028                                    |  |   | 7,596                  
|REPAIR AND MAINTENANCE            |   | -                       |  |   | 24                                       |  |   | -                      
|SITE ADMINISTRATION               |   | -                       |  |   | 396                                      |  |   | 138                    
|TRAVEL                            |   | 396                     |  |   | 610                                      |  |   | -                      
|                                  |   |                         |  |   |                                          |  |   |                        
|                                  | $ | 46,223                  |  | $ | 14,547                                   |  | $ | 10,335                 
|                                  |   |                         |  |   |                                          |  |   |                        
|SANTA ISABEL - BOLIVIA            |   |                         |  |   |                                          |  |   |                        
|SITE ADMINISTRATION               | $ | -                       |  | $ | -                                        |  | $ | 337                    
|                                  |   |                         |  |   |                                          |  |   |                        
|WALTER - BOLIVIA                  |   |                         |  |   |                                          |  |   |                        
|PROPERTY PATENT PAYMENTS          | $ | 1,045                   |  | $ | 1,045                                    |  | $ | 1,155                  
|                                  |   |                         |  |   |                                          |  |   |                        
|WARA WARA - BOLIVIA               |   |                         |  |   |                                          |  |   |                        
|FIELD SUPPLIES                    | $ | -                       |  | $ | -                                        |  | $ | 304                    
|FOOD AND LODGING                  |   | -                       |  |   | -                                        |  |   | 140                    
|GEOLOGY, MAPPING AND SURVEYS      |   | -                       |  |   | -                                        |  |   | 7,825                  
|PROPERTY PATENT PAYMENTS          |   | 6,488                   |  |   | 6,260                                    |  |   | 6,410                  
|TRAVEL                            |   | -                       |  |   | -                                        |  |   | 3,798                  
|                                  |   |                         |  |   |                                          |  |   |                        
|                                  | $ | 6,488                   |  | $ | 6,260                                    |  | $ | 18,477                 
|                                  |   |                         |  |   |                                          |  |   |                        
|YARETANI - BOLIVIA                |   |                         |  |   |                                          |  |   |                        
|PROPERTY PATENT PAYMENTS          | $ | 4,455                   |  | $ | 4,457                                    |  | $ | 4,925                  
|                                  |   |                         |  |   |                                          |  |   |                        





|                       |   |        |  |   |        |  |   |       
|---------------------- | - | ------ |  | - | ------ |  | - | ------
|EXPENDITURES - BOLIVIA | $ | 64,090 |  | $ | 32,189 |  | $ | 41,631







|                                    |   |           |  |   |           |  |   |          
|----------------------------------- | - | --------- |  | - | --------- |  | - | ---------
|EXPENDITURES - CHILE                | $ | 1,854,483 |  | $ | 1,141,542 |  | $ | 2,277,924
|                                    |   |           |  |   |           |  |   |          
|EXPENDITURES - BOLIVIA              |   | 64,090    |  |   | 32,189    |  |   | 41,631   
|                                    |   |           |  |   |           |  |   |          
|EXPLORATION ADVANCES / (RECOVERIES) |   | 9,633     |  |   | 215,161   |  |   | (236,330)
|                                    |   |           |  |   |           |  |   |          
|TOTAL EXPENDITURES                  | $ | 1,928,206 |  | $ | 1,388,892 |  | $ | 2,083,225







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





82





---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



CONSOLIDATED STATEMENTS OF CASH FLOW



|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|------------------------------------------------------------ |  | ---------------------------- | --------------------------------------------- | ---------------------------- | ----------- |  | - | ----------- |  | - | -----------
|                                                             |  | YEAR ENDED
DECEMBER 31,
2006 | THIRTEEN
MONTH PERIOD ENDED
DECEMBER 31,
2005 | YEAR ENDED
NOVEMBER 30,
2004
|CASH FLOWS FROM OPERATING ACTIVITIES                         |  |                              |                                               |                              |             |  |   |             |  |   |            
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|NET LOSS                                                     |  |                              |                                               | $                            | (1,979,866) |  | $ | (1,546,357) |  | $ | (1,833,879)
|ADD NON-CASH ITEMS                                           |  |                              |                                               |                              |             |  |   |             |  |   |            
|AMORTIZATION                                                 |  |                              |                                               |                              | 36,301      |  |   | 30,457      |  |   | 20,552     
|MINERAL INTERESTS AND
DEFERRED EXPLORATION
COSTS WRITTEN OFF |  |                              |                                               |                              | 17,867      |  |   | 17,642      |  |   | 31,296     
|STOCK-BASED COMPENSATION                                     |  |                              |                                               |                              | 886,014     |  |   | 830,742     |  |   | 1,077,916  
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|                                                             |  |                              |                                               |                              | (1,039,684) |  |   | (667,516)   |  |   | (704,115)  
|CHANGES IN NON-CASH WORKING
CAPITAL ITEMS                    |  |                              |                                               |                              |             |  |   |             |  |   |            
|OTHER CURRENT ASSETS                                         |  |                              |                                               |                              | (769)       |  |   | 23,467      |  |   | (88,995)   
|ACCOUNTS PAYABLE AND
ACCRUED LIABILITIES                     |  |                              |                                               |                              | 32,325      |  |   | (55,064)    |  |   | 58,499     
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|NET CASH USED IN OPERATIONS                                  |  |                              |                                               |                              | (1,008,128) |  |   | (699,113)   |  |   | (734,611)  
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|CASH FLOWS FROM FINANCING ACTIVITIES                         |  |                              |                                               |                              |             |  |   |             |  |   |            
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|COMMON SHARES  FOR CASH                                     |  |                              |                                               |                              | 3,706,800   |  |   | 340,300     |  |   | 1,484,954  
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|NET CASH PROVIDED

BY FINANCING ACTIVITIES                   |  |                              |                                               |                              | 3,706,800   |  |   | 340,300     |  |   | 1,484,954  
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|CASH FLOWS FROM INVESTING ACTIVITIES                         |  |                              |                                               |                              |             |  |   |             |  |   |            
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|MINERAL INTERESTS                                            |  |                              |                                               |                              | (1,719,645) |  |   | (1,388,892) |  |   | (2,083,225)
|EQUIPMENT                                                    |  |                              |                                               |                              | (63,553)    |  |   | (3,316)     |  |   | (68,956)   
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|NET CASHED USED IN

INVESTING ACTIVITIES                     |  |                              |                                               |                              | (1,783,198) |  |   | (1,392,208) |  |   | (2,152,181)
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|NET CHANGE IN CASH                                           |  |                              |                                               |                              | 915,474     |  |   | (1,751,021) |  |   | (1,401,838)
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|CASH, BEGINNING                                              |  |                              |                                               |                              | 424,287     |  |   | 2,175,308   |  |   | 3,577,146  
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|CASH, ENDING                                                 |  |                              |                                               | $                            | 1,339,761   |  | $ | 424,287     |  | $ | 2,175,308  
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|SUPPLEMENTAL INFORMATION                                     |  |                              |                                               |                              |             |  |   |             |  |   |            
|                                                             |  |                              |                                               |                              |             |  |   |             |  |   |            
|CASH PAID FOR INTEREST                                       |  |                              |                                               | $                            | -           |  | $ | -           |  | $ | -          



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



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





83





---





SAMEX MINING CORP.

