UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 MAY 31, 2007
                                       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 event requiring this shell company report _________

                         Commission file number: 0-30920

                             CENTRASIA MINING CORP.
             (Exact name of Registrant as Specified in its Charter)

                             CENTRASIA MINING CORP.
                 (Translation of Registrant's Name into English)

                            BRITISH COLUMBIA, CANADA
                 (Jurisdiction of Incorporation or Organization)

 #1305              - 1090 WEST GEORGIA  STREET,  VANCOUVER,  BRITISH  COLUMBIA,
                    CANADA, V6E 3V7 (Address of Principal Executive Offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.
                                      NONE

Securities registered or to be registered pursuant to Section 12(g) of the Act.
                           COMMON STOCK, NO 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)

Indicate the number of  outstanding  shares of each of the  issuer's  classes of
capital  or common  stock as of the close of the  period  covered  by the annual
report.

                   26,087,631 COMMON SHARES AS OF MAY 31, 2007



<PAGE>



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

If this report is an annual 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 [   ]  No [ X ]

Note - Checking the box above will not relieve any  registrant  required to file
reports  pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934
from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [ X ] 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.  (Check
one):
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

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

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 [ ] No [ X ]


                                      - 2 -
<PAGE>


GENERAL INFORMATION:

Unless otherwise indicated, all references herein are to Canadian dollars.

The Company is required under Canadian law (National Instrument 43-101 Standards
Of Disclosure  For Mineral  Projects)  ("NI 43-101") to calculate and categorize
"mineral  reserve",  "proven  mineral  reserve",   "probable  mineral  reserve",
"mineral  resource",  "measured mineral resource",  "indicated mineral resource"
and  "inferred  mineral  resource"  under  the  Canadian   Institute  of  Mining
Metallurgy and Petroleum  ("CIM")  Standards on Mineral Resources and Reserves -
Definitions  and Guidelines  adopted by the CIM in August 2000.  These standards
establish   definitions   and   guidelines  for  the  reporting  of  exploration
information, mineral resources and mineral reserves in Canada. These definitions
have not been adopted for use in the United States of America by the  Securities
and Exchange Commission (the "SEC"). Under these guidelines, the CIM definitions
of proven and probable reserves equate to the definitions of proven and probable
reserves as set out in Guide 7 of the Securities Act Industry  Guides adopted by
the SEC ("Guide 7"). In addition,  Canadian law requires  disclosure  of mineral
resources that equate to measured, indicated and inferred resources.

                                    GLOSSARY

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

AG                            silver

ANDESITE a dark colored, fine grained volcanic rock.

AU                            gold

BRECCIA                       rock   comprised   of  large   angular   fragments
                              suspended in a fine grained mineral.

CARBONACEOUS                  GREYWACKE a dark poorly sorted  sandstone that has
                              a significant carbon content.

CARBONACEOUS                  SHALE a fine grained,  sedimentary rock that has a
                              significant carbon content.

CHLORITIZATION                an alteration process where pre-existing  minerals
                              are replaced by chlorite.

CONTAINED                     SILVER OR GOLD total measurable  silver or gold in
                              grams or ounces estimated to be contained within a
                              mineral  deposit.  Makes no allowance for economic
                              criteria, mining dilution or recovery losses.

CU                            copper

CUT-OFF GRADE                 the lowest grade of mineralization  that qualifies
                              as ore in a resource calculation

DEVONIAN                      a period of time in the  Paleozoic  era covering a
                              time period between 400 and 345 million years ago.

DIORITE                       an intrusive  igneous  rock  largely  comprised of
                              feldspar, hornblende, pyroxene and quartz.

FEASIBILITY                   STUDY a detailed report assessing the feasibility,
                              economics  and  engineering  of  placing a mineral
                              deposit into commercial production.

FUCHSITE a bright green chromium rich mica mineral.

G                             grams

GPT                           grams per tonne.



                                      - 3 -
<PAGE>


GRANODIORITE                  an  intrusive  igneous rock  comprised  largely of
                              quartz, feldspar, biotite and hornblende.

GREENSCHIST                   FACIES a term  used to  describe  rocks  that have
                              undergone low grade metamorphism associated with a
                              temperature  range  between  300 and  500  degrees
                              Celsius.

GREENSTONE                    a general  term used to  describe  any dark  green
                              color metamorphosed igneous rock.

HISTORICAL                    RESERVES/RESOURCES  a phrase  used to  describe  a
                              mineral  reserve or resource that was  established
                              prior to the implementation of NI 43-101.

IGNEOUS                       a rock that has  solidified  from molten or partly
                              molten rock material.

INDICATED RESOURCE            (NI  43-101  definition)  means  that  part  of  a
                              mineral  resource  for  which  quantity,  grade or
                              quality,    densities,    shape    and    physical
                              characteristics  can be estimated  with a level of
                              confidence  sufficient  to allow  the  appropriate
                              application of technical and economic  parameters,
                              to support  mine  planning and  evaluation  of the
                              economic viability of the deposit. The estimate is
                              based on detailed  and  reliable  exploration  and
                              testing  information  gathered through appropriate
                              techniques   from   locations  such  as  outcrops,
                              trenches,  pits, workings and drill holes that are
                              spaced  closely  enough for  geological  and grade
                              continuity to be reasonably assumed.

INFERRED RESOURCE             (NI  43-101  definition)  means  that  part  of  a
                              mineral  resource for which  quantity and grade or
                              quality   can  be   estimated   on  the  basis  of
                              geological   evidence  and  limited  sampling  and
                              reasonably assumed,  but not verified,  geological
                              and grade  continuity.  The  estimate  is based on
                              limited  information and sampling gathered through
                              appropriate  techniques  from  locations  such  as
                              outcrops,   trenches,  pits,  workings  and  drill
                              holes.

INFILL                        DRILLING PROGRAM a series of drill holes that have
                              been  laid out to  intersect  the  untested  areas
                              between two previously drilled holes.

INTRUSIVE                     ROCK a general  term used to  describe  an igneous
                              rock body that has intruded  pre-existing rock and
                              solidified without breaching the earth's surface.

KM                            kilometer

M                             meter

MAFIC                         a term used to describe igneous rocks comprised of
                              dark colored iron and magnesium rich minerals.

MAGMA                         mobile, molten rock material.

MANTLE                        PLUME an  isolated  upwelling  of the magma in the
                              mantle  created  by  convection  flow  within  the
                              mantle.



                                      - 4 -
<PAGE>



MEASURED RESOURCE             (NI  43-101  definition)  means  that  part  of  a
                              mineral  resource  for  which  quantity,  grade or
                              quality,      densities,      shape,      physical
                              characteristics  are so well established that they
                              can be estimated  with  confidence  sufficient  to
                              allow the appropriate application of technical and
                              economic   parameters,   to   support   production
                              planning and evaluation of the economic  viability
                              of the deposit.  The estimate is based on detailed
                              and  reliable  exploration,  sampling  and testing
                              information     gathered    through    appropriate
                              techniques   from   locations  such  as  outcrops,
                              trenches,  pits, workings and drill holes that are
                              spaced closely  enough to confirm both  geological
                              and grade continuity.

METAMORPHISM                  the   mineralogical,   chemical,   and  structural
                              adjustment of solid rocks to physical and chemical
                              conditions   which  have  been   imposed   due  to
                              prolonged exposure to heat and pressure.

MINERAL RESERVE               (NI  43-101  definition)  means  the  economically
                              mineable part of a measured or indicated  resource
                              demonstrated by at least a preliminary feasibility
                              study.    This   study   must   include   adequate
                              information on mining, processing,  metallurgical,
                              economic   and   other   relevant   factors   that
                              demonstrate,   at  the  time  of  reporting,  that
                              economic  extraction  can be justified.  A mineral
                              reserve includes diluting materials and allowances
                              for  losses  that may occur when the  material  is
                              mined.

MINERAL RESOURCE              (NI  43-101  definition)  a  body  of  mineralized
                              material  which has not yet been  determined to be
                              ore, and the potential for mining of which has not
                              yet  been  determined;  categorized  as  possible,
                              probable  and proven,  according  to the degree of
                              certainty  with which  their grade and tonnage are
                              known;  sometimes  referred  to  as a  "geological
                              resource" or "mineral inventory".

MONZODIORITE                  an igneous  intrusive  rock  largely  comprised of
                              quartz and feldspar and minor pyroxene.

ORDOVICIAN                    a period of time in the  Paleozoic  era covering a
                              time period between 500 and 440 million years ago.

ORE                           a naturally  occurring rock or material from which
                              economic minerals can be extracted at a profit.

OROGENIC                      a  term   used   to   describe   the   large-scale
                              deformation   process   often   resulting  in  the
                              formation of mountains.

OUNCE OR OZ.                  a troy ounce or 20  pennyweights  or 480 grains or
                              31.103 grams.

PALEOZOIC                     a  period  or era of  time  between  570  and  225
                                million years ago

PORPHYRY                      an  igneous  rock   comprised  of  larger  mineral
                              crystals  suspended  in a matrix of finer  grained
                              crystals.

PROBABLE RESERVE              (NI 43-101  definition) the economically  mineable
                              part of an indicated,  and in some circumstances a
                              measured  resource  demonstrated  by  at  least  a
                              preliminary  feasibility  study.  This  study must
                              include    adequate    information    on   mining,
                              processing,  metallurgical,  economic,  and  other
                              relevant factors that demonstrate,  at the time of
                              reporting,   that  economic   extraction   can  be
                              justified.



                                      - 5 -
<PAGE>


PROBABLE                      (INDICATED)  RESERVES  (SEC  Guide  7  definition)
                              reserves  for  which  quantity  and  grade  and/or
                              quality are computed form  information  similar to
                              that used for proven (measure)  reserves,  but the
                              sites for  inspection,  sampling,  and measurement
                              are farther apart or are otherwise less adequately
                              spaced.  The degree of assurance,  although  lower
                              than that for proven (measured) reserves,  is high
                              enough  to  assume  continuity  between  points of
                              observation.

PROFESSIONAL ASSOCIATION      for the purposes of the  definition of a Qualified
                              Person below, means a self-regulatory organization
                              of engineers,  geoscientists or both engineers and
                              geoscientists that (a) has been given authority or
                              recognition   by  statute;   (b)  admits   members
                              primarily   on  the   basis  of   their   academic
                              qualifications   and   experience;   (c)  requires
                              compliance  with  the  professional  standards  of
                              competence   and   ethics   established   by   the
                              organization;  and  (d) has  disciplinary  powers,
                              including the power to suspend or expel a member.

PROVEN RESERVE                (NI  43-101  definition)  means  the  economically
                              mineable part of a measured resource  demonstrated
                              by at least a preliminary  feasibility study. This
                              study must include adequate information on mining,
                              processing,  metallurgical,  economic,  and  other
                              relevant factors that demonstrate,  at the time of
                              reporting, that economic extraction is justified.

PROVEN (MEASURED) RESERVES    (SEC Guide 7  definition)  reserves  for which (a)
                              quantity is computed from  dimensions  revealed in
                              outcrops, trenches, workings or drill holes; grade
                              and/or  quality are  computed  from the results of
                              detailed   sampling   and   (b)  the   sites   for
                              inspection, sampling and measurement are spaced so
                              closely  and  the  geologic  character  is so well
                              defined  that  size,  shape,   depth  and  mineral
                              content of reserves are well-established.

PYRITE                        an ore mineral of iron and sulphur.

QUALIFIED PERSON              means  an  individual  who (a) is an  engineer  or
                              geoscientist   with  at   least   five   years  of
                              experience    in   mineral    exploration,    mine
                              development   or  operation  or  mineral   project
                              assessment,  or any combination of these;  (b) has
                              experience  relevant to the subject  matter of the
                              mineral project and the technical report;  and (c)
                              is a member  in good  standing  of a  professional
                              association.

QUARTZ                        a rock-forming mineral of silica and oxygen, often
                              found in veins also.

RESERVE                       (SEC  Guide 7  definition)  that part of a mineral
                              deposit  which could be  economically  and legally
                              extracted  or  produced at the time of the reserve
                              determination.

SILICIFICATION                an   alteration   process  of  pre  existing  rock
                              involving the  introduction  of or  replacement by
                              fine grained silica.

SILURIAN                      a period of time in the  Paleozoic  era covering a
                              time period between 440 and 400 million years ago.

SULPHIDIZATION                an  ore  forming  process  where  sulfur  from  an
                              external  source is  introduced  into pre existing
                              rock or magma and  bonds  with  metallic  elements
                              forming metallic sulphide minerals.

TECTONISM                     a general  term for all  movements  of the earth's
                              crust.

TON                           short ton (2,000 pounds).



                                      - 6 -
<PAGE>



TONNE                         metric tonne (2,204.6 pounds).

UNCONFORMITY                  a substantial  break or gap in the geologic record
                              where a rock is  overlain  by another  that is not
                              the  next  unit  in  a  continuous   stratigraphic
                              succession.

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


Forward Looking Statements

The Company cautions readers regarding  forward looking  statements found in the
following  discussion  and  elsewhere  in this  annual  report  and in any other
statement  made by, or on the  behalf of the  Company,  whether or not in future
filings with the SEC.  Forward  looking  statements  are statements not based on
historical  information  and  which  relate to  future  operations,  strategies,
financial  results  or  other  developments.   Forward  looking  statements  are
necessarily based upon estimates and assumptions that are inherently  subject to
significant business,  economic and competitive uncertainties and contingencies,
many of which are beyond the Company's  control and many of which,  with respect
to  future  business  decisions,  are  subject  to  change.  See  "Item  3.  Key
Information - Risk Factors".  These  uncertainties  and contingencies can affect
actual  results and could cause actual results to differ  materially  from those
expressed in any forward looking statements made by or on behalf of the Company.
The Company disclaims any obligation to update forward looking statements.



                                      - 7 -
<PAGE>


                                     PART I


ITEM 1.  DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.
--------------------------------------------------------------------------------

Not applicable.


ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE.
--------------------------------------------------------------------------------

Not applicable.


ITEM 3.  KEY INFORMATION.
--------------------------------------------------------------------------------

Selected Financial Data

The  selected  financial  data of the Company for the years ended May 31,  2007,
2006, and 2005,  was derived from the financial  statements of the Company which
have been audited by Davidson & Company LLP, independent Chartered  Accountants,
as indicated in their report which is included elsewhere in this annual report.

The  information  in the following  table was  extracted  from the more detailed
consolidated  financial  statements and related notes included herein and should
be read in conjunction  with such financial  statements and with the information
appearing  under  the  heading  "Item 5.  Operating  and  Financial  Review  and
Prospects."

Reference is made to Note 16 of the Company's  consolidated financial statements
included herein for a discussion of the material  differences  between  Canadian
generally accepted accounting  principles ("GAAP") and US GAAP, and their effect
on the Company's financial statements.

On September  14, 2005,  the Company  completed  the  acquisition  of all of the
issued and outstanding common shares of 0724000 B.C. Ltd. ("724 BC") in exchange
for  common  shares of the  Company  on a  one-for-one  basis,  along with other
transactions.   On  completion  of  the   acquisition  of  724  BC,  the  former
shareholders of 724 BC became the majority shareholders of the combined Company.
Since this transaction  resulted in the former  shareholders of 724 BC acquiring
control of the Company, the acquisition has been treated for accounting purposes
as a recapitalization. In accounting for this transaction:

i)       724 BC is deemed to be the purchaser and parent  company for accounting
         purposes.  Accordingly, its net assets are included in the consolidated
         balance sheets at their historical book value;
ii)      control of the net assets of the Company was acquired on September  14,
         2005.  The  transaction  has been  accounted  for as a purchase  of the
         assets and liabilities of the Company by 724 BC; and
iii)     the  consolidated  statements of operations  and deficit and cash flows
         for the year ended May 31, 2006, include 724 BC's results of operations
         and cash  flows for the year  ended  May 31,  2006,  and the  Company's
         results of  operations  and cash flows from  September  14,  2005.  The
         comparative  figures  for the year ended May 31,  2005 and period  from
         February 4, 2004 (the date of incorporation of 724 BC) to May 31, 2004,
         and as at May 31, 2005 and 2004, are those of 724 BC.

<TABLE>
<CAPTION>

                                                                                                     PERIOD FROM
                                                                                                     FEBRUARY 4,
                                                    YEAR ENDED      YEAR ENDED      YEAR ENDED         2004 TO
                                                   MAY 31, 2007    MAY 31, 2006    MAY 31, 2005     MAY 31, 2004

<S>                                              <C>              <C>             <C>              <C>

Interest and Other Income                               $42,993         $19,455             Nil              Nil
General and Administrative Expenses                  $1,949,793      $1,194,486        $162,633          $75,974
Loss From Continuing Operations                     $(2,036,069)    $(1,206,667)      $(161,466)        $(75,903)
Net Loss                                            $(2,036,069)    $(1,206,667)      $(161,466)        $(75,903)
Total Assets                                         $5,843,162      $2,254,424        $335,943          $11,935
Net Assets (Deficiency)                              $5,502,047      $2,099,370       $(214,258)        $(69,158)
Capital Stock                                        $8,490,285      $3,490,004         $23,111           $1,349

</TABLE>



                                      - 8 -
<PAGE>

<TABLE>
<CAPTION>

                                                                                                     PERIOD FROM
                                                                                                     FEBRUARY 4,
                                                    YEAR ENDED      YEAR ENDED      YEAR ENDED         2004 TO
                                                   MAY 31, 2007    MAY 31, 2006    MAY 31, 2005     MAY 31, 2004

<S>                                              <C>              <C>             <C>              <C>

Contributed Surplus                                    $625,900        $187,435             Nil           $5,396
Weighted Average Number of Shares                    19,576,880      12,518,011       1,469,962               32
Dividends per Share                                         Nil             Nil             Nil              Nil
Basic and Fully Diluted Loss Per Share from
   Continuing Operations                                 $(0.10)         $(0.10)         $(0.11)      $(2,371.97)
Loss Per Share                                           $(0.10)         $(0.10)         $(0.11)      $(2,371.97)

</TABLE>


ADJUSTMENT TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The  consolidated  financial  statements  of the Company  have been  prepared in
accordance  with  Canadian  GAAP.  Canadian  GAAP  differs in  certain  material
respects from US GAAP. The material differences between Canadian and US GAAP and
their effect on the Company's  consolidated  financial statements are summarized
in the tables below.

CONSOLIDATED STATEMENTS OF OPERATIONS
                                       2007            2006            2005
                                         $               $               $

Loss under Canadian GAAP             (2,036,069)     (1,206,667)       (161,466)
Unproven mineral interests expensed    (384,958)       (429,774)              -
                                   ------------    ------------    ------------
Net loss under US GAAP               (2,421,027)     (1,636,441)       (161,466)
                                   ============    ============    ============

Loss per share under US GAAP              (0.12)          (0.13)          (0.11)
                                   ============    ============    ============

CONSOLIDATED BALANCE SHEETS
                                                       2007            2006
                                                         $               $
SHAREHOLDERS' EQUITY

Balance per Canadian GAAP                             5,502,047       2,099,370
Unproven mineral interests expensed                    (814,732)       (429,774)
                                                   ------------    ------------
Balance per US GAAP                                   4,687,315       1,669,596
                                                   ============    ============
UNPROVEN MINERAL INTERESTS

Balance per Canadian GAAP                             1,491,844         803,386
Expensed under US GAAP                                 (814,732)       (429,774)
                                                   ------------    ------------
Balance per US GAAP                                     677,112         373,612
                                                   ============    ============

CONSOLIDATED STATEMENTS OF CASH FLOWS
                                       2007            2006            2005
                                         $               $               $
OPERATING ACTIVITIES

Cash used per Canadian GAAP          (1,464,627)       (917,224)        (85,261)
Unproven mineral interests             (395,319)       (157,548)              -
                                   ------------    ------------    ------------
Cash used per US GAAP                (1,859,946)     (1,074,772)        (85,261)
                                   ============    ============    ============
INVESTING ACTIVITIES

Cash used by per Canadian GAAP         (800,778)       (174,090)       (268,346)
Unproven mineral interests              395,319         157,548               -
                                   ------------    ------------    ------------
Cash used per US GAAP                  (405,459)        (16,542)       (268,346)
                                   ============    ============    ============



                                      - 9 -
<PAGE>


Unproven Mineral Interests

Mineral property costs and related exploration expenditures are accounted for in
accordance  with Canadian  GAAP.  For US GAAP  purposes the Company  follows the
provisions  of EITF 04-02  "Whether  Mineral  Rights are Tangible or  Intangible
Assets" which  concluded that mineral rights are tangible  assets.  Accordingly,
the Company  capitalizes  certain  costs related to the  acquisition  of mineral
rights.  The Company  expenses,  as incurred,  the exploration costs relating to
unproven mineral  properties.  When proven and probable  reserves are determined
for a property and a feasibility study prepared, then subsequent exploration and
development costs of the property would be capitalized. The capitalized costs of
such properties would then be amortized using the unit of production method over
the  estimated  life of the ore body based on proven and  probable  reserves and
would be measured periodically for recoverability of carrying values.

Stock-Based Compensation

Effective June 1, 2006, the Company adopted SFAS No. 123 (revised), "Share-Based
Payment"  ("SFAS  123(R)"),  utilizing the modified  prospective  approach.  The
impact of  adopting  this  standard  did not  materially  affect  the  Company's
consolidated financial position, results of operations or cash flows because the
Company  previously  applied the fair value based method of accounting for stock
options prescribed by SFAS 123, "Accounting for Stock-Based Compensation".

Under SFAS 123 the Company  used the fair value based method of  accounting  for
stock-based employee compensation.  The Company's results for the year ended May
31, 2007 were not significantly  affected as a result of adopting SFAS 123(R) on
June 1, 2006.

Under Canadian GAAP, the Company accounts for stock-based compensation using the
fair value method as disclosed in Note 2.  Accordingly,  there is no  difference
between   Canadian  GAAP  and  US  GAAP  on  the  accounting  for  stock-  based
compensation for the years ended May 31, 2007, 2006 and 2005.

RECENT ACCOUNTING PRONOUNCEMENTS

United States Pronouncements

In July 2006,  the FASB issued  Financial  Instrument  No. 48,  "Accounting  for
Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109" ("FIN
48"), which is a change in accounting for income taxes. FIN 48 specifies how tax
benefits  for  uncertain  tax  positions  are  to be  recognized,  measured  and
derecognized in financial  statements;  require certain disclosures of uncertain
tax matters;  specifies  how  reserves for  uncertain  tax  positions  should be
classified on the balance  sheet;  and provides  transition  and interim  period
guidance, among other provisions. FIN 48 is effective for fiscal years beginning
after December 15, 2006. The adoption of the new  pronouncement  is not expected
to have a material effect on the Company's  consolidated  financial  position or
results of operations.

In  September  2006,  the FASB issued SFAS No.  157,  "Fair Value  Measurements"
("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring
fair value in accordance with US GAAP and expands  disclosures  about fair value
measurements.  SFAS 157 is effective for fiscal years  beginning  after November
15, 2007. Any cumulative effect will be recorded as an adjustment to the opening
accumulated  deficit  balance,  or other  appropriate  component of equity.  The
Company  is  currently  evaluating  the  effect  of SFAS  157  will  have on the
Company's consolidated financial position and results of operations.

In February  2007,  the FASB issued  SFAS No.  159,  "The Fair Value  Option for
Financial  Assets and  Financial  Liabilities  - Including  an Amendment of FASB
Statement  No. 115" ("SFAS 159"),  which  permits  entities to choose to measure
many financial instruments and certain other items at fair value. The fair value
option  established  by SFAS 159  permits  all  entities  to choose  to  measure
eligible  items at fair value at specified  election  dates.  A business  entity
shall  report  unrealized  gains and  losses  on items for which the fair  value
option has been elected in earnings at each subsequent  reporting date. Adoption
is required for fiscal years beginning  after November 15, 2007.  Early adoption
is  permitted  as of the  beginning  of a fiscal  year that  begins on or before
November 15, 2007,  provided the entity also elects to apply the  provisions  of
SFAS 159.  The  Company is  currently  evaluating  the impact of SFAS 157 on its
consolidated  financial  statements  and is  currently  not yet in a position to
determine such effects.


                                     - 10 -
<PAGE>


Exchange Rate History

The following table sets forth the average exchange rate for one Canadian dollar
expressed  in terms of one U.S.  dollar for the fiscal years ended May 31, 2007,
2006 and 2005 and the period from February 4, 2004 (the date of incorporation of
724 BC) to May 31, 2004.

                  PERIOD                              AVERAGE

                  June 1, 2006 - May 31, 2007          0.8839
                  June 1, 2005 - May 31, 2006          0.8581
                  June 1, 2004 - May 31, 2005          0.7984
                  February 4, 2004 - May 31, 2004      0.7424

The following  table sets forth the high and low exchange rates for one Canadian
dollar  expressed  in terms of one U.S.  dollar for the  six-month  period ended
October 31, 2007.

                  MONTH                  HIGH            LOW

                  October 2007           1.0531        0.9998
                  September 2007         1.0041        0.9497
                  August 2007            0.9527        0.9299
                  July 2007              0.9641        0.9355
                  June 2007              0.9453        0.9322
                  May 2007               0.9345        0.8980

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  December  5, 2007,  reported by the United  States
Federal  Reserve Bank of New York for the  conversion  of Canadian  dollars into
United States dollars was CDN $1.0127 (US $1.00 = CDN$1.0127).

Risk Factors

THE  COMPANY  HAS LIMITED  FINANCIAL  RESOURCES  AND IF THE COMPANY IS UNABLE TO
SECURE ADDITIONAL FUNDING, THE COMPANY MAY FAIL.

The Company has limited financial resources,  no revenues,  and has no assurance
that  additional  funding will be  available  to it. As of August 31, 2007,  the
Company had working capital of $5,674,417, which excludes the $5,546,100 current
portion of long-term  debt which is due on July 24, 2008. As of the date of this
annual report,  the Company has not yet finalized its exploration budget for the
next 12 months,  pending current  results.  However,  the Company  anticipates a
significant  exploration  program will be implemented on its Souker Project.  In
addition,  the Company anticipates that it will incur approximately $1.6 million
for the next 12 months for  corporate  overhead and  salaries.  The Company will
need to raise  significant  funding  to meet its  anticipated  expenditures  and
ongoing  costs and to retire its long-term  debt. In addition,  the Company will
need to raise further funds based upon the results of the  exploration  programs
or if the Company acquires any additional properties.

The only significant  source of funds presently  available to the Company is the
sale of its equity  capital.  There can be no assurance that the Company will be
able to  obtain  adequate  financing  in the  future  or that the  terms of such
financing will be favourable.  Failure to obtain such additional financing could
result  in  delay  or  indefinite   postponement  of  further   exploration  and
development of its projects with the possible loss of such properties.

If the  Company  issues  additional  shares  to fund its  operations  or for the
acquisition  of  additional  businesses,  the  shareholders  of the Company will
experience dilution of their ownership interests.

The Company's consolidated financial statements were prepared on a going concern
basis  which  assumes  that the  Company  will be able to realize its assets and
discharge its liabilities in the normal course of business.



                                     - 11 -
<PAGE>


THE  COMPANY  HAS  LIMITED  HISTORY OR  EXPERIENCE  IN THE  MINERAL  EXPLORATION
BUSINESS AND, AS A RESULT, ITS ACTIVITIES MAY BE UNSUCCESSFUL.

To date the Company has limited experience in the mineral exploration  business.
There can be no assurance that the Company will generate  profits in the future.
The Company has experienced, on a consolidated basis, losses in the years of its
operations.  There is no assurance  that the Company will be able to achieve and
maintain profitable operations. The likelihood of success of the Company must be
considered in light of the problems,  expenses,  difficulties,  complication and
delays  frequently  encountered in connection with the  establishment of any new
business. There is no assurance that the Company can generate revenues,  operate
profitably,  or  provide a return on  investment,  or that it will  successfully
implement its plans.

THE  BUSINESS OF  ACQUIRING  PROPERTIES  AND MINERAL  EXPLORATION  COMPANIES  IS
EXTREMELY  COMPETITIVE  AND IF THE  COMPANY IS UNABLE TO COMPETE  AGAINST  OTHER
COMPANIES,  THE COMPANY MAY BE UNABLE TO ACQUIRE OTHER PROPERTIES OR EXPLORATION
COMPANIES.

Significant  competition exists for mineral  opportunities.  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 the
Company,  the Company  may be unable to acquire  additional  attractive  mineral
interests or exploration companies on terms it considers acceptable.

THE COMPANY'S  OPERATIONS ARE NOT, AND MAY NOT BE, DIVERSIFIED AND, AS SUCH, THE
COMPANY MAY BE SUBJECT TO  FLUCTUATIONS IN THE BUSINESS OR INDUSTRY IN WHICH THE
COMPANY MAY OPERATE.

The Company's  inability to diversify its activities  into a number of areas may
subject it to economic  fluctuations  within a  particular  business or industry
and, therefore, increase the risks associated with its operations.

IF THE COMPANY IS UNABLE TO EFFECTIVELY  COMPETE AGAINST OTHER COMPANIES,  OR IF
THE COMPANY CANNOT MARKET ANY MINERALS DISCOVERED ON ITS PROPERTIES, THE COMPANY
MAY HAVE TO CEASE OPERATIONS.

The mineral  industry is intensely  competitive  in all its phases.  The Company
competes  with  many  companies   possessing  greater  financial  resources  and
technical  facilities  than itself for the  acquisition of mineral  concessions,
claims,  leases and other mineral  interests as well as for the  recruitment and
retention of qualified employees.

Even if  commercial  quantities  of ore are  discovered,  a ready market may not
exist for their sale.  Factors  beyond the control of the Company may affect the
marketability  of  any  substances  discovered.  These  factors  include  market
fluctuations,  the  proximity  and  capacity  of natural  resource  markets  and
processing equipment, government regulations,  including regulations relating to
prices,  taxes,  royalties,  land tenure,  land use,  importing and exporting of
minerals and environmental protection.  The exact effect of these factors cannot
be accurately predicted,  but the combination of these factors may result in the
Company  not  receiving  an adequate  return on  invested  capital or losing its
investment capital.

TRADING OF THE COMPANY'S COMMON SHARES HAS BEEN EXTREMELY  LIMITED AND INVESTORS
MAY NOT BE ABLE TO RE-SELL THEIR SHARES.

To date,  there has been extremely  limited  trading of the Company's  shares of
common stock on the Over-the-Counter  Bulletin Board system, the Frankfurt Stock
Exchange  Open Market and the TSX Venture  Exchange  (the  "TSX-V").  Therefore,
persons  purchasing  shares  of the  Company's  common  stock may not be able to
resell the shares and may have to hold the  shares  indefinitely.  In  addition,
purchasers  may not be able to use their shares for  collateral or loans and may
not be able to liquidate at a suitable price in the event of an emergency.

IF THE  COMPANY  ISSUES  SHARES OR OPTIONS  TO ITS  OFFICERS,  DIRECTORS  OR KEY
EMPLOYEES,  OR IF THE COMPANY  OBTAINS  FUNDING  THROUGH THE SALE OF  ADDITIONAL
COMMON SHARES, THE SHAREHOLDERS WILL EXPERIENCE DILUTION.

The Company has granted to some or all of its directors,  officers, insiders and
key  employees  options to  purchase  the  Company's  common  shares as non-cash
incentives to those employees.  In the future,  the Company may grant additional
options  and such  options  may be granted at  exercise  prices  equal to market
prices, or at prices as allowed under the policies of the TSX-V, when the public
market is depressed.  To the extent that significant numbers of such options may
be granted and  exercised,  the interests of then existing  shareholders  of the
Company will be subject to additional dilution.


                                     - 12 -
<PAGE>


THE PRICE OF THE COMPANY'S  COMMON SHARES IS SUBJECT TO MARKET  FLUCTUATIONS AND
VOLATILITY  WHICH  MAY NOT BE  RELATED  TO THE  COMPANY'S  ACTIVITIES  AND  SUCH
FLUCTUATIONS MAY IMPACT THE COMPANY'S ABILITY TO COMPLETE EQUITY FINANCINGS.

In recent years, the securities  markets in Canada have experienced a high level
of price and volume  volatility,  and the  market  price of  securities  of many
companies,  particularly junior natural resources  exploration  companies,  have
experienced  wide  fluctuations in price which have not necessarily been related
to the  operating  performance,  underlying  asset  values or  prospects of such
companies.  In  particular,  the per share price of the Company's  common shares
fluctuated  from a high of $1.92 to a low of $0.43  during the  12-month  period
ending October 31, 2007.  Continued price  fluctuations  will have a significant
impact on the Company's ability to complete equity financings.