(AN EXPLORATION STAGE COMPANY)



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2006



1.

BASIS OF PRESENTATION



These consolidated financial statements include the accounts of SAMEX Mining Corp. (the Company) and its Canadian, Bahamian, Chilean and Bolivian subsidiaries. The financial statements are expressed in Canadian dollars.  All inter-company balances and transactions are eliminated on consolidation.  The fiscal year end of the inactive subsidiary, South American Mining & Exploration Corp. and of the Bolivian subsidiaries is September 30th.  The fiscal year end of the Chilean subsidiary is December 31st.  In November of 2005, the Company changed its fiscal year-end of November 30th by extending it for one additional month to a new fiscal year-end of December 31st.  This was done in order to synchronize the year end of the Company with the year end of its Chilean subsidiary and with the quarter ends of its Bolivian subsidiaries, making the Companys accounting and reporting process more streamlined and efficient.  As a result of the year end change, the financial statements for fiscal 2005 (the transition year) cover a period of thirteen months from December 1, 2004 to December 31, 2005 as compared to fiscal 2006 which covers the year ended December 31, 2006.



NAME

LOCATION

OWNERSHIP

South American Mining & Exploration Corp.

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 generally accepted accounting principles (GAAP) in Canada.



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.  Different bases of measurement may be appropriate if the Company is not expected to continue operations for the foreseeable future.  As at December 31, 2006 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 continuation as a going concern is dependent upon its ability to attain profitable operations and generate funds there from and/or raise equity capital or borrowings sufficient to meet current and future obligations



For the year ended December 31, 2006 and the thirteen-month period ended December 31, 2005, the Company reported net losses of $1,979,866 and $1,546,357 respectively and has incurred losses since inception totalling $20,673,479.  At December 31, 2006, the Company had working capital in the amount of $1,338,330.



2.

SIGNIFICANT ACCOUNTING POLICIES



a.

Use of Estimates - The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions, including stock-based compensation and carrying value of mineral properties, 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.



b.

Financial Instruments - The fair value of the Companys financial instruments included in current assets and current liabilities were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments.  The Company conducts business in Canada, Chile and Bolivia giving rise to significant exposure to market risks from changes in foreign currency rates.  The Company does not use derivative instruments to reduce its exposure to foreign currency risk.



c.

Risk Management  The Company is engaged primarily in mineral exploration and manages related industry risk issues directly.  The Company may be at risk for environmental issues and fluctuations in commodity pricing.  Management is not aware of and does not anticipate any significant environmental remediation costs or liabilities in respect of current operations, however it is not possible to be certain that all aspects of environmental issues affecting the Company, if any, have been fully determined or resolved.  The Company is not exposed to significant credit concentration or interest rate risk.



d.

Mineral Interests - The Company is engaged in the exploration of mineral resource properties and records its investment in mineral property interests at the lower of acquisition and capitalized mineral exploration costs 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,



84





---





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 property 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 costs as reported on the balance sheet represent acquisition and capitalized mineral exploration costs 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 costs 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 properties not acquired by the Company.



e.

Translation of Foreign Currency  The Company uses the temporal method of foreign currency translation to account for its integrated subsidiaries.  Balances denominated in foreign currencies are translated into Canadian dollar equivalents as follows:



i.

Monetary assets and liabilities at year end rates;

ii.

All other assets and liabilities at historical rates;

iii.

Revenue and expense transactions at the average rate of exchange prevailing during the year, except for amortization which is translated at historical rates.



Exchange gains or losses arising on these translations are charged to operations as incurred.



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 periods.  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 Plans - The Company grants to its directors, employees and consultants incentive stock options to acquire shares in the Companys common stock in accordance with the terms of its stock option plan.  The Company adopted the ccounting recommendations of the CICA Handbook, Section 3870, Stock-based compensation and other stock-based payments, whereby it expenses all stock-based compensation awards.  The standard requires that all new or altered stock-based awards provided to employees and non-employees are measured and recognized using a fair value based method.  Fair values are determined using the Black-Scholes option pricing model.



j.

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 period.  Future income tax liabilities (assets) are the amount of income taxes arising from taxable temporary differences between the tax bases 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.



k.

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



85





---





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.



l.

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.

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 years financial statements.



3.

MINERAL INTERESTS



The Company has invested in various properties 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.  Annual government patent fees must be paid each year in order to keep the mineral concessions valid and in effect.



CHILE



i.

Inca Property  The Company holds 100% interest in more than 5,000 hectares of mineral concessions acquired by staking, purchase at government auction, and by three separate agreements for options to purchase 100% interest in mineral concessions as follows: Minera Porvenir Option - Option to acquire 2,138 hectares of mineral interests for consideration of US$2,000,000 (US$608,677 paid).  Option payments are due: March 31, 2007 - US$191,323; March 31, 2008  US$200,000; and March 31, 2009  US$1,000,000.  A 1% net smelter royalty 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 1.2 million tonnes or ten years, which ever is reached first.  Araya Option - Option to acquire 45 hectares of mineral interests for consideration of US$300,000 (US$50,000 paid April 4, 2006).  Option payments are due: March 31, 2007 - US$50,000; March 31, 2008  US$100,000; and March 31, 2009  US$100,000.  A 1% net smelter royalty retained by the vendor for a period of 20 years.  The Company has the option to buyout the royalty at any time for US$500,000.    Rojas Option - Option to acquire 20 hectares of mineral interests for consideration of US$300,000 (US$25,000 paid May 25, 2006).  Option payments are due: US$50,000 on April 30, 2007; US$75,000 on April 30, 2008; and US$150,000 on April 30, 2009.  No royalty is payable on these concessions.



ii.

Los Zorros Property  The Company acquired 100% interest in approximately 7,895 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 a net smelter royalty of up to 2%.  The Company has the option to buyout the royalty at any time for US$1,800,000.  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 March 1st of 2008, 2009, 20010, 20011, and 2012) to a maximum of US$500,000.  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.  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% net smelter royalty 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% Net Smelter Return royalty.



iii.

Espejismo Prospects The Company acquired 100% interest in 463 hectares of mineral concessions by staking and purchasing concessions at government auction.



iv.

Tres Puntas/Chimbero Prospects The Company acquired 100% interest in 824 hectares of mineral concessions by staking and purchasing concessions at government auction.





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, who is a Director of SAMEX.  Emibol 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 S.A.   The property is subject to a net smelter royalty of 0.6 % and to a US$2,000,000 cash royalty, to be paid out of production on the



86





---





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 between approximately US$1.00 to $2.00 per hectare have been paid annually to maintain the mining concessions.



ii.

El Desierto Property - The Company has a 99% interest in 1,469 hectares of mineral concessions.  The concessions are owned by El Roble S.A.  Emibol 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 S.A.  The property is subject to a net smelter royalty of 0.6%.  The property is currently inactive and consequently the property has been written down to a nominal value of $1,000 until exploration activity is resumed on the property.  Patent fees ranging between approximately US$1.00 to $2.00 per hectare have been paid annually to maintain the mining concessions.



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 the owner of the concessions, Corporation Minera de Bolivia (Comibol) and the Companys Bolivian subsidiary, Samex S.A.  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 pending resolution of certain ongoing legal proceedings between Comibol and a third party.  Comibol confirmed that a portion of the property is 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 S.A. that it is taking legal proceedings to resolve the dispute and asked Samex S.A to wait for it to do so.  Due to the inactivity on the property, the property has been written down to a nominal value of $1,000 until the issue with Comibol is resolved and exploration activity is resumed on the property.



iv.

Walter Property - The Companys subsidiary, Bolivex S.A. acquired 100% interest in 910 hectares of mineral interests for a purchase price of US$500,000. The property is subject to a net sales royalty of up to 3% (gross sales less the cost of smelting and sale).  Patent fees of approximately US$1.00 per hectare have been paid annually to maintain the mining concessions.  The property is currently inactive and consequently the property has been written down to a nominal value of $1,000 until exploration activity is resumed on the property.



v.

Wara Wara Property - The Companys subsidiary, Emibol S.A. acquired 100% interest in 3,875 hectares of mineral concessions acquired by staking and by two purchase/sale agreements for an aggregate purchase price of US$9,500.  The property is subject to a net smelter royalty of 0.6 %.  Patent fees of between approximately US$1.00 and $2.00 per hectare have been paid annually to maintain the mining concessions. The property is currently inactive and consequently has been written down to a nominal value of $1,000 until exploration activity is resumed on the property.



vi.

Yaretani Property  The Companys subsidiary Emibol S.A. acquired 100% interest in 2,280 hectares of mineral interests pursuant to an option agreement and two purchase agreements for an aggregate purchase price of US$131,200.  The property is subject to a net smelter royalty of 0.6 %.  Patent fees ranging between approximately US$1.00 to $2.00 per hectare have been paid annually to maintain the mining concessions.  The property is currently inactive and consequently the property has been written down to a nominal value of $1,000 until exploration activity is resumed on the property.







87





---





4.

EQUIPMENT



|                      |                      |                          |                |           |                          |               
|--------------------- | -------------------- | ------------------------ | -------------- | --------- | ------------------------ | --------------
|                      | AT DECEMBER 31, 2006 | AT DECEMBER 31, 2005    
|                      |                      |                         
|                      | COST                 | ACCUMULATED
AMORTIZATION | NET BOOK
VALUE | COST      | ACCUMULATED
AMORTIZATION | NET BOOK
VALUE
|                      |                      |                          |                |           |                          |               
|Office equipment      | $
89,612             | $
64,155                 | $
25,457       | $
125,920 | $
90,206                 | $
35,714      
|Exploration equipment | 55,220               | 11,369                   | 43,851         | 131,835   | 123,499                  | 8,336         
|Vehicles              | 82,586               | 39,192                   | 43,394         | 125,499   | 84,099                   | 41,400        
|                      |                      |                          |                |           |                          |               
|                      | $
227,418            | $
114,716                | $
112,702      | $
383,254 | $
297,804                | $
85,450      



In 2006, the Company wrote-off $219,389 of fully depreciated assets in Bolivia.



5.

RELATED PARTY TRANSACTIONS



During the year ended December 31, 2006, a director charged the Company $25,965 for legal services (2005 - $31,918).  Employees who are also directors or officers of the Company were paid salaries totaling $418,884 in fiscal 2006, a $124,484 portion of which was capitalized as mineral interests (fiscal 2005  $432,494 of which $133,494 was capitalized).  Stock options were granted to director/officers for the purchase of 1,500,000 shares in aggregate at a price of $0.85 per share (Refer to Note 6. d).



6.

SHARE CAPITAL



a.

Authorized



Unlimited Common Shares without par value.

Unlimited Preferred Shares



b.

Issued



Common shares

|                                  |               |            |       |   |           
|--------------------------------- | ------------- | ---------- | ----- | - | ----------
|                                  | COMMON SHARES |            | VALUE
|                                  |               |            |       |   |           
|Balance November 30, 2004         |               | 65,272,415 |       | $ | 21,752,018
|                                  |               |            |       |   |           
|Incentive stock options exercised |               |            |       |   |           
|At $0.20 per share                |               | 50,000     |       |   | 10,000    
|Warrants exercised                |               |            |       |   |           
|At $0.30 per share                |               | 1,100,000  |       |   | 330,000   
|At $0.40 per share                |               | 750        |       |   | 300       
|                                  |               |            |       |   |           
|Balance December 31, 2005         |               | 66,423,165 |       |   | 22,092,318
|                                  |               |            |       |   |           
|Incentive stock options exercised |               |            |       |   |           
|At $0.20 per share                |               | 450,000    |       |   | 90,000    
|At $0.40 per share                |               | 300,000    |       |   | 120,000   
|Warrants exercised                |               |            |       |   |           
|At $0.40 per share                |               | 304,500    |       |   | 121,800   
|At $0.78 per share                |               | 50,000     |       |   | 39,000    
|At $0.80 per share                |               | 1,040,000  |       |   | 832,000   
|Private Placement                 |               |            |       |   |           
|At $0.70 per share                |               | 3,720,000  |       |   | 2,604,000 
|Financing Costs                   |               |            |       |   |           
|Cash                              |               | -          |       |   | (100,000) 
|                                  |               |            |       |   |           
|Balance at December 31, 2006      |               | 72,287,665 |       | $ | 25,799,118



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





88





---







c.

Stock Options and Warrants



(i)

Incentive 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 TSX Venture Exchange.



BALANCE
NOV 30, 2004GRANTED
(EXERCISED
OR EXPIRED)BALANCE
DEC 31, 2005GRANTED
(EXERCISED)BALANCE
DEC 31, 2006EXERCISE PRICETERM TO2,175,000(2,175,000)---$0.40Apr 19, 2005950,000(50,000)900,000(400,000)500,000$0.20Mar 19, 2007200,000(100,000)100,000(50,000)50,000$0.20Sep 12, 200750,000-50,000-50,000$0.20Nov 12, 200750,000-50,000-50,000$0.40Aug 13, 2008105,000(75,000)30,000-30,000$0.63Oct 15, 2008590,000-590,000-590,000$1.00Nov 17, 2008330,000(125,000)205,000-205,000$1.00Feb 3, 200975,000(75,000)---$1.00May 4, 20091,070,000(125,000)945,000-945,000$1.10Aug 6, 2009-2,255,0002,255,000(300,000)1,955,000$0.40Apr 20, 2015---1,850,0001,850,000$0.85May 2, 20165,595,000(470,000)5,125,0001,100,0006,225,000




As at December 31, 2006, the weighted average remaining contractual life of the options is 6 years and the weighted average exercise price is $ 0.70



(ii)

Share Purchase Warrants



BALANCE
NOV 30, 2004ISSUED
(EXERCISED)BALANCE
DEC 31, 2005ISSUED
(EXERCISED
OR EXPIRED)BALANCE
DEC 31, 2006EXERCISE PRICETERM TO1,100,000(1,100,000)---$0.30Jun 11, 2005305,250(750)304,500(304,500)-$0.40Sep 15, 2006753,200-753,200(753,200)-$0.80Nov 7, 2006431,150-431,150(431,150)-$0.80Nov 27, 2006500,000-500,000(500,000)-$1.05Nov 28, 2006400,000-400,000-400,000$1.10Aug 25, 2009---1,860,0001,860,000$0.78Feb 13, 2009---(50,000)(50,000)$0.78Feb 13, 20093,489,600(1,100,750)2,388,850(178,850)2,210,000






As at December 31, 2006, the weighted average remaining contractual life of the share purchase warrants is 2.25 years and the weighted average exercise price is $0.84



d.