THE  COMPANY  IS  DEPENDENT  UPON  ITS  MANAGEMENT  AND  THE  LOSS OF ANY OF ITS
MANAGEMENT AND/OR IF THE COMPANY IS UNABLE TO RECRUIT ADDITIONAL  MANAGERS COULD
NEGATIVELY IMPACT THE COMPANY'S ABILITY TO CONTINUE ITS ACTIVITIES.

The success of the  activities  of the  Company is  dependent  to a  significant
extent on the efforts and abilities of its  management.  The loss of services of
any of its  management  could have a  material  adverse  effect on the  Company.
Except for the employment agreement with Mr. Turnbull,  the Management Agreement
with Chase  Management  Ltd.  ("Chase"),  the Consulting  Agreement  between the
Company and Dr. William Tafuri,  the Consulting  Agreement  between Mr. Oleg Kim
and BMC, and the Consulting Agreement between Mr. Vladimir Danilov and Centrasia
Kazakhstan,  the Company and/or its subsidiaries has not entered into employment
agreements  with  any  of its  officers  and  is  not  expected  to do so in the
foreseeable  future.  See "Item 6. Directors,  Senior Management and Employees -
Compensation." The Company has not obtained key-man life insurance on any of its
officers or directors.  Notwithstanding the combined limited experience and time
commitment of management, loss of the services of any of these individuals would
adversely  affect  development  of the Company's  business and its likelihood of
continuing operations.

IT IS UNCERTAIN  WHETHER ANY OF THE PROPERTY  INTERESTS OWNED OR OPTIONED BY THE
COMPANY WILL CONTAIN "RESERVES";  THEREFORE, IT IS POSSIBLE THAT THE FUNDS SPENT
BY THE COMPANY ON ITS EXPLORATION ACTIVITIES WILL BE LOST.

All of the Company's  property interests are in the exploration stage and do not
contain any  "reserves",  as that term is defined in Guide 7 adopted by the SEC.
The term  "reserves"  is defined  in Guide 7 as "that part of a mineral  deposit
which could be economically and legally extracted or produced at the time of the
reserve determination." Guide 7 is available from the SEC's website at:

        http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7

Mineral  exploration  involves  significant  risk  and few  properties  that are
explored are ultimately  developed into producing  mines.  The probability of an
individual  prospect ever having reserves that meet the  requirements of Guide 7
is extremely remote. The Company's property interests,  in all probability,  may
not contain any reserves  and any funds spent on  exploration  of the  Company's
property interests may be lost. If any of the Company's exploration programs are
successful,  the Company will require  additional  funds to advance the property
beyond the exploration stage. 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. If the
Company  is  unable to  secure  additional  funding,  the  Company  may lose its
interest  in one or more of its mineral  claims  and/or may be required to cease
all activities.

EXPLORATION  FOR MINERALS ON THE COMPANY'S  PROJECTS ARE SUBJECT TO  SIGNIFICANT
RISKS WHICH COULD INCREASE THE COSTS OF EXPLORATION  AND COULD CAUSE THE COMPANY
TO DELAY OR ABANDON ITS PROJECTS.

The  Company's  exploration  projects are without known  commercial  ore bodies.
Continued   exploration  of  the  Company's  projects  depends  on  satisfactory
exploration results.  Mineral exploration involves a high degree of risk and few
properties which are explored are ultimately developed into producing mines. The
long-term  profitability of the Company's  operations will be, in part, directly
related  to the cost and  success  of its  exploration  programs,  which  may be
affected by a number of factors beyond the Company's control.

Mineral exploration involves many risks, which even a combination of experience,
knowledge  and careful  evaluation  may not be able to overcome.  Operations  in
which the Company has a direct or indirect  interest  will be subject to all the
hazards and risks  normally  incidental  to  exploration  for gold (also  "Au"),
silver (also "Ag") and other metals including



                                     - 13 -
<PAGE>


but not limited to nickel (also "Ni") and copper (also "Cu"), any of which could
result in work stoppages, damage to property, and possible environmental damage.

The Company will continue to rely upon  consultants  and others for  exploration
and, if required,  development  expertise.  If any of the Company's  exploration
property interests merit development,  substantial expenditures will be required
to establish ore reserves through drilling, to develop  metallurgical  processes
to extract the metal from the ore and, in the case of new properties, to develop
the mining and processing  facilities and  infrastructure at any site chosen for
mining.  The  Company may not  discover  minerals in  sufficient  quantities  to
justify  commercial  operations  and the  Company  may not be able to obtain the
funds required for  development  on a timely basis.  The economics of developing
gold, silver , nickel,  copper and other mineral  properties is affected by many
factors including the cost of operations,  variations in the grade of ore mined,
fluctuations  in metal  markets,  costs of  processing  equipment and such other
factors as government regulations,  including regulations relating to royalties,
allowable  production,  importing  and  exporting of minerals and  environmental
protection.

EXPLORATION  ACTIVITIES  ARE SUBJECT TO MANY RISKS,  INCLUDING  ECONOMIC  RISKS,
WHICH MAY CAUSE THE COMPANY'S  ACTIVITIES  TO BE UNECONOMIC  AND THE COMPANY MAY
NOT HAVE SUFFICIENT EXPERIENCE TO ADEQUATELY CONDUCT ITS PROPOSED ACTIVITIES.

Exploration and development risks for the business of exploring for minerals and
mining are high. Few properties that are explored are ultimately  developed into
producing mines. Major expenses may be required to advance a property beyond the
exploration  stage, to develop  metallurgical  processes and to construct mining
and processing  facilities at a particular site. It is impossible to ensure that
exploration   programs   planned  by  the  Company  will  result  in  profitable
activities.

Unusual or unexpected  formations,  formation  pressures,  fires, power outages,
labour  disruptions,   flooding,  explosions,  cave-ins,  land  slides  and  the
inability  to obtain  suitable or adequate  machinery,  equipment  or labour are
other  risks  involved  in mining  activities  and the  conduct  of  exploration
programs and the  advancement of a property beyond the  exploration  stage.  The
Company  has limited  experience  in the  conducting  development  programs  and
advancing  properties  beyond the exploration  stage. The Company has relied and
may continue to rely upon consultants for expertise. The economics of developing
mineral   properties  are  affected  by  many  factors  including  the  cost  of
operations,  variations of the grade of ore mined and  fluctuations in the price
of minerals produced.  Depending on the price of minerals produced,  the Company
may  determine  that  it is  impractical  to  commence  or  continue  commercial
production.  Although  precautions  to minimize  risk will be taken,  processing
operations  are  subject  to  hazards  such as  equipment  failure or failure of
retaining dams around tailings disposal areas, which may result in environmental
pollution and consequent  liability.  There are no assurances that the Company's
exploration activities will result in development or mining operations.

THE  COMPANY'S  FOREIGN  OPERATIONS  SUBJECT  THE  COMPANY TO  FOREIGN  CURRENCY
FLUCTUATIONS  WHICH MAY INCREASE THE  COMPANY'S  EXPENSES  AND, IN THE EVENT THE
COMPANY ACHIEVES PROFITABILITY, REDUCE THE COMPANY'S PROFITABILITY.

The Company's  operations in the Kyrgyz Republic,  Russian  Federation and other
countries in Central Asia make it subject to foreign  currency  fluctuation  and
such  fluctuation  may  adversely  affect the Company's  financial  position and
results.  The  Canadian  dollar and the  foreign  currencies  vary under  market
conditions.  The Company's foreign  subsidiaries  comprise a direct and integral
extension  of the  Company's  operations.  The  subsidiaries  are also  entirely
reliant  upon the  Company to provide  financing  in order for them to  continue
their  activities.  Consequently,  the functional  currency of the subsidiary is
considered  by  management to be the Canadian  dollar and  accordingly  exchange
gains and losses are included in net income.  The Company maintains its cash and
cash  equivalent  amounts  primarily  in Canadian  denominated  currencies.  The
Company does not currently engage in hedging activities.  See "Item 5. Operating
and Financial Review and Prospects."

THE COMPANY'S  MINERAL CLAIM INTERESTS ARE LOCATED IN FOREIGN  COUNTRIES,  WHICH
MAY  PREVENT OR DELAY  EXPLORATION  ACTIVITIES  AND COULD  CAUSE THE  COMPANY TO
ABANDON ITS PROJECTS.

The Company's mining  exploration  activities are affected in varying degrees by
political stability and government  regulations  relating to foreign investment,
social unrest, corporate activity and the mining business in each of the Russian
Federation and the Kyrgyz  Republic.  Operations may also be affected in varying
degrees  by  terrorism,   military  conflict  or  repression,   crime,   extreme
fluctuations in currency rates and high inflation in Central Asia and the former
Soviet Union.  The relevant  governments  have entered into  contracts  with the
Company or granted permits or concessions  that enable it to conduct  operations
or development and exploration  activities.  Notwithstanding these arrangements,
the Company's  ability to conduct  operations  or  exploration  and  development
activities is subject to renewal of permits or concessions,



                                     - 14 -
<PAGE>


changes in government  regulations or shifts in political  attitudes  beyond the
Company's control.  There can be no assurance that industries deemed of national
or  strategic  importance  like  mineral  production  will not be  nationalized.
Government    policy   may   change   to    discourage    foreign    investment,
re-nationalization   of  mining   industries  may  occur  or  other   government
limitations,   restrictions  or  requirements  not  currently  foreseen  may  be
implemented.  There can be no assurance  that the  Company's  assets will not be
subject to nationalization,  requisition or confiscation,  whether legitimate or
not, by any authority or body.

Similarly,  the  Company's  operations  may be  affected  in varying  degrees by
government  regulations  with  respect  to  restrictions  on  production,  price
controls,   export   controls,   income   taxes,   expropriation   of  property,
environmental legislation,  labour legislation,  mine safety, and annual fees to
maintain mineral properties in good standing. There can be no assurance that the
laws in these countries  protecting  foreign  investments will not be amended or
abolished or that these existing laws will be enforced or interpreted to provide
adequate protection against any or all of the risks described herein.

With respect to the Company's Russian properties,  the current legal environment
in the Russian  Federation is characterized by  poorly-drafted  and inconsistent
legislation,  gaps where  legislation is not yet available,  and  uncertainty in
application due to frequent policy shifts and lack of administrative experience.
Russian laws often provide general statements of principles rather than specific
guide to operations and government  officials may be delegated or exercise broad
authority to determine matters of significance to the operations and business of
the  Company.  Such  authority  may be  exercised  in an  unpredictable  way and
effective  appeal  processes  may not be  available.  In  addition,  breaches of
Russian  law  may  involve  severe  penalties  and   consequences   regarded  as
disproportionate  to the offence.  Exploration for and extraction of minerals in
the  Russian  Federation  is  governed  by the  Law on  Subsoil,  the  Licensing
Regulations,  the  Precious  Metals Law and other laws.  Given the fact that the
legislative  scheme  and the  regulatory  bodies  governing  this  scheme are of
relatively  recent origin,  the law has been subject to varying  interpretations
and inconsistent  application.  Therefore, it can be difficult to determine with
certainty in any given  instance  the exact nature of legal rights  possessed by
persons using the subsoil.  There are uncertainties in conclusively  determining
all necessary  information about required permits,  approvals and licenses,  and
there  is  no  comprehensive  index  or  system  for  determining  all  relevant
legislation.  As well, the Russian legal system is a civil law system, and legal
precedents are not of the same  determinative  nature as in a common law system.
Additionally,   officials  often  interpret   regulations  in  an  arbitrary  or
unpredictable way, and this extends to most areas of regulation. There can be no
assurance that the Company has complied with all applicable laws or obtained all
necessary  approvals in the Russian  Federation.  There can be no assurance that
laws,  orders,  rules,  regulations  and  other  Russian  legislation  currently
relating  to the  Company's  investment  in the Russian  Federation  will not be
altered,  in whole or in part, or that a Russian court or other  authority  will
not interpret existing Russian legislation,  whether retroactively or otherwise,
in such a way that would  have an adverse  impact on the  Company.  In  general,
there remains great  uncertainty  as to the extent to which Russian  parties and
entities,  particularly  governmental agencies,  will be prepared to respect the
contractual and other rights of the non-Russian parties with which they deal and
also as to the extent to which the rule of law has taken hold and will be upheld
in the Russian Federation.  Procedures for the protection of rights, such as the
taking of security,  the  enforcement of claims and  proceedings  for injunctive
relief or to obtain  damages  are still  relatively  undeveloped  in the Russian
Federation.  Accordingly,  there may be greater  difficulty  and  uncertainty in
respect of the Company's  abilities to protect and enforce its rights (including
contractual  rights).  There  can be no  assurance  that  this  will  not have a
material adverse effect upon the Company.

Russian  corporate  law is not  extensively  developed  and is still  very  much
evolving from the former Soviet times. There are corporate law requirements of a
technical  nature that are not complied with by  significant  numbers of Russian
corporations,  which  rarely  result in action  being taken by the  authorities.
There is a risk  however,  of arbitrary  action being taken  against any of such
Russian  corporations,  including the Company's Russian subsidiary,  RPI, due to
these  technical  irregularities,  and  the  result  of  such  action  could  be
materially  adverse to RPI and the  Company.  In  addition,  the Souker  License
confers upon RPI the right to explore,  develop and mine the Souker  Deposit and
the Souker License area. As with many Russian mineral properties affected by the
transitory nature of the legal system,  there are certain issues relating to the
Souker  Property which may adversely  affect RPI's  interest.  RPI is taking and
will continue to take all appropriate steps to protect its interest.

With respect to the Company's  properties  located in the Kyrgyz Republic,  this
country has  experienced  political  difficulties  in recent  years  including a
revolution in March 2005 that resulted in the ouster of the long-time  incumbent
President. Although the election of a new President and the appointment of a new
Prime  Minister  have  brought a measure of  stability  to the  Kyrgyz  Republic
following  the events of March  2005,  the  political  situation  in the country
continues  to  evolve.  There  continues  to  be  a  risk  of  future  political
instability.



                                     - 15 -
<PAGE>


Any  changes in  government  policy  may  result in  changes  to laws  affecting
ownership of assets,  mining policies,  monetary  policies,  taxation,  rates of
exchange,  environmental regulations,  labour relations,  repatriation of income
and return of capital.  This may affect both the Company's  ability to undertake
exploration activities in respect of present and future properties in the manner
currently  contemplated,  as well as its  ability to  continue  to  explore  and
conduct other  activities on those  properties in which it has an interest or in
respect of which it has obtained exploration and development rights to date. The
possibility that future governments may adopt substantially  different policies,
which might extend to expropriation of assets, cannot be ruled out.

The effect of all of these factors cannot be accurately  predicted.  The Company
does not maintain, nor does it intend to purchase, political risk insurance.

THE  COMPANY'S  ACTIVITIES  ARE SUBJECT TO  GOVERNMENTAL  REGULATIONS  WHICH MAY
SUBJECT THE COMPANY TO PENALTIES FOR FAILURE TO COMPLY,  MAY LIMIT THE COMPANY'S
ABILITY TO CONDUCT  EXPLORATION  ACTIVITIES AND COULD CAUSE THE COMPANY TO DELAY
OR ABANDON ITS PROJECTS.

Various regulatory  requirements affect the current and future activities of the
Company,  including  exploration  activities  on  its  properties.   Exploration
activities  require permits from various federal,  state and local  governmental
authorities  and are  subject to laws and  regulations  governing,  among  other
things, prospecting, exports, taxes, labor standards, occupational health, waste
disposal, toxic substances, land use, environmental protection, mine safety, and
others which currently or in the future may have a substantial adverse impact on
the Company.  Exploration  activities are also subject to substantial regulation
under  these laws by  governmental  agencies  and may  require  that the Company
obtain permits from various  governmental  agencies.  See "Item 4.Information on
the Company - Business Overview - Government Regulations."

Licensing  and  permitting  requirements  are  subject  to  changes  in laws and
regulations and in various  operating  circumstances.  There can be no assurance
that the  Company  will be able to obtain or  maintain  all  necessary  licenses
and/or  permits it may require for its  activities  or that such permits will be
will be obtainable  on  reasonable  terms or on a timely basis or that such laws
and regulations will not have an adverse effect on any project which the Company
might  undertake.  If the Company is unable to obtain the necessary  licenses or
permits for its  exploration  activities,  the  Company  might have to change or
abandon its planned exploration for such non-permitted properties and/or to seek
other joint venture arrangements.  In such event, the Company might be forced to
sell or abandon its property interests.

Failure to comply with applicable laws, regulations, and permitting requirements
may result in  enforcement  actions,  including  orders  issued by regulatory or
judicial  authorities causing  exploration  activities to cease or be curtailed,
and may include corrective measures requiring capital expenditures, installation
of  additional  equipment,  or  remedial  actions.  Parties  engaged  in  mining
activities  may be  required to  compensate  those  suffering  loss or damage by
reason  of the  mining  activities  and may  have  civil  or  criminal  fines or
penalties  imposed for  violations of  applicable  laws or  regulations  and, in
particular, environmental laws.

Any change in or amendments to current laws,  regulations and permits  governing
activities of mineral exploration  companies,  or more stringent  implementation
thereof, could require increases in exploration expenditures,  or require delays
in exploration or abandonment of new mineral properties.  The cost of compliance
with  changes in  governmental  regulations  has a  potential  to  increase  the
Company's expenses.

THERE IS NO AUTOMATIC LICENSE RENEWAL PROCESS FOR THE COMPANY'S  LICENSES IN THE
KYRGYZ REPUBLIC.  FAILURE TO OBTAIN RENEWAL OF ITS KYRGYZ REPUBLIC LICENSES WILL
LIMIT THE COMPANY'S  ABILITY TO CONDUCT  EXPLORATION  ACTIVITIES AND COULD CAUSE
THE COMPANY TO DELAY OR ABANDON ITS PROJECTS.

The  Company,  though its  subsidiary  BMC, is required to annually  prepare and
submit reports to the State Agency for Geology and Mineral  Resources  under the
Government  of the Kyrgyz  Republic (the "KSAG") to confirm that it has complied
with the terms of its license  agreements.  Upon approval by the KSAG extensions
to the licenses and license agreements may be applied for up to a maximum of ten
years.  Provided  the  Company is in  compliance  with the terms of its  license
agreements,  it is required to pay to the KSAG approximately US $7 in payment of
the KSAG's  services  associated  with the  applications  to extend the  license
agreements.  At the end of each  license  period the  Company may be required to
relinquish  a portion of the  license  area.  The  Company,  through  BMC as the
license holder,  determines  which areas are to be  relinquished;  however,  the
Company may have to relinquish areas which it wishes to retain. The Subsoil Laws
provide that a subsoil user who has  discovered a deposit has the  indisputable,
exclusive right to its exploitation.



                                     - 16 -
<PAGE>


Prior to any  exploitation  on its  properties,  the Company will be required to
obtain  approval  from the KSAG to conduct such  exploitation  and negotiate the
terms of such  exploitation,  to include  royalties,  bonuses and other payments
with the KSAG.  There are no assurances  that the Company will be able to obtain
such approvals. See "Item 4. Information on the Company - Business Overview."

THERE IS NO AUTOMATIC RENEWAL PROCESS FOR THE COMPANY'S  LICENSES IN THE RUSSIAN
FEDERATION.  FAILURE TO OBTAIN RENEWAL OF ITS RUSSIAN  FEDERATION  LICENSES WILL
LIMIT THE COMPANY'S  ABILITY TO CONDUCT  EXPLORATION  ACTIVITIES AND COULD CAUSE
THE COMPANY TO DELAY OR ABANDON ITS PROJECTS.

The Company's Souker combined production and subsoil use license,  and its Tsaga
and Uleeta Subsoil Use Licenses are not automatically  renewable. In the Russian
Federation,  the rights and  obligations of subsoil users arise from the date of
registration of the respective  Subsoil Use License  ("Exploration  License") or
Production and Combined Subsoil License ("Development License").  While there is
some ambiguity in the law as to the state body responsible for such registration
of  Exploration  Licenses,  the  ultimate  responsibility  lies with the Central
Federal District  Regional Subsoil Use Agency ("FASU").  Granting of Exploration
Licenses  will require the  preliminary  consent of  respective  land  resources
management bodies or landowners.

Exploration and Development  Licenses are issued for a specified period of time.
Once granted,  the Exploration and Development  License documents provide a list
of terms and annual cash payments which are based on the commodity  being sought
within the license area. An Exploration or Development License can be terminated
under the terms of the  license or  applicable  law.  Russian  law  contains  an
extensive  list of grounds for  termination,  including  breach of the  material
terms of the license by the subsoil user.  The license  period of an Exploration
or  Development  License may be  extended  provided  that the  subsoil  user has
complied with the original list of terms.  However,  there is no guarantee  that
the Exploration License period will be extended. An Exploration License does not
guarantee exclusive rights to a license area and multiple  Exploration  Licenses
may be issued for the same area of land. Where this is the case the subsoil user
relations  are to be  determined  in the course of granting  their rights to use
subsoil and the  respective  terms are included in the  licenses  issued to such
subsoil  users.  Whereas a  Development  License  grants  the  subsoil  user the
exclusive rights to use the subsoil in the licensed area.

Exploration  licenses  restrict the subsoil user to conducting only  preliminary
exploration work that does not involve material  disturbance of the integrity of
the subsoil, in particular, the creation of any significant mine workings or the
drilling of wells for the purpose of extracting  minerals. A Development License
grants the subsoil user the right to conduct exploration or detailed prospecting
operations as well as production operations.

BECAUSE THE COMPANY IS SUBJECT TO COMPLIANCE WITH ENVIRONMENTAL REGULATION,  THE
COST OF ITS EXPLORATION PROGRAMS MAY INCREASE.

The Company's operations may be subject to environmental regulations promulgated
by government agencies from time to time. Environmental legislation provides for
restrictions  and  prohibitions  on spills,  releases  or  emissions  of various
substances  produced in association with certain exploration and mining industry
operations,  such as seepage from tailings disposal areas, which would result in
environmental  pollution.  A  breach  of  such  legislation  may  result  in the
imposition  of fines and  penalties.  In addition,  certain  types of operations
require  the  submission  and  approval  of  environmental  impact  assessments.
Environmental   legislation  is  evolving  in  a  manner  which  means  stricter
standards,  and  enforcement,  fines and penalties for  non-compliance  are more
stringent.  Environmental  assessments  of proposed  projects carry a heightened
degree of  responsibility  for companies and directors,  officers and employees.
The cost of compliance with changes in governmental  regulations has a potential
to reduce the profitability of operations.

THE ECONOMICS OF MINERAL  EXPLORATION  ACTIVITIES ARE SUBJECT TO VARIOUS FACTORS
WHICH COULD CAUSE SUCH ACTIVITIES TO BE UNECONOMIC.

Mineral  exploration  activities,  and if warranted  production  and  production
costs,  and the  economics  of mineral  products are affected by such factors as
environmental  permitting  regulations  and  requirements,  weather,  unforeseen
technical  difficulties,  unusual or unexpected  geological  formations and work
interruptions.  In addition,  the grade of any ore  ultimately  mined may differ
from that  indicated by drilling  results.  Short-term  factors  relating to ore
reserves,  such  as the  need  for  orderly  development  of ore  bodies  or the
processing of new or different  grades may also have an adverse effect on mining
activities and on financial results.  There can be no assurance that small-scale
laboratory  tests,  which  recovers any metals or minerals can be  duplicated in
large-scale tests under on-site conditions or in production-scale operations.



                                     - 17 -
<PAGE>


THE PRICES OF METALS FLUCTUATE IN THE MARKET AND SUCH  FLUCTUATIONS  COULD CAUSE
CERTAIN ACTIVITIES TO BECOME UNECONOMIC.

Metal  prices may be  unstable.  The  mining  industry  in general is  intensely
competitive and there is no assurance  that, even if commercial  quantities of a
mineral resource are discovered,  a profitable market will exist for the sale of
it.  Factors beyond the control of the Company may affect the  marketability  of
any  substances  discovered.   The  price  of  various  metals  has  experienced
significant  movements  over short periods of time,  and is affected by numerous
factors beyond the control of the Company,  including international economic and
political trends,  expectations of inflation,  currency  exchange  fluctuations,
interest  rates  and  global  or  regional  consumption  patterns,   speculative
activities  and  increased  production  due to  improved  mining and  production
methods.  The supply of and demand for metals are  affected by various  factors,
including  political events,  economic  conditions and production costs in major
producing regions. There can be no assurance that the price of any metal will be
such that the Company's properties can be mined at a profit.

THE COMPANY MAY INCUR LIABILITY FOR CERTAIN RISKS AGAINST WHICH THE COMPANY DOES
NOT HAVE INSURANCE, WHICH COULD REDUCE OR ELIMINATE ANY FUTURE PROFITABILITY AND
NEGATIVELY IMPACT THE PRICE OF THE COMPANY'S SHARES.

In the course of  exploration  of mineral  concessions,  certain  risks,  and in
particular, unexpected or unusual geological operating conditions including rock
bursts,  cave-ins,  fires,  flooding and earthquakes may occur. It is not always
possible to fully  insure  against  such risks and the Company may decide not to
take out  insurance  against  such risks as a result of high  premiums  or other
reasons.  Should such  liabilities  arise,  they could reduce or  eliminate  any
future  profitability  and result in increasing costs and a decline in the value
of the  securities  of the  Company.  The  Company  does not have any  insurance
coverage on its mineral concessions.

THE COMPANY MAY NOT BE ABLE TO OBTAIN SUPPLIES AND  INFRASTRUCTURE  NECESSARY TO
CONDUCT ITS  EXPLORATION  OPERATIONS  AND, AS SUCH, MAY HAVE TO DELAY OR ABANDON
ITS PROJECTS.

Some of the  Company's  property  interests  are not in developed  areas and the
availability of infrastructure  (water and power, and in some areas roads) at an
economic  cost  cannot  be  assured.  Power is an  integral  requirement  of any
production  facility on the  Company's  properties.  In the event the Company is
unable to obtain water or power at any of its properties, the Company may not be
able to conduct  exploration  activities,  or in the event the Company discovers
mineralization,  the Company may not be able to begin a development  program, in
which case the  Company  may lose its  interest  in the  property or may have to
abandon the property.

EXPLORATION  FOR MINERALS ON THE COMPANY'S  PROJECTS ARE SUBJECT TO  SIGNIFICANT
RISKS WHICH COULD INCREASE THE COSTS OF EXPLORATION  AND COULD CAUSE THE COMPANY
TO DELAY OR ABANDON ITS PROJECTS.

Mineral  exploration  activities  are  subject  to a  variety  of risks  such as
cave-ins and other accidents, flooding,  environmental hazards, the discharge of
toxic  chemicals  and other  hazards.  Such  occurrences  may delay  activities,
increase  costs  or  result  in  liability.  The  Company  is  not  insured  for
environmental  liability or earthquake  damage nor does it carry any accident or
liability insurance on its mineral property interests.

CONFLICTS OF INTEREST MAY ARISE AMONG THE OFFICERS AND  DIRECTORS OF THE COMPANY
AND SUCH  CONFLICTS  MAY CAUSE THE COMPANY TO ENTER INTO  TRANSACTIONS  ON TERMS
WHICH ARE NOT BENEFICIAL TO THE COMPANY.

Certain  officers and directors of the Company are officers and/or directors of,
or are  associated  with or have  significant  shareholdings  in, other  natural
resource   companies  that  acquire  interests  in  mineral   properties.   Such
associations  may give rise to  conflicts  of  interest  from time to time.  The
directors are required by law, however, to act honestly and in good faith with a
view to the best  interests of the Company and to disclose  any  interest  which
they may have in any project or  opportunity  of the  Company.  If a conflict of
interest  arises  at a meeting  of the board of  directors,  any  director  in a
conflict will disclose his interest and abstain from voting on such matter.  The
Company  does  not  currently  have a  right  of  first  refusal  pertaining  to
opportunities that come to management's  attention insofar as such opportunities
may relate to the  Company's  proposed  business  operations.  The  officers and
directors are, so long as they are officers or directors of the Company, subject
to the restriction that all opportunities  contemplated by the Company's plan of
operation  which come to their  attention,  either in the  performance  of their
duties or in any other manner, will be considered  opportunities of, and be made
available to the Company and the companies that they are  affiliated  with on an
equal basis. If the Company or the companies in which the officers and directors
are affiliated  with,  both desire to take advantage of the  opportunities,  the
said officers and directors  would abstain from  negotiating and voting upon the
opportunity. However, all directors


                                     - 18 -
<PAGE>



may still  individually  take advantage of opportunities if the Company declines
to do so. Except as set forth above, the Company has not adopted any conflict of
interest policy with respect to such transactions. In determining whether or not
the Company will  participate in any project or  opportunity,  the director will
primarily  consider  the degree of risk which the Company may be exposed and its
financial  position  at the  time.  Except  for  Mr.  Turnbull,  no  members  of
management have entered into  non-competition  agreements with the Company.  See
"Item 7. Major  Shareholders  and Related  Party  Transactions  - Related  Party
Transactions - Conflicts of Interest".

INVESTORS  IN THE  UNITED  STATES  MAY  NOT  BE  ABLE  TO  ENFORCE  THEIR  CIVIL
LIABILITIES AGAINST THE COMPANY OR ITS DIRECTORS AND OFFICERS.

Certain of the directors and officers of the Company  reside  outside of Canada.
Substantially  all of the assets of the Company  are located  outside of Canada.
Although the Company has appointed  Chase as the Company's  agent for service of
process in Canada,  it may not be possible for  investors  to effect  service of
process  within  Canada upon the  directors  and officers who reside  outside of
Canada.  It may also not be possible to enforce against certain of the directors
and officers of the Company  judgments  obtained in Canadian  courts  predicated
upon the civil liability provisions of applicable securities laws in Canada.

The  Company is a  corporation  domiciled  in British  Columbia.  Except for Dr.
William Tafuri, none of the Company's officers or directors is a resident of the
United  States,  and  all or a  substantial  portion  of the  non-U.S.  resident
officers and directors  assets are located  outside of the United  States.  As a
result,  it may be difficult for U.S.  holders of the Company's common shares to
effect service of process on the non-U.S. resident officers and directors within
the United  States or to enforce  judgments  obtained  in the U.S.  based on the
civil  liability  provisions  of the U.S.  federal  securities  laws against the
Company  or its  non-U.S.  resident  officers  and  directors.  In  addition,  a
shareholder  should  not  assume  that the  courts of Canada  (i) would  enforce
judgments of U.S. courts  obtained in actions against the Company,  its officers
or directors  predicated upon the civil liability provisions of the U.S. federal
securities  laws or other laws of the United States,  or (ii) would enforce,  in
original  actions,  liabilities  against the Company,  its officers or directors
predicated  upon the U.S.  federal  securities  laws or other laws of the United
States.

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

         a)       where the U.S.  court where the  judgment  was rendered had no
                  jurisdiction according to applicable Canadian law;

         b)       the judgment was subject to ordinary remedy (appeal,  judicial
                  review and any other  judicial  proceeding  which  renders the
                  judgment not final,  conclusive or enforceable  under the laws
                  of  the  applicable   state)  or  not  final,   conclusive  or
                  enforceable under the laws of the applicable state;

         c)       the judgment  was obtained by fraud or in any manner  contrary
                  to natural justice or rendered in contravention of fundamental
                  principles of procedure;

         d)       a dispute between the same parties,  based on the same subject
                  matter  has given rise to a  judgment  rendered  in a Canadian
                  court or has been decided in a third  country and the judgment
                  meets the necessary  conditions for  recognition in a Canadian
                  court;

         e)       the outcome of the judgment of the U.S. court was inconsistent
                  with Canadian public policy;

         f)       the judgment enforces  obligations  arising from foreign penal
                  laws or laws that deal with taxation or the taking of property
                  by a foreign government; or

         g)       there has not been  compliance  with  applicable  Canadian law
                  dealing with the limitation of actions.


                                     - 19 -
<PAGE>



THE COMPANY DOES NOT PAY DIVIDENDS ON ITS COMMON  SHARES;  THEREFORE,  INVESTORS
SEEKING DIVIDEND INCOME SHOULD NOT PURCHASE THE COMMON SHARES.

The Company has never  declared or paid cash  dividends on its common shares and
does  not  anticipate  doing so in the  foreseeable  future.  Additionally,  the
determination as to the declaration of dividends is within the discretion of the
Company's  board of  directors,  which may never  declare cash  dividends on the
Company's  common  stock.  Investors  cannot expect to receive a dividend on the
Company's common shares in the foreseeable future, if at all.

THE  COMPANY'S  SHARES ARE  SUBJECT TO THE SEC'S PENNY  STOCK  RULES,  WHICH MAY
RESTRICT  THE  ABILITY  OF BROKERS TO SELL THE  COMPANY'S  COMMON  STOCK AND MAY
REDUCE THE SECONDARY MARKET FOR THE COMMON STOCK.