Stock-Based Compensation



During 2006, the Company granted options on 1,850,000 shares at $0.85 per share resulting in a stock-based compensation expense totaling $1,094,575. Of that amount, $886,014 was included in the category Salaries, Benefits and Stock-based Compensation of the Statement of Operations, and $208,561 was capitalized to mineral expenses included in the categories Geology, Mapping and Surveys in the Statements of Mineral Interests.  The Company measures compensation costs using the fair value-based method for all stock options.  Compensation costs have been determined based on the fair value of the options at the grant date using the Black-Scholes option-pricing model.  Option pricing models require the input of assumptions including the expected life and price volatility.  Changes in these assumptions can materially affect the fair value estimate.  The following assumptions were used for the Black-Scholes valuation of these stock options granted during 2006:  Expected dividend yield  0; Expected stock price volatility  80%; Risk-free interest rate  4.0%; Expected life of options  5 years.  The following assumptions were used for the Black-Scholes valuation of stock options granted during 2005:  Expected dividend yield  0%; Expected stock price volatility  79%; Risk-free interest rate  4.1%; Expected life of options  10 years.



e.

Contributed Surplus



The Contributed Surplus arises solely from Stock Based Compensation (Refer Note 6.d).



89





---







7.

SEGMENTED INFORMATION



The Company is in the business of exploring and developing mineral resource properties located in South America. The Company derives income 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:



|                                                             |   |           |  |   |               |  |   |          
|------------------------------------------------------------ | - | --------- |  | - | ------------- |  | - | ---------
|For the year ended December 31, 2006                         |   | CANADA    |  |   | SOUTH AMERICA |  |   | TOTAL    
|                                                             |   |           |  |   |               |  |   |          
|Operating expenses                                           |   |           |  |   |               |  |   |          
|Amortization                                                 | $ | 8,357     |  | $ | 27,944        |  | $ | 36,301   
|Foreign exchange loss                                        |   | -         |  |   | 31,846        |  |   | 31,846   
|Mineral interests administration
and investigation costs     |   | -         |  |   | 233,043       |  |   | 233,043  
|Salaries, benefits & stock-based compensation                |   | 1,248,679 |  |   | -             |  |   | 1,248,679
|Administration and general                                   |   | 337,991   |  |   | 74,139        |  |   | 412,130  
|                                                             |   |           |  |   |               |  |   |          
|Net loss from operations                                     |   | 1,595,027 |  |   | 366,972       |  |   | 1,961,999
|                                                             |   |           |  |   |               |  |   |          
|Mineral interests and deferred exploration costs
written off |   | -         |  |   | 17,867        |  |   | 17,867   
|                                                             |   |           |  |   |               |  |   |          
|Net loss for the year                                        | $ | 1,595,027 |  | $ | 384,839       |  | $ | 1,979,866
|                                                             |   |           |  |   |               |  |   |          
|Expenditure for equipment and mineral interests              | $ | 4,107     |  | $ | 1,987,652     |  | $ | 1,991,759
|                                                             |   |           |  |   |               |  |   |          
|Equipment and mineral interests                              | $ | 17,534    |  | $ | 7,086,240     |  | $ | 7,103,774
|                                                             |   |           |  |   |               |  |   |          
|Total assets                                                 | $ | 1,350,526 |  | $ | 7,254,474     |  | $ | 8,605,000
|                                                             |   |           |  |   |               |  |   |          
|For the 13 months ended December 31, 2005                    |   |           |  |   |               |  |   |          
|                                                             |   |           |  |   |               |  |   |          
|Operating expenses                                           |   |           |  |   |               |  |   |          
|Amortization                                                 | $ | 13,360    |  | $ | 17,097        |  | $ | 30,457   
|Foreign exchange gain                                        |   | -         |  |   | (37,320)      |  |   | (37,320) 
|Mineral interests administration
and investigation costs     |   | -         |  |   | 102,656       |  |   | 102,656  
|Salaries, benefits & stock-based compensation                |   | 1,175,415 |  |   | -             |  |   | 1,175,415
|Administration and general                                   |   | 191,805   |  |   | 76,874        |  |   | 268,679  
|                                                             |   |           |  |   |               |  |   |          
|Net loss from operations                                     |   | 1,380,580 |  |   | 159,307       |  |   | 1,539,887
|                                                             |   |           |  |   |               |  |   |          
|Mineral interests and deferred exploration costs
written off |   | -         |  |   | 17,642        |  |   | 17,642   
|Gain on sale of equipment                                    |   | -         |  |   | (11,172)      |  |   | (11,172) 
|                                                             |   |           |  |   |               |  |   |          
|Net loss for the year                                        | $ | 1,380,580 |  | $ | 165,777       |  | $ | 1,546,357
|                                                             |   |           |  |   |               |  |   |          
|Expenditure for equipment and mineral interests              | $ | 7,616     |  | $ | 1,384,592     |  | $ | 1,392,208
|                                                             |   |           |  |   |               |  |   |          
|Equipment and mineral interests                              | $ | 21,814    |  | $ | 5,239,537     |  | $ | 5,261,357
|                                                             |   |           |  |   |               |  |   |          
|Total assets                                                 | $ | 480,938   |  | $ | 5,270,228     |  | $ | 5,751,166



8.

INCOME TAXES



The Company has incurred resource-related expenditures and operating losses which are available to reduce future years taxable income in Canada.  For the year ended December 31, 2006, the Company had Canadian operating losses of approximately $720,000.  These losses expires as follows: 2007 - $430,000; 2008 - $490,000; 2009 - $483,000; 2010 - $880,000; 2014 - $560,000; 2015 - $566,000; and 2016 - $720,000.  Resource-related expenditures available for carry-forward in Canada amount to approximately $5,598,000.  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 benefits have been recognized in the accounts for these foreign losses and resource-related expenditures.







90





---







9.

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 basis) 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 accounting principles generally accepted in the United States (US basis).  Had the Company followed the US basis, 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.  US GAAP requires that a statement of comprehensive income be displayed with the same prominence as other financial statements and that the aggregate amount of comprehensive income excluding the deficit be disclosed separately in shareholders equity.  Comprehensive income, which incorporates the net loss, includes all changes in shareholders equity during a period except those resulting from investments by and distributions to owners.  There is currently no requirement to disclose comprehensive income under Canadian GAAP.



Mineral interest costs are accounted for in accordance with Canadian GAAP as disclosed in Note 2.d.  For US GAAP, mineral property 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 expensed as incurred if the criteria for capitalization are not met.



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, whether in cash or shares, 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 properties under option agreements, all option payments have been expensed to date.



When it has been determined that a mineral property 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 which have been expensed.   To date the Company has not established any proven or probable reserves on its mineral properties.





CONSOLIDATED STATEMENTS OF OPERATIONS200620052004Net loss as shown on the financial
statements  CDN basis$(1,979,866)$(1,546,357)$(1,833,879)Deferral of translation gain (loss) on inter-company
transactions of a long-term investment nature(40,515)33,523(13,435)Mineral interests costs expensed(1,910,339)(1,371,250)(2,051,929)Net loss  US basis(3,930,720)(2,884,084)(3,899,243)Other Comprehensive income (loss)(40,515)(33,523)13,435Comprehensive loss$(3,971,235)$(2,917,607)$(3,885,808)Basic and diluted loss per share  US basis$(0.06)$(0.04)$(0.06)Weighted average number of
common shares outstanding70,264,20765,915,41564,153,516








91





---







9.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING

PRINCIPLES AND PRACTICES (CONTINUED)







CONSOLIDATED STATEMENTS OF CASH FLOW200620052004Net cash flows from operating activities under
Canadian GAAP$(1,008,128)$(699,113)$(734,611)Mineral Interest Costs(1,719,645)(1,388,892)(2,083,225)Net cash used in operating activities under US GAAP(2,727,773)(2,088,005)(2,817,836)Net cash flows from financing activities under
CDN GAAP and US GAAP3,706,800340,3001,484,954Net cash flows used in investing activities under
CDN GAAP(1,783,198)(1,392,208)(2,152,181)Mineral Interest Costs1,719,6451,388,8922,083,225Net cash used in investing activities under US GAAP(63,553)(3,316)(68,956)Net change in cash915,474(1,751,021)(1,401,838)Cash, beginning424,2872,175,3083,577,146Cash, ending$1,339,761$424,287$2,175,308






CONSOLIDATED BALANCE SHEETS20062005AssetsCDN BASISUS BASISCDN BASISUS BASISCurrent$1,406,058$1,406,058$489,815$489,815Mineral interests7,086,240-5,175,901-Equipment112,702112,70285,45085,450$8,605,000$1,518,760$5,751,166$575,265LiabilitiesCurrent$67,728$67,728$35,403$35,403Shareholders equity8,537,2721,451,0325,715,763539,862$8,605,000$1,518,760$5,751,166$575,265




US Recent Accounting Pronouncements



In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. This Statement permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. SFAS No. 159 does not have any impact on the Company.



In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans. This Statement requires an employer to recognize the over funded or under funded status of a defined benefit post retirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position, and to recognize changes in that funded status in the year in which the changes occur through comprehensive income.  SFAS No. 158 is effective for fiscal years ending after December 15, 2006.  The adoption of SFAS No. 158 had no impact on the financial position or results of operations of the Company.



In September 2006, the FASB issued SFAS No. 157, Fair Value Measures. This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, which for the Company would be the fiscal year beginning January 1, 2008. SFAS No. 157 does not have any impact on the Company.



In September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB No. 108 addresses how the effects of prior year uncorrected misstatements should be considered when quantifying misstatements in current year financial statements. SAB No. 108 requires companies to quantify misstatements using a balance sheet and income statement approach and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. SAB No. 108 is effective for periods ending after November 15, 2006.  The adoption of SAB No. 108 had no impact on the financial position or results of operations of the Company.





92





---







10.  SUBSEQUENT EVENTS



Private Placement March 2007  The Company completed a private placement of 5,742,500 units comprised of one common share and one-half of a share purchase warrant at a price of $0.80 per unit.  One full warrant entitles the holder to purchase an additional common share at a price of $1.00 per share if exercised at any time during the two year term of the warrant which expires March 16, 2009.  The units (5,742,500 shares and 2,871,250 warrants) were issued March 16, 2007 and are subject to a four-month hold period until July 17, 2007.  The proceeds of the private placement will be used for expenditures on the Companys mineral properties and for general working capital.  A director of the Company was a placee for 200,000 units.  The Company paid 7% finders fees ($253,400 in aggregate) to four separate parties for their assistance in placing portions ($3,620,000 in aggregate) of the private placement.



Options Granted - February 23, 2007- Pursuant to the Companys Stock Option Plan, the Company granted options to directors and officers of the Company on an aggregate of 1,295,000 shares at a price of $0.84 per share.   The options have a ten-year term which expires February 23, 2017.











93





---





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);

1.2.

*Change of Name Certificate for SAMEX (*previously filed with the 1995 Annual Report);

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);

1.4.

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

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);

1.6.

*New Articles of SAMEX effective June 13, 2005 (*previously filed with our 2005 Annual Report);

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);

4.1

*Stock Option Plan which received annual approval by our shareholders on May 20, 2004 and on May 5, 2005 and on June 1, 2006 and again on May 31, 2007 (*previously filed with our 2004 Annual Report);

4.2

*Letter of Intent re Option to Purchase mining concessions dated May 18, 2005 between our subsidiary, Minera Samex Chile S.A. and Minera San Estaban Primera S.A. concerning our option to purchase mining concessions in the Copiapo Area III Region, Chile (Los Zorros district) (*previously filed with our 2004 Annual Report);

4.3

*Unilateral Purchase Option Contract dated June 29, 2005 between our subsidiary, Minera Samex Chile S.A. and Compañia Minera San Estaban Primera S.A. concerning option to purchase concessions covering a 95-hectare-portion of the Los Zorros district (English translation of the Spanish contract) (*previously filed with our 2005 Annual Report);

4.4

*Area of Interest Agreement dated November 7, 2005 between SAMEX Mining Corp. and SilverCrest Mines Inc. (SilverCrest) to facilitate joint exploration for silver deposits in Region III of Chile (*previously filed with our 2005 Annual Report);

4.5

*Corporate Finance Consulting Agreement dated January 12, 2006 between SAMEX Mining Corp. and Spartacus Ltd. concerning assistance with respect to our corporate financing efforts in Europe and other jurisdictions (*previously filed with our 2005 Annual Report);

4.6

*Unilateral Option Purchase Contract dated March 31, 2006 between Sociedad Contractual Minera Porvenir and our subsidiary Minera Samex Chile S. A. concerning option to purchase concessions covering a 2,138-hectare-portion of the Inca project (English translation of the Spanish contract) (*previously filed with our 2005 Annual Report);



94





---





4.7

*Unilateral Option Purchase Contract dated April 4, 2006 between Malvina del Carmen Araya Santander and our subsidiary Minera Samex Chile S.A. concerning option to purchase concessions covering a 45-hectare-portion of the Inca project (English translation of the Spanish contract) (*previously filed with our 2005 Annual Report);

4.8

*Unilateral Option Purchase Contract dated May 25, 2006 between Oscar David Rojas Garin and our subsidiary Minera Samex Chile S. A. concerning option to purchase concessions covering a 20-hectare-portion of the Inca project (English translation of the Spanish contract) (*previously filed with our 2005 Annual Report);

4.9

Unilateral Option Purchase Contract dated April 9, 2007 between Jaime Ruben Parra Vasquez and our subsidiary Minera Samex Chile S. A. concerning option to purchase concessions covering a 21-hectare-portion of the Inca project (English translation of the Spanish contract);

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 25, 2007



SAMEX Mining Corp.