The SEC has adopted  rules that regulate  broker-dealer  practices in connection
with  transactions  in  "penny  stock".  Generally,   penny  stocks  are  equity
securities with a price of less than US $5.00 (other than securities  registered
on  certain  national  securities  exchanges  or  quoted  on  certain  automated
quotation  systems).  If the Company's  shares are traded for less than US $5.00
per share,  as they currently are, the shares will be subject to the SEC's penny
stock rules unless (1) the  Company's  net tangible  assets exceed US $5,000,000
during the Company's first three years of continuous operations or US $2,000,000
after the  Company's  first three  years of  continuous  operations;  or (2) the
Company has had  average  revenue of at least US  $6,000,000  for the last three
years. The penny stock rules require a broker-dealer,  prior to a transaction in
a penny stock not  otherwise  exempt from the rules,  to deliver a  standardized
risk disclosure document  prescribed by the SEC that provides  information about
penny  stocks and the nature and level of risks in the penny stock  market.  The
broker-dealer  also  must  provide  the  customer  with  current  bid and  offer
quotations for the penny stock,  the compensation of the  broker-dealer  and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. In addition, the penny
stock rules require that prior to a  transaction  in a penny stock not otherwise
exempt  from  those  rules,  the  broker-dealer  must  make  a  special  written
determination  that the penny stock is a suitable  investment  for the purchaser
and  receive  the  purchaser's  written  agreement  to  the  transaction.  These
requirements  may have the effect of reducing  the level of trading  activity in
the secondary  market for a stock that becomes subject to the penny stock rules.
Since the  Company's  shares are  traded  for less than US $5.00 per share,  the
Company's  common  stock is subject to the penny  stock  rules.  Therefore,  the
holders of the common  stock may find it  difficult  to sell the common stock of
the Company.  These rules may restrict the ability of brokers to sell the common
stock and may  reduce the  secondary  market  for the  common  stock.  A limited
secondary  market may result in a decrease  in the value of the shares  and/or a
partial or total loss of an investor's investment.

THE COMPANY MAY BE DEEMED TO BE A "PASSIVE FOREIGN INVESTMENT  COMPANY" FOR U.S.
TAX PURPOSES WHICH COULD SUBJECT U.S. SHAREHOLDERS TO INCREASED TAX LIABILITY.

The Company may be deemed to be a "Passive Foreign Investment Company" ("PFIC").
See "Item 10. Additional Information - Taxation." If the Company is deemed to be
a PFIC, a United States holder of the Company's  common shares would be required
to pay an interest  charge  together with tax calculated at maximum tax rates on
certain "excess distributions" (defined to include certain dividends from a PFIC
and any gain on the sale of stock of a PFIC) unless such holder made an election
either to (1) include in his or her taxable  income his or her pro rata share of
the PFIC's ordinary earnings and net capital gains under the Qualified  Electing
Fund rules or (2) mark to market his or her Company  common shares at the end of
each taxable  year as set forth in Section 1296 of the Internal  Revenue Code of
1986, as amended. The elections require certain conditions be met such as filing
on or before the due date, as extended,  for filing the shareholder's income tax
return for the first taxable year to which the election will apply.

THIS ANNUAL REPORT CONTAINS STATEMENTS ABOUT FUTURE EVENTS AND RESULTS WHICH MAY
NOT BE ACCURATE.

Statements  contained in this annual  report that are not  historical  facts are
forward-looking statements that involve risks and uncertainties. Such statements
may not prove to be accurate as actual  results and future  events  could differ
materially from those anticipated in such statements.


                                     - 20 -
<PAGE>


ITEM 4.   INFORMATION ON THE COMPANY.
--------------------------------------------------------------------------------

History and Development of the Company

The Company was incorporated under the British Columbia Company Act ("BC Company
Act") on December 10, 1999 under the name "Buck  Ventures Ltd." On May 10, 2000,
the Company  changed its name to "QDM Ventures  Ltd." On September 25, 2001, the
Company changed its name from QDM Ventures Ltd. to "California  Exploration Ltd"
and changed its domicile through continuation from British Columbia to the Yukon
Territory under the Business  Corporations Act (Yukon) (the "YBCA").  On June 3,
2004 the Company changed its name from California  Exploration Ltd. to "Baradero
Resources  Limited".  On  September  14, 2005,  the Company  changed its name to
"Centrasia Mining Corp."

From March 2001 until March  2004,  the  Company's  focus was on its oil and gas
interests.  In  March  2004,  the  Company  sold  its  interests  in oil and gas
properties.

On June 3, 2004, the Company completed a consolidation of its share capital on a
one new share for four old shares basis.

Effective  November 23, 2004, the Company  continued its corporate  jurisdiction
from the Yukon  Territory  into  British  Columbia  under the  British  Columbia
Business  Corporations  Act, as amended (the "BCBCA").  See "Item 10. Additional
Information - Memorandum and Articles of Association."

On  September  14, 2005,  the Company  completed a  recapitalization  whereby it
purchased all of the issued and outstanding common shares of 724 BC (the "724 BC
Acquisition") and in connection  thereto:  (i) issued 3,700,100 common shares of
its capital stock to acquire 724 BC and 233,338  common shares with respect of a
finder's  fee;  (ii)  issued  1,900,000  units  and  100,000  common  shares  in
consideration  of  $400,000  principal  of loans which have been made to 724 BC;
each unit  comprised one common share of the Company and one warrant,  entitling
the holder to purchase an additional  common share at a price of $0.40 per share
expiring  September  14,  2007;  and  (iii)  completed  a private  placement  of
4,375,000  units at a price of $0.20 per unit;  each unit  comprised  one common
share of the  Company  and one  warrant  having the same  terms as the  warrants
described above.

724 BC's principal asset was an agreement (the "Marsa Option") to acquire all of
the  issued  and  outstanding  share  capital  of BMC,  from  Marsa  Gold  Corp.
("Marsa"), a privately owned Kyrgyz company. The sole asset of BMC was a license
permitting the  exploration of an area in the  north-central  part of the Kyrgyz
Republic,  covering  approximately  240 square  kilometers  (the "Bulakashu Gold
Property").  The Marsa Option effectively allowed 724 BC to acquire its interest
in the Bulakashu Gold Property.  The completion of the  Acquisition and issuance
of Company shares on the purchase of $400,000 of indebtedness of 724 BC resulted
in the 724 BC shareholders holding the majority of the combined Company's issued
and outstanding common shares.  Accordingly,  the 724 BC Acquisition was treated
as a reverse takeover and effective September 14, 2005, the financial statements
were treated for accounting purposes as a recapitalization.

In November 2005,  the Company  agreed to reorganize its  arrangement to acquire
its interest in the Bulakashu Gold Property, thereby replacing the Marsa Option.
As a result,  BMC transferred its ownership  interest in Bulakashu Gold Property
back to Marsa.  Marsa then  assigned all of its  interests  to Kantanna  Company
Limited  ("Kantanna").  Both  Marsa and  Kantanna  are owned by Mr.  Oleg Kim, a
director  of the  Company.  Consequently,  BMC held an option to  acquire a 100%
interest in the Bulakashu  Gold  Property from Kantanna  under the same terms as
contemplated  under the Marsa Option and directly hold the exploration  licenses
on the Eastern Sary Jaz Property.  The Company  issued  200,000 common shares to
Kantanna as consideration  for the Eastern Sary Jaz Property and the transfer of
100%  ownership  of BMC to the  Company.  See "Item 7.  Major  Shareholders  and
Related Party Transactions - Related Party Transactions."

In August of 2007, the Company entered into an amending agreement with Kantanna,
pursuant to which  Kantanna has agreed to forego the aggregate  US$1,890,000  in
exploration  expenditures  for 2007 and 2008,  which was one of the requirements
for the  Company  to acquire  the  remaining  62.5%  interest  in the  Bulakashu
Property  that it had not  acquired  to  date.  The  other  requirement  was the
issuance of 375,000 shares to the vendor, which the Company has now been issued.
Thus the Company has  acquired the  remaining  62.5%  interest in the  Bulakashu
Property and now owns the entire Property.



                                     - 21 -
<PAGE>


Pursuant  to  an  Agency   Agreement  dated  September  26,  2005  (the  "Agency
Agreement") between the Company and Canaccord Capital Corporation ("Canaccord"),
on October  28, 2005 the Company  conducted a Short Form  Offering of  3,076,923
units, for gross proceeds of $2,000,000. Each unit consisted of one common share
of the  Company  and one  common  share  purchase  warrant.  The  warrants  were
subsequently exercised.

On May 26,  2006,  the Company  entered into a Memorandum  of  Understanding  to
acquire a 90%  interest two base metal  properties  located in  Kazakhstan  (the
"Kazakhstan MOU") for cash in the amount of US $8,500,000.  However, the Company
terminated  the  Kazakhstan  MOU on July 12,  2006  after it was unable to reach
acceptable terms for the proposed acquisition.

On August 25, 2006,  the Company and BMC entered into an agreement with Eurasian
Minerals Inc. ("Eurasian"),  a British Columbia corporation,  and Altyn Minerals
LLC ("Altyn Minerals"),  a Kyrgyz Republic corporation wholly-owned by Eurasian,
to acquire an option to purchase a 100%  interest in the Turgeldy  Property from
Eurasian (the "Turgeldy Agreement"). Terms of the Turgeldy Agreement included an
immediate  payment to  Eurasian  of 60,000  common  shares of the Company for an
option (the  "Turgeldy  Option") to acquire all rights and title to the Turgeldy
exploration  license,  with Eurasian  retaining a 1% Net Smelter Return royalty.
The  Company  had up to six  months  from the date of signing  to  exercise  the
Turgeldy Option by making a cash payment of US $30,000 and issuing an additional
90,000  common  shares to  Eurasian.  In the fall of 2006,  Company  field crews
completed a preliminary  mapping and sampling  program at Turgeldy.  The Company
determined  that the  results  from the  sampling  program  did not  warrant the
exercise of the Turgeldy option and on February 21, 2007, the Company terminated
its option to acquire a 100% interest in the Turgeldy property.

On May 11, 2007, the Company,  its wholly-owned  subsidiary,  Magellan  Holdings
(BVI) Corp.  and  Stargate  Solutions  Ltd.  ("Stargate")  entered  into a share
purchase agreement (as amended on June 8, 2007, June 22, 2007, July 11, 2007 and
July 13, 2007, respectively, the "Share Purchase Agreement") whereby the Company
agreed to  purchase  100% of the  issued  and  outstanding  shares  of  R.P.I.M.
Minerals Ltd., a Cyprus company  incorporated  solely to hold a 100% interest in
the shares of ZAO Rudprominvest ("RPI") (the "RPIM Acquisition"). As a result of
the RPIM  Acquisition,  the  Company  now holds a 100%  interest  in the  Souker
Property  and  the  Uleeta  and  Tsaga  Properties  (collectively  the  "Russian
Properties").

The  consideration  paid by the  Company to  Stargate  under the Share  Purchase
Agreement was:

         i)       an aggregate US $12,500,000, of which US $6,000,000 payable at
                  closing (the  "Closing"),  US $5,000,000  payable on the first
                  anniversary  of Closing,  and US  $1,500,000 is payable on the
                  second anniversary of Closing; and
         ii)      issuance  of  12,500,000  common  shares of the  Company to be
                  issued on Closing.

The Company also agreed to pay DBM Capital  Partners Ltd. ("DBM") a finder's fee
of US $625,000 cash and 625,000 common shares. The share portion of the finder's
fee and US $300,000 of the cash fee was paid at Closing. The balance of the cash
finder's fee is payable as the Company makes the balance of the payments for the
RPIM Acquisition.

As at May 31, 2007 the Company had advanced  $226,860 (US $200,000) to RPI, paid
$14,257 (US $12,472) in advances to DBM and incurred a total of $162,858 for due
diligence and  professional  fees. These amounts were recorded by the Company as
deferred acquisition costs and were included in the cost of the RPIM Acquisition
on Closing.

On July 24, 2007 (the "Effective  Date"),  the Company  completed the Closing of
the RPIM  Acquisition  whereby  it  completed  the  initial  cash  payment of US
$6,000,000 and issued  12,500,000 common shares, at a fair value of $12,000,000,
to  Stargate.  In  addition,  the Company  paid the initial  finder's  fee of US
$300,000 and issued 625,000 common shares, at a fair value of $600,000,  to DBM.
All of the shares issued for the RPIM  Acquisition  and to DBM are subject to an
escrow  agreement  pursuant to which the shares will be released  from escrow in
the normal course over a period of eighteen months.

On July 10, 2007, the Company completed a private placement for $12,600,000 from
the sale of 10,500,000 subscription receipts (the "Subscription  Receipts") at a
price of $1.20 per Subscription  Receipt.  The  Subscription  Receipts were then
released from escrow and exchanged for the issuance of 10,500,000  common shares
of the Company and 5,250,000 transferable share purchase warrants.  Each warrant
entitles the holder to purchase one common share at a price of $1.70


                                     - 22 -
<PAGE>

until July 10, 2010. Part of the proceeds from this private  placement were used
as cash consideration for the RPIM Acquisition.

The Company also issued 82,615 common shares,  at a fair value of $79,310,  to a
company  controlled by Cary Pinkowski,  a director of the Company as a bonus for
providing a loan of US  $500,000  to RPI prior to  Closing.  The loan was repaid
subsequent  to  completion  of  the  RPIM   Acquisition.   See  "Item  7.  Major
Shareholders and Related Party Transactions - Related Party Transactions."

The  Company's  registered  office is located at Suite 1305,  1090 West  Georgia
Street,  Vancouver,  British  Columbia,  V6E 3V7. The  Company's  head office is
located at Suite 300, 1055 West Hastings Street,  Vancouver,  British  Columbia,
V6E 2E9. The contact person is Douglas  Turnbull.  The telephone number is (604)
688-4110 and the facsimile number is (604) 688-4169. The Company does not have a
registered agent in the United States.

The  Company's  common  shares  were  listed on the TSX-V on October 1, 2001 and
currently  trade  under the  symbol  "CTM".  Effective  January  27,  2002,  the
Company's common stock was approved for trading on the Over-the-Counter Bulletin
Board  (the "OTC  Bulletin  Board")  operated  by the  National  Association  of
Securities  Dealers.  The  Company's  common shares  currently  trade on the OTC
Bulletin  Board under the symbol  "CTMHF".  Effective  November  18,  2005,  the
Company's  common stock  commenced  trading on the Frankfurt Stock Exchange Open
Market  under  the  symbol  "C8M".  See  "Item 9. The  Offer  and  Listing-Price
History."

Business Overview

The Company's  original goal was to identify,  acquire,  explore and develop oil
and natural gas  reserves in the Western  United  States.  From March  2001until
March 2004,  the Company  focused on its oil and gas interests and conducted oil
and gas operations during fiscal year 2003. In 2004, the Company divested itself
of all its oil and gas interests and as of the date of this annual  report,  the
Company no longer holds any oil and gas interests or leases.

During the period May 2004 until March 2005,  the Company  assessed  acquisition
and joint venture  opportunities in both the oil and gas and mineral  extraction
industries.

PROPERTIES IN THE KYRGYZ REPUBLIC

During the period March 2005 through August of 2007,  the Company  completed the
724 BC  Acquisition  and in a  series  of  related  transactions  finalized  its
interests,  via its  subsidiary  BMC,  in the  Bulakashu  Property,  the  Kokjar
Property, and the Eastern Sary-Jaz Property, all located in the Kyrgyz Republic.
See  "Item 4.  Information  on the  Company  - History  and  Development  of the
Company."

BMC is in the  process  of  exploring  its  mineral  properties  and has not yet
determined  whether these properties  contain ore reserves that are economically
recoverable.  The  recoverability  of amounts expended by BMC in connection with
the  exploration  of its property  interests is dependent upon the discovery and
exploitation  of  economically  recoverable  reserves,   confirmation  of  BMC's
interest in the underlying  mineral claims, the ability of the Company to obtain
necessary  financing to conduct  exploration  activities and advance  properties
beyond the exploration stage, and future profitable activities on the properties
or proceeds from the disposition thereof.

The Company's main assets in the Kyrgyz Republic, via its subsidiary BMC, are:

(i)      the Bulakashu License (License No: AP 48, originally referred to as the
         "BMC License" in the  Company's  2005 Form 20-F filing and now referred
         to as the "Bulakashu  License"),  which permits the  exploration of the
         Bulakashu Property.  Pursuant to the Bulakashu License,  BMC obtained a
         license  from  KSAG  that  provides  BMC  with  the  right  to  conduct
         geological  research of basic and placer gold in the Bulakashu  area of
         the Kyrgyz  Republic,  excluding  the following  gold  alluvial  placer
         licenses:  Upper Karabulak,  Lower  Karabulak,  Upper Tokailu and Lower
         Tokailu.  BMC  concurrently  negotiated  the size of the property to be
         explored and the terms of an  exploration  license  agreement  with the
         Geology  Agency (the  "Bulakashu  License  Agreement").  The  Bulakashu
         License  Agreement  is an integral  part of the  Bulakashu  License and
         determines the  exploration  expenditures  to be incurred by BMC on the
         Bulakashu Property and provides details of the proposed work program.



                                     - 23 -
<PAGE>


         The Bulakashu License was issued for a term until December 31, 2005 and
         can be extended for up to ten years subject to the approval of KSAG and
         provided  that  BMC is in  compliance  with the  terms  of the  License
         Agreement.  BMC fulfilled  the  commitments  of the  Bulakashu  License
         Agreement,  and  consequently,  the  Bulakashu  License  and  Bulakashu
         License  Agreement were renewed in 2006 for a period of four years. See
         "Item 4. Information on the Company - Business Overview".  However, the
         Law of the Kyrgyz  Republic on "Subsoil"  dated July 2, 1997 No. 42 (as
         last  amended on February  4, 2002) does not provide for any  automatic
         procedure for renewal or obtaining of an exploration license after this
         period  has  expired.  There  can be no  assurance  that the  Bulakashu
         License will be renewed.  If the Bulakashu License is not renewed,  the
         Company's investment in the Bulakashu Property may be worthless.

         Each year,  BMC is  required  to prepare and submit a report to KSAG to
         confirm that BMC has complied with the terms of the  Bulakashu  License
         Agreement.  Upon approval by KSAG,  extensions to the Bulakashu License
         and Bulakashu  License Agreement may be applied for an annual basis, up
         to a maximum of ten years. Provided BMC is in compliance with the terms
         of the  Bulakashu  License  Agreement,  BMC is  required to pay to KSAG
         approximately  US $7 in payment of KSAG  services  associated  with the
         application to extend the License Agreement.  At the end of each annual
         license period, KSAG may require that areas of the Bulakashu License be
         relinquished by BMC. BMC, as the license holder, determines which areas
         are to be relinquished; however, BMC may have to relinquish areas which
         it wishes to retain.

         The Subsoil  Laws  provide  that a sub soil user who has  discovered  a
         deposit  has the  indisputable,  exclusive  right to its  exploitation.
         Prior  to any  exploitation  on the  Bulakashu  Property,  BMC  will be
         required to obtain approval from KSAG to conduct such  exploitation and
         negotiate the terms of such exploitation, to include royalties, bonuses
         and other payments with KSAG.  There are no assurances that BMC will be
         able to obtain such approval.

(ii)     the  Eastern  Sary Jaz  License  (AP 303),  which was  issued to BMC on
         November  14,  2005,  giving BMC the  exclusive  rights to explore  the
         Eastern  Sary Jaz  Property  for an initial  period of two  years,  and
         renewable  up to a period of ten years.  The Eastern  Sary Jaz Property
         was  acquired  by the Company  based on its  favorable  geological  and
         structural setting for hosting gold mineralization.  The Company's 2006
         license  agreement with KSAG for the Eastern Sary Jaz Property required
         that a minimum of US $80,000 be spent on the Eastern  Sary Jaz Property
         by December of 2006 and a further US $305,000 by December of 2007.  The
         Company has met this  commitment  for 2006 and 2007. In 2007,  the KSAG
         extended the License  period until  December 31, 2010. The extension of
         the  license  period  will  be  subject  to  the  company  successfully
         fulfilling the terms of annual license  agreements until 2010.  Pending
         approval of its 2007 expenditures by the KSAG, the Company  anticipates
         that the Eastern Sary Jaz License will be renewed for 2008.

(iii)    the Kokjar  License (AP 383),  which was issued to BMC on February  10,
         2006,  giving BMC the exclusive  rights to explore the Kokjar  Property
         for an initial period of two years, and renewable up to a period of ten
         years.  The Kokjar  Property was  acquired by the Company  based on its
         favorable   geological   and   structural   setting  for  hosting  gold
         mineralization.  Although the KSAG  granted the Company an  exploration
         license  for  the  Kokjar   Property,   the  Company's   proposed  2006
         exploration  program for the Kokjar  Property  was not  approved by the
         KSAG, and the Company did not enter into a license  agreement with KSAG
         that specified any work  commitment for Kokjar in 2006. As a result the
         Company did not conduct any  exploration  work or incur any expenditure
         on the Kokjar Property in 2006. The Company attempted to negotiate with
         the KSAG to obtain  approval for a proposed 2007  exploration  program,
         but was  unsuccessful.  The  Company  has not yet  decided  whether  to
         continue to  negotiate  to obtain  KSAG  approval to work on the Kokjar
         License or whether to abandon the License altogether.

PROPERTIES IN THE RUSSIAN FEDERATION

The Company  completed  its  acquisition  of its Russian  Properties on July 24,
2007. The Company's  wholly owned  subsidiary RPI is in the process of exploring
the Russian  Properties  and has not yet  determined  whether  they  contain ore
reserves  that are  economically  recoverable.  The  recoverability  of  amounts
expended by RPI in connection with the exploration of its property  interests is
dependent  upon the  discovery  and  exploitation  of  economically  recoverable
reserves, confirmation of RPI's interest in the underlying mineral Licenses, the
ability of the  Company to obtain  necessary  financing  to conduct  exploration
activities and advance properties beyond the exploration stage, and future



                                     - 24 -
<PAGE>


profitable  activities  on the  properties  or  proceeds  from  the  disposition
thereof.  See "Item 4.  Information on the Company - History and  Development of
the Company."

The Company's main assets in the Russian  Federation,  via its  subsidiary  RPI,
are:

i)       Souker - The Souker  Production and Combined Subsoil License IO-D 00695
         OY (the "Souker  License") was issued to RPI by the Territorial  Agency
         on  Subsoil  Use for the  Murmansk  oblast,  which  is the  territorial
         department  of the  Federal  Agency  on  Subsoil  Use as a result of an
         auction held on December 15, 2004.  The Souker  License  grants the RPI
         the right to explore,  develop and  extract  minerals  from the license
         area of approximately 1.6 kilometers (the "Souker Property") subject to
         certain  conditions  stipulated  by the license  agreement.  The Souker
         License  is valid  until  December  15,  2030 and  stipulates  that the
         Company must commence  production at a rate of no less than 300,000 ore
         tonnes of ore per annum, no later than December 31, 2010.

ii)      Tsaga - RPI  obtained  subsoil  use  license  IO-D 13487 OI (the "Tsaga
         License")  for  the   preliminary   exploration  of  the  Tzaginsk  and
         Medvezhje-Elskoozersk  subsoil  plot  (the  "Tsaga  Property")  for the
         purposes of the search and  valuation of deposits of copper and nickel,
         registered on February 22, 2006.

iii)     Uleeta - RPI  obtained  subsoil use license  IO-D 13486 OI (the "Uleeta
         License")  for  the  preliminary  exploration  of the  Ulitaozersk  and
         Anistundra plot (the "Uleeta  Property") for the purposes of the search
         and  valuation  of  deposits  of nickel  and  platinum,  registered  on
         February 22, 2006.

Government Regulation

KYRGYZ REPUBLIC

The Kyrgyz  Republic is a  landlocked  and  mountainous  country  located in the
middle of the Asian continent.  It borders Kazakhstan in the north, the People's
Republic of China in the east,  Tajikistan in the  south-west  and Uzbekistan in
the west.  It is one of the  smallest  of the  Central  Asian  nations and has a
population  of  approximately   five  million  people.  The  Kyrgyz  economy  is
predominantly  agricultural,  with two thirds of the country's population living
in rural areas.  The Kyrgyz  Republic is a secular state and freedom of religion
is protected in its Constitution.  Approximately 75% of the population is Muslim
and 20% are Russian  Orthodox.  The  country  contains  deposits  of gold,  tin,
tungsten,   antimony,  mercury,  and  rare  earth  metals  as  well  as  locally
exploitable coal, oil and natural gas.

The Kyrgyz Republic is a former  constituent  republic of the Soviet Union.  The
country  declared  its  independence  from the Soviet Union in 1991 and became a
member of the  Commonwealth of Independent  States (the "CIS"),  and has overall
been a  politically-stable  constitutional  democracy.  Since independence,  the
nation has  undertaken  substantial  economic  and  political  reforms,  such as
introducing  an improved  regulatory  system and land  reforms,  and undergone a
transition to a  market-orientated  economy.  The Government  and  international
financial  institutions have also engaged in comprehensive  medium-term  poverty
reduction and economic growth strategies.

In March 2005, the former 105 member two-chamber  parliament ceased to exist and
was replaced by a one chamber  parliament  approximately  half its current size.
The new one-chamber  parliament has broader  constitutional powers, with certain
powers  being  relinquished  to it by the  President.  These  changes  were made
pursuant to constitutional referendums which were conducted in 2003. On July 10,
2005 Kurmanbek  Bakiyev was elected as the country's new president.  Mr. Bakiyev
had been serving as the interim  President of Kyrgyzstan since protests in March
of 2005 forced the  departure and  subsequent  resignation  of former  president
Askar Bakiyev in March 2005. The President was elected for a five-year  term. In
late October of 2006,  protesters critical of the Bakiyev government took to the
streets in Bishkek, the nation's capital,  calling for the President to agree to
a new  constitution  that would curb his power.  Many  protestors  believed that
Bakiyev  should  resign  his post.  Tensions  rose when  groups  supporting  the
President clashed with opposing groups in the main square in Bishkek on November
7, 2006. The situation soon calmed as the President signed a new constitution on
November 9, 2006, that reduced his power, and increased that of parliament.

The Kyrgyz Republic has generally not experienced the ethnic,  civil or military
unrest that has befallen other former Soviet states,  with the exception of very
few  localized,   politically-motivated   conflicts  and  small-scale  terrorist
activity in the southern  Batken  region of the country  during  1999,  2000 and
early  2005.  The  Batken  region  is over 700  kilometers  from  the  Bulakashu
Property.  Since 2001, the Kyrgyz Republic has permitted military personnel from
the United States



                                     - 25 -
<PAGE>

and  other  western  countries  to  be  stationed  in  the  country.   In  2002,
construction  of a large U.S.  airbase  began  outside the  nation's  capital of
Bishkek,  which  is now  complete.  The  presence,  in the past  few  years,  of
international  military  coalition  forces and the recent  addition of a Russian
military  base in Kyrgyz  territory  have  brought  increased  stability  to the
country.

The  country's  legal  system,   both   legislative   and  judicial,   has  been
substantially  reformed since 1991. However, the legal system has not matured to
the level of  developed  economies.  These  factors  make it prudent for foreign
investors to seek additional protection through contractual  agreements with the
government in order to stabilize the investment  environment  and provide for an
independent forum for conflict resolution.

The national  currency of the Kyrgyz  Republic,  the Som, is freely  convertible
into U.S. dollars within the Kyrgyz Republic at a floating exchange rate and has
remained  relatively  stable  over the last  four  years.  The  Kyrgyz  economy,
although  still  recovering  from the  post-Soviet  collapse  and  substantially
lagging  in  foreign  investment  when  compared  with  its  oil-rich  neighbors
Kazakhstan and Uzbekistan,  exhibited  positive  economic signs in 2004, with an
inflation rate of 2.8% and gross domestic  product ("GDP") growth of 7.1% in the
same year. However, the political problems in 2005, along with decreased foreign
investment and slowing metals production, caused a 0.6% contraction in 2005 GDP.
The Kyrgyz Republic was the first former CIS state to be accepted as a member of
the World Trade  Organization and one of the first to receive  financial support
from the International Monetary Fund ("IMF").  Further restructuring of domestic
industry and success in attracting foreign investment are seen as keys to future
growth. The IMF has forecast real GDP growth of 7.5% for 2007.

The  laws of the  Kyrgyz  Republic  that  are  most  relevant  to the  Company's
activities  are the  law of  March  27,  2003,  "On  Investments  in the  Kyrgyz
Republic"  (the  "Investment  Law")  and  the  law of  March  6,  1992,  "Law on
Concessions  and Foreign  Concession  Enterprises  in the Kyrgyz  Republic" (the
"Concessions Law").

The Investment Law  establishes  the basic  principles of the Kyrgyz  Republic's
policy toward foreign  investment as well as investor  protections.  It provides
that foreign  investors are entitled to freely use, possess and dispose of their
investments   and  to  freely  export  or  repatriate   the  proceeds  of  these
investments.  The  Investment Law prohibits all types of  discrimination  toward
foreign  investors or  investments,  including  that based on country of origin.
Investors are guaranteed  freedom from interference by governmental  bodies with
their economic  activities,  free conduct of monetary  operations,  the right to
hire both Kyrgyz citizens and  expatriates and the ability to submit  resolution
of disputes to international arbitration.

The Investment Law states that expropriation of investments must be conducted in
accordance with Kyrgyz law and, where effected,  must be in the public interest.
Expropriation  must not be  discriminatory  and must be  accompanied  by timely,
proper and real  compensation  of losses,  including lost profit.  The amount of
such  compensation  is to be determined in accordance with the fair market value
of the  expropriated  investment,  together  with  interest  from  the  date  of
expropriation.  Investors  who suffer  losses as a result of war or other  armed
conflict, upheaval or other similar circumstances will be granted the same legal
status and terms of operation as Kyrgyz nationals.

Under Kyrgyz law,  mining rights may be granted  either by way of exploration or
mining  licenses,  both of which are issued by KSAG, or by a concession from the
Government of the Kyrgyz Republic.  Although concessions are typically much more
difficult,  expensive and time-consuming to obtain,  they provide investors with
greater protection.

While a license  may be  terminated  without the  licensee's  consent in certain
circumstances,  including  a  breach  of the  law,  a  concession  may  only  be
terminated in accordance with the terms and conditions of the agreement pursuant
to which it is granted.

The  Concessions  Law  establishes  the procedure by which the Government of the
Kyrgyz Republic may grant  concessions to foreign investors and provides for the
status and rights of such investors. The most important step is the execution of
an  agreement  between the  Government  of the Kyrgyz  Republic and the relevant
investor,  in which the Government of the Kyrgyz  Republic  gives  permission to
possess and use the property  granted under the  concession and to gain proceeds
from such concession.



                                     - 26 -
<PAGE>


RUSSIAN FEDERATION

Russia  has  been  undergoing  a  substantial  political  transformation  from a
centrally  controlled  command  economy  under  communist  rule  to a  pluralist
market-oriented  democracy.  While President  Putin had maintained  governmental
stability and even  accelerated the reform process during the first few years of
his first term as the president of the Russian Federation (2000-2004), since the
end of his first term to the  beginning  of his second term  (2004-2008),  there
have  been  signs  of  increased  concentration  of  power  in the  presidential
executive.  Russian  politics are now  dominated by the President and his United
Russia party and decisions impacting certain strategic  businesses in Russia may
be substantially influenced by the Kremlin.

Russian laws, licenses,  and permits have been in a state of change and new laws
may  be  given   retroactive   effect.   Ambiguity   exists  in  regard  to  the
interpretation  of  licenses  and  permits  and the  application  of  rules  and
regulations  in  regard  to  mining  activities  and  associated   environmental
requirements in the Russian Federation. In such circumstances, mining activities
may be  significantly  and  adversely  affected.  It is also not  unusual in the
context of dispute  resolution in Russia for parties to use the  uncertainty  in
the Russian legal environment as leverage in business negotiations. In addition,
Russian  tax  legislation  is subject to varying  interpretations  and  constant
change.

The  prospects  for future  economic  stability  in the Russian  Federation  are
largely dependent upon the effectiveness of economic measures  undertaken by the
government,  together with legal, regulatory, and political developments.  There
has been a recent proposal to restrict foreign  participation in major strategic
subsoil properties.  If realized, such restriction may negatively affect foreign
investments in such major strategic  properties,  including  mining  properties.
However,  generally  the  regime  for  foreign  investment  in  Russian  subsoil
properties has not been negatively impacted.

Over the last  several  years  there have been some key  changes in the  Russian
mining industry which the Company believes have created a favorable  environment
for  exploring  and  developing  mineral  properties  in Russia,  including  the
devaluation  of the ruble in 1998, the reduction of corporate tax rates from 35%
to 24% and income tax rates from 35% to 13%, and  liberalization  in the area of
foreign currency controls.

INVESTMENT COMPANY ACT OF 1940

Although the Company is subject to regulation  under the Securities Act of 1933,
and the Securities  Exchange Act of 1934,  management  believes the Company will
not be subject to regulation  under the  Investment  Company Act of 1940. In the
event the Company holds passive investment interest in a number of entities, the
Company could be subject to regulation under the Investment Company Act. In such
event,  the Company would be required to register as an  investment  company and
could be expected to incur  significant  registration and compliance  costs. The
Company has obtained no formal  determination  from the  Securities and Exchange
Commission as to its status under the Investment  Company Act.  Consequently,  a
violation of the  Investment  Company Act could subject the Company to civil and
criminal penalties and could cause the Company to cease operations.

INVESTMENT ADVISERS ACT OF 1940

Under the  Investment  Advisers Act of 1940, an  "investment  adviser" means any
person who, for compensation, engages in the business of advising others, either
directly or through  publications or writings,  as to the value of securities or
as to the advisability of investing in, purchasing,  or selling  securities,  or
who, for compensation and as part of a regular  business,  issues or promulgates
analyses or reports concerning securities. The Company does not intend to engage
in the business of advising others in investment matters for a fee or otherwise.

Expenditures and Dispositions

During fiscal 2007, the Company  recorded a total of $740,819 on the acquisition
and exploration of its mineral interests in the Kyrgyz Republic, comprising: (i)
the  issuance  of  200,000  common  shares,  at a  fair  value  of  $96,000,  as
consideration  for the Eastern Sary Jaz  Property;  (ii) the issuance of 250,000
common  shares,  at a fair  value of  $207,500,  for an  option  payment  on the
Bulakashu Property;  (iii) the issuance of 60,000 common shares, at a fair value
of $42,000, for an option payment on the Turgeldy Property; and (iv) exploration
expenditures  totaling $395,319, of which $304,033 was incurred on the Bulakashu
Property.  The Company also incurred $23,865 for general exploration  activities
in fiscal 2007. During the latter part of fiscal 2007, the Company  investigated
and negotiated the RPIM Acquisition, under which


                                     - 27 -
<PAGE>


the  Company  paid a $226,860  non-refundable  deposit  and  incurred a total of
$162,858 for due  diligence  and  professional  fees as at May 31,  2007.  These
amounts were recorded as deferred acquisition costs.

During fiscal 2006, the Company  recorded a total of $803,386 on the acquisition
and exploration of its mineral interests  comprising of: (i) issuance of a total
of 400,000 common shares of its share capital, at a fair value of $230,000,  and
payment  of  $46,440  (US  $40,000)  under  its  commitments  under  the  option
commitments for the Bulakashu  Property;  (ii) $369,398  attributable to mineral
interests  on cash  advances  made to BMC prior to  completion  of the  Kantanna
Option,  and (iii)  $133,654  for  exploration  incurred on  exploration  on the
Bulakashu  Property and $23,894 for exploration on other  properties.  No direct
mineral  interest  activities  occurred in fiscal 2005.  During fiscal 2005, the
Company advanced $268,346 to BMC.

In fiscal 2007,  the Company  withdrew from the Turgeldy  Property and wrote-off
$52,361 in costs. No dispositions occurred during fiscal 2006 or 2005.

Sales and Revenue Distribution

The Company did not generate any sales or revenue  during  fiscal 2007,  2006 or
2005.

Total interest income reported for fiscal 2007, 2006 and 2005, were as follows:

                                       2007            2006            2005
                                   ------------    ------------    ------------
Interest Income                        $ 42,993        $ 19,455          $  Nil
                                   ------------    ------------    ------------
Total Interest Income                  $ 42,993        $ 19,455          $  Nil
                                   ============    ============    ============

Plan of Operation

                                KYRGYZ REPUBLIC

The Company has completed its 2007 drill program at the Severny  Prospect on the
Bulakashu Property in the Kyrgyz Republic. A total of 4,405 meters was completed
in 19 holes. Based on favourable  exploration  results from the 2006 exploration
programs  carried out on the Severny and  Karabulak  prospects on the  Bulakashu
property,  the  Company  originally  planned  to carry out a 6,000  meter  drill
program,  the bulk of which would be carried out on the  Severny  Prospect.  The
company  initiated  the 2007  drill  campaign  with 2 drill rigs that were later
joined by two more drill rigs in August of 2007. Due to mechanical problems with
heavy  equipment  (drills and  bulldozers)  and poor drill rigs, bull dozers and
poor  production,  only 19 drill  holes,  totaling  4,405 meters of the proposed
6,000 meter  program,  were  completed,  entirely at Severny.  Assay results are
still pending for some of the drill holes  completed to date.  Once received,  a
compilation and interpretation of the drill results form the 2007 drill campaign
will be used to plan exploration activities for 2008. It is anticipated that the
Company will  conduct  further  drilling at Severny and complete the  originally
proposed drilling at Karabulak in 2008

Based on  favourable  results from the 2006  exploration  program at the Eastern
Sary  Project,  the Company  carried out a small follow up  exploration  program
consisting  of surface  prospecting  and mapping.  The Company has completed the
2007  exploration  program and  analytical  results are pending.  The Company is
presently  compiling results from the 2007 program and preparing reports to meet
it  license  renewal  obligations  with  the  KSAG.  A  full  evaluation  of the
exploration results will be carried out during the winter to determine the scope
of exploration work to be carried out on Eastern Sary Jaz project in 2008.

RUSSIAN FEDERATION

Upon closing of the acquisition of RPI and the Russian  Properties,  the Company
implemented a drill program on the Souker Property to verify historic reports of
nickel and copper mineralization at Souker and to determine whether the historic
occurrence  constituted an economically  viable orebody.  Prior to the Company's
acquisition of the Souker Property, a total of 65 drill holes had been completed
on the  property.  The Company is  currently  carrying  out a 10,000 meter drill
program so that the known  mineralization will have been drilled tested at a 100
meter spacing.  The Company has determined  that this spacing will be sufficient
to verify whether the grade and distribution of nickel and copper mineralization
on the  Souker  Property  constitutes  an  economically  viable  orebody.  As of
November 11, 2007, a total of



                                     - 28 -
<PAGE>


5,568 meters of the planned drill program has been  completed in 42 drill holes.
Complete  analytical results have been reported from 22 of the 42 drill holes to
date.

During the summer of 2007, RPI carried out extensive  rock and soil  geochemical
and geophysical  surveys,  consisting of ground magnetic,  induced  polarization
("IP") and resistivity surveys on both the Uleeta and Tsaga Properties. The data
from the geophysical  surveys are now being  interpreted  for  presentation in a
final  report  anticipated  in  late  December  2007.  The  geochemical  data is
incomplete at this time.  Preliminary results of the surveys are encouraging and
they have outlined potential areas of sulfide mineralization. Additional work on
the  properties  will be proposed after results of this year's  geochemical  and
geophysical surveys are completed and evaluated.

The Company's  management  and technical  staff  maintains an ongoing  review of
exploration projects and opportunities  worldwide,  but primarily in Kyrgyzstan,
Kazakhstan  and  Russia.  Pending  the  outcome of these  property  reviews  and
evaluations,  the Company may decide to pursue and  acquire  additional  mineral
properties that it feels would add significant  value to the existing asset base
of the Company.  Any new property  evaluations that require intensive  technical
due diligence or future property  acquisitions would require the Company to seek
additional financing.

Depending on the level of the Company's activities,  it may be necessary for the
Company to hire additional  administrative and/or technical staff on a part time
or temporary basis.

As at August 31,  2007,  the Company had working  capital of  $5,674,417,  which
excludes the $5,546,000  current  portion of long-term debt which is due on July
24, 2008.  Management  recognizes that these funds will be insufficient to cover
the cost of its  operations  for the next twelve months and it will be necessary
to seek additional financing.

Management  estimates  that it will  require  funds for the  following  purposes
within the next twelve months:

--------------------------------------------------------------------------------
Principal Use of Funds                                US $(3)         CDN $
                                                                   EQUIVALENT(3)
--------------------------------------------------------------------------------

Completion of 2007 Drill Program at Souker Deposit     $734,000        $734,000

Completion of 2007 Exploration Program at
   Bulakashu (1)(2)                                    $300,000        $300,000

Estimated 2008 Work Commitments on Bulakashu,
   Souker, Eastern Sary Jaz, Uleeta and
      Tsaga (1)(2)                                   $4,000,000      $4,000,000

Property Payments (RPI Acquisition)                  $5,000,000      $5,000,000

Property Evaluation/Due Diligence costs (1)(2)         $250,000        $250,000

General and Administrative Expenses for the
   Next 12 Months                                    $1,600,000      $1,600,000
                                                   ------------    ------------
                                           TOTAL    $11,884,000     $11,884,000
                                                   ============    ============

(1)  See "Item 4. Information on the Company - Principal  Properties - Bulakashu
     Property."
(2)  See "Item 4.  Information  on the  Company -  Business  Overview - Kantanna
     Option."
(3)  Converted at Cdn $1.00 = US $1.00.

There may be circumstances  where, for sound business reasons, a reallocation of
funds  may be  necessary.  The  Company  will only  redirect  the funds to other
properties and will only do so, on the basis of a written recommendation from an
independent professional geologist or engineer.

Principal Properties

KYRGYZ REPUBLIC

Bulakashu Property

The  Bulakashu  Property is without  known  reserves as defined by Guide 7 or NI
43-101 and BMC's programs at the Bulakashu Property are exploratory in nature.

Technical  information  provided herein for the Bulakashu Property is based upon
information  derived from the results of the Company's 2006 and 2007 exploration
programs  and  information  contained  in a  report  (the  "Bulakashu  Technical
Report") entitled "The Bulakashu Property,  The Bulakashu Mining District,  Chui
Oblast, Kyrgyzstan" dated June 15,


                                     - 29 -
<PAGE>


2005,  prepared by APEX  Geoscience  Ltd.  ("APEX").  The  Technical  Report was
prepared  for  724  BC  in  compliance  with  NI  43-101  for  submission  as an
independent  technical report to the TSX-V, the British Columbia and the Alberta
Securities Commission in connection with the Company's Management Proxy Circular
and the Centrasia Acquisition.  The Technical Report was prepared by Mr. Dean J.
Besserer,  B.Sc.,  P.Geol.  of APEX, as the responsible  Qualified  Person.  The
technical  information  contained  in this  annual  report  with  respect to the
Bulakashu Property has been summarized from the Technical Report.

Data used in the compilation of the Technical  Report came from many sources and
time  periods  before the  author's  involvement.  Other than for the purpose of
conveying  the  history  of all  exploration  work  at the  Bulakashu  Property,
references to historical  data cannot be verified and therefore  were not relied
upon other than a general indication of the presence and style of mineralization
on the Bulakashu Property.  For example, many of the reports used to prepare the
Technical   Report,   were  prepared  under  the   supervision  of  and  to  the
specifications  of the  Department  of the  Kyrgyz  SSR,  prior to  Kyrgyzstan's
independence or by KSAG, after independence.  Management believes, the manner in
which most of the data was collected  and  presented  was  reasonable by current
standards and unless specified should be considered reliable. The format of more
recent  reports  compiled  by the staff of BMC and Marsa do not  comply  with NI
43-101  standards,  however,  Mr.  Besserer  had no reason to  believe  that the
information and observations contained within those reports were not accurate.

The  Bulakashu  exploration  program is carried out under the  direction  of the
Company's  Qualified  Person and Vice  President  of  Exploration,  Dr.  William
Tafuri.

PROPERTY DESCRIPTION AND LOCATION

The Bulakashu  Property lies within the  Bulakashu  mining  district in the Chui
Oblast, Panfilov Region of the Republic of Kyrgyzstan,  and falls within a broad
band of mineral  deposits  which are locally  referred  to as the  Kyrgyz-Kungey
mineral  belt which have  historically  produced  gold and  copper.  The primary
prospects  located on the Bulakashu  Property are the Karabulak  Gold  Prospect,
Severny Copper/Gold Prospect, and the Otradny Prospect.

The location of the  Bulakashu  Property in the Kyrgyz  Republic is shown on the
following map (Map -1) prepared by APEX Geoscience Ltd., dated June 2005:




                                     - 30 -
<PAGE>



                                     Map - 1

                       [GRAPHIC OMITTED][GRAPHIC OMITTED]

                      Map of Bulakashu Property, Kyrgystan

                     [View Exhibit 15-1 in PDF format - Map - 1]



The  Bulakashu  License  was  originally  issued to BMC on March 28,  2005 for a
4-year period.  The exploration  license is renewed annually and can be extended
for up to ten years subject to the approval of the KSAG and provided that BMC is
in compliance with the terms of the Bulakashu  License  Agreement or any further
license  agreements.  Kyrgyz  Subsoil  Law does not  provide  for any  automatic
procedure for renewal or obtaining of an exploration  license after this current
license period has expired.  See "Item 4.  Information on the Company - Business
Overview - Properties in the Kyrgyz Republic."

The  Bulakashu  Property  is defined by License No: AP 48 issued by the KSAG and
originally  comprised  an area of 240 km(2).  Under the annual  license  renewal
process for the Kyrgyz Republic,  79 km(2) of the original Bulakashu License has
been relinquished since 2005 and 25 km(2) of new license area has been added. As
of 2007, the Bulakashu License remains a contiguous license and currently covers
an area of 186 km(2). In, 2006, the Company entered into a new license agreement
with KSAG that  would  extend  the term of the  license  to the end of 2010.  To
fulfill the terms of this agreement,  the Company must incur minimum exploration
expenditures of 9,120,000 Som (approximately USD$225,000) annually until the end
of 2010. The boundary of the Bulakashu  License area is defined by the following
coordinates.

         CORNER            NORTH LATITUDE            EAST LONGITUDE

             142.381          73.616
             242.385          73.967
             342.340          73.969
             442.338          73.797
             542.302          73.799
             642.300          73.618



                                     - 31 -
<PAGE>




ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The  Bulakashu  Property is accessed  by driving on paved  roads  westerly  from
Bishkek to Kara  Balta on highway  M39 and then south from Kara Balta on highway
M41 (the  Bishkek to Osh  highway) for about 120 km. A 5 km dirt road of varying
quality leads westerly from Highway M41 to the center of the Bulakashu Property.

The region  experiences  long cold winters and cool summers.  Based on long-term
observations at the Tuya Ashu weather  station,  at an elevation of 3,586 m, the
average annual temperature is -3.2(degree)C, with lowest average temperatures in
January  (-12.8(degree)  C) and  highest  in July  (+8.5(degree)  C).  Sustained
subzero  temperatures  last from  November to March  inclusive.  Snowfall can be
expected  from  November to May.  There are no glaciers or permanent  snowfields
within  the  Bulakashu  Property.  Avalanches  are common  throughout  the area.
Average  annual  precipitation  is 855 mm, of which  approximately  613 mm falls
during the warm  period  from April to  October.  Highway  M39 is kept open year
round because it provides the main access to Osh from Bishkek.  Highway M41, the
Bishkek to Osh highway,  cuts the eastern edge of the Bulakashu  License area. A
power line runs through the east edge of the Bulakashu Property with the closest
established sub-station at Tuya Ashu.

The elevation at the property ranges from 2,500m to 4,050m in rugged mountainous
topography  that  is  dominated  by  glacial  features.  Higher  elevations  are
dominated by steep walled  cirques and aretes while the major valleys are filled
with moraines.  Moderate to gentle slopes are often covered by talus and outcrop
exposure is poor.  Vegetation on the Bulakashu  Property consists of grasses and
sparse shrubs with very few trees. All the major drainages have flowing streams.

Any  necessary  local  labor  will  likely  come from Kara  Balta,  Susdmir,  or
Sosnovka.  Kyrgyzstan  has a 98  percent  literacy  rate and  mining is a common
profession.  Kara Balta is 60 km to the north and is the closest  large city and
railhead.
Initially, the field season should be limited to the snow free months. There may
be some weather  caused delays if the project  progresses  past the  exploration
stage but any future  production  should not be effected  any more than  similar
mines in severe climates.

Access to the Bulakashu  Property is  excellent.  A paved,  year round,  highway
crosses  the  property  from which the main  exploration  camp at  Bulakashu  is
accessed by a  five-kilometer  dirt road. A 35-kilovolt  power line runs through
the  east  edge  of the  Bulakashu  Property.  The  climate  is of  the  extreme
continental type with long cold winters and cool summers. Snow may come as early
as November and stay on the ground,  at the lower  elevations,  until May. There
are no  glaciers or  permanent  snowfields  within the  Bulakashu  Property  and
avalanches are common throughout the area in the winter and early spring.

Although conducting  exploration or drill programs in mountainous terrain during
winter  conditions can present  challenges,  successful winter drilling programs
have been conducted in similar terrain and climatic  conditions as those present
at the Bulakashu Property.

GEOLOGICAL SETTING

The Bulakashu  Mining District lies within the Northern Tien Shan terrane of the
Kyrgyz  Republic.  The Bulakashu  Property  falls within a broad band of mineral
deposits which are locally referred to as the  Kyrgyz-Kungey  mineral belt which
have historically produced gold and copper.

The geology of the  Bulakashu  Property is  extremely  complex due to the varied
nature of the  volcanic  stratigraphy,  several  stages of  intrusive  activity,
structural complexity consisting of several periods of folding and faulting, and
metamorphism.  The  stratigraphy  of the Bulakashu  district is  represented  by
volcanic and volcaniclastic  rocks of Lower Mid-Ordovician to Lower Mid-Devonian
age.  The  Silurian  strata  are  absent  and are  represented  by a  widespread
unconformity  throughout the Northern Tien Shan terrane.  The composition of the
rocks is varied  representing  the  multi-stages  of  volcanic  activity  in the
district.



                                     - 32 -
<PAGE>

DEPOSIT TYPES

Gold occurs in veins and vein/stockwork  combinations in mafic volcanic rocks in
complex   structural   settings.   Copper-gold   mineralization   occurs  within
granodiorite to diorite porphyry  intrusions similar to many other such deposits
throughout the world.

There are two identified types of hard rock mineral occurrences in the Bulakashu
district:   greenstone/mafic   volcanic   hosted  gold   deposits  and  porphyry
copper/gold  deposits.  Gold occurs within small discontinuous  quartz veins and
quartz vein stockworks in sheared  greenstones in complex  structural  settings.
These deposits are  remarkably  devoid of other metals and the gold often occurs
as free gold.

Porphyry copper/gold  mineralization is mid-Ordovician in age and related to the
island  arc  stage  of  mineralization.  Mineralization  occurs  in  diorite  to
monzodiorite  porphyries  with  zoning  that  is  typical  for  porphyry  copper
deposits.

HISTORY

In  1935   prospectors   first  recorded  gold  placers  in  the  Susamir  basin
(Yarushevsky et al., 2003).

Extensive  uranium  exploration  and geological  mapping  (1:200,000  scale) was
conducted in the area in 1946 and 1957.  However,  the most  interesting find of
that period was a small gold-bearing quartz vein found in Korgantash creek and a
great  number of old placer  excavations,  found in the  Tokailu-Karabulak  area
(Yarushevsky et al., 2003).

In 1958, gold bearing outcrops were found at Karabulak,  Bulakashu,  Altyn-Masha
and the placer gold content of Tokailu creek and the Karabulak  river valley was
discovered (Yarushevsky et al., 2003; Maximov, et al., 1960).

During 1960-1961,  additional  sampling was completed at Karabulak.  At the same
time, the Severny  prospect was identified as being  promising in terms of gold,
copper,  and lead  (Yarushevsky  et al.,  2003;  Krivtsov,  et al.,  1978).  The
Karabulak  placer  mine is  located  downstream  along  the  drainage  where  it
coalesces with the stream that drains the Severny prospect.  Certainly Karabulak
and  perhaps  Severny,  along with other long since  eroded  deposits,  may have
yielded significant gold input specific to the Karabulak placer deposit (Tafuri,
2005).

Trenching and continuous chip sampling  completed by the Soviet era workers from
1960 to 1963 returned the following  significant  anomalous  intervals  from the
Karabulak  gold  prospect  (Doljenko,  et al.,  1963).  Over  twenty wide spaced
(40-60m apart) trenches were excavated across sections the apparent trend of the
Karabulak  prospect and  continuous  chip samples were collected over the entire
length of the trenches.
              -----------------------------------------------
              Trench            Interval (m)       Gold (g/t)
              -----------------------------------------------
                K1                   8.2              35.4
                K9                   4.0               7.1
                K13                 22.2               2.2
                Including            6.0              46.0
                K14                  6.0               4.4
                K15                  4.45              5.1
                K16                  15.5              2.26
                K17                  17.5              2.37
                K18                  11.45             6.49

A number of the trenches ended in  mineralization  indicating that some parts of
the zone may extend further  north,  south and along strike to the northeast and
southwest.  Mineralization encountered in the southern end of trench K1 returned
the highest  gold values  (35.4 g/t gold across 8.2 meters) and remains  open to
the south.

Based on these  sample  results,  Soviet  geologists  drove two adits to further
investigate  the vertical  down dip extent of the  mineralization.  Adit one was
driven under the northeast  Karabulak prospect and adit two was driven under the
western Karabulak prospect.  Crosscuts were driven from each adit. Each adit was
sampled thoroughly and reported to be barren of gold  mineralization.  One drill
hole was drilled from the face of adit two and it was also reported to be barren
with  respect  to  gold.   The   Soviet's   interpretation   of  the   Karabulak
mineralization was that the vein/stockwork system was


                                     - 33 -
<PAGE>


vertical.  Both the adits and the lone drill hole were intended to intercept the
downward vertical projection of the surface mineralization.

During  the  period  from  1967 to  1971,  extensive  work  was  done by  Soviet
geologists  on the  stratigraphy,  petrology,  and  structure  of the  Bulakashu
district.  A  structural  lithological  and  forecast  map of the  district  was
prepared at a scale of  1:100,000.  Lithogeochemical  mapping was completed at a
scale of 1:10,000. A distribution map of known mineralization was also compiled.

During  the  period  from 1981 to 1983  further  reconnaissance  studies  of the
Bulakashu  district  were  completed by Soviet  geologists,  with the purpose of
collecting  additional  information  in order to initiate  new  exploration  and
evaluation  work.  At the  Karabulak  prospect,  23  trenches  were dug and five
outcrops were cleared.  Like many researchers before, the Soviet geologists also
came to the  conclusion  that,  at deeper  levels,  Karabulak  had high economic
potential  (Yarushevsky et al., 2003;  Supambaev et al., 1984). In 1984 and 1985
the same crew of Soviet geologists  continued to explore the Bulakashu  district
for porphyry copper  deposits.  This resulted in finding several large low-grade
porphyry copper/gold  occurrences with grades from surface sampling ranging from
..02 to 0.25 % Cu and locally 2.0 g/t gold. Work was  discontinued due to the low
grade of the  deposits  and the steep  topography  that would  have made  mining
uneconomic  under Soviet  guidelines  (Yarushevsky  et al.,  2003;  Supamanbaev,
1986).

In 1996,  Karabalta GMK,  started  production at the Upper Karabulak and Tokailu
placers.  This operation lasted two years. Also during 1996, the  Kyrgyz-Russian
joint  venture  "Ordo," put  together an  exploration  plan for  Karabulak  gold
deposit,  however,  fieldwork  ceased  at  start-up  stage.  Subsequently,   the
Tien-Shan  Gold  Company,  a  joint  venture  between  Cameco  and  Kyrgyzaltyn,
performed  verification  exploration  work consisting of re-sampling of selected
existing  trenches and drilling four core holes  (Lopatko,  et al.,  1996).  The
Tien-Shan exploration was conducted at the Altyn Masha and Otradny prospects.

In 2002,  Marsa  obtained an  exploration  license  within the Bulakashu  Mining
District and an exploitation  license,  which included the Karabulak gold placer
deposit. During the summer of 2002, Marsa re-sampled many of the trenches at the
Karabulak  prospect and re-evaluated the Karabulak placer deposit.  During 2003,
column  leach tests were  conducted  on the assay  sample  rejects from the 2002
sampling and Marsa commenced production at the Karabulak gold placer deposit. In
2004, Marsa  established BMC as a separate company and transferred the Bulakashu
License to BMC. The Bulakashu  License was renewed in BMC's name as of March 28,
2005. Marsa retained the Karabulak gold placer exploitation license.

MINERAL RESOURCE ESTIMATES

There are no NI 43-101 or Guide 7 compliant  resource  estimates made for any of
the prospects in the license area which is the subject of the Bulakashu License.

MINERALIZATION

Karabulak Gold Prospect

Host  rocks for the gold  mineralization  at the  Karabulak  Gold  Prospect  are
mid-Ordovician altered, sheared,  silicified and/or veined mafic volcanic rocks.
The mafic rocks form a prominent series of outcrops along the southern flanks of
a  west-southwest  trending  ridge.  The  ridges  are  cut  by a  narrow,  steep
north-south  trending  drainage that divides the prospect  into two halves:  the
Main and Western prospects  (cumulatively termed the Karabulak  Prospect).  Both
halves have been trenched on surface over a distance of 400 meters and up to 80m
across and have similar alteration,  silicification and veining characteristics.
Within the river valley,  immediately down drainage from the Karabulak zone is a
large  independent  placer operation (the Karabulak  Placer) which is mined on a
seasonal  basis.  BMC does not have any interest in the placer  operations.  The
ridge appears to be the expression of a northeast  striking,  shallow  northwest
dipping  truncated   thrusted  sequence  of  sheared,   variably  altered  mafic
volcanics.  Alteration  within the known mineralized zone at surface consists of
silicification,  chloritization,  localized  fuchsite  and, to a lesser  extent,
sulphidization.  It is unclear what controls gold  mineralization  at this time,
however, in general it appears that shearing and alteration along thrust planes,
tend to yield  higher  grade  gold.  The most  intensely  veined and  silicified
portion of the zone is well  exposed  and  resistant  to  weathering  giving the
surface exposure a very dark knobby  appearance.  Similar looking outcrop can be
observed for some distance along strike and adjacent to main trenched portion of
the Karabulak



                                     - 34 -
<PAGE>


Gold Prospect.  There is no indication  that any  significant  sampling has been
conducted on these similar looking outcrops.

Localized  granitic  intrusions south of the Karabulak prospect provide a nearby
heat source for mineralizing fluids. Management believes the greenschist facies,
mafic volcanic rocks hosting the quartz stockwork at Karabulak are geochemically
favourable for the deposition of gold.

Severny Copper/Gold Prospect

Mineralization  at  Severny is hosted in a multi  phase  granodiorite/monzonite/
diorite intrusive  complex with the best grades occurring in intrusive  breccias
within the  granodiorite  body.  The  deposit has been  described  as a porphyry
copper but porphyritic textures are not ubiquitous and most of the observed rock
was nearly equigranular. Mineralization consisted of very fine chalcopyrite with
spotty occurrences of galena. Very fine grained pyrite was ubiquitous. Oxidation
was almost absent and only traces of malachite were seen.

The southern and southwestern  margins of the granodiorite had strong propylitic
alteration.  The host  rocks in the same  area  were  often  hornfelsed  and had
epidote veining. The more central parts of the granodiorite had phyllic and weak
potassic  alteration.  Breccia zones had potassic  alteration  and fine granular
tourmaline.  Chalcopyrite  in the breccia zones was coarser than the rest of the
deposit and often up to several millimeters in size.

EXPLORATION

Karabulak Gold Prospect

From 2002 to 2005, most of the exploration on the Bulakashu  Property focused on
the Karabulak  gold  prospect.  During 2004 and 2005,  more than US $110,000 was
spent on the Bulakashu Property,  entirely on the Karabulak prospect.  This work
was funded by  Centrasia  and  carried  out by the field staff of Marsa and BMC.
During this period,  four diamond drill holes were  completed at Karabulak and a
preliminary  evaluation of a number of other gold and copper prospects including
the Otradny gold prospect and the Severny  copper/gold  prospect was carried out
under the supervision of the Company's V.P. of Exploration,  Dr. William Tafuri.
In 2005, the Company engaged Mr. Dean Besserer of APEX Geoscience to complete an
independent  NI43-101 compliant technical report "(Bulakashu  Technical Report")
on the Bulakashu property.

The four diamond drill holes completed at Karabulak in 2004, were drilled on the
western  portion  of the  prospect,  totaling  557.6  meters.  The  table  below
summarizes  the analytical  results of the drilling.  As with the historic adits
and single drill hole completed in the 1960's, the 2004 drilling was targeted to
intersect the vertical  downward  extension of the western  Karabulak zone, down
dip of the surface mineralization,  but above the historic underground workings.
All four holes were drilled to the  northeast at shallow  inclinations  from the
south face of the ridge  immediately  below the Karabulak zone on the ridge top.
Alteration and gold  mineralization  was  intersected in all four holes and over
significant widths in three of the four holes.

SUMMARY OF RESULTS - 2004 DRILLING AT THE KARABULAK PROSPECT
<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------
DRILL HOLE         LOCATION               INTERVAL       ELEVATION, AZIMUTH, DIP       INTERVAL           GOLD
                                            FROM                   AND                  SAMPLE             IN
                                          (M TO M)         TOTAL DEPTH OF HOLE         LENGTH IN          G/T
                                                                                        METERS
---------------------------------------------------------------------------------------------------------------
<S>               <C>                   <C>               <C>                          <C>             <C>

02-04              63296.05               57 - 58          3049.4m, 330, -10,              1              1.30
                   68917.13                                      137.1m
---------------------------------------------------------------------------------------------------------------
                                          60 - 66               As above.                  6              1.07
---------------------------------------------------------------------------------------------------------------
                   63223.23              100 - 101              As above.                  1              0.57
                   68881.05
---------------------------------------------------------------------------------------------------------------

03-04              63317.95                9 - 13           3074.19m, 330, 5,              4              8.09
                   68937.61                                      140.7m
---------------------------------------------------------------------------------------------------------------

</TABLE>



                                     - 35 -
<PAGE>


<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------
DRILL HOLE         LOCATION               INTERVAL       ELEVATION, AZIMUTH, DIP       INTERVAL           GOLD
                                            FROM                   AND                  SAMPLE             IN
                                          (M TO M)         TOTAL DEPTH OF HOLE         LENGTH IN          G/T
                                                                                        METERS
---------------------------------------------------------------------------------------------------------------
<S>               <C>                   <C>               <C>                          <C>             <C>


04-04              63317.95               29 - 60          3050.23m, 330, -3,             31             *2.28
                   68937.61                                      136.3m
---------------------------------------------------------------------------------------------------------------
                                          63 - 64               As above.                  1              0.75
---------------------------------------------------------------------------------------------------------------
                                          66 - 67               As above.                  1              0.76
---------------------------------------------------------------------------------------------------------------
                                          69 - 70               As above.                  1              0.79
---------------------------------------------------------------------------------------------------------------
                                         120 - 121              As above.                  1              0.88
---------------------------------------------------------------------------------------------------------------
                                         133 - 134              As above.                  1              4.46
---------------------------------------------------------------------------------------------------------------

05-04              63177.31                4 - 5            3097.41m, 330, 8,              1              0.84
                   68861.39                                      143.5m
---------------------------------------------------------------------------------------------------------------
                                           7 - 8                As above.                  1              0.52
---------------------------------------------------------------------------------------------------------------
                                          12 - 14               As above.                  2              1.28
---------------------------------------------------------------------------------------------------------------
                                          15 - 16               As above.                  1              0.56
---------------------------------------------------------------------------------------------------------------
                                          20 - 22               As above.                  2              0.70
---------------------------------------------------------------------------------------------------------------
                                          25 - 30               As above.                  5            **4.61
---------------------------------------------------------------------------------------------------------------
                                          32 - 33               As above.                  1              0.53
---------------------------------------------------------------------------------------------------------------
                                          72 - 73               As above.                  1              0.50
---------------------------------------------------------------------------------------------------------------
                                         104 - 105              As above.                  1              0.75
---------------------------------------------------------------------------------------------------------------
</TABLE>

Note - all drill core sample intervals are 1 meter in length.  Interval averages
were selected using a 0.5 gm/t Au cut-off.  * Interval includes 8.14 g/t Au over
1 meter and 12.7 g/t Au over 1 meter **  Interval  includes  11.45 g/t Au over 1
meter *** There are no NI 43-101 or Guide 7 compliant  resource  estimates  made
for any
     of the  prospects in the license area which is the subject of the Bulakashu
     License.

Correlation of the surface mineralization in the trenches and the mineralization
and alteration intersected in the drill holes suggests that the mineralized zone
had a shallower  dip to the  northwest  than  anticipated.  Due to the  apparent
shallow dip of the mineralized zone, the drill holes may not have intersected or
completely   penetrated   the   high-grade   zones  exposed  on  surface.   Post
mineralization  tectonism has complicated the structure and made it difficult to
discern the true distribution of the mineralization..