Jeffrey P. Dahl

Larry D. McLean

Jeffrey P. Dahl, Chief Executive Officer

Larry D. McLean, Chief Financial Officer





95





---





Exhibit 4.9

English translation of the Spanish contract

UNILATERAL OPTION CONTRACT

JAIME RUBEN PARRA VASQUEZ

and

MINERA SAMEX CHILE S.A.



In Santiago de Chile, on April 9 of the year two thousand and seven, before me, Eduardo Avello-Concha, Notary Public and Title Holder to the 27° Notarys Office of Santiago, with place of business at No 0153, Orrego Luco, District of Providencia, the following parties appear: Mr. Jaime Ruben Parra Vasquez, Chilean, married, mining entrepreneur, national identification card number 5.193.621-3, acting in his own name and on behalf of Mrs Olga Eliana Salas Ansaldi, Chilean, married with the appearing named party,  national identification  card number 5. 514.558-k,  with domicile in  Arica, Población Tucapel II, Avenida Tucapel number 0185, Arica commune, First Region and for this purpose both with domicile in this city, calle Calvo Mackenna number  76, de la  Florida commune, hereinafter also denominated the  Offerer and on the other part, Mr. Francisco Vergara Irarrázaval, Chilean, married, lawyer, identity card number 6.063.548-K, domiciled in Isidora Goyenechea N° 2939, suite 704, Las Condes commune, Santiago, in representation of MINERA SAMEX CHILE S.A.hereinafter also SAMEX or indistinctly the Beneficiary, a contractual mining society engaged in the line of business of its denomination  that was constituted by means of a public deed date July 5, 2002, executed before the Notary of Santiago Mr. Eduardo Avello  Concha, which abstract was recorded in folio 29.424 number 23.874 of the Commerce Registry of the Registrar of Real State and Commerce of Santiago of year 2002 of the same domicile as it representative. The appearing parties are of age and have accredited their identity with the above referred cards and Witnesses: That the parties hereby enter into the following Unilateral Sale Option Contract of Mining Concessions, hereinafter and indistinctly the Contract, pursuant to the provisions of articles one hundred and sixty nine and other applicable articles of the Mining Code.



CLAUSE ONE: Mining Properties  of Mr Jaime Ruben Parra Vasquez which are  Part of this Option Agreement Sociedad Contractual Minera Porvenir :  California 26, 27, 36 and 37, located in  Sierra San Pedro de Cachiyuyo Diego de Almagro commune, Chañaral province, III Region of Atacama  which Survey Document is registered in folio 162 overleaf, number 43 in the Registry of Property of the Registrar of Mines of Chañaral for year 1989, Rol Nacional Number 031021309-8, all the said mining concessions are legally constituted, filed and in effect and the mining patents covering same have been fully and paid; hereinafter all this mining properties jointly, shall be referred to as the Concessions.



CLAUSE TWO: Purchase Option. By virtue of the present Contract, Mr Jaime Ruben Parra Vasquez   duly individualize  and duly authorized by his wife Mrs Olga Eliana Salas Ansaldi, as is evidenced by the special power of attorney granted in Arica by public document dated March 27, 2007, before the Notary Public  of Arica, Mr Juan Antonio Retamal Concha, power which is not inserted in this document because it is known by the parties and by the Notary Public who  authorize this document,  hereby  grant to SAMEX a purchase option according to the terms of article  one hundred and sixty nine of the Mining Code, and irrevocably offer to sell, assign and transfer the Mining Concessions specified in clause One of the present deed in the term, price, form of payment, modus operandi, conditions, formalities and other clauses stated below, which Mr. Francisco Vergara-Irarrázaval, acting in the representation conferred to him by SAMEX hereby accepts. The purchase option and sale offer of the Mining Concessions contained in this instrument are granted with an irrevocable nature, such that Offerer cannot repent or retract its offer.  In turn, the eventual exercise of this option shall be for all Concessions, not being admissible the partial exercise of the option by SAMEX.  By the indicated terms, the Offerer by the present instrument expresses its consent for the eventual sale of the said concessions.  SAMEX hereby declares to receive the offer and purchase option and reserves itself the faculty to freely exercise it within the term and according to the conditions stipulated in the present Contract. While the option right contemplated in this agreement is pending, SAMEX shall be entitled to conduct trial mining to obtain bulk samples for testing and for pilot plant trials to confirm processes to be applied to the eventual exploitation of the ores that come from the said Mining Concessions.



96





---







CLAUSE THREE: Term for Exercising the Option. The purchase option offered in the present Contract is granted for the term of 24 months counted from  April 9, 2007,which expires on  April 9, 2009 .At any time within said term, SAMEX can express its decision to accept or reject the offer for sale of the above mentioned Mining Concessions, being entitled to give or not said acceptance, although it should then abide by the terms and conditions stipulated in the present Contract. In case SAMEX elects to exercise within the indicated term the purchase option of the Mining Concessions offered, it should so express it by means of a public deed on acceptance thereof executed before the same Notary who authorizes this Contract, or before the person who replaces or acts for him at any title within the term stipulated in the present Clause.  In case that SAMEX expresses its decision to exercise the proposed purchase option and in the event that one or more installments are pending of payment, established in Clause Four. Two, simultaneously with the subscription of the acceptance deed, SAMEX should deliver to the Notary the respective endorsable bank checks payable at sight in favor of the Offerer, for the amount of money representing the price of the purchase option then pending of payment, as stipulated in Clause Four. Two, together with the instruction of delivering same to the Offerer against signature of the corresponding receipt public deed and the exhibition of a certificate issued by the Mining Registrar of Chañaral, both documents are to SAMEX account, and accrediting that the Mining Concessions specified in Clause One of the present Contract are recorded in favor of SAMEX or its assignees, free from any mortgage and encumbrances, prohibitions, interdictions and litigations. SAMEX should likewise inform the Offerer by means of a registered letter, at the latest within the seven days following the execution of the acceptance deed, their decision of having exercised the offer. To the effects of the validity of the acceptance, the Notary who authorizes the acceptance deed should leave on record therein that he has received the above mentioned bank checks, for delivery to the Offerer. The mere fact that SAMEX or its assignee subscribes said public deed on acceptance shall mean that the purchase and sale operation is formalized, being understood that it is made up by this Purchase Option Contract and said acceptance deed.