In the  summer  of 2006,  a 15  kilometer,  dipole-dipole  induced  polarization
("I.P.") and ground magnetic survey was completed over the Severny and Karabulak
Prospects.  At  Karabulak,  the  I.P.  survey  identified  a  northwest  dipping
resistivity  anomaly coincident with the WSW trending,  NNW dipping,  silicified
quartz stockwork zone exposed on surface. The resistivity anomaly indicates that
the quartz stock work zone remains open to the  northeast  and  southwest and is
open at depth on the middle and western most lines,  suggesting  that the quartz
stockwork  zone  exposed on surface  extends  at least 200 meters  down dip.  In
addition to the I.P.  survey, a total of 52 chip samples were collected from the
possible  extensions to the known  surface  mineralization  at  Karabulak,  with
results ranging from nil to 1.68 g/t Au.

No exploration work was conducted at Karabulak during 2007.

Severny Copper Gold Prospect

During 2006, the road to the Severny  Prospect was upgraded and extended  giving
access to the upper part of the prospect. Continuous chip samples were collected
along the new road cuts where  bedrock  was  exposed.  On  October 5, 2006,  the
Company  released  results  from a  continuous  sequence of 1 meter chip samples
collected along a newly constructed drill road at Severny.  Of the 81 new sample
results  from the road cut,  four  samples  assayed  greater than 5.0 g/t Au, 32
samples assayed greater than 1.0 g/t Au and 44 of the 81 samples assayed greater
than 0.5 g/t Au. Within this series,  one mineralized  interval assayed 2.27 g/t
Au over 48 meters, including 1 meter intervals of 10.5 g/t Au, 7.85 g/t Au, 6.61
g/t Au and 6.64 g/t Au. Copper results from these samples were weakly  anomalous
with  22 of  the 48  samples  assaying  greater  than  100  ppm  copper.  Of the
approximately  850 rock grab and chip samples  collected  from Severny  Prospect
during the 2006 exploration  program.,  assays ranged from nil to 4.5% Cu and up
to  37.7  g/t Au.  In  addition  to the  surface  rock  sampling  program,  a 15
kilometer,  dipole-dipole  Induced  Polarization  ("I.P.")  was  completed  over
Severny.  Results from the survey  defined a large 1km by 2km  conductive  zone,
approximately 50 to 100 meters from surface.  A very strong northwest  trending,
linear resistivity anomaly was identified on the southwest side of the survey



                                     - 36 -
<PAGE>


area coincident with an area of  silicification  where surface sampling returned
gold values ranging from nil to 37.7 g/t Au over one meter.

During the summer of 2006, a 15 kilometer,  dipole-dipole  induced  polarization
("I.P.") survey was completed over Severny and Karabulak.  The interpretation of
the results  defined a zone of  conductivity at Severny that remains open to the
north and northeast,  approximately 50 to 100 meters from surface. A very strong
northwest  trending,  linear resistivity anomaly was identified on the southwest
side of the Severny Prospect area,  where surface sampling  returned gold values
ranging from nil to 37.7 g/t Au over one meter.

Based on favourable results from the 2006 summer exploration  program at Severny
and  Karabulak,  a local  drilling  and mining  contractor,  was  contracted  to
complete a 2,000 meter drill program that would test  targets,  based on surface
mineralization and associated IP anomalies. Drilling was originally scheduled to
commence at Severny in September, but was delayed until mid-December. Due to the
late start and severe winter conditions  associated with the terrain at Severny,
only  one of the six  proposed  drill  sites  (SV06-01)  was  completed  and the
remainder of the proposed drill program was postponed until the spring of 2007.

Drill hole SV06-01 intersected a broad zone of gold mineralization  hosted in an
alternating  sequence of propylitically  altered andesite and granodiorite.  The
mineralized  interval  returned an average  grade of 1.15 g/t gold and anomalous
copper  mineralization over 50.5 meters.  Drill hole SV06-01 is a vertical hole,
drilled to a depth of 250 meters and collared within the southeastern portion of
a 1arge 1km x 2 km zone of conductivity  defined by the I.P. survey completed at
Severny in the fall of 2006. Subsequent to the completion of drill hole SV06-01,
the  numbering  convention  used to label  drill holes on Severny was changed so
that the  numbering  carried  on from  the five  drill  holes  completed  on the
Bulakashu  property,  all at the  Karabulak  Prospect  As a result,  drill  hole
SV06-01 was re labeled as SV06-06.  Significant  assay results from hole SV06-06
are as follows.

--------------------------------------------------------------------------------
DRILL HOLE       FROM        TO     INTERVAL(M)     AU (G/T)      CU (PPM)
--------------------------------------------------------------------------------

SV06-06*          33        83.5       50.5**         1.15           132
Including         48         52         4.0           5.86           248
Including         49         50         1.0          11.50           581
--------------------------------------------------------------------------------

*  Previously  labeled  as hole  SV06-01  in  company  disclosure  **  There  is
insufficient information to determine whether this interval
     represents true width

Within the mineralized interval reported above, two samples assayed greater than
5.0 g/t Au, 17 samples  assayed  greater than 1.0 g/t Au and 34 samples  assayed
greater  than 0.50 g/t Au.  Several,  sporadic  intervals (1 - 3 meters) of gold
mineralization were also intersected from surface to 33 meters. Assays for these
intervals  ranged  from 0.10 g/t Au to 3.94 g/t Au.  Surface  chip  sampling  at
Severny last fall returned a mineralized  interval of 2.27 g/t Au over 48 meters
within  silicified  andesite  along a newly exposed road cut  approximately  320
meters east of drill hole SV06-01.  The silicified andesite  intersected in this
trench  and in drill  hole  SV06-01 is  similar  in  appearance  to the  altered
andesite  encountered  in the previous  drilling and  trenching at the Karabulak
Prospect, 1.2 kilometers to the south.

In February  2007,  the Company  retained a geophysics  contractor  to provide a
detailed,  comprehensive interpretation of all ground geophysical data collected
to date from the Severny and Karabulak  Prospects on the Bulakashu Project.  The
interpretation  was used to finalize  drill  targets  for the summer of 2007.  A
total of  approximately  6,000  meters of  drilling  has been  proposed  to test
targets at Severny and  Karabulak.  The Company  retained a local  drilling  and
mining  contractor to provide two core rigs to conduct the year's drill program;
the same  contractor  was also  mobilized  to the site  with two  drill  rigs to
complete the drilling  they were  contracted  to do last year and to build drill
access roads, some of which required drilling and blasting.

During the second week of May, the Company  initiated its 2007  exploration  and
drill program on the Bulakashu  Property with the opening of the site camp,  the
arrival of two drill  rigs,  and  commencement  of the  regional  reconnaissance
program.  Due to delays in receiving all of the permits to operate in the Kyrgyz
Republic,  the two diamond drill rigs and drill crews did not commence  drilling
until the last week of August 2007.  Severny is the highest priority prospect on
the  Bulakashu  Property,  and as a  result,  a  decision  was made to delay the
drilling on Karabulak until 2008 and to complete as much drilling as possible at
Severny.

At Severny, a total of 4,405 meters of drilling was completed in 19 drill holes,
of which the Company has only  received  complete  assay results for three drill
holes.  All drill holes have been  systematically  drilled at 200 meter  centers
along


                                     - 37 -
<PAGE>


NE-SW trending fences designed to test an IP-resistivity  anomaly and associated
surface gold  mineralization  identified  in the fall of 2006.  Hole SV07-07 was
drilled to a depth of 296 meters,  intersecting sporadic gold mineralization and
quartz-sericite-pyrite  alteration  ("QSP")  throughout  most of the hole.  Hole
SV07-08,  200m to the southwest of Hole  SV07-07,  was drilled to a depth of 501
meters,  intersecting  strengthening QSP alteration and gold mineralization over
wider intervals. Hole SV07-09 was drilled to a depth of 320 meters, under a road
cut where a surface rock chip sample returned 48m of 2.27 g/t gold. Hole SV07-09
intersected  two distinct,  broad zones of gold  mineralization  and  associated
intense QSP alteration. The mineralized intervals are separated by post mineral,
unaltered andesite dikes. The mineralization and alteration vectors point toward
the  southwest  where last year's rock chip surface  sampling  encountered  gold
values  ranging  from 0.14 g/t up to 37.7 g/t in QSP  altered  greenstones.  The
drill holes are not being  completed in  sequential  order,  and the table below
shows the significant drill intercepts as of September 20, 2007.
<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------
HOLE                AZIMUTH/DIP     FROM (METERS)       TO (METERS)    INTERVAL (METERS)           AU (G/T)
----------------------------------------------------------------------------------------------------------

<S>                  <C>             <C>                 <C>               <C>                   <C>

SV07-07                 0/90              54                61                 7                     1.07
----------------------------------------------------------------------------------------------------------
SV07-08                 0/90              34                35                 1                     6.86
                                         101                118                17                    0.53
                                         128                136                8                     0.68
                                         151                163                12                    0.60
                                         171                177                6                     1.20
                                         188               195.4               7                     0.74
----------------------------------------------------------------------------------------------------------
SV07-09                 0/90              1                 44                 43                   1.49*
     including                            1                 12                 11                    2.46
     including                            17                25                 12                    2.31
                                          92                149                47                   1.38**
     including                            92                97                 5                     2.80
     including                           100                109                9                     2.10
     including                           114                118                4                     2.45
     including                           126                133                7                     2.36
----------------------------------------------------------------------------------------------------------
</TABLE>

*    Interval  contains 4 samples  with gold  analyses  greater  than 3.0 g/t Au
     (8.63, 4.58, 4.47 and 5.19 g/t Au)
**   Interval  contains 6 samples with gold  analyses  greater than 3.0 g/t Au (
     8.69, 3.69, 3.49, 3.84, 3.67, and 4.26 g/t Au)

In  addition  to  drilling,   additional  ground  magnetic  and   IP/resistivity
geophysical surveys have been conducted in the Bulakashu River basin to the west
of Severny where extensions of the Severny  structures and alteration halos were
found.  Preliminary  results are  encouraging  and the pattern of magnetic lows,
probably caused by magnetite  destruction,  are coincident with IP chargeability
highs, probably caused by sulfidation, and are the same as found at Severny. The
final interpretation of the ground geophysical surveys are in progress.

FUTURE AND PROPOSED EXPLORATION PLAN

Based on the  exploration  work completed to date on the Severny,  Karabulak and
other  gold  and  copper-gold   occurrences,   favourable  structural  settings,
alteration  and  geology,  the  Company  believes  the  Bulakashu  Property  has
potential to host large scale,  orogenic/structurally  hosted gold  deposits and
porphyry style copper-gold deposits.  The Company is presently compiling results
from its 2007 exploration  program at Bulakshu and preparing reports to meet its
license renewal  obligations with the KSAG. A full evaluation of the exploration
results will be carried out during the winter of 2007 to determine  the scope of
exploration work to be carried out in 2008. Although  exploration plans for 2008
have not been  formulated,  the Company has determined that the results received
to date warrant further exploration work on the Bulakashu Property.

As of August  31,  2007,  the  Company  has  expended  $885,172  on  exploration
activities and $1,258,338 on acquisition costs on the Bulakashu Property.

Eastern Sary Jaz Property

The Eastern Sary Jaz Property was acquired by the Company based on its favorable
geological and structural setting for hosting gold  mineralization.  In November
2005, BMC, the Company's 100% controlled Kyrgyz subsidiary, was granted


                                     - 38 -
<PAGE>


an  exploration  license for the Eastern Sary Jaz Property in Eastern  Kyrgystan
(the  "Eastern Sary Jaz  Property").  The Eastern Sary Jaz License gives BMC the
exclusive  rights to explore the Eastern  Sary Jaz  Property for a period of one
year,  renewable up to a period of ten years.  The  Company's  2006  exploration
contract  with the KSAG  required  that a minimum  of US $80,000 be spent on the
Eastern Sary Jaz Property by December of 2006.  The Company met this  commitment
for 2006, resulting in the renewal of the license for 2007.

In 2007,  the KSAG  extended  the  license  period  for  Eastern  Sary Jaz until
December 31, 2010.  The  extension of the license  period will be subject to the
company  successfully  fulfilling the terms of annual license  agreements  until
2010. As per the terms of the 2007 license  agreement , the Company was required
to incur a minimum  exploration  expenditure  of 12,207,000  som  (approximately
USD$305,000)  in 2007. The Company has met its spending  requirement and pending
approval of its 2007 expenditures by the KSAG, the Company  anticipates that the
Eastern Sary Jaz License will be renewed for 2008.

PROPERTY DESCRIPTION AND LOCATION

The Eastern Sary Jaz  Property is defined by License No: AP 303,  issued by KSAG
and comprises 912 km(2) in size (the  "Eastern  Sary Jaz  License").  Concurrent
with the license  renewal for 2007,  the  Company  relinquished  90 km(2) of the
license  area and  subsequently  added  140 km(2) of new  area,  resulting  in a
revised,  contiguous  area of 962 km2. . The  boundary of the  Eastern  Sary Jaz
License  area is defined  by the  following  coordinates  on the  following  map
prepared by Lakehead Geological Services Inc. dated December 4, 2007:


             CORNER            LONGITUDE                 LATITUDE
                               (DEGREES)                (DEGREES)

               1                 79.54                    42.36
               2                 80.00                    42.37
               3                 80.14                    42.29
               4                 80.03                    42.29
               5                 80.03                    42.25
               6                 79.98                    42.25
               7                 79.98                    42.21
               8                 79.45                    42.21
               9                 79.45                    42.24
               10                79.50                    42.24
               11                79.50                    42.27
               12                79.52                    42.27
               13                79.52                    42.28
               14                79.55                    42.28




                                     - 39 -
<PAGE>




                                     Map - 2

                       [GRAPHIC OMITTED][GRAPHIC OMITTED]


          Location Map of Easter Sary Jaz Property, Eastern Krygystan

                [Please view PDF format of Exhibit 15-1, Map 2]


ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The Eastern Sary Jaz Property covers an area of 912 square  kilometers along the
Kyrgzstan-Kazakhstan  border,  approximately  110 east of  Centerra  Gold Inc.'s
Kumtor  Deposit.  The property is accessed by  traveling  east from town Karakol
approximately  100  kilometers  by  paved  road to the  property's  northwestern
boundary  and then  portions  of the  property  can be  accessed by a network of
gravel  logging  roads that enter the property  from its northern  border.  More
remote  parts of the  property  are  accessed  by foot  trail  and  horse  back.
Topography  on the property is dominated by rugged  glaciated  mountain  terrain
with elevations  ranging from 3,100 to 6,200 meters above sea level. Many of the
higher peaks are snow covered year round and glaciers  occupy many of the higher
valleys.  Alpine  type  vegetation  occurs at more  moderate  elevations  on the
property,  giving  way to  coniferous  forests  at lower  elevations.  There are
numerous glacier fed rivers,  streams and lakes on the property. The property is
completely snow covered from late October to May with temperatures  ranging from
-30C in the winter to +15 in the summer.

GEOLOGICAL SETTING AND DEPOSIT TYPES

The Eastern Sary Jaz Property  occurs in the Tien Shan  Metallogenic  belt which
extends from  Uzbekistan in the west,  through  Tajikistan and  Kyrgyzstan  into
northwestern  China.  The  Tien  Shan  belt of  rocks  is a  major  metallogenic
province,  which is host to a number of multi million ounce gold  deposits.  One
such  deposit,  the Kumtor Gold Deposit is hosted  within  Vendian  rocks of the
Jetymtau  Formation  consisting of pyritiferous black shales,  phyllite,  slate,
conglomerate and siltstone,  bound by two major northeast  trending  structures,
the Nickolaev Line to the north and by Atbashi-Inylchek fault to the south. This
sequence of rocks extends  northeastward from the Kumtor Deposit,  approximately
110 kilometers, onto the Eastern Sary Jaz property.



                                     - 40 -
<PAGE>

HISTORY

Very little exploration work has been conducted on the Eastern Sary Jaz Property
and the Company conducted its first  exploration  program on the property during
the summer for 2006.

MINERAL RESOURCE ESTIMATES

The Eastern Sary Jaz Property is without known reserves as defined by Guide 7 or
NI 43-101 and all current and historic work on the Eastern Sary Jaz Property has
been exploratory in nature.

EXPLORATION

The Company conducted its first  exploration  program on the property during the
summer for 2006.  During the 2006 field season,  field crews were  successful in
discovering a series of quartz  stockwork  occurrences  within a three kilometer
long  zone of  altered  black  pyritiferous  shale.  The  shale is  capped  by a
limestone unit, which has been locally  altered,  consisting of an assemblage of
fuchsite,  pyrite, and quartz.  Over 500 surface chip and grab samples have been
collected.  Analytical  results received to date from this sampling has returned
assays  ranging  from nil up to 1.3 g/t Au, up to 69.1 g/t Ag and more than 5.0%
Cu.

DRILLING

PROPOSED EXPLORATION AND DEVELOPMENT PROGRAM

The Company has completed its 2007  Exploration  program on the Eastern Sary Jaz
Property.  Results  from this  program are  pending.  Once all results have been
received,  the Company  will prepare the  necessary  reports to meet its license
renewal  obligations with the KSAG. A full evaluation of the exploration results
will be  carried  out  during  the  winter  of 2007 to  determine  the  scope of
exploration  work to be carried out in 2008. As of August 31, 2007,  the Company
has expended $189,016 on exploration activities and $96,000 on acquisition costs
on the Eastern Sary Jaz Property.

KOKJAR PROPERTY

The  Kokjar  Property  was  acquired  by the  Company  based  on  its  favorable
geological  and  structural  setting  for  hosting  gold,  silver and base metal
mineralization.  The Kokjar  Property is defined by License No: AP 383 issued by
the KSAG and  comprises  238 km(2) in size (the  "Kokjar  License").  The Kokjar
License  gives BMC the  exclusive  rights to explore the Kokjar  Property  for a
period of one year,  and  renewable up to a period of ten years from the date of
issue.  A  proposed  2006  exploration  program  was  submitted  to the KSAG for
approval and issuance of its 2006 license  agreement.  The license agreement was
not approved by one of the local Hakim or  Governors  in the Issykul  region and
the Company was unable to conduct any  exploration  work on Kokjar  during 2006.
Although the Company has determined  that the local Hakim has no legal authority
to deny the Company's  exploration  rights to the Kokjar  Property,  the Company
decided  it was  prudent  to  resolve  any  local  community  concerns  prior to
proceeding  with its exploration  activities.  The KSAG recognizes the Company's
efforts  to  resolve  any  concerns  the local  Akim may have with the  proposed
exploration of the Kokjar Property and granted the Company a one-year  extension
to the Kokjar  License  for 2007.  Although  the  Company  continued  to work to
alleviate the concerns the local communities had with the Company's  exploration
activities, it was unsuccessful.  During the first calendar quarter of 2008, the
Company  will  evaluate  whether to continue  working with KSAG in an attempt to
acquire  another  one year  extension  of the Kokjar  License or to abandon  the
Kokjar License.

PROPERTY DESCRIPTION AND LOCATION

The boundary of the Kokjar License area is defined by the following  coordinates
on the  following  map  prepared by Lakehead  Geological  Services  Inc.,  dated
December 10, 2007.

         CORNER            NORTH LATITUDE            EAST LONGITUDE

              1                42.833                     77.333
              2                43.000                     77.750
              3                43.000                     77.333
              4                42.833                     77.750


                                     - 41 -
<PAGE>



                                     Map - 3

                       [GRAPHIC OMITTED][GRAPHIC OMITTED]

                   Location map of Kokjar Property, Kyrgystan

                [Please view PDF format of Exhibit 15-1, Map 3]


ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The  Kokjar  Property  covers  an  area  of  238  square  kilometers  along  the
Kyrgzstan-Kazakhstan   border.   The  property  is  located   approximately  300
kilometers  east of the  country's  capital  city,  Bishkek  and is  accessed by
traveling  north by gravel road from the main  highway that runs along the north
shore of lake  Issykul.  The  nearest  airport is 50  kilometers  to the west at
Cholpan Ata; the closest rail access is approximately 150 kilometers to the west
at  Balykchi.  A small  capacity  power  line is within  1.5  kilometers  of the
southern  border of the property.  Portions of the property can be accessed by a
network of gravel  logging drill roads that enter the property from its southern
border.  More remote  parts of the property are accessed by foot trail and horse
back.  Topography  on  the  property  is  dominated  by  mountain  terrain  with
elevations  ranging  from 2,600 to 4,500  meters  above sea  level.  Many of the
higher peaks are snow covered year round.  Alpine type vegetation occurs at more
moderate  elevations on the property,  giving way to coniferous forests at lower
elevations.  There are  numerous  glacier fed  rivers,  streams and lakes on the
property.  The property is completely snow covered from late October to May with
temperatures ranging from -30C in the winter to +20C in the summer.

GEOLOGICAL SETTING

The Kokjar  Property  lies within the Kyrgyz  Kungey  metal belt within the Tien
Shan  metallogenic  province in northern  Kyrgyzstan.  The Kyrgyz Kungey belt is
host to a number of  multi-million  ounce gold and porphyry copper gold deposits
in Kyrgyzstan.


                                     - 42 -
<PAGE>



DEPOSIT TYPES

The Kokjar  Property is underlain  by  metamorphosed  volcanic  and  sedimentary
rocks.  Previous  work by Soviet  geological  agencies  and  Cameco  Corporation
identified a series of  high-grade  gold and  gold-silver-lead-zinc  occurrences
within the Kokjar License area.

HISTORY

In 1998, Cameco Corporation  ("Cameco")  acquired the Kokjar License and held it
until 2000.  During this period,  Cameco  identified  targets  which the Company
regards as high  priority  targets  including the Quartz,  Conglomerate,  Skarn,
Stockworks, West Baicorun, and East Baicorun. Only two drill holes (total of 215
meters) have been completed on the Quartz and Conglomerate targets.

MINERAL RESOURCE ESTIMATES

The Kokjar Property is without known reserves as defined by Guide 7 or NI 43-101
and all current and historic work on the Kokjar Property has been exploratory in
nature.

MINERALIZATION

The information reported below has been extracted from historic exploration data
and  summaries  that the  Company  has been able to  acquire.  In some cases the
historic exploration summaries emphasize the highest assay results from the most
significant  prospects identified by Soviet and Cameco geologists.  Although the
Company regards these results as a significant  indication of the mineralization
potential  on  the  property,  the  results  may be  selective  and  may  not be
representative of all exploration work completed on the property.

Based  on  a  preliminary   assessment  of  the   historical   work  on  Kokjar,
mineralization  appears to be spatially  associated  with  intrusive  bodies and
localized by structures,  including thrust and normal faulting.  Highlights from
Cameco's  exploration  program  included  the  following  results  from the four
principal mineralization styles observed on the property:

         1.       Felsic dikes with phyllic alteration. These range in size from
                  1 to 50 meters in width and from 40 to 1,000 meters in length,
                  the highest reported assay being 2.8 g/t Au.

         2.       Quartz and quartz-sericite veins, banded veins and stockworks.
                  These range in size from 0.15 meters to 10 meters in width and
                  from 100 to 400 meters in length;  the highest  reported assay
                  being 44.4 g/t Au.

         3.       Pyritized  and   silicified   shear  zones  in  the  volcanic,
                  volcaniclastic  and sedimentary  rocks.  The highest  reported
                  assay is 190.8 g/t Au and 232.0 g/t Au.

         4.       Fractured,  and pervasively pyritized and limonitized rocks of
                  various  compositions.  The highest reported assay is 41.6 g/t
                  Au.

The Quartz  Prospect  consists  of a thick  sequence of  sediments,  intruded by
diorite stocks. These sediments are weakly silicified and cut by a shear zone of
unconfirmed width and length. One diamond drill hole was completed on the Quartz
zone,  intersecting a mineralized  shear zone. Assay results from the shear zone
returned  15.4 g/t Au over 4 meters,  including a single sample of this interval
assaying 55.1 g/t Au over 1 meter.

A second drill hole was targeted to intersect a  silicified,  pyritic shear zone
at the  Conglomerate  Prospect  and  intersected  9 meters  assaying 2.3 g/t Au.
Significant surface trench channel sample results from the Conglomerate  Showing
include  2.8 g/t Au over 6  meters,  1.0 g/t Au over 7  meters,  1.3 g/t over 10
meters and 3.2 g/t Au over 2 meters.

A  great  deal of  historic  data  exists  in the  KSAG's  archive  in  Bishkek,
Kyrgyzstan.  However,  the  Company  has  decided  not to expend  any  resources
acquiring  this data until it receives  assurance  from the KSAG that it will be
able to conduct exploration work on the Kokjar License.



                                     - 43 -
<PAGE>



EXPLORATION

Although the KSAG granted the Company the Kokjar License, the Company's proposed
2006 and 2007  exploration  program for the Kokjar  Property was not approved by
the KSAG,  and  therefore  the  Company  and KSAG did not  enter  into a license
agreement  that specified a work  commitment on the Kokjar  Property for 2006 or
2007.  As a result,  the Company was unable to conduct any  exploration  work or
incur any significant expenditures on the Kokjar Property to date.

DRILLING

The Company has conducted no drilling on the Kokjar Property.

PROPOSED EXPLORATION AND DEVELOPMENT PROGRAM

The Company has been  unsuccessful in its negotiations with the KSAG and did not
obtain approval for a proposed 2007 exploration program. The Company will decide
whether to  continue  negotiations  with KSAG or abandon  the Kokjar  License in
early 2008.  As of August 31, 2007,  the Company has expended $405 on the Kokjar
Property.

RUSSIAN FEDERATION PROPERTIES

Souker Property

Technical  information  provided  herein for the Souker  Property  is based upon
information  derived from the results of the Company's 2007 exploration  program
and information  contained in a report (the "Souker Technical  Report") entitled
"Independent  Technical Report on the Souker Ni-Cu Deposit,  Russian Federation"
dated July 1, 2007, SRK Consulting  (Canada) Inc. ("SRK").  The Souker Technical
Report was  prepared  for the  Company  following  the  guidelines  of  Canadian
Securities  Administrators  National  Instrument 43-101 and Form 43-101F1 and in
conformity with generally accepted CIM "Exploration Best Practice Guidelines".

The  Souker  Technical  Report  was  compiled  by Jeff  Volk,  P.  Geo.,  as the
responsible Qualified Person. The technical information contained in this annual
report with respect to the Souker  Property has been  summarized from the Souker
Technical Report.

The  Souker  exploration  program  is  carried  out under the  direction  of the
Company's  Qualified  Person and Vice  President  of  Exploration,  Dr.  William
Tafuri.

PROPERTY DESCRIPTION AND LOCATION

The Souker  Property is located  approximately  170 km  northwest of the city of
Murmansk,  the capital of Murmansk Oblast, 12 km East of the town of Nickel, and
14 km. west of the town of Zapolyarny. The property is accessible from the north
via the Nickel-Zapolyarny motorway and via the Nickel- Murmansk railway.

The  location  of the  Souker  Property  in  Murmansk,  Oblast  is  shown on the
following map prepared by Lakehead  Geological  Services Inc.  dated December 5,
2007:



                                     - 44 -
<PAGE>



                                     Map - 4

                       [GRAPHIC OMITTED][GRAPHIC OMITTED]

                Loaction map of Souker Property, Kola Peninsula

                [Please view PDF format of Exhibit 15-1, Map 4]


The Souker License,  held by the Company's  subsidiary RPI, comprises an area of
approximately  1.6 square km and was legally  surveyed in the fall of 2007.  The
Souker License provides for mining to a depth of 900m and requires the following
obligations:

     o   Exploration  must be completed and a reserve  calculation  submitted to
         the government for approval no later than December 31, 2008;
     o   Submission of mine plans sustaining a production rate of 300,000 tonnes
         per annum for approval by the commission no later than June 30, 2009;
     o Commence  mining  operations  no later than  December  31, 2009; o Attain
     minimum production of 300,000 tonnes per annum no later than
         December 31, 2010.

The Souker License is valid until December 15, 2030.

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The Souker Property is located in a low mountainous area in the northwest corner
of the Kola Peninsula, characterized with rounded hills varying between 270m and
350m in elevation.  The terrain is characterized as arctic tundra,  and the area
displays  numerous  bogs and tundra  lakes which are  interconnected  by a large
network of streams and creeks. The largest river in the area is the Souker-Yoki,
and there are no large lakes on or near the property.

The climate can be characterized as Arctic Maritime,  with temperatures  ranging
from -44 degrees Celsius to 33 degrees Celsius.  The average annual  temperature
is 0 Celsius,  with the temperature remaining below 0 degrees Celsius 200 to 215
days per year. First snowfall is typically in September,  with stable snow cover
in October, remaining until June.



                                     - 45 -
<PAGE>


Snow depths can be as thick as 2.5m.  The weather is  typically  unstable,  with
warm  periods in winter and cold  periods in summer.  Fog,  wind,  black ice and
blizzards  are common in the area.  Polar night starts in late October and lasts
for two months.  From the end of May until the end of July,  the sun never sets.
Annual  precipitation  averages  between 450 to 480mm,  with most  precipitation
during the period July-October.  The number of days with precipitation can reach
200, with minimal precipitation in February-March.

The  property  is  located  approximately  12 km east of the town of Nickel  and
approximately  14 km  west  of the  town  of  Zapolyarny.  The  project  area is
accessible  via the  Nickel-Zapolyarny  motorway  and via the  Murmansk-  Nickel
railway. Regional power lines run both north and south of the property, provided
by a  series  of Paz  hydropower  stations  operated  by  "Kolenergo".  There is
well-established   infrastructure   in  both  the  towns  of  Nickel   (District
administrative  center)  and  Zapolyarny.  There is no local fuel  supply in the
area,  though  coal is  provided  from the  Pechora  coal basin and  firewood is
available  from  Karelia and  Archangelsk.  Construction  material for roads and
foundations are widely available throughout the area.

GEOLOGICAL SETTING

The Souker  deposit is located  in the  central  portion of the  Pechenga-Pasvik
Greenstone Belt,  within the northwest corner of the Kola Peninsula.  The Souker
deposit  is  hosted  by the  Pilgujarvi  Sedimentary  and  Volcanic  Formations,
consisting of clastic  sedimentary  rocks  interbedded with mafic to ultra mafic
igneous rocks..

DEPOSIT TYPES

Ni-Cu  sulphide  mineralization  in the  Pechenga  Belt occurs in five  distinct
settings:

         1) Disseminated  sulphides  within ultra mafic - mafic igneous rocks 2)
         Massive sulphides occurring at the contacts between mafic-ultra
              mafic  igneous  rocks and fine  grained  carbonaceous  shales;  3)
         Sulphides in breccia matrix, occurring at the contacts between
              mafic-ultra   mafic  igneous  rocks  and  black  schists;   4)  As
         chalcopyrite veins and veinlets 5) Pyrite-rich layers,  concretions and
         lenses in the sedimentary
              rocks.

HISTORY

The Souker  Property  explored  throughout  the period  1954-1982  by Soviet era
exploration  expeditions.  Subsequent  to the  initial  discovery  in 1947,  two
boreholes  were  drilled  on  the  Souker  Property,  one of  which  intersected
significant  Ni-Cu  sulphide  mineralization.   The  Pechenga  expedition  first
discovered  nickel-copper  mineralization  at  Souker  in 1947  during  regional
exploration of the western portion of the Kola Peninsula. In 1950, the first two
exploration drill holes were completed,  with one of the two holes  intersecting
significant  Cu-Ni  mineralization.  Commencing in 1954, an intensive program of
surface  mapping,  magnetic  surveys and  drilling  was  conducted at the Souker
Property.

From  1956-1957,  59 surface drill holes were completed at the Souker  Property,
with two of the prospecting drill holes intersecting mineralization in excess of
1% Ni. By 1964,  all previous  exploration  work was compiled on 1:10,000  scale
maps.  In the period  1967- 1969,  the deposit was drilled on a 200m x 200m grid
down to ~ 400m depth.  The data from this drill  program was used to calculate a
Soviet classified  resource estimate.  In 1971,  additional  geophysical surveys
were conducted which identified anomalies for additional follow up drilling.  In
1973,  one of the  anomalies  identified  during this  program was  subsequently
drilled and  intersected  nickel and copper  mineralization.  In 1974, a revised
structural-geologic interpretation was completed,  characterizing the deposit as
complexly folded and faulted.  Exploration resumed in 1977 and continued through
1981, with additional drilling and geophysical  surveys conducted.  The drilling
continued   to  confirm  and  extend  the  known  zones  of  nickel  and  copper
mineralization  on the  property.  Based on the known  mineralization,  a Soviet
style  technical  economic study was conducted in 1985 by Gipronickel  institute
utilizing an updated Soviet  classified  resource  estimate.  The results of the
technical economic study showed negative project  economics,  and development of
the project was halted.

RPI acquired the license to Souker in January  2005 and  subsequently  engaged a
local  consulting  group to  calculate  a  revised  Soviet  classified  resource
estimate and produce a Soviet style  technical-economic  study with the regional
mining and resource  authorities.  The study,  completed In May 2005,  indicated
positive project economics.