CLAUSE FOUR: Offered Purchase and Sale Price. Four.One. The total price of the offered purchase and sale covering the Mining Concessions singularized in Clause One shall be the amount of US$ 180.000 dollars of the United States of America, which shall be paid to the Offerer as follows:



a) The sum of US$ 50.000 dollars of the United States of America which is paid in its equivalent in Chilean currency and which amounts to CH$ 26.840.500, pesos which is received in this act by the Offerer to its entire satisfaction;



b)   With the sum of US$ 50.000 dollars of the United States of America payable in their equivalent in local currency on April 9, 2008 ;



c) With the sum of US$ 80.000 dollars of the United States of America; payable in their equivalent in local currency on April 9, 2009;



As of the moment that the full payment of the price stipulated in this Clause Four. One  is effected, together with the respective recording of the acceptance public deed, it shall be understood that SAMEX has acquired the ownership title of the Mining Concessions covered by the present Contract, all as specified in clause One.  The payment of each of the price installments shall be effected in the domicile of the Notary who authorizes this deed, against the signature of a public deed on receipt to be signed by the Offerer. In any case, the  obligation to pay each installment shall be understood to be fully and timely complied with through the delivery to the authorizing Notary, or to  its  successor, alternate or replacement, of the bank checks at sight in favor of the Offerer, expressed in pesos, local tender for the total of each installment, or of the outstanding balance of the price, stipulated in this Clause Four. One, on the date the Beneficiary pays the installment or exercises the option as foreseen in Clause Three, jointly with the instruction to deliver same to the Offerer upon signature of the corresponding receipt deed.



CLAUSE FIVE:  Waiver to Exercise the Option. If the Beneficiary does not express its decision to accept the proposed offer within the term expiring on April 9, 2009 , as stipulated in Clause Four.One, or if it expressly states in a public deed its decision not to persevere in the Option Contract, or if it does effect a full and timely payment of any of the price installments provided for in Clause Four.One  and the Offerer advise in writing to



97





---





SAMEX  the situation of non-payment of said installment  and the latter does not pay it  within a term of thirty days counted from the date of  dispatch of said communication, both the purchase option and the irrevocable  offer submitted in this instrument shall ipso facto become without effect, and SAMEX hereby waives the request of return of any sum of money paid to the Offerer as part of the price, and said amounts shall remain to the benefit of the latter by way of indemnity of all and any damage. In this case, SAMEX shall consequently not be bound to pay to the Offerer the amounts or non-paid installments of the price of the offered purchase option stipulated in Clause Four.One  which have not become due for payment.  In the same case, the immediate release of all prohibitions and encumbrances established by reason of this Contract shall proceed, without any further arrangement except of the exhibition to the respective Mining Registrar of the corresponding statement made in a public deed, or of a certificate issued by the Notary in lieu thereof, whereby it is accredited that the stipulated terms have lapsed and the Beneficiary has not accepted the offer nor exercised the option, or else it has not paid any one of the option installments agreed upon in above Clause Four.One.  In the event the present Contract is terminated, SAMEX hereby expressly authorizes the above Notary to execute the deeds on release of prohibitions established hereunder.  At the same time, within the term of thirty days, SAMEX should transfer at no cost whatsoever the permits and authorizations it has obtained in relation to the Mining Concessions which are the subject matter of this Contract and shall provided to the Offerer within the same term all the technical, geological, drilling, samples and in general all technical information and documentation that SAMEX has obtained in relation to the Mining Concessions while this Contract has been in effect.  CLAUSE SIX: Exchange Rate. To all the payment effects of the sums stipulated in this instrument, the equivalence of the dollar to the peso shall be that indicated by the Central Bank of Chile for the observed dollar prevailing on the working day of any day of payment referred to in this Contract. If said exchange rate does not exist, the dollar equivalence shall be determined according to the exchange rate that replaces same that best reflects the par of exchange between the US dollar and the Chilean pesos.



CLAUSE SEVEN: Exclusive Exploration Right (ONE).As of this date and while the Beneficiary maintains its optional right in force, SAMEX shall have in possession of the property and the exclusive right to undertake in it all kind of reconnaissance and geological prospection works, such as trenches, pits, drifts, geophysical, geochemical, magnetometric works,  all types of drilling and in general,  all the necessary exploratory works conducive to complete a qualitative evaluation of the mineral resources that could exist in the Mining Concessions; the Offerer shall be bound from then on to grant all kind of facilities in order that SAMEX performs the above mentioned works and research.(TWO) For purposes of carrying out the reconnaissance, prospection and other geological exploratory works referred to in the preceding paragraph (One), SAMEX shall be authorized by the Offerer to introduce in the mining concessions under its exclusive responsibility and risk, all kind of vehicles, equipment and machinery, either its own or belonging to third parties, and to install all the types of camps that are necessary for the welfare of the personnel collaborating in said duties. To these effects, Offerer leave on record that at present no installations or camps belonging to it or to third parties exist in the mining concessions. (THREE) As of this date and during the life of this contract, Offerer commits itself not to undertake, either by itself or through third parties any mining activity whatsoever in the area of the Mining Concessions. (FOUR) Offerer will remove from the areas of the Mining Concessions all elements that belong to third parties and will cancel any arrangement, agreement or authorization granted or enter into with third parties or individuals currently mining or undertaking mining work in the areas cover by the Mining Concessions. In case that SAMEX has to remove from the area the individuals or equipments of third parties the cost involved for this effect will be paid and charged to Offerer. SAMEX will be authorized to deduct from any Option Payment due in accordance to Clause 4.1 the cost incurred to comply with these obligations.



CLAUSE EIGHT: Defense, Payment of Patents and Processing. During the life of the present Contract, the Offerer should adopt all judicial and extrajudicial necessary measures to maintain duly constituted and effective the Mining Concessions specified in this deed and to defend said Mining Concessions and the ores contained therein against any third parties pretension; they should inform in writing to SAMEX of any action or legal appeal filed to safeguard said concessions and /or the ores they contain and from any action or legal appeal filed by third parties to claim or pretend any rights over said mining properties and/or the ores they contain, within the seven days subsequent to the filing of the former or the receipt of the notice, in case of the second. While the present Contract is in effect, SAMEX or the party designated by it can intervene as a third party supporting of one party, in the defense of litigations or law suits relating to the mining properties referred to hereunder. During the life of the present Contract, all expenses covering payment of mining patents shall be borne by SAMEX and



98





---





should be paid in March of each year; the Offerer should be delivered in the month of April of each year the vouchers accrediting said payment.  If necessary, SAMEX shall request the Offerer the original payment vouchers covering patents for any required legal arrangement. If during the period when this Contract is in effect, SAMEX does not pay the mining patents of the Mining Concessions, these may be paid directly by the Offerer, who will have the right to request and charge SAMEX through a request made by certified mail, the reimbursement of the said payments made, being SAMEX obligated to reimburse the amount paid within a period of 30 days.



CLAUSE NINE.  Assignment of the Contract. The Beneficiary shall be empowered to assign its rights in the present Contract or to transfer, be associated or dispose in any form of all or part of its rights in this Contract to a third party, provided the involved assignee declares in the contract serving as a title of its acquisition, that assignee shall agree to comply with the same and all obligations assumed by the assignor by virtue of the present Contract, in the same terms and as if the Contract had been entered into by the assignee and it shall commit itself to impose the same obligations to any subsequent assignee. In the event that the rights and warranties stipulated in this Contract in favor of the Offerer are maintained in full force and effect, the Offerer cannot reject to concur to the execution of the public deed of assignment.



CLAUSE TEN:  Form of the Sale and Title Clearance. The Mining Concessions are sold as a specified item, in the condition they currently are found, with all their uses, usages, rights and active and passive easements, free from mortgages, encumbrances, prohibitions, litigations, attachments, purchase contracts of ores found in situ, leases or any other kind of acts or contracts, encumbrances, real and personal rights that prevent the free use, enjoyment, disposition and delivery of the Mining Concessions specified in Clause One, with exception of the encumbrances and prohibitions duly indicated in Clause 18 of this public document in favor of Empresa Nacional de Minería. The Offerer shall be accountable for the title clearance pursuant to the law.



CLAUSE ELEVEN: Prohibitions. The Offerer, being duly represented, hereby establish in favor of SAMEX voluntary prohibition not to encumber or dispose of or to enter into acts or contracts in respect of the  Mining Concessions specified in Clause One hereunder of this document, without the prior, express and written consent of SAMEX, whose recordings in the Registry of Prohibitions kept by the respective Mining Registrar can be required by the bearer of an authorized copy of this deed. The preceding is without prejudice to the recording of the present Contract in the Registry of Mortgages and Encumbrances, by virtue of the provisions of article one hundred and sixty nine of the Mining Code.



CLAUSE TWELVE. Permits. The Offerer hereby confer sufficient power of attorney to SAMEX and its representative, Mr. Francisco Vergara-Irarrázaval, in order that in the name of the Offerer they are empowered to process and obtain to its exclusive cost and charge the permits that in compliance with the legal provisions or because they are necessary to undertake explorations they should apply for, whether according to the mining, environmental or any other legislation. The Offerer specially confer power to request the change of use of the soil and to process mining easements.  SAMEX shall give notice to the Offerer of each and all permits that it obtains during the term of the present Contract, within a period of 15 days as of the date the permit is granted. In the event the purchase option is rendered effective, all the rights and obligations required by law and which corresponds to the Offerer shall be acquired free of cost by SAMEX from the moment the acceptance deed is executed.



CLAUSE THIRTEEN : Domicile of the Parties. To all the effects of the present Contract, especially to the effects of any communication that should be done to execute same, the parties hereby establish their special domicile in the city and district of Santiago de Chile and specifically (a) SAMEX designates its domicile at Isidora Goyenechea N° 2939, suite 704, district of Las Condes, Santiago of Chile,  to the attention of Mr. Francisco Vergara-Irarrázaval, facsimile number 56-2-333 8633; (b) the Offerer designate their domicile at  Calvo Mackenna number 76, La Florida commune, Santiago, to the attention of Mr. Jaime Ruben Parra Vasquez. Any requirement, communication or notice that either party should or could make, shall be sent by means of a registered letter addressed through a Notary Public to the above indicated domiciles; it is understood that the requirement, communication or notice is timely by the mere fact that the registered letter is send within the term or opportunity stipulated in this Contract.





99





---





CLAUSE FOURTEEN. Arbitration. Any doubts or controversies arising between the parties by reason of the present Contract or pertaining to the execution, validity, interpretation, implementation thereof and especially the acceptance of the option exercised by the Beneficiary or any other reason relating to this instrument shall be submitted to the decision and award of an arbitrator ex aequeo et bono, whose resolution shall not be the object of any further appeal, either in respect of the procedure or the essence. Said arbitrator shall be designated by common agreement of the parties, and in case of disagreement, the arbitrator shall be designated pursuant to the pertinent regulations of the Center of Arbitrations of the Chamber of Commerce of Santiago A.G. The parties hereby confer an irrevocable special power of attorney to the Chamber of Commerce of Santiago A.G. in order that at the request of any of them the Chamber designates the arbitrator, who shall act as arbitrator ex aequeo et bono, among the members of the Arbitration Center of said Chamber.  The sole fact of requesting the appointment of the arbitrator to the above Center shall imply the disagreement of the parties to appoint the arbitrator.



CLAUSE FIFTEEN : Expenses. All expenses, rights and taxes caused by the subscription of this Unilateral Sale Option Contract and its execution shall be borne by SAMEX.



CLAUSE SIXTEEN: Authorization of the Spouse.By public document dated on March 27, 2007 granted before the Notary Public of Arica, Mr Juan Antonio Retamal Concha, Mrs Olga Eliana Salas Ansaldi, duly individualized in the appearing paragraph of this public document has expressly authorized her spouse Mr Jaime Ruben Parra Vasquez to executed the present Unilateral Option to Purchase Agreement and also the Purchase Agreement of the Mining Concessions duly singularized in Clause One of this public deed, power of attorney which is not inserted because it is known to the parties and to the Notary Public who authorized this public deed.



CLAUSE SEVENTEEN: Recording Faculty. The bearer of an authorized copy of this deed is empowered to request and sign all pertinent recordings, sub-recordings and annotations with the Mining Registrar of Chañaral, as well as with any other public pertinent registry, and especially to request and sign the pertinent ones in the Registry of Mortgages and Encumbrances kept by the Mining Registrar of Chañaralin aspects pertaining to this contract and the deed on acceptance of mining rights, and in the Registry of Prohibitions and Interdictions kept by same Registrar concerning the prohibition established in this instrument. Likewise, the parties grant special power of attorney to  Mr. Francisco Vergara- Irarrázaval, who acting  on behalf of the parties can rectify, complement and/or clarify the present Contract in relation to any mistake or omission that could exist regarding the individualization of the concessions object of this Contract, being the said person allowed to sign and grant any kind of solicitude, declarations, minutes and/or public or private documents necessary for the compliance of the present task.



The legal capacity of Mr. Francisco Vergara-Irarrazaval to act in representation of MINERA SAMEX CHILE S.A., board of directors minute number one, celebrated on October 25 of the year 2002, reduced in the same year to public deed before the notary Mr. Eduardo Avello-Concha. The present public deed has been drafted by the lawyer Mr Francisco Vergara-Irarrazaval.IN WITNESS WHEREOF, the appearing parties stamp their signature.- A copy was given and  the deed was registered.-  I hereby certify.-



JAIME RUBEN PARRA- VASQUEZ



FRANCISCO VERGARA-IRARRAZAVAL







100





---





Exhibit 8.1





LIST OF SUBSIDIARIES





The following companies are subsidiaries of SAMEX Mining Corp. as of May 31, 2007:





|                                          |                               |          
|----------------------------------------- | ----------------------------- | ---------
|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





101





---





Exhibit 12.1

CERTIFICATION



I, Jeffrey Peter Dahl, President and Chief Executive Officer, certify that:



1.

I have reviewed this annual report on Form 20-F of Samex Mining Corp. (the Company);



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)) 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)

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

(c)

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 25, 2007 |  | Jeffrey P. Dahl                                     
|                    |  | Jeffrey P. Dahl, President and Chief Executive Officer







102





---







Exhibit 12.2

CERTIFICATION



I, Larry Dennis McLean, Chief Financial Officer, certify that:



1.

I have reviewed this annual report on Form 20-F of Samex Mining Corp. (the Company);



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)) 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)

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

(c)

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 25, 2007 |  | Larry D. McLean                       
|                    |  | Larry D. McLean, Chief Financial Officer







103





---





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, 2006 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 25, 2007











104





---









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, 2006 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 25, 2007









105