                                     - 46 -
<PAGE>


Currently,  RPI is conducting a 10,000 meter infill drilling program designed to
determine  whether  any  NI43-101  compliant  resources  exists  on  the  Souker
Property.  Additional work planned for 2008 includes  resurveying all drill hole
collars and  re-establishing the old surface topography with the regional survey
grid.  Initiation of environmental  baseline work is also planned for this year,
as well as additional geophysical surveys.

Historic Russian based "resource" and "reserve" inventories cannot be considered
a mineral  resource or a mineral  reserve  under Guide 7 or CIM  guidelines,  as
economic parameters used to create these estimates do not reflect accurately the
current economics of exploiting these deposits. Furthermore, procedures and data
used have not been  reviewed  and verified by a Qualified  Person and  therefore
cannot be  classified  as a mineral  resource  under CIM  Standards  on  Mineral
Resources  and Reserves  Definitions  and  Guidelines  adopted by CIM Council on
December, 2005.

MINERAL RESOURCE ESTIMATES

There are no NI 43-101 or Guide 7 compliant  resource  estimates made for any of
the prospects at the Souker Property.

MINERALIZATION

At  Souker,  Cu-Ni-sulphide  mineralization  occurs  primarily  as  disseminated
sulphides  within mafic - ultra mafic  igneous  rocks and  breccia-matrix  ores.
Nickel  mineralization  occurs primarily in the form of pentlandite,  associated
with  pyrrotite  and  chalcopyrite.  Mineralization  is currently  defined in 11
orebodies and 14 lenses,  with thicknesses  ranging from 0.2 to 20m at a 0.3% Ni
cutoff.

EXPLORATION

Upon  closing  of  the   acquisition   of  the  Souker   Deposit  and  based  on
recommendations  from the Souker  Technical  Report,  the Company  implemented a
10,000  meter  infill  drill  program to verify  and if  possible,  convert  the
historic Soviet resource estimate to a NI 43-101 compliant resource.  Concurrent
with its 2007 drill program,  the Company also completed a detailed audit of the
historic drill information.  Unfortunately,  the facility where all core samples
from the historic  drill  programs at Souker and other mineral  properties  were
stored was destroyed in a fire.  Although the company will be unable to resample
the historic  drill core from the property,  the 2007 drill program was designed
to confirm  the results  from the  historic  drilling.  The 2007 drill plan will
include the  duplication  or twinning pf some of the historic  drill  holes,  in
order to  directly  compare  and verify  the  historic  nickel and copper  assay
results. To date the 2007 infill drill hole results have returned similar nickel
and copper grades as the historic drilling

DRILLING

The  historical  drill  programs  at  the  Souker  Property  were  conducted  in
accordance with Soviet era procedures and regulations,  and the lack of historic
core and details as to drilling  procedures and protocols  precludes an analysis
of these programs.  Prior to the Company acquiring the Souker Property,  a total
of 94 drill holes had been  drilled on and  adjacent to the known body of nickel
and copper  mineralization  at Souker.  The drill program  planned for 2007 will
target many of the  unassayed  intervals  as twin holes,  and should  serve as a
basis with which to evaluate Soviet era assay quality. The previous operator had
initiated  a drill  program on 100 meter  centers  in order to upgrade  previous
Soviet data. The Company has further  modified this program so that the ore body
will be drilled at a spacing  sufficient to convert  Soviet era data into either
CIMM or JORC  compliant  resource  categories  by early 2008. As of November 11,
2007, a total of 5,568 meters of drilling had been completed in 2007 in 42 drill
holes.  It is planned to complete an additional  3,500 meters of drilling by the
end of the year but the late arrival of a second drill rig may cause a reduction
in this number.

Complete analytical results have been reported from 22 of the 42 completed drill
holes to date.  The results are  encouraging  and  confirm  the  historic  drill
results.  Assay values in the intervals reported were remarkably  consistent and
none of the averages were unduly influenced by included, higher grade intervals.
A summary of the significant drill intersections are as follows:

--------------------------------------------------------------------------------
 DRILL        FROM         TO           INTERVAL            NI             CU
 HOLE         (M)          (M)            (M)               %               %
--------------------------------------------------------------------------------
CP07-03       99.8        105.9             6.1            0.25           0.08
CP07-05        2.8         24.3            21.5            0.53           0.24
CP07-06       18.5         40.5            22.0            0.29           0.08


                                     - 47 -
<PAGE>


--------------------------------------------------------------------------------
 DRILL        FROM         TO           INTERVAL            NI             CU
 HOLE         (M)          (M)            (M)               %               %
--------------------------------------------------------------------------------
CP07-11        0.0         46.5            46.5            0.29           0.06
CP07-14        2.9         11.0             8.1             0.24          0.05
              17.0         53.0            36.0            0.25           0.03
              56.9         69.8            12.9            0.26           0.07
CP07-15       22.6        120.5            97.9            0.25           0.03
CP07-18       49.0         60.0            11.0            0.23           0.06
             116.0        282.0           166.0            0.31           0.07
CP07-19       59.0        210.0           151.0            0.26           0.03
CP07-21        2.0         58.9            56.9            0.29           0.06
CP07-22       71.4        165.1            93.7            0.23           0.04
CP07-23       73.8         77.0             3.2            0.27           0.11
CP07-24       14.1         34.1            20.0            0.22           0.02
              69.0         78.0             9.0            0.20           0.03
              99.0        101.0             2.0            0.27           0.05
             106.0        191.7            85.7            0.29           0.07
CP07-25        3.4         37.4            34.0            0.30           0.05
              73.4        146.8            73.4            0.29           0.07

The mineralized  intervals  reported above were all associated with disseminated
sulphide  mineralization  (pentlandite,  chalcopyrite,  and  pyrrhotite)  within
layered, medium to coarse grained, mafic - ultra mafic igneous rocks, peridotite
and pyroxenite. The hosting stratigraphy dips variably to the south and although
holes have been  oriented to intersect the  mineralized  horizon as optimally as
possible, the intervals reported below may not represent true width.

FUTURE WORK - RECOMMENDATIONS FROM THE TECHNICAL REPORT

Based on  recommendations by the Company's  independent mining consultant,  SRK,
the  geological  setting  and  character  of  the  nickel-copper  mineralization
currently  being  developed at the Souker  Property are of  sufficient  merit to
justify  the  following  work  program,   primarily  designed  to  address  five
objectives:
         o    Survey of all  pre-existing  drillhole  collars  and tie-in of the
              historical topography to the regional survey grid;
         o    Validation of existing historical data and limited infill drilling
              to support a mineral  resource  estimation in  compliance  with NI
              43-101  and   NI43-101F1,   including  twin  holes  of  previously
              unassayed  intervals.  This would  include  construction  of a 3-D
              resource block model implementing Western standards;
         o    Audit of the  current  mining  assumptions  and metal  price  cost
              structure and additional  engineering and environmental studies to
              develop mineral reserves;
         o    Implementation of defendable QA/QC lab protocols and a third party
              audit of sample preparation and assay methodologies;
         o    And finally,  regional exploration work outside the mining area in
              the  remainder  of the  tenements  in  existing  license  areas to
              identify  potential  additional  areas which would  contribute  to
              overall project cash flow.

PROPOSED EXPLORATION AND DEVELOPMENT PROGRAM

Subsequent  to the drilling that is planned for the remainder of 2007 at Souker,
the Company has engaged SRK to produce a NI43-101  resource  calculation for the
Souker Property.  Contingent on the results of the SRK report,  the Company will
be  implementing  the  necessary  work that will be  required  to  complete  all
technical/economic studies required by Russian law and an international standard
scoping  study on Souker in the first  half of 2008.  This work will be based on
the new resource  calculation and include  environmental  baseline studies,  and
preliminary geotechnical and metallurgical test work.

As of August  31,  2007,  the  Company  has  expended  $983,833  on  exploration
activities and $36,340,938 on acquisition costs on the Souker Property.



                                     - 48 -
<PAGE>


Uleeta Property

PROPERTY DESCRIPTION AND LOCATION

The Uleeta  License is located in the Murmansk  Oblast within the Kola Peninsula
of the Russian  Federation.  The Uleeta  License  covers an area of 202.5 square
kilometers,  the  boundary  of which is defined by the  following  corner  point
coordinates.

                  68(degree)31'00`' N 32(degree)00'00`' E
                  68(degree)31'00`'N32(degree)19'00`'E
                  68(degree)23'07`'N32(degree)19'00`'E
                  68(degree)23'01`'N32(degree)15'04`'E
                  68(degree)22'30`'N32(degree)15'09`'E
                  68(degree)22'30`' N 32(degree)00'00`' E

The location of the Uleeta  Property in the Russian  Federation  is shown on the
following map prepared by Lakehead  Geological  Services Inc.  dated December 5,
2007.


                                     Map - 5
                       [GRAPHIC OMITTED][GRAPHIC OMITTED]

          Location map of Uleeta and Tsaga Properties, Kola Peninsula

                [Please view Exhibit 15.1 in PDF format Map 5.]



                                     - 49 -
<PAGE>



ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The Uleeta  Property is  undeveloped  and  unpopulated,  but it road  accessible
during the summer months.  Access within most of the property is limited to foot
and ATV  travel.  The  prospect  is  located in an area of low  rolling  terrain
covered with typical arctic vegetation.  The area has numerous small streams and
lakes with Lake Uleeta being the largest.

The  climate  is cold with  summer  temperatures  ranging up to +20(0) C and the
minimum winter  temperature being close to -200 C. There is no permafrost in the
Uleeta Property area.

GEOLOGICAL SETTING

The Uleeta  License  area is  underlain  by a layered  ultra-mafic  complex  and
various  Precambrian  aged rock  sequences.  The  complex is  situated  within a
transform fault zone, that connects Proterozoic Pechenga and Imandra-Varzugskaya
structures  which  are  host to most of the  known  copper-nickel  belts  in the
Monchegorsk region.

DEPOSIT TYPES

The  geological  setting of the Uleeta  Property is a favourable  environment to
host magmatic sulphide nickel, copper, chrome and platinum group elements.

HISTORY

The  Company has been unable to confirm  any  previous  exploration  work on the
Uleeta  Property,  other  than  that the area has been  covered  by  Soviet  era
aeromagnetic  surveys  which  outlined  areas of  interest.  Although  there are
translated  summaries of historic  exploration work at the Uleeta Property,  the
Company  is unable to  confirm  any of the  historic  work  completed  on Uleeta
Project and it does not regard the historic results to be significant.

MINERAL RESOURCE ESTIMATES

There are no NI  43-101 or Guide 7  compliant  resource  estimates  made for the
Uleeta Property.

MINERALIZATION

The  Company  has  yet  to  confirm  whether  any  sulphide  nickel  and  copper
mineralization exists on the Uleeta Property.

EXPLORATION

The Company  completed the first stage of its exploration  program on the Uleeta
Property during the summer of 2007, consisting of geologic mapping,  geochemical
sampling,  and  geophysical  surveys.  The  final  geophysical  report  has been
completed  and is now  being  evaluated.  A  total  of 180  line  km of  induced
polarization,  resistivity,  and magnetic  survey was completed.  A total of 930
geochemical samples have been collected.  Most of the assay results have not yet
been  received,  and so the final  analysis  of this  year's  program  cannot be
completed.  The  preliminary  results from all surveys are  encouraging and they
have  outlined   potential  areas  of  sulfide   mineralization  for  follow  up
exploration.

DRILLING

The Company is unaware of any  drilling  that has been  conducted  on the Uleeta
Property.

FUTURE WORK - RECOMMENDATIONS FROM THE TECHNICAL REPORT

The Uleeta  Property  was not within the scope of the Souker  Technical  Report,
however the following exploration has program has been proposed,  parts of which
were initiated in 2007.

          1.   Conduct  preliminary  ground magnetic  survey and  IP/resistivity
               surveys;
          2.   Conduct  soil  geochemical  sampling on a 400o100  meter grid and
               geological mapping at a 1:25,000 scale;



                                     - 50 -
<PAGE>


          3.   Follow up soil  geochemical  sampling  on a 100o20  and follow up
               depth  targeted  IP survey of priority  areas  defined in initial
               surveys;
          4.   Create more  detailed  geological  mapping at a 10,000  scale and
               surface  rock  trenching;  and  5.  Potential  drill  testing  of
               identified targets.

PROPOSED EXPLORATION AND DEVELOPMENT PROGRAM

Additional  work on the Uleeta  Property will be proposed  after results of this
year's  geochemical  and  geophysical  surveys are completed and evaluated.  The
Company  will  also  conduct  a search  for any  relevant  historic  exploration
information for the Uleeta  Property that may be stored in the local  geological
data archives.

Tsaga Property

PROPERTY DESCRIPTION AND LOCATION

The Tsaga  License is located the within  Lovozersky  district  of the  Murmansk
Oblast within the Kola Peninsula of the Russian Federation, 80km east of Apatity
station of the St. Petersburg-Murmansk railway. The Tsaga License covers an area
of 1970 square  kilometers,  the  boundary of which is defined by the  following
corner point coordinates.

                  67(degree)35'00`'N35(degree)12'00`'E
                  67(degree)48'00`'N35(degree)26'00`'E
                  67(degree)40'00`'N36(degree)24'00`'E
                  67(degree)20'00`'N37(degree)00'00`'E
                  67(degree)11'00`'N37(degree)00'00`'E
                  67(degree)32'40`' N 35(degree)40'00`' E

The location of the Tsaga Property in the Russian Federation is shown on page 49
[Map - 5] prepared by Lakehead Geological Services Inc. dated December 5, 2007.

ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The Tsaga License area is economically undeveloped and unpopulated. A 30 km long
dirt road connects the area with the railway Apatity-Revda.

The Tsaga  Property is  characterized  by low rolling hills with numerous  small
creeks and lakes. Typical arctic vegetation covers the area. Normal temperatures
range  for a  summer  high of 20 C to a  winter  low of  -20(0)  C.  There is no
permafrost in the area.

GEOLOGICAL SETTING

Much of the Tsaga Property area is underlain by a sequence of Lower  proterozoic
age-mafic and ultra-mafic intrusive rocks.

DEPOSIT TYPES

The geological setting of the Tsaga Property is a favourable environment to host
magmatic sulphide nickel,  copper,  chrome,  titanferous  magnetite and platinum
group elements.

HISTORY

Other than the historically reported titanium/magnetite occurrences on the Tsaga
Property,  the Company has yet to complete a detailed  search and compilation of
the historic exploration data from the Tsaga License area.

MINERAL RESOURCE ESTIMATES

There are no NI  43-101 or Guide 7  compliant  resource  estimates  made for the
Tsaga Property.



                                     - 51 -
<PAGE>



MINERALIZATION

There is a historic Titaniferous  magnetite deposit located n the southeast part
of the License area.  Titanium and iron oxide  mineralization  occurs as complex
zones of knot shaped massive lenses, disseminations and cumulate layers.

EXPLORATION

During the summer of 2007, the Company  completed the first phase of geophysical
surveys,  geologic mapping and geochemical  sampling.  Assay results and a final
geophysical report are not complete at this time.

DRILLING

The Company has no record of drilling activity at the Tsaga Property.

FUTURE WORK - RECOMMENDATIONS FROM THE TECHNICAL REPORT

The Tsaga  Property  was not within the scope of the  Souker  Technical  report,
however the following exploration has program has been proposed,  parts of which
were initiated in 2007.

          1.   Conduct  preliminary  ground magnetic  survey and  IP/resistivity
               surveys;
          2.   Conduct  soil  geochemical  sampling on a 400o100  meter grid and
               geological mapping at a 1:25,000 scale;
          3.   Follow up soil  geochemical  sampling  on a 100o20  and follow up
               depth  targeted  IP survey of priority  areas  defined in initial
               surveys;
          4.   Create more  detailed  geological  mapping at a 10,000  scale and
               surface rock trenching; and
          5.   Potential drill testing of identified targets.

PROPOSED EXPLORATION AND DEVELOPMENT PROGRAM

Additional  work on the Tsaga  License  will be proposed  after  results of this
year's  geochemical  and  geophysical  surveys are completed and evaluated.  The
Company  will  also  conduct  a search  for any  relevant  historic  exploration
information  from the Tsaga Property that may be stored in the local  geological
data archives.

Employees

As of the date of this annual report, the Company has one full-time employee and
three  part-time  employees,  including its officers.  In addition,  the Company
employs a number of consultants to perform specific  functions,  on an as needed
basis.

As of the date of this annual report, BMC employs 28 full-time employees and one
part-time  employee,  including its officers,  and Centrasia  Kazakhstan employs
three  part-time  employees,  including  its officers.  See "Item 6.  Directors,
Senior Management and Employees - Employees" and "Item 7. Major Shareholders and
Related Party Transactions - Related Party Transactions."

Organizational Structure

As of the date of this annual report, the Company has seven subsidiaries:

1.       Magellan  Holdings (BVI) Corp.  ("Magellan  Holdings"),  a wholly-owned
         subsidiary of the Company,  incorporated  under the laws of the British
         Virgin  Islands on May 9,  2005.  Magellan  Holding  (BVI)  Corp.  owns
         Magellan Gold (BVI) Inc. and R.P.I.M. Minerals Ltd.

2.       Magellan Gold (BVI) Inc.  ("Magellan  (BVI)"),  a company  incorporated
         under the laws of the British Virgin  Islands on May 9, 2005.  Magellan
         (BVI) is a wholly-owned subsidiary of Magellan Holdings (BVI) Corp. and
         owns Bulakashu Mining Company Ltd. and Centrasia Mining Kazakhstan Ltd.

3.       0724000 B.C.  Ltd.  ("724 BC"), a company  continued  under the laws of
         British  Columbia,  which is a wholly-owned  subsidiary of the Company.
         724 BC was  incorporated  as Magellan  Gold Corp.  on February 4, 2004,
         under the Nevada Business Corporations Act under the name Magellan Gold
         Corp. 724 BC changed its name to



                                     - 52 -
<PAGE>


         Centrasia  Mining Corp. and continued its corporate  jurisdiction  from
         the State of Nevada to the Province of British Columbia on May 9, 2005.
         On September  14, 2005,  724 BC changed its name to its current name in
         connection with the Centrasia Acquisition.

4.       Bulakashu  Mining  Company Ltd.  ("BMC"),  a company  registered in the
         Kyrgyz  Republic on June 4, 2004. BMC is a  wholly-owned  subsidiary of
         Magellan BVI.

5.       Centrasia  Mining  Kazakhstan Ltd.  ("Centrasia  Kazakhstan") a company
         registered in the Republic of  Kazakhstan  in April 2006,  but inactive
         until summer 2006. Centrasia Kazakhstan is a wholly-owned subsidiary of
         Magellan BVI.

6.       R.P.I.M. Minerals Ltd. ("RPIM") a company registered in Cyprus on April
         28, 2007 to hold the shares of Zao Rudprominvest

7.       Zao Rudprominvest  ("RPI"), a company incorporated in Russia on July 7,
         2004.

                              ORGANIZATIONAL CHART

                      |----------------------------------|
                      |      Centrasia Mining Corp.      |
                      |        (British Columbia)        |
                      |----------------------------------|
                                       |
                                       |
                                       |
           |-----------------------------------|
           |                                   |
           |                                   |
           | 100%                         100% |
|---------------------|       |---------------------------------|
   0724000 B.C. Ltd.  |       |  Magellan Holdings (BVI) Corp.  |
  (British Columbia)  |       |      (British Virgin Islands)   |
|---------------------|       |---------------------------------|
                                               |
                                               |
                                               |
              |----------------------------------------------------------
              |                                           |
              |                                           |
              | 100%                                 100% |
 |-------------------------|               |------------------------------|
    R.P.I.M. Minerals Ltd. | | Magellan Gold (BVI) Corp. | (Cyprus) | | (British
         Virgin Islands) |
 |-------------------------|               |------------------------------|
              |                                           |
              |                                           |
              |                                           |
              | 100%                          |----------------------|
              |                               |                      |
              |                               | 100%            100% |
   |---------------------|         |--------------------|  |------------------|
   |  Zao Rudprominvest  |         |  Bulakashu Mining  |  | Centrasia Mining |
   |      (Russia)       |         |     Company Ltd.   |  |   Kazakhstan Ltd.|
   |---------------------|         | (Kyrgyz Republic)  |  |    (Republic of  |
                                   |--------------------|  |      Kazakhstan) |
                                                           |------------------|

Principal Offices

The  Company's  corporate  office is located at Suite  #1305,  1090 West Georgia
Street,  Vancouver,  British  Columbia,  Canada,  V6E 3V7. The corporate  office
facility  is  provided  on a  month-to-month  basis  by  Chase  Management  Ltd.
("Chase")  as part of its  agreement  with  the  Company.  See  "Item  7.  Major
Shareholders and Related Party Transactions - Related Party Transactions."

The Company  also has an  executive  office at  300-1055  West  Hasting  Street,
Vancouver,  British  Columbia V6E 2E9.  During the year ended May 31, 2005,  the
executive  office was leased on a  month-to-month  basis by Lakehead  Geological
Services Inc.  ("Lakehead"),  a company  controlled by the Company's  President,
Doug Turnbull.  Until November 1, 2006, there was no written agreement  relating
for the lease and the Company  reimbursed  Lakehead  $1,450 and $12,328 for rent
expenses  for the years ended May 31, 2005 and 2006,  respectively.  The Company
reimbursed  Lakehead  $2,078 for rent  expenses  for the month of June 30, 2006.
From July 1, 2006 to October 31, 2006, the Company paid rent of $9,810  directly
to Guinness  Business Centre Ltd.  ("Guinness") for the same office  facilities.
Effective  November 1, 2006, the Company  entered into six-month lease agreement
with Guinness,  with an option to renew for additional  six-month intervals upon
one month's advance notice, with rent set at $2,570 monthly.  See "Item 7. Major
Shareholders and Related Party Transactions - Related Party Transactions."



                                     - 53 -
<PAGE>



The Company's  subsidiary  BMC  maintains an office in Bishkek,  Kyrgyzstan on a
yearly basis, payable for each subsequent year in full at the rate of US$880 per
month. There is a written lease agreement.

The Company's  subsidiary  Centrasia  Kazakhstan  maintains an office in Almaty,
Kazakhstan,  on a month-to-month  basis for US $700 a month. There is no written
lease agreement.

See "Item 7. Major  Shareholders and Related Party  Transactions - Related Party
Transactions."


ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS.
--------------------------------------------------------------------------------

The  following  discussion  of the results of  operations of the Company for the
fiscal years ended May 31, 2007,  2006, and 2005,  should be read in conjunction
with the  consolidated  financial  statements  of the Company and related  notes
included therein.

The Company's  consolidated financial statements are prepared in accordance with
Canadian GAAP, the application of which, in the case of the Company, conforms in
all  material  respects  for the periods  presented  with US GAAP except for the
differences  referred to in Note 16 of the consolidated  financial statements of
the  Company  included  herein.  The noon rate of  exchange on December 5, 2007,
reported  by the  United  States  Federal  Reserve  Bank  of New  York  for  the
conversion of Canadian  dollars into United  States  dollars was CDN $1.0127 (US
$1.00 = CDN$1.0127)..  The effects of inflation and price changes have not had a
material  impact on the Company's  income or net sales revenues  during the past
three years. Foreign currency fluctuations have not had a material impact on the
Company  during the last three  fiscal  years and the Company does not engage in
any foreign currency hedging activities.

Overview

The Company is a junior  mineral  exploration  company  actively  engaged in the
acquisition, exploration and development of mineral properties located in Kyrgyz
Republic and other  countries in Central  Asia,  Eastern  Europe and Russia.  On
September  14,  2005,  the  Company  completed  a  recapitalization  whereby  it
purchased all of the issued and  outstanding  common shares of 0724000 B.C. Ltd.
("724 BC") in exchange for common shares of the Company on a  one-for-one  basis
(the "Acquisition").

724 BC's principal asset was an agreement (the "Marsa Option") to acquire all of
the  issued  and  outstanding  share  capital  of BMC,  from  Marsa  Gold  Corp.
("Marsa"), a privately owned Kyrgyz company. The sole asset of BMC was a license
permitting the  exploration of an area in the  north-central  part of the Kyrgyz
Republic,  covering  approximately  240 square  kilometers  (the "Bulakashu Gold
Property").  The Marsa Option effectively allowed 724 BC to acquire its interest
in the Bulakashu Gold Property.

The completion of the Acquisition and issuance of Company shares on the purchase
of  $400,000  of  indebtedness  of 724 BC  resulted  in the 724 BC  shareholders
holding the majority of the combined  Company's  issued and  outstanding  common
shares.  Accordingly,  the  Acquisition  was treated as a reverse  takeover  and
effective  September  14,  2005,  the  financial  statements  were  treated  for
accounting purposes as a recapitalization.

In November 2005,  the Company  agreed to reorganize its  arrangement to acquire
its interest in the Bulakashu Gold Property, replacing the Marsa Option, whereby
BMC has  transferred  its ownership  interest in Bulakashu Gold Property back to
Marsa.  Marsa then  assigned all of its  interests to Kantanna  Company  Limited
("Kantanna").  Both Marsa and  Kantanna are owned by Mr. Oleg Kim, a director of
the Company.  As a result, BMC now holds an option to acquire a 100% interest in
the Bulakashu Gold Property from Kantanna  under the same terms as  contemplated
under the Marsa Option and directly hold the exploration licenses on the Eastern
Sary Jaz  Property.  The Company  issued  200,000  common  shares to Kantanna as
consideration  for the  Eastern  Sary  Jaz  Property  and the  transfer  of 100%
ownership of BMC to the Company.  In August of 2007, the Company entered into an
amending  agreement  with  Kantanna,  pursuant to which  Kantanna  has agreed to
forego the aggregate US$1,890,000 in exploration expenditures for 2007 and 2008,
which was one of the requirements for the Company to acquire the remaining 62.5%
interest in the Bulakashu  Property that it had not acquired to date.  The other
requirement was the issuance of 375,000 shares to the vendor,  which the Company
has now issued.  Thus the Company has acquired the remaining  62.5%  interest in
the Bulakashu Property and now owns the entire Bulakashu Property.



                                     - 54 -
<PAGE>



On May 14,  2007 the  Company  announced  that it had  signed  a share  purchase
agreement to acquire a 100% interest in the Souker  Nickel-Copper  deposit,  and
the Uleeta and Tsaga  Properties  (collectively  the "Russian  Properties")  for
initial  payments of US $6,000,000  and 12,500,000  shares of the Company,  with
cash payments of an additional US $5,000,000 in 2008 and US $1,500,000 in 2009.

On July 24, 2007 the Company  announced that it had  successfully  completed the
transaction and acquired a 100% interest in the Russian  Properties  through the
acquisition  of a  Cyprus-registered  company  which  owns a  Russian-registered
company  which owns the Russian  Properties.  The Company  made the initial cash
payment of US  $6,000,000  and issued  12,500,000  shares of the  Company to the
vendor,  Stargate  Solutions Limited. A further US $5,000,000 is payable on July
24,  2008  and  US  $1,500,000  on  July  24,  2009  to  Stargate.   An  initial
finders/success fee of US $300,000 cash plus 625,000 shares has been paid to DBM
Capital Partners Ltd. ("DBM"). A further US $250,000 cash is payable on July 24,
2008 and US $75,000 on July 24,  2009 to DBM.  All of the shares  issued for the
acquisition and to DBM are subject to an escrow agreement  pursuant to which the
shares  will be  released  from  escrow in the  normal  course  over a period of
eighteen months.

The Company derives  interest  income on its bank deposits and other  short-term
deposits,  which  depend  on the  Company's  ability  to  raise  funds.  Of most
significance  would be further  cash  received  from  issuance of shares to fund
ongoing activities. The Company may require significant additional financing and
there is no assurance  that funds will be available on terms  acceptable  to the
Company or at all.

The Company's consolidated financial statements were prepared on a going concern
basis  which  assumes  that the  Company  will be able to realize its assets and
discharge its liabilities in the normal course of business.

USE OF ESTIMATES

The  preparation  of financial  statements  in  conformity  with  Canadian  GAAP
requires  management to make estimates and assumptions  that affect the reported
amount of assets  and  liabilities  and  disclosure  of  contingent  assets  and
liabilities at the date of the financial  statements and the reported  amount of
revenues and expenses during the period.  Significant areas requiring the use of
management  estimates relate to the  determination of environmental  obligations
and  impairment of mineral  properties  and deferred  costs.  Actual results may
differ from these estimates.

UNPROVEN MINERAL INTERESTS

Acquisition  and  exploration   costs  directly  relating  to  unproven  mineral
interests  are  deferred  until the  mineral  interests  to which they relate is
placed into production,  sold or abandoned. The deferred costs will be amortized
over the life of the orebody following commencement of production or written off
if the property is sold or abandoned. Administration costs and other exploration
costs that do not relate to any specific property are expensed as incurred.

On a periodic basis, management reviews the carrying values of deferred unproven
mineral  interest  acquisition  and  exploration  expenditures  with a  view  to
assessing whether there has been any impairment in value.  Management takes into
consideration  various  information  including,  but not limited to,  results of
exploration  activities  conducted to date,  estimated future metal prices,  and
reports and opinions of outside geologists, mine engineers and consultants. When
it is  determined  that a project or interest  will be abandoned or its carrying
value  has been  impaired,  a  provision  is made for any  expected  loss on the
project or interest.

Although  the Company has taken steps to verify  title to mineral  interests  in
which it has an interest,  according  to the usual  industry  standards  for the
stage of exploration of such  interests,  these  procedures do not guarantee the
Company's title.  Such interests may be subject to prior agreements or transfers
and title may be affected by undetected defects.

From time to time, the Company acquires or disposes of interests pursuant to the
terms of option agreements.  Options are exercisable  entirely at the discretion
of the optionee and,  accordingly,  are recorded as mineral  interests  costs or
recoveries when the payments are made or received.



                                     - 55 -
<PAGE>



Results of Operations

On September  14, 2005,  the Company  completed all the  transactions  under the
Acquisition as described in  "Recapitalization  and  Acquisition"  and "Selected
Financial  Data".  The  Acquisition  was treated as a  recapitalization  and the
consolidated   financial  statements  represent  a  continuation  of  the  legal
subsidiary,  724 BC as the legal parent.  Accordingly,  as a public company, the
Company has experienced a significant increase in costs during fiscal 2006.

Year Ended May 31, 2007 Compared to Year Ended May 31, 2006

During fiscal 2007, the Company recorded a loss of $2,036,069  ($0.10 per share)
compared to a loss of $1,206,667  ($0.10 per share) for fiscal 2006, an increase
in  loss  of  $829,402.  The  increase  in the  loss in  fiscal  2007 is  mainly
attributed to the ongoing  corporate costs as a public reporting and TSXV listed
company,  increased  activities in fiscal 2007 due to activities relating to the
Company's increased  exploration  activities of its unproven mineral properties,
additional costs of ongoing reviews of and due diligence  conducted on potential
property  acquisitions  in Central  Asia and  Russia and the impact of  non-cash
stock-based compensation recognition.

General and  administrative  expenses of $1,949,793  were incurred during fiscal
2007, an increase of $755,307, from $1,194,486 in fiscal 2006. Specific expenses
of note during fiscal 2007 are as follows:

     o   the Company incurred accounting,  management and administrative fees of
         $76,850 (2006 - $62,358) provided by Chase Management Ltd. ("Chase"), a
         private  company  controlled  by Mr.  Nick  DeMare,  a director  of the
         Company;
     o   the Company  incurred  legal fees of $63,021 (2006 - $93,785).  General
         legal expenses were incurred in fiscal 2007 mainly for the  preparation
         of the  Form  20F,  whereas  the  Company  incurred  significant  legal
         expenses in fiscal 2006 negotiating the terms of the Acquisition;
     o   the Company  incurred  travel costs of $284,729  (2006 - $170,984)  for
         review of  potential  properties  in Central  Asia,  Russia and Eastern
         Europe,   numerous  Company  site  visits  and  the  attendance  to  an
         investment conference in Frankfurt, Germany;
     o   the Company  incurred total management fees of $82,975 (2006 - $80,500)
         to its  President,  of which $46,214 (2006 - $67,438) has been recorded
         as management fees and $36,761 (2006 - $13,062) has been capitalized to
         unproven mineral interests or deferred acquisition costs;
     o   expenses such as regulatory fees, shareholder costs and office expenses
         have increased  significantly  due to the reporting  requirements  of a
         public company;
     o   the Company incurred  corporate  development  expenses totaling $92,263
         (2006 - $60,655) for a market  awareness and  promotional  campaign and
         participation in an investment conference in Frankfurt, Germany;
     o   the  Company  paid  salaries  of  $238,980  (2006  -  $75,193)  for the
         administrative  staff in the mining offices in the Kyrgyz  Republic and
         Kazakhstan;
     o   the Company  incurred  professional  fees of $224,382 (2006 - $151,170)
         mainly for  administrative  services  provided  by  consultants  in the
         mining offices in the Kyrgyz Republic, Kazakhstan and Canada;
     o   the Company  incurred  property due diligence  costs of $99,242 (2006 -
         $170,217) due to  unsuccessful  negotiations  on a mineral  property in
         Kazakhstan; and
     o   recorded   $503,400   (2006  -  $137,250)   in  non-cash   stock  based
         compensation  on the vested  portions of stock options  granted  during
         fiscal 2007.

As the Company is in the exploration  stage of investigating  and evaluating its
unproven mineral interests, it has no revenue. Interest income is generated from
cash held with the Company's  financial  institution.  During  fiscal 2007,  the
Company reported  interest income of $42,993 compared to $19,455 in fiscal 2006.
The increase is attributed to higher levels of cash held during fiscal 2007.

During fiscal 2007, the Company spent $395,319 on exploration  activities on its
unproven mineral  interests mainly on the Bulakashu  Property.  See "Exploration
Update" for further discussion.

During fiscal 2007, the Company  completed a non-brokered  private  placement of
4,000,000  units for gross  proceeds of $2,000,000 and issued  4,904,863  common
shares on the exercise of stock  options,  warrants and agent  options for gross
proceeds of $2,664,078.


                                     - 56 -

<PAGE>


Year Ended May 31, 2006 Compared to Year Ended May 31, 2005

During fiscal 2006, the Company recorded a loss of $1,206,667  ($0.10 per share)
compared to a loss of $161,466  ($0.11 per share) for fiscal 2005.  The increase
in the loss in 2006 is mainly attributed to the  recapitalization of the Company
conducted,  effective September 14, 2005, the additional ongoing corporate costs
as a public reporting and TSXV listed company,  increased activities relating to
the Company's  exploration  activities  of its mineral  properties in the Kyrgyz
Republic and review of potential property acquisitions in Central Asia.

General and  administrative  expenses of $1,194,486  were reported during fiscal
2006, an increase of $1,031,853, from $162,633 in fiscal 2005. Specific expenses
of note during the 2006 and 2005 are as follows:

     o   during  2006,   the  Company   incurred   accounting,   management  and
         administrative  fees of  $62,358  (2005 - $nil)  provided  by Chase,  a
         private  company  controlled  by Mr.  Nick  DeMare,  a director  of the
         Company;
     o   during  2006,  the Company  incurred  or accrued  audit fees of $36,563
         (2005 -  $12,000)  and legal  fees of  $93,785  (2005 -  $38,198).  The
         increase  in costs  is  attributed  to the  Acquisition  and  increased
         Company activities and filings;
     o   incurred  travel costs of $170,984 (2005 - $2,478) mainly for review of
         potential  properties in Kyrgyz  Republic and Central Asia and numerous
         Company site visits.  Members of management and certain  directors also
         traveled to Europe to discuss financing opportunities for the Company;
     o   The President is paid a minimal base salary of $5,000 per month. During
         2006 the Company  incurred  total  management  fees of $80,500  (2005 -
         $60,000),  of which  $67,438  (2005 -  $45,500)  has been  recorded  as
         management  fees and $13,062 (2005 - $14,500) has been  capitalized  to
         unproven mineral interests;
     o   expenses  such as transfer  agent fees,  regulatory  fees,  shareholder
         costs and  office  expenses  have  increased  significantly  due to the
         completion of the  Acquisition  and reporting  requirements of a public
         company;
     o   during 2006, the Company  incurred  corporate  development  expenses of
         $60,655 for a market awareness and promotional campaign;
     o   Effective November 15, 2005, the Company retained Mr. Jordan Shapiro to
         provide market awareness and investor relations activities. Mr. Shapiro
         was paid a monthly fee of $2,500. During 2006, the Company paid $16,250
         to  Mr.  Shapiro.   Mr.  Shapiro's  contract  was  mutually  terminated
         effective June 1, 2006;
     o   during   2006,   the   Company   paid   salaries  of  $75,193  for  the
         administrative staff in the BMC office in the Kyrgyz Republic;
     o   during 2006, the Company recorded a non-cash  stock-based  compensation
         charge of $137,250 on the vested  portion of stock  options  granted to
         purchase  1,217,500 common shares. The calculation is based on the fair
         value  of  the  stock   options   granted  by  the  Company  using  the
         Black-Scholes   option   pricing   model,   which  uses  estimates  and
         assumptions;
     o   incurred  professional  fees of  $151,170  (2005 - $9,514)  mainly  for
         services  provided by Dr.  William  Tafuri  (officer)  and Mr. Oleg Kim
         (director) in the office in the Kyrgyz Republic; and
     o   incurred property due diligence costs of $170,217. The Company advanced
         $133,164 (US $120,000)  under a loan  agreement for costs incurred on a
         property.  The Company was  unsuccessful  in  acquiring  the  property;
         accordingly,  the  Company  has  written  off  the  advance  as part of
         property  due  diligence   costs.   The  remaining  amount  of  $37,053
         represents  costs  incurred in the review of  potential  properties  in
         Kyrgyz Republic and Central Asia.

As the Company is in the exploration  stage of investigating  and evaluating its
unproven mineral interests, it has no revenue. Interest income is generated from
cash held with the Company's  financial  institution.  During 2006,  the Company
reported  interest  and other  income of $19,455  compared to $nil in 2005.  The
increase is attributed to higher levels of cash held during 2006.

During  2006,  the Company  spent  $195,959  on  exploration  activities  on its
unproven mineral  interests mainly on the Bulakashu  Property.  See "Exploration
Update" for further discussion.

During 2006, the Company  completed a private  placement of 4,375,000  units for
gross  proceeds of $875,000  and a short-form  offering of  3,076,923  units for
gross proceeds of $2,000,000.


                                     - 57 -
<PAGE>




Liquidity and Capital Resources

As at May 31, 2007, the Company had working capital of $3,381,371. Subsequent to
May 31, 2007, the Company received  approximately  $1,312,135 on the exercise of
warrants and $12,600,000 on the completion of a private placement for 10,500,000
units. The Company believes that it currently has sufficient financial resources
to conduct  anticipated  exploration  programs  and meet  anticipated  corporate
administration costs for the upcoming 12 month period. However, the Company will
require additional  financing to pay the $5,546,000 on its due date, of July 24,
2008, pursuant to the RPIM Acquisition. In addition,  exploration activities may
change due to ongoing  results and  recommendations,  or the Company may acquire
additional  properties,  which may entail  significant  funding  or  exploration
commitments.  In the event that the occasion arises, the Company may be required
to  obtain  additional  financing.  The  Company  has  relied  solely  on equity
financing  to  raise  the  requisite  financial  resources.  While  it has  been
successful  in the past,  there can be no  assurance  that the  Company  will be
successful in raising future financing should the need arise.

On completion of the RPIM  Acquisition the Company assumed  long-term debt of US
$6,825,000,  of which US  $5,250,000  is due on July 24, 2008 and the  remaining
balance of US $1,575,000 is due on July 24, 2009.  There are no  restrictions on
the use of its cash resources.

There are no material commitments for capital expenditures during fiscal 2008.

The Company holds its cash and cash equivalents mainly in Canadian funds.

Research and Development

During fiscal 2007, the Company  recorded a total of $740,819 on the acquisition
and exploration of its mineral interests in the Kyrgyz Republic, comprising: (i)
the  issuance  of  200,000  common  shares,  at a  fair  value  of  $96,000,  as
consideration  for the Eastern Sary Jaz  Property;  (ii) the issuance of 250,000
common  shares,  at a fair  value of  $207,500,  for an  option  payment  on the
Bulakashu Property;  (iii) the issuance of 60,000 common shares, at a fair value
of $42,000, for an option payment on the Turgeldy Property; and (iv) exploration
expenditures  totaling $395,319, of which $304,033 was incurred on the Bulakashu
Property.  The Company also incurred $23,865 for general exploration  activities
in fiscal 2007. During the latter part of fiscal 2007, the Company  investigated
and  negotiated  the RPIM  Acquisition,  under which the Company paid a $226,860
non-refundable  deposit and incurred a total of $162,858 for due  diligence  and
professional  fees as at May 31, 2007.  These  amounts were recorded as deferred
acquisition costs.

During fiscal 2006 the Company  recorded a total of $803,386 on the  acquisition
and exploration of its mineral interests  comprising of: (i) issuance of a total
of 400,000 common shares of its share  capital,  at a fair value of $230,000 and
payment of $46,440 under its  commitments  under the option  commitments for the
Bulakashu  Property;  (ii) $369,398  attributable  to mineral  interests on cash
advances  made to BMC prior to  completion  of the  Kantanna  Option,  and (iii)
$133,654 of exploration  incurred on  exploration on the Bulakashu  Property and
$23,894 of  exploration  on other  properties.  No mineral  interest  activities
occurred in fiscal 2005.  During fiscal 2005, the Company  advanced  $268,346 to
BMC.

Off Balance Sheet Arrangements

The Company does not have any material off balance sheet  arrangements that have
or are  reasonably  likely to have a current or future  effect on the  Company's
financial  condition,  changes in  financial  condition,  revenues or  expenses,
results of operations, liquidity, capital expenditures or capital resources.



                                     - 58 -
<PAGE>


Tabular Disclosure of Contractual Obligations

As  of  November  30,  2007,  the  Company  had  the  following  long-term  debt
obligations:

                                         DUE                     DUE
DUE TO                              JULY 24, 2008          JULY 24, 2009S
                                  ------------------      ------------------

Stargate                             US $ 5,000,000          US $ 1,500,000
DBM                                  US $   250,000          US $    75,000
                                  ------------------      ------------------
                                     US $ 5,250,000          US $ 1,575,000
                                  ==================      ==================

Governmental Policies

Except  as  set  forth  in  "Item  10.  Additional  Information"  there  are  no
governmental  economic,  fiscal,  monetary or  political  policies  known to the
Company that have materially affected,  or could materially affect,  directly or
indirectly, the Company's operations or investments by U.S. shareholders.


ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.
--------------------------------------------------------------------------------

Directors and Senior Management

MANAGEMENT AND BOARD OF DIRECTOR CHANGES

Mr. Damien  Reynolds was appointed to the board of directors on December 6, 2006
and resigned from the board of directors on October 10, 2007.


On March 15, 2007  Centrasia  created an advisory  board  comprised  of industry
leaders to assist the company in reaching its objectives.  The advisory  members
bring  considerable  expertise  from  their  fields of  mining,  accounting  and
financial compliance,  and financial and capital markets and provide the company
with  strategic  business   development  advice  and  introductions  within  the
development  and financial  communities.  The advisory  board is subsidiary  and
supportive in nature and not intended to negate the  responsibility of the board
of directors  to manage the business and affairs of the company.  Members of the
Advisory board receive  incentive options and reimbursement for expenses in lieu
of direct compensation.


Initial  appointments  to the board were Mr. Brian  McEwen,  P. Geol and Mr. Ken
Kuchling,  P. Eng as its inaugural  members.  The advisory board is comprised of
natural resources  professionals and reports to the board of directors from time
to time regarding matters assigned to it by the board of directors.

On July 3, 2007, the Company appointed Mr. Andre Agapov to the advisory board.

Also in July 2007, Mr. Oleg Kim, director, assumed the role and responsibilities
of  Vice   President  of  Operations   for   Centrasia.   Mr.  Kim's   principal
responsibility will be to manage the development of the Company's newly acquired
Souker Deposit.

In  conjunction  with the  acquisition  of the Russian  properties,  Mr. Grigory
Aleksenko was appointed to the board of directors on July 24, 2007.

In August 2007, the Company appointed Mr. Leonid Oparin and Mr. Brian McEwen, P.
Geol to the board of directors.

Also in August 2007, the Company accepted the resignations of Messrs. Gregory G.
Crowe and Lindsay  Bottomer from the board of directors.  Both Mr. Crowe and Mr.
Bottomer will continue to be involved with the Company in consulting roles.

On October 10, 2007,  the Company  appointed Mr. Tim  McCutcheon to its advisory
board.



                                     - 59 -
<PAGE>



The following  table sets forth the names,  positions  held with the Company and
terms of office of each  director  and  officer of the Company as of the date of
this annual report:
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------
NAME                       POSITION WITH THE COMPANY         TERM OF OFFICE (FOR EACH OFFICE HELD)
-------------------------------------------------------------------------------------------------
<S>                       <C>                              <C>

Douglas Turnbull           President                         September 14, 2005 to present
                           Chief Executive Officer           September 14, 2005 to present
                           Director                          September 12, 2005 to present
-------------------------------------------------------------------------------------------------
Nick DeMare                Chief Financial Officer           September 24, 2003 to present
                           Director                          October 27, 2002 to present
-------------------------------------------------------------------------------------------------
Cary Pinkowski             Director                          September 14, 2005 to present
-------------------------------------------------------------------------------------------------
Oleg Kim                   Director,                         September 14, 2005 to present
                           Vice-President of Operations      July 3, 2007
-------------------------------------------------------------------------------------------------
Grigory A. Aleksenko       Director                          July 24, 2007 to present
-------------------------------------------------------------------------------------------------
Leonid Oparin              Director                          August 4, 2007 to present
-------------------------------------------------------------------------------------------------
Brian McEwen               Director                          August 4, 2007 to present
-------------------------------------------------------------------------------------------------
William J. Tafuri          Vice-President of Exploration     September 14, 2005 to present
-------------------------------------------------------------------------------------------------
James Harris               Corporate Secretary               September 14, 2005 to present
-------------------------------------------------------------------------------------------------
</TABLE>

Directors are elected at each annual general meeting of the  shareholders of the
Company  and  serve  until  the next  annual  general  meeting  or  until  their
successors  are elected or  appointed.  The Company  does not have an  executive
committee  or  a  compensation  committee.  The  Company's  audit  committee  is
responsible  for reviewing the Company's  financial  statements  before they are
approved by the Company's directors.

There are no family relationships between any directors or executive officers of
the Company. To the best of the Company's  knowledge,  there are no arrangements
or understandings  with major  shareholders,  customers,  suppliers,  or others,
pursuant to which any of the Company's  officers or directors was selected as an
officer or director of the Company.

Set forth  below are  brief  descriptions  of  recent  employment  and  business
experience of the Company's officers and directors.

DOUGLAS S. TURNBULL (AGE 44), PRESIDENT, CHIEF EXECUTIVE OFFICER, AND DIRECTOR

Mr.  Turnbull is a consulting  geologist  and  president of Lakehead  Geological
Services Inc., a geological  consulting company based in Vancouver,  Canada. Mr.
Turnbull  has over 20 years  experience  in  diamond,  precious  and base  metal
exploration.  Mr. Turnbull holds a Honours Bachelor of Science degree in Geology
and is a Qualified  Professional  Geoscientist  recognized by the Association of
Professional  Engineers and  Geoscientists of British  Columbia.  Mr. Turnbull's
previous working and consulting  experience  includes Monopros Ltd., the Ontario
Geological Survey, Goldfields Mining Corporation, Prime Exploration Ltd., Adrian
Resources  Ltd., and Madison  Enterprises  Corp.  Mr.  Turnbull has been part of
exploration  teams  responsible for the exploration and development of the Eskay
Creek Gold  Deposit in British  Columbia,  Canada,  the  Petaquilla  Copper-Gold
Porphyry  Deposit in Panama and the Mt.  Kare Gold  Deposit in Papua New Guinea.
Currently Mr.  Turnbull  serves as a director on the board of Buffalo Gold Ltd.,
Oromin  Explorations  Ltd.  and  Grizzly  Explorations  Ltd.  See "Item 7. Major
Shareholders  and Related  Party  Transactions  - Related Party  Transactions  -
Conflicts of Interest." Mr. Turnbull  devotes at least 90% of his time (36 hours
per week) to the business and affairs of the Company.

NICK DEMARE (AGE 53), CHIEF FINANCIAL OFFICER AND DIRECTOR

Mr.  DeMare holds a Bachelor of Commerce  degree from the  University of British
Columbia  and is a  member  in  good  standing  of the  Institute  of  Chartered
Accountants of British Columbia.  Mr. DeMare devotes approximately 10-15% of his
time  (approximately  4-6 hours per week) to the affairs of the  Company.  Since
May, 1991, Mr. DeMare has been the President of Chase Management Ltd., a private
company which provides a broad range of administrative, management and financial
services  to private and public  companies  engaged in mineral  exploration  and
development,  gold and silver production, oil and gas exploration and production
and venture capital. Mr. DeMare indirectly owns 100% of Chase.


                                     - 60 -
<PAGE>


Mr. DeMare devotes  approximately  ten percent of his time to the affairs of the
Company.  Mr. DeMare  currently  serves as an officer and/or  director of Aguila
American   Resources  Ltd.,   Andean   American  Mining  Corp.,   Astral  Mining
Corporation, Consolidated Kookaburra Resources Ltd., GeoPetro Resources Company,
GGL Diamond  Corp.,  Gold Point  Energy  Corp.,  Golden  Peaks  Resources  Ltd.,
Goldmarca  Limited,  Halo Resources Ltd.,  Lariat Energy Ltd.,  Mawson Resources
Limited, Mirasol Resources Ltd., Mulligan Capital Corp., Tinka Resources Limited
and Tumi Resources  Limited.  See "Item 7. Major  Shareholders and Related Party
Transactions - Related Party Transactions - Conflicts of Interest."

OLEG KIM (AGE 48), DIRECTOR

Mr. Kim is a Kyrgyz national. Mr. Kim has been the principal of Marsa Gold since
2003 and the General  Director of BMC since July 2004.  Mr. Kim has graduate and
post graduate  qualifications  in geology from Russia and Uzbekistan and further
qualifications  in economics from McGill  University.  From 1985 to 1992 Mr. Kim
worked for a number of state geology  organizations  in the Kyrgyz  Republic and
subsequently Kyrgyzaltyn, the principal mining state in the Kyrgyz Republic. Mr.
Kim was involved  from 1993 until 2000 with the  development  of the Kumtor gold
deposit joint  venture with Cameco  Corporation  and in 1998 became  exploration
manager at Kumtor in charge of the major continuing exploration program for this
gold mine.  Mr. Kim was also  generally  responsible  for  Cameco's  CIS (former
Soviet  Union)  exploration  programs.  Since 1992 Mr. Kim has developed his own
business interests in gold exploration and productions. Since June 2004, Mr. Kim
has been a General Director of Andash Mining Company in the Kyrgyz Republic. Mr.
Kim has also held a controlling interest in Kantanna since its inception in late
2004. See "Item 7. Major  Shareholders and Related Party  Transactions - Related
Party Transactions - Conflicts of Interest." Mr. Kim devotes at least 50% of his
time (approximately 20 hours per week) to the business and affairs of BMC.

CARY PINKOWSKI (AGE 37), DIRECTOR

Mr. Pinkowski has fifteen years of experience in dealing with North American and
European capital markets. Mr. Pinkowski was an investment adviser with Canaccord
Capital  Corporation  from  June 1992 to  November  2004.  During  this time Mr.
Pinkowski  specialized in venture and resource company financings and maintained
a large retail and institutional  clientele.  Since December 2004, Mr. Pinkowski
has acted as a business and  corporate  development  advisor to Entree Gold Inc.
See "Item 7. Major  Shareholders and Related Party  Transactions - Related Party
Transactions - Conflicts of Interest."

GRIGORY A. ALEKSENKO (AGE 38), DIRECTOR

Mr.  Aleksenko is the managing  partner and cofounder of AGA Management Ltd. AGA
Management  Ltd., a leading,  Moscow based  consulting  company  specializing in
Russian  financial and mergers and  acquisitions  ("M&A")  markets and played an
instrumental role in the acquisition of the Russian  Properties as agent for the
vendor. He has more than nine years of professional experience in M&A, strategic
consulting and restructuring projects for international corporations with Bain &
Company  (Moscow-Johannesburg-Sydney)  and  two  years  as a  manager  with  the
investment banking division of Renaissance Capital. Mr. Aleksenko graduated from
Moscow  State  University  and  has an MBA  from  the  International  School  of
Business, INSEAD.

BRIAN MCEWEN (AGE 49) DIRECTOR

Mr. McEwen has over 25 years of mineral  exploration  and production  experience
including project management,  economic evaluation and mine planning for various
mining  concerns  throughout  the world.  Mr.  McEwen was the former  Manager of
Mineral  Projects for Norwest  Corporation.  Prior to that, Mr. McEwen consulted
for AMEC Inc. as their Manager of Geology for Latin America, and was involved in
numerous deposit  evaluations  including the Spence deposit (BHP Billiton),  the
Lomas  Bayas   deposit   (Falconbridge),   and  the  Quebrada   Blanca   deposit
(Teck/Cominco).  Mr.  McEwen is currently the President of Buffalo Gold Ltd. Mr.
McEwen  is a  Professional  Geoscientist,  registered  with the  Association  of
Professional Engineers,  Geologists,  and Geophysicists of Alberta. See "Item 7.
Major Shareholders and Related Party Transactions - Related Party Transactions -
Conflicts of Interest."

LEONID OPARIN (AGE 58), DIRECTOR

Mr. Oparin has over 30 years of mine development and construction  experience in
Russia after graduating from the Leningrad Mining Institute in 1971, as a mining
surveyor. Mr. Oparin is currently the Head of the Mining and Geological



                                     - 61 -
<PAGE>



department  and Advisor to the President of JSC Alrosa.  From 1973 to 2002,  Mr.
Oparin worked for Norilsk Nickel, most recently as head of the Mineral Resources
Department and Director of Mining Production  Development  Projects.  During his
earlier years with Norilsk, he held positions as Branch Mining Surveyor, Head of
the Construction  Department and Deputy Head of the Construction  Division.  Mr.
McEwen  has over 25 years  of  mineral  exploration  and  production  experience
including project management,  economic evaluation and mine planning for various
mining  concerns  throughout  the world.  Mr.  McEwen was the former  Manager of
Mineral  Projects for Norwest  Corporation.  Prior to that, Mr. McEwen consulted
for AMEC Inc. as their Manager of Geology for Latin America, and was involved in
numerous deposit  evaluations  including the Spence deposit (BHP Billiton),  the
Lomas  Bayas   deposit   (Falconbridge),   and  the  Quebrada   Blanca   deposit
(Teck/Cominco).

WILLIAM J. TAFURI (AGE 66), VICE-PRESIDENT EXPLORATION

Dr.  Tafuri has a Ph.D.  in geology and over 30 years of mining and  exploration
experience in precious and base metals.  In addition to Dr. Tafuri's  consulting
experience, he has worked for number of major international and mining companies
including Phelps Dodge Corporation,  Santa Fe Pacific Gold Corporation,  Kinross
Gold Corporation and Getty Mining. Prior to 1995, Dr. Tafuri worked primarily in
the western United States,  as an exploration  geologist early in his career and
ultimately as the Western U.S. Exploration Manager of Getty Mining. From 1995 to
1998,  Dr.  Tafuri  served  as  regional  geologist  for Santa Fe  Pacific  Gold
Corporation in Kazakhstan.  For the year following,  Dr. Tafuri served as senior
geologic advisor to Phelps Dodge  Corporation in Kazakhstan and Russia assisting
with  exploration,  negotiation  and  acquisition of new projects.  From 1999 to
2001, Dr. Tafuri worked for Kinross Gold Corporation  principally  involved with
the evaluation of projects in Russia,  North and South America.  Since 2001, Dr.
Tafuri has  focussed on his  consulting  business,  mainly  conducting  property
evaluations  in  Kazakhstan.  Dr.  Tafuri is a member of the Society of Economic
Geologists  and  the  Geological   Society  of  America.   See  "Item  7.  Major
Shareholders  and Related  Party  Transactions  - Related Party  Transactions  -
Conflicts of Interest."  Dr. Tafuri  devotes all of his time  (approximately  40
hours per week) to the affairs of the Company.

JAMES HARRIS (AGE 56), SECRETARY

Mr. Harris is a corporate, securities, and business lawyer with over 20 years of
experience in British Columbia and  internationally.  Since 1993, Mr. Harris has
operated his own  independent  law practice,  which has been associated with the
law firm Thomas Rondeau since 2003. Mr. Harris has extensive experience with the
acquisition and disposition of assets;  corporate structuring and restructuring;
regulatory  requirements and corporate  filing;  and corporate  governance.  Mr.
Harris has been an  instructor at the  Professional  Legal  Training  course for
articling  students  sponsored  by the Law  Society of British  Columbia  on the
subject of corporate and securities  law. Mr. Harris was also a Founding  Member
of the Legal Advisory  Committee of the former  Vancouver Stock Exchange.  Apart
from his legal  education,  Mr. Harris has also  completed a graduate  course in
business at the London School of Economics.  See "Item 7. Major Shareholders and
Related  Party   Transactions  -  Related  Party  Transactions  -  Conflicts  of
Interest."  Mr.  Harris'  duties as  corporate  Secretary  of the Company do not
require  substantial  time.  Mr. Harris does provide  services to the Company as
counsel and bills for his services.  See "Item 7. Major Shareholders and Related
Party Transactions - Related Party Transactions."

Compensation

Pursuant to a management  services agreement by and among the Company,  Lakehead
Geological Services,  Inc.  ("Lakehead") and Douglas Turnbull dated September 1,
2007 (the "Lakehead  Agreement"),  the Company has retained  Lakehead to provide
management  services to the Company, to include the services of Douglas Turnbull
as  President  of the Company.  Lakehead is a private  corporation  owned by Mr.
Turnbull.

Pursuant  to  the  Lakehead   Agreement,   Mr.  Turnbull  has  agreed  to  spend
approximately  ninety percent of his working hours,  or up to 36 hours per week,
working for the Company. In consideration for the services provided by Lakehead,
the Company will pay Lakehead $12,500 per month. The Lakehead  Agreement expires
August 31,  2009,  subject  to  earlier  termination  provisions  for cause,  in
accordance  with the  agreement.  In the event that the  Lakehead  Agreement  is
terminated by the Company without cause,  the Company will provide Lakehead with
a lump sum payment of twelve times the monthly fee. During the fiscal year ended
May 31, 2007, and the period from June 1, 2007 to November 30, 2007, the Company
has been billed a total of $82,975 and  $74,500,  respectively,  by Lakehead for
Mr. Turnbull's services.



                                     - 62 -
<PAGE>



During fiscal 2007,  the Company was billed  $97,513 for  professional  services
provided by William  Tafuri,  an officer of the Company,  and $112,695 for legal
services provided by James Harris, the Corporate Secretary of the Company. As at
May 31, 2006, $34,751 remained  outstanding and was included in accounts payable
and accrued liabilities.

Additionally,  pursuant to a consulting  agreement,  (the  "Tafuri  Agreement"),
between the Company and William  Tafuri dated  December 1, 2005, the Company has
retained Dr. Tafuri to act as its  Vice-President of Exploration and Director of
Operations,  Asia  effective  as of  December  1,  2005.  The term of the Tafuri
Agreement  was for an initial  period of one year  expiring on December 1, 2006,
subject to earlier  termination  in accordance  with the  agreement.  The Tafuri
Agreement is automatically renewed for successive one-year periods at the end of
the  initial  term of the  agreement,  unless  either  party  gives to the other
written notice of non-renewal at least 90 days in advance of the expiration date
of the then current term. Dr. Tafuri agreed to spend  approximately 100% percent
of his working hours working for the Company.  In consideration for the services
provided by Dr. Tafuri to the Company, the Company pays Dr. Tafuri a base salary
of US $8,750 monthly.

During  fiscal 2006,  Oleg Kim, a director of the Company and principal of Marsa
and   Kantanna,   received  US  $60,300  in   compensation   from  the  Company.
Additionally,  pursuant to a consulting  agreement (the "Kim Agreement") between
the  Company's  subsidiary  BMC and Oleg Kim dated  November 23,  2005,  BMC has
retained  Mr. Kim to act as its  General  Director  effective  as of December 1,
2005.  The  term of the Kim  Agreement  was for an  initial  period  of one year
expiring on December 1, 2006, subject to earlier  termination in accordance with
the  agreement.  The Kim  Agreement  is  automatically  renewed  for  successive
one-year periods at the end of the initial term of the agreement,  unless either
party  gives to the  other  written  notice of  non-renewal  at least 90 days in
advance of the expiration date of the then current term. Mr. Kim agreed to spend
approximately   fifty   percent  of  his  working  hours  working  for  BMC.  In
consideration  for the  services  provided by Mr. Kim to BMC, BMC pays Mr. Kim a
base salary of $36,000 annually.

Pursuant  to a  consulting  agreement  (the  "Danilov  Agreement")  between  the
Company's subsidiary Centrasia Kazakhstan and Vladimir Danilov dated January 31,
2006,  Centrasia  Kazakhstan  has  retained  Mr.  Danilov to act as its  General
Director effective as of February 1, 2006. The term of the Danilov Agreement was
for an initial  period of one year  expiring  on  February  1, 2007,  subject to
earlier  termination in accordance with the agreement.  The Danilov Agreement is
automatically  renewed for successive one-year periods at the end of the initial
term of the agreement,  unless either party gives to the other written notice of
non-renewal  at  least 90 days in  advance  of the  expiration  date of the then
current term.  Mr. Danilov  agreed to spend  approximately  fifty percent of his
working  hours  working  for  Centrasia  Kazakhstan.  In  consideration  for the
services provided by Mr. Danilov to Centrasia  Kazakhstan,  Centrasia Kazakhstan
pays Mr. Danilov a base salary of $36,000 annually.

The Company is required,  under applicable securities  legislation in Canada, to
disclose to its shareholders  details of compensation  paid to its directors and
officers.  The  following  fairly  reflects all material  information  regarding
compensation  paid  by the  Company  to the  persons  who  were  serving  as its
directors and officers as of May 31, 2007, which  information has been disclosed
to the Company's shareholders in accordance with applicable Canadian law.

EXECUTIVE COMPENSATION - CENTRASIA

"Named  Executive  Officer" means each Chief Executive  Officer ("CEO") and each
Chief  Financial  Officer  ("CFO") of the Company,  regardless  of the amount of
compensation  of that  individual,  and each of the Company's  three most highly
compensated executive officers,  other than the CEO and CFO, who were serving as
executive officers at the end of the most recently completed  financial year and
whose total salary and bonus exceeds $150,000.  In addition,  disclosure is also
required for any individual  whose total salary and bonus during the most recent
completed year exceeds  $150,000,  whether or not they were an executive officer
at the end of the most recent fiscal year.

During  the  financial  year  ended  May 31,  2007,  the  Company  had two Named
Executive  Officers,  Mr. Douglas Turnbull,  the Company's President and CEO and
Mr. Nick DeMare, the Company's CFO.

SUMMARY OF COMPENSATION

The following  table sets forth all annual and long-term  compensation  awarded,
paid to or earned by the Company's Named Executive Officers during the financial
years ended May 31, 2005, 2006 and 2007.


                                     - 63 -
<PAGE>


<TABLE>
<CAPTION>

                                    ------------------------------      ------------------------------------
                                          ANNUAL COMPENSATION                  LONG TERM COMPENSATION
                                    ------------------------------      ------------------------------------
                                                                                  AWARDS             PAYOUTS
                                                                        --------------------------   -------
                                                                                       RESTRICTED
                                                            OTHER        SECURITIES     SHARES OR                 ALL
-------------------       ------                           ANNUAL           UNDER      RESTRICTED               OTHER
    NAME AND                                               COMPEN-      OPTIONS/SARS      SHARE       LTIP      COMPEN-
PRINCIPAL POSITION        YEAR(1)    SALARY      BONUS     SATION         GRANTED         UNITS      PAYOUTS    SATION
                                       ($)        ($)        ($)           (#)(2)          ($)         ($)        ($)
-------------------       ------    ------------------------------      --------------------------   -------    --------
<S>                       <C>      <C>          <C>       <C>          <C>             <C>          <C>        <C>

Douglas Turnbull(3)        2007     82,975(4)     nil        nil          nil/nil           n/a         n/a        nil
President & CEO            2006     61,025(4)     nil        nil        300,000/nil         n/a         n/a        nil
                           2005        n/a        n/a        n/a         n/a / n/a          n/a         n/a        n/a
-------------------------------------------------------------------------------------------------------------------------
Nick DeMare(3)             2007        nil        nil        nil         40,000/nil         n/a         n/a      76,850(6)
CFO                        2006        nil        nil        nil        300,000(5)/nil      n/a         n/a      86,458(6)
                           2005        nil        nil        nil         75,000/nil         n/a         n/a      69,325(6)
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTES:
(1) Fiscal year ended May 31.
(2) Represents  stock options granted during a particular year. (3) On September
14, 2005, Mr. DeMare resigned as President and CEO of the
         Company.  Mr.  Douglas  Turnbull was  appointed as President and CEO to
         fill the vacancy.
(4)      Billed by Lakehead  Geological  Services  Inc.,  a private  corporation
         owned by Mr. Douglas Turnbull, for services provided by Mr. Turnbull.
(5)      Includes 25,000 stock options granted to Chase.
(6)      Paid to Chase Management Ltd. ("Chase"), a private corporation owned by
         Mr. Nick DeMare.  Chase personnel  provides  accounting,  professional,
         secretarial and administrative services to the Company.

LONG TERM  INCENTIVE  PLAN AWARDS - AWARD IN MOST RECENTLY  COMPLETED  FINANCIAL
YEAR

The Company has no long-term  incentive  plans in place and therefore there were
no awards made under any long-term incentive plan to the Name Executive Officers
during the  Company's  most  recently  completed  financial  year.  A "Long-Term
Incentive Plan" is a plan under which awards are made based on performance  over
a period longer than one  financial  year,  other than a plan for options,  SARs
(stock appreciation rights) or restricted share compensation.

OPTIONS AND SHARE APPRECIATION RIGHTS

The following  table sets forth stock options  granted by the Company during the
financial  year  ended  May 31,  2007 to the  Named  Executive  Officers  of the
Company:

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
                                                % OF TOTAL                          MARKET VALUE OF
                              SECURITIES      OPTIONS GRANTED    EXERCISE OR     SECURITIES UNDERLYING
                             UNDER OPTIONS     IN FINANCIAL     BASE PRICE(2)   OPTIONS ON DATE OF GRANT    EXPIRATION
NAME                          GRANTED (#)         YEAR(1)       ($/SECURITY)          ($/SECURITY)             DATE
----------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>               <C>                  <C>                 <C>

Douglas Turnbull                  nil               n/a               n/a                  n/a                   n/a
----------------------------------------------------------------------------------------------------------------------

Nick DeMare                     40,000             4.15%             0.70                  0.50             Sept.14/11

----------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTES:

(1) Percentage of all stock options  granted during the financial  year. (2) The
exercise price of stock options was set accordingly to the rules of the
     TSX Venture.  The exercise  price of stock  options may only be adjusted in
     the event that  specified  events  cause  dilution of the  Company's  share
     capital.



                                     - 64 -

<PAGE>


The following  table sets forth details of all exercises of stock options during
the financial year ended May 31, 2007 by the Named Executive  Officers,  and the
financial year end value of unexercised options:

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
                                                                                               VALUE OF UNEXERCISED IN
                                                                         UNEXERCISED              THE MONEY OPTIONS AT
                              SECURITIES                               OPTIONS/SARS AT          FINANCIAL YEAR -END(1)
                              ACQUIRED ON      AGGREGATE VALUE       FINANCIAL YEAR -END             EXERCISABLE /
NAME                           EXERCISE           REALIZED       EXERCISABLE / UNEXERCISABLE         UNEXERCISABLE
                                  (#)                ($)                     (#)                          ($)
----------------------------------------------------------------------------------------------------------------------
<S>                            <C>               <C>               <C>                         <C>

Douglas Turnbull                  nil                n/a                 300,000 / nil               426,000 / n/a
----------------------------------------------------------------------------------------------------------------------

Nick DeMare                       nil                n/a              320,000(2) / 20,000            444,400 / 18,400

----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES:
(1) The closing  price of the  Company's  shares on May 31, 2007 was $1.62.  (2)
Includes 25,000 options granted to Chase.

PENSION PLANS

The Company does not  generally  provide  retirement  benefits for  directors or
officers.

TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS

The  Company   does  not  have  any   compensatory   plan(s),   contract(s)   or
arrangement(s)  with  respect  to  the  resignation,  retirement  or  any  other
termination of the Named Executive Officers' employment,  a change of control of
the  Company  or a change  in the  Named  Executive  Officers'  responsibilities
following  a change in  control,  which  entitle a Named  Executive  Officer  to
receive  from  the  Company  an  amount,   including  all  period   payments  or
instalments, exceeding $100,000.

COMPENSATION OF DIRECTORS

Cash Compensation

During the financial  year ended May 31, 2007,  the Company  incurred a total of
$56,470 for  professional  fees to the directors who are not the Named Executive
Officers of the Company.

Non-cash Compensation

The following  table sets forth stock options  granted by the Company during the
financial  year ended May 31, 2007 to the current and former  directors  who are
not the Named Executive Officers of the Company:

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------
                                                % OF TOTAL                          MARKET VALUE OF
                              SECURITIES       OPTIONS/SARS                      SECURITIES UNDERLYING
                                UNDER            GRANTED         EXERCISE OR         OPTIONS/SARS
                             OPTIONS/SARS      IN FINANCIAL      BASE PRICE         ON DATE OF GRANT       EXPIRATION
NAME                          GRANTED (#)         YEAR(%)        ($/SECURITY)          ($/SECURITY)           DATE
----------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>               <C>                  <C>                 <C>

Directors, as a group,
who are not the Named          120,000(1)          12.44%            0.70                  0.50             Sept.14/11
Executive Officers

----------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE:
(1)  Does not include  the  granting of 200,000  stock  options,  at an exercise
     price of $0.60 per share,  and 200,000 stock options,  at an exercise price
     of $1.71 per share, which are subject to Company shareholder approval.


                                     - 65 -
<PAGE>


The following  table sets forth details of all exercises of stock options during
the  financial  year ended May 31, 2007 by the current and former  directors who
are not the  Named  Executive  Officers,  and the  financial  year end  value of
unexercised options:

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------
                                                                                               VALUE OF UNEXERCISED IN
                                                                         UNEXERCISED             THE MONEY OPTIONS AT
                                 SECURITIES                            OPTIONS/SARS AT         FINANCIAL YEAR -END (1)
                                ACQUIRED ON        AGGREGATE         FINANCIAL YEAR -END            EXERCISABLE /
            NAME                  EXERCISE      VALUE REALIZED   EXERCISABLE / UNEXERCISABLE        UNEXERCISABLE
                                    (#)               ($)                    (#)                         ($)
-----------------------------------------------------------------------------------------------------------------------
<S>                              <C>               <C>              <C>                         <C>

Directors, as a group,
who are not the Named               nil               n/a          1,160,000(2) / 60,000(2)    1,617,200(2) / 55,200(2)
Executive Officers

-----------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTES:
(1) The closing  price of the  Company's  shares on May 31, 2007 was $1.62.  (2)
Does not include the granting of 200,000 stock options, at a exercise price
     of $0.60 per share,  and 200,000  stock  options,  at an exercise  price of
     $1.71 per share, which are subject to Company shareholder approval.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The  following  table sets out, as of the end of the  Company's  financial  year
ended May 31, 2007, all information  required with respect to compensation plans
under which equity securities of the Company are authorized for issuance:

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------

                                                                                        NUMBER OF SECURITIES REMAINING
                                NUMBER OF SECURITIES TO BE         WEIGHTED-AVERAGE     AVAILABLE FOR FUTURE ISSUANCE
                                 ISSUED UPON EXERCISE OF          EXERCISE PRICE OF    UNDER EQUITY COMPENSATION PLANS
                                   OUTSTANDING OPTIONS,          OUTSTANDING OPTIONS,       (EXCLUDING SECURITIES
                                   WARRANTS AND RIGHTS           WARRANTS AND RIGHTS        REFLECTED IN COLUMN (A))
----------------------------------------------------------------------------------------------------------------------
Plan Category                             (a)                            (b)                          (c)
----------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                              <C>                        <C>

Equity compensation plans              3,250,000(1)                      0.38                     See Note (1)
approved by securityholders

Equity compensation plans
not approved by
securityholders                          500,000                         1.07                     See Note (1)
----------------------------------------------------------------------------------------------------------------------

Total                                  3,750,000                         0.46                     See Note (1)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE:
(1)  The Company  currently  has in place a fixed stock option plan (the "Plan")
     whereby  the  maximum  number of common  shares  that may be  reserved  for
     issuance  pursuant  to the Plan was set at 20% of the issued  shares of the
     Company on or about the date the Plan was approved by shareholders,  and no
     options  remain  available  for grant  under the Plan as so  approved.  The
     Company has granted, subject to Company shareholder approval, stock options
     to purchase  1,750,000  common shares at prices  between $0.60 to $1.71 per
     share, each for a term of up to five years from the date of grant.

INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS OF THE COMPANY

During the  Company's  last  completed  financial  year ended May 31,  2007,  no
director,   executive  officer  or  senior  officer  of  the  Company,  proposed
management  nominee for election as a director or each associate or affiliate of
any such  director,  executive or senior  officer or proposed  nominee is or has
been  indebted  to the  Company  or any of its  subsidiaries  or is and has been
indebted to another entity where such indebtedness is or has been the subject of
a guarantee, support agreement, letter of credit or other similar arrangement or
understanding  provided  by the Company or any of its  subsidiaries,  other than
routine indebtedness.



                                     - 66 -
<PAGE>



Board Practices

                                AUDIT COMMITTEE

THE AUDIT COMMITTEE CHARTER

Mandate

The primary  function of the audit committee (the  "Committee") is to assist the
board of directors in fulfilling  its financial  oversight  responsibilities  by
reviewing the financial reports and other financial  information provided by the
Company to regulatory  authorities and  shareholders,  the Company's  systems of
internal controls  regarding finance and accounting and the Company's  auditing,
accounting and financial reporting processes. The Committee's primary duties and
responsibilities are to:

     o   Serve as an  independent  and objective  party to monitor the Company's
         financial   reporting  and  internal  control  system  and  review  the
         Company's financial statements.
     o Review and appraise the performance of the Company's external auditors. o
     Provide an open avenue of communication among the Company's auditors,
         financial and senior management and the board of directors.

Composition

The Committee  shall be comprised of three  directors as determined by the board
of directors,  the majority of whom shall be free from any relationship that, in
the opinion of the board of directors,  would interfere with the exercise of his
independent  judgment as a member of the  Committee.  At least one member of the
Committee shall have accounting or related financial management  expertise.  All
members of the  Committee  that are not  financially  literate will work towards
becoming financially literate to obtain a working familiarity with basic finance
and accounting  practices.  For the purposes of the Audit Committee Charter, the
definition of "financially literate" is the ability to read and understand a set
of  financial  statements  that  present a breadth  and level of  complexity  of
accounting issues that are generally comparable to the breadth and complexity of
the  issues  that can  presumably  be  expected  to be raised  by the  Company's
financial statements.

The members of the  Committee  shall be elected by the board of directors at its
first meeting  following  the annual  shareholders'  meeting.  Unless a Chair is
elected  by the full  board of  directors,  the  members  of the  Committee  may
designate a Chair by a majority vote of the full Committee membership.

Meetings

The  Committee  shall  meet a  least  twice  annually,  or  more  frequently  as
circumstances  dictate.  As part of its job to foster  open  communication,  the
Committee will meet at least annually with the Chief  Financial  Officer and the
external auditors in separate sessions.

Responsibilities and Duties

To fulfill its responsibilities and duties, the Committee shall:

DOCUMENTS/REPORTS REVIEW

(a)      Review and update the Charter annually.
(b)      Review  the  Company's  financial  statements,  MD&A and any annual and
         interim earnings,  press releases before the Company publicly discloses
         this  information  and  any  reports  or  other  financial  information
         (including quarterly financial statements),  which are submitted to any
         governmental  body,  or to the  public,  including  any  certification,
         report, opinion, or review rendered by the external auditors).


                                     - 67 -
<PAGE>


EXTERNAL AUDITORS

(a)      Review annually,  the performance of the external auditors who shall be
         ultimately  accountable  to the board of directors and the Committee as
         representatives of the shareholders of the Company.
(b)      Recommend  to  the  board  of  directors  the  selection   and,   where
         applicable, the replacement of the external auditors nominated annually
         for shareholder approval.
(c)      Review with management and the external auditors the audit plan for the
         year-end   financial   statements   and  intended   template  for  such
         statements.
(d)      Review and  pre-approve  all audit and  audit-related  services and the
         fees  and  other  compensation   related  thereto,  and  any  non-audit
         services, provided by the Company's external auditors.

Provided  the  pre-approval  of  the  non-audit  services  is  presented  to the
Committee's  first scheduled  meeting following such approval such authority may
be  delegated  by the  Committee  to  one or  more  independent  members  of the
Committee.

FINANCIAL REPORTING PROCESSES

(a)      In consultation with the external auditors,  review with management the
         integrity of the Company's financial  reporting process,  both internal
         and external.
(b)      Consider  the  external  auditors'  judgements  about the  quality  and
         appropriateness  of the Company's  accounting  principals as applied in
         its financial reporting.
(c)      Consider and approve, if appropriate, changes to the Company's auditing
         and  accounting  principles  and practices as suggested by the external
         auditors and management.
(d)      Following  completion  of the  annual  audit,  review  separately  with
         management  and the  external  auditors  any  significant  difficulties
         encountered during the course of the audit,  including any restrictions
         on the scope of work or access to required information.
(e)      Review any  significant  disagreement  among  management  and  external
         auditors  in  connection   with  the   preparation   of  the  financial
         statements.
(f)      Review with the external  auditors and  management  the extent to which
         changes and improvements in financial or accounting practices have been
         implemented.
(g)      Review any  complains or concerns  about any  questionable  accounting,
         internal accounting controls or auditing matters.
(h)      Review certification process.
(i)      Establish a procedure  for the  confidential,  anonymous  submission by
         employees of the Company of concerns regarding questionably  accounting
         or auditing matters.

OTHER

Review any related-party transactions.

COMPOSITION OF THE AUDIT COMMITTEE

The following are the members of the Committee:


--------------------------------------------------------------------------------
                                INDEPENDENT (1)         FINANCIALLY LITERATE (1)
--------------------------------------------------------------------------------

Nick DeMare                            N                           Y
--------------------------------------------------------------------------------
Grigory Aleksenko                      Y                           Y
--------------------------------------------------------------------------------
Brian McEwen                           Y                           Y
--------------------------------------------------------------------------------

NOTE:
(1) As defined by Multilateral Instrument 52-110 ("MI 52-110").

RELEVANT EDUCATION AND EXPERIENCE

Nick DeMare is a Chartered  Accountant with significant  experience working with
resource  issuers as a chief financial  officer and as an officer or director of
numerous  reporting  companies.  Grigory  Aleksenko is the managing  partner and
cofounder of AGA Management  Ltd., a leading,  Moscow based  consulting  company
specializing in Russian financial and



                                     - 68 -
<PAGE>



M&A  markets.  Brian  McEwen  has  over 25  years  of  mineral  exploration  and
production experience including project management, economic evaluation and mine
planning for various  mining  concerns  throughout  the world.  Mr. McEwen is an
officer and  director of other  reporting  companies.  As such each has acquired
knowledge and  understanding of the financial  issues and accounting  principles
that are relevant in assessing this Company's financial disclosures and internal
control systems.

AUDIT COMMITTEE OVERSIGHT

At no time since the  commencement  of the  Company's  most  recently  completed
financial year was a  recommendation  of the Committee to nominate or compensate
an external auditor not adopted by the board of directors.

RELIANCE ON CERTAIN EXEMPTIONS

At no time since the  commencement  of the  Company's  most  recently  completed
financial  year has the  Company  relied on the  exemption  in Section 2.4 of MI
52-110 (De Minimis Non-audit Services), or an exemption from MI 52-110, in whole
or in part, granted under Part 8 of Multilateral Instrument 52-110.

PRE-APPROVAL POLICIES AND PROCEDURES

The Committee has adopted specific policies and procedures for the engagement of
non-audit  services as  described  above under the heading  "External  Auditors"
above.

REMUNERATION COMMITTEE

The Company does not have a separate Remuneration Committee.

Employees

Including  the Company's  officers,  as of the date of this annual  report,  the
Company has one  full-time  employee and three  part-time  employees.  Corporate
accounting,  management and administration  were provided,  in part, by Chase, a
company  owned by Mr. Nick  DeMare.  Chase  provides its services to a number of
public and private  companies  and currently  employs six  full-time  employees,
(excluding Mr. DeMare).  Management services are also provided to the Company by
Lakehead, including Douglas Turnbull's services as President of the Company.

The  Company  also  retains   consultants  to  handle  specific  projects  on  a
case-by-case basis. In the event the Company needs to employ personnel,  it will
need to  recruit  qualified  personnel  to staff  its  operations.  The  Company
believes that such personnel  currently are available at reasonable salaries and
wages in the geographic areas in which the Company and its subsidiaries operate.
There can be no assurance, however, that such personnel will be available in the
future.

As of the date of this annual report, BMC employs 28 full-time employees and one
part-time  employee,  including  its officers and Centrasia  Kazakhstan  employs
three part-time employees, including its officers.

See Item 6. Directors, Senior Management and Employees - Compensation" and "Item
4. Information on the Company - Employees."

Share Ownership

The following table sets forth certain  information  regarding  ownership of the
Company's  shares by the  Company's  officers  and  directors as of November 30,
2007.

                                                   SHARES AND RIGHTS
                                                     BENEFICIALLY
                                                        OWNED OR      PERCENT OF
TITLE OF CLASS    NAME  OF OWNER                      CONTROLLED(1)    CLASS (1)
--------------    ---------------------------       ----------------  ----------

Common Stock      Douglas Turnbull                     2,225,100(2)       4.09%

Common Stock      Nick DeMare                            686,056(3)       1.26%

Common Stock      Cary Pinkowski                       5,279,714(4)       9.46%

Common Stock      Oleg Kim                             1,325,000(5)       2.44%


                                     - 69 -
<PAGE>


                                                   SHARES AND RIGHTS
                                                     BENEFICIALLY
                                                        OWNED OR      PERCENT OF
TITLE OF CLASS    NAME  OF OWNER                       CONTROLLED(1)   CLASS (1)
--------------    ---------------------------       ----------------  ----------

Common Stock      Grigory A. Aleksenko                   500,000(6)       2.44%

Common Stock      Leonid Oparin                          200,000(7)       0.37%

Common Stock      Brian McEwen                           200,000(8)       0.37%

Common Stock      William J. Tafuri                      875,000(9)       1.61%

Common Stock      James Harris                           470,000(10)      0.87%
                                                       ---------
Common Stock      TOTAL GROUP (9 persons)              3,275,000(11)     18.79%
                                                       =========
NOTES:

(1)  Where  persons  listed on this  table  have the right to obtain  additional
     shares of common  stock  through  the  exercise of  outstanding  options or
     warrants within 60 days from November 30, 2007, these additional shares are
     deemed to be  outstanding  for the purpose of computing  the  percentage of
     common stock owned by such  persons,  but are not deemed to be  outstanding
     for the purpose of  computing  the  percentage  owned by any other  person.
     Based on 53,837,457  shares of common stock  outstanding as of November 30,
     2006.
(2)  Includes  the  following  shares  and  options  beneficially  owned  by Mr.
     Turnbull: a. 1,625,100 shares held by Mr. Turnbull;  and b. options held by
     Mr. Turnbull to acquire 600,000 shares of common
          stock.
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(3)  Includes the following shares,  options and warrants  beneficially owned by
     Mr. DeMare:  a. 9,000 shares held by Mr.  DeMare;  b. 25,425 shares held by
     Chase, a Company owned by Mr. DeMare;  c. 61,631 shares held by DNG Capital
     Corp. ("DNG"), a company owned by
          Mr. DeMare;
     d. 150,000  shares held by Marbella  Capital Corp.  ("Marbella")  a company
     owned 30% by Mr. DeMare;
     e. options held by Mr. DeMare to acquire 415,000 shares; f. options held by
     Chase to acquire 25,000 shares;  See "Item 6. Directors,  Senior Management
     and Employees - Options, Warrants and Other Rights to Acquire Securities."
(4)  Includes the following shares,  options and warrants  beneficially owned by
     Mr. Pinkowski: a. 2,600,600 shares held by Mr. Pinkowski;
     b. 677,448 shares held by Prussian  Capital Corp.  ("Prussian"),  a company
     owned by Mr. Pinkowski;
     c. options held by Mr.  Pinkowski to acquire  925,000  shares;  d. warrants
     held by Mr.  Pinkowski  to acquire  779,250  shares;  e.  warrants  held by
     Prussian  to  acquire  297,416  shares.  See  "Item  6.  Directors,  Senior
     Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(5)  Includes the following shares and options beneficially owned by Mr. Kim: a.
     850,000  shares held by Kantanna,  a company  controlled by Mr. Kim; and b.
     options held by Mr. Kim to acquire 475,000 shares.  See "Item 6. Directors,
     Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(6)  Options held by Mr. Aleksenko to acquire 500,000 shares.
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(7) Options held by Mr. Oparin to acquire 200,000 shares.
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(8) Options held by Mr. McEwen to acquire 200,000 shares.
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(9)  Includes the following shares,  options and warrants  beneficially owned by
     Dr. Tafuri:  a. 400,000  shares held by Dr. Tafuri;  and b. options held by
     Dr.  Tafuri to  acquire  475,000  shares.  See "Item 6.  Directors,  Senior
     Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(10) Includes the following shares and options beneficially owned by Mr. Harris:
     a. 185,000 shares held by Mr. Harris;  and b. options held by Mr. Harris to
     acquire  285,000  shares.  See "Item 6.  Directors,  Senior  Management and
     Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(11) See footnotes 2 through 9 above.

All of the Company's shareholders have the same voting rights.



                                     - 70 -
<PAGE>


Options, Warrants and Other Rights to Acquire Securities

Additionally,  as of November  30,  2007,  the Company had granted or reserved a
number of stock options and issued a number of warrants  pursuant to which up to
14,153,750 common shares of the Company may be issued.  The following is a brief
summary of these stock options and warrants.

STOCK OPTION PLAN

The following information is intended to be a brief description of the Company's
Stock  Option  Plan  (the  "Plan")  adopted  by the  Company's  shareholders  on
September 12, 2005, as amended November 21, 2007.

The Plan  provides  for equity  participation  in the Company by the  directors,
officers and employees of the Company and their affiliates, employees of persons
providing management services of the Company, and consultants to the Company and
its  affiliates,  through the acquisition of common shares pursuant to the grant
of options to purchase  common shares.  The Plan is be administered by the board
of directors,  in certain circumstances,  a committee of the board of directors.
Options  may be granted to purchase  common  shares of the Company on such terms
that the  administrator  of the Plan may determine within the limitations of the
Stock Option Plan and subject to the rules of applicable regulatory authorities.

On November 21, 2007, the  shareholders of the Company  approved an amendment to
the Company's Stock Option Plan to increase the number of shares issuable on the
exercise  of  options  under  the  Plan  by  7,503,000  shares,  from  3,274,000
(previously approved at the 2006 Shareholders' Meeting) to 10,777,000 shares and
thus,  the  maximum of  aggregate  number of common  shares to be  reserved  and
authorized to be issued pursuant to options granted under the Plan is 10,777,000
common shares.

The exercise  price for options  granted under the Plan may not be less than the
closing  price of the common shares on the TSX-V on the trading day prior to the
date of grant (less up to the maximum  discount  permitted by  applicable  TSX-V
policies).  Options  granted  under the Plan are  subject to a minimum  18-month
vesting  schedule whereby each option will vest equally on a quarterly basis, or
such other more restrictive  vesting  schedule as the  administrator of the Plan
may determine. Options are non-assignable and are exercisable for a period of up
to five  years  from  the  date  the  option  is  granted,  subject  to  earlier
termination after certain events such as the optionee's  cessation of service to
the Company or death. Under TSX-V rules all stock options granted under the Plan
and any common  shares of the  Company  issued  thereunder  will be subject to a
minimum four-month hold period from the date of grant of the option.

Insiders of the Company will not be permitted to hold options  entitling them to
acquire greater than 10% of the Company's outstanding common shares. The Plan is
effective until ten years from its commencement,  unless the Plan is extended or
earlier terminated by the administrator of the Plan in accordance with the terms
thereof.

As of November 30, 2007,  an aggregate of 6,255,000  incentive  stock options to
purchase  shares  of  the  Company's  common  stock  remain  outstanding  to the
following persons:

<TABLE>
<CAPTION>

                                      NATURE                     NO. OF      EXERCISE
OPTIONEE                              OF OPTION                 OPTIONS     PRICE/SHARE    EXPIRY DATE
-----------------                     ---------                ---------    -----------    ------------------

<S>                                  <C>                      <C>           <C>          <C>

Douglas Turnbull                      Officer & Director         300,000       $0.20       September 14, 2010
Nick DeMare                           Officer & Director         275,000       $0.20       September 14, 2010
Oleg Kim                              Director                   275,000       $0.20       September 14, 2010
Cary Pinkowski                        Director                   400,000       $0.20       September 14, 2010
Gregory Crowe                         Director                   150,000       $0.20       September 14, 2010
Lindsay Bottomer                      Director                   150,000       $0.20       September 14, 2010
William Tafuri                        Officer                    275,000       $0.20       September 14, 2010
James Harris                          Officer                    150,000       $0.20       September 14, 2010
Harvey Lim                            Consultant                  75,000       $0.20       September 14, 2010
Robin Merrifield                      Consultant                  50,000       $0.20       September 14, 2010
D. G. Vedeshkin-Ryabov                Consultant                  50,000       $0.20       September 14, 2010
Chase Management Ltd.                 Consultant                  25,000       $0.20       September 14, 2010
Eugene Antonov                        Consultant                  25,000       $0.20       September 14, 2010
Alexander Antonov                     Consultant                  25,000       $0.20       September 14, 2010
Julie Clain                           Consultant                  10,000       $0.20       September 14, 2010
Accent Marketing Ltd.                 Investor Relations         200,000       $1.15       February 8, 2011

</TABLE>



                                     - 71 -
<PAGE>



<TABLE>
<CAPTION>

                                      NATURE                     NO. OF      EXERCISE
OPTIONEE                              OF OPTION                 OPTIONS     PRICE/SHARE    EXPIRY DATE
-----------------                     ---------                ---------    -----------    ------------------

<S>                                  <C>                      <C>           <C>          <C>

Brian McEwen                          Consultant                 100,000       $1.15       February 17, 2011
William Tafuri                        Officer                     50,000       $0.70       September 14, 2011
Oleg Kim                              Director                    50,000       $0.70       September 14, 2011
Vladimir Danilov                      Consultant                  75,000       $0.70       September 14, 2011
D. G. Vedeshkin-Ryabov                Consultant                  25,000       $0.70       September 14, 2011
Irina Mordan                          Consultant                  25,000       $0.70       September 14, 2011
Andrey Belozeroff                     Consultant                  75,000       $0.70       September 14, 2011
Nick DeMare                           Director                    40,000       $0.70       September 14, 2011
James Harris                          Officer                     35,000       $0.70       September 14, 2011
Harvey Lim                            Consultant                  35,000       $0.70       September 14, 2011
Brenda Dayton Cesareo                 Consultant                  25,000       $0.70       September 14, 2011
Linda Liu                             Consultant                  20,000       $0.70       September 14, 2011
Betty Moody                           Consultant                  20,000       $0.70       September 14, 2011
Arabella Smith                        Consultant                  20,000       $0.70       September 14, 2011
Rosanna Wong                          Consultant                  20,000       $0.70       September 14, 2011
Lindsay Bottomer                      Director                    35,000       $0.70       September 14, 2011
Greg Crowe                            Director                    35,000       $0.70       September 14, 2011
David Matousek                        Investor Relations          80,000       $0.70       September 14, 2011
Ken Kuchling                          Consultant                 100,000       $0.73       March 14, 2012
Cary Pinkowski                        Director                   200,000       $1.71       May 18, 2012
Andrey Agapov                         Consultant                 250,000       $1.20       July 3, 2012
Grigory Aleksenko                     Director                   500,000       $1.20       July 24, 2012
Michael Baybak                        Consultant                  75,000       $1.20       July 25, 2012
Leonid Oparin                         Director                   100,000       $1.20       August 4, 2012
Douglas Turnbull                      Officer & Director         300,000       $1.20       October 10, 2012
Nick DeMare                           Officer & Director         100,000       $1.20       October 10, 2012
Oleg Kim                              Officer & Director         150,000       $1.20       October 10, 2012
Cary Pinkowski                        Director                   325,000       $1.20       October 10, 2012
Brian McEwen                          Director                   100,000       $1.20       October 10, 2012
Leonid Oparin                         Director                   100,000       $1.20       October 10, 2012
William Tafuri                        Officer                    150,000       $1.20       October 10, 2012
James Harris                          Officer                    100,000       $1.20       October 10, 2012
Tim McCutcheon                        Consultant                 100,000       $1.20       October 10, 2012
Andrey Belozeroff                     Consultant                  50,000       $1.20       October 10, 2012
Brenda Dayton Cesareo                 Consultant                  75,000       $1.20       October 10, 2012
Zukhra Rozieva                        Consultant                  10,000       $1.20       October 10, 2012
Andrew Fedak                          Consultant                 100,000       $1.20       October 10, 2012
Harvey Lim                            Consultant                  50,000       $1.20       October 10, 2012
D. G. Vedeshkin-Ryabov                Consultant                  15,000       $1.20       October 10, 2012
Irina Mordan                          Consultant                  15,000       $1.20       October 10, 2012
Vladimir Danilov                      Consultant                  15,000       $1.20       October 10, 2012
Sergey Dubovik                        Consultant                  75,000       $1.20       October 10, 2012
                                                               ---------
TOTAL:                                                         6,255,000
                                                               =========
</TABLE>

As of November 30, 2007,  the directors and officers of the Company,  as a group
(9 persons),  held, or have been granted 3,900,000 options to purchase shares of
the Company's common stock.


                                     - 72 -
<PAGE>


WARRANTS

As of November  30, 2007,  there were  non-transferable  common  share  purchase
warrants exercisable for the purchase of 7,898,750 common shares as follows:

                                    EXERCISE
          NUMBER                    PRICE
                                      $                    EXPIRY DATE

         1,708,750                   0.75                  June 20, 2008
           840,000                   1.50                  July 24, 2009
         5,350,000                   1.70                  July 10, 2010
      ------------
         7,898,750
      ============

Additionally,  as of  November  30,  2007,  the  directors  and  officers of the
Company,  as a group (9 persons),  held warrants to purchase 1,076,666 shares of
the Company's common stock.

There are no  assurances  that the option or  warrants  described  above will be
exercised in whole or in part.


ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.
--------------------------------------------------------------------------------

Principal Holders of Voting Securities

To the best of the Company's  knowledge,  it is not directly or indirectly owned
or controlled by another corporation,  by any foreign government or by any other
person(s),  severally  or  jointly.  The  following  table  sets  forth  certain
information  regarding  ownership of the Company's shares by all persons who own
five percent (5%) or more of the Company's  outstanding  shares,  as of November
30, 2007.



                                                   SHARES AND RIGHTS
                                                     BENEFICIALLY
                                                        OWNED OR      PERCENT OF
TITLE OF CLASS    NAME OF BENEFICIAL OWNER           CONTROLLED(1)    CLASS (1)
--------------    -------------------------        -----------------  ----------

Common Stock      Stargate Solutions Ltd.              12,125,000        22.52%
Common Stock      Cary Pinkowski                        5,279,714(2)      9.46%

(1)  Where  persons  listed on this  table  have the right to obtain  additional
     shares of common  stock  through  the  exercise of  outstanding  options or
     warrants within 60 days from November 30, 2007, these additional shares are
     deemed to be  outstanding  for the purpose of computing  the  percentage of
     common stock owned by such  persons,  but are not deemed to be  outstanding
     for the purpose of  computing  the  percentage  owned by any other  person.
     Based on 53,837,457  shares of common stock  outstanding as of November 30,
     2007.
(2)  Includes the following shares,  options and warrants  beneficially owned by
     Mr. Pinkowski: a. 2,600,000 shares held by Mr. Pinkowski;
     b. 677,448 shares held by Prussian;
     c. options held by Mr. Pinkowski to acquire 925,000 shares; and d. warrants
     held by Mr.  Pinkowski  to acquire  779,250  shares.  e.  warrants  held by
     Prussian  to  acquire  297,416  shares.  See  "Item  6.  Directors,  Senior
     Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."

None of the Company's  principal  shareholders have different voting rights than
any of the Company's other common shareholders.

Escrowed Shares

STARGATE ESCROWED SHARES

Upon  completion of the RPIM  Acquisition,  a total of 13,125,000  shares of the
Company's  common  stock were  escrowed in  accordance  with the policies of the
TSX-V (the "RPIM Escrow Securities") in connection with the RPIM Acquisition and
are subject to the terms of an escrow agreement entered into between the Issuer,
each of the entities named below and  Computershare  Investor Services Inc. (the
"RPIM Escrow Agreement").


                                     - 73 -
<PAGE>


The RPIM Escrow  Securities  will be released  from escrow in the normal  course
over a period of  eighteen  months.  The first  release  occurred at the time of
acceptance by the TSX-V of the Share Purchase Agreement for the RPIM Acquisition
in the amount of 1/4th of the RPIM Escrow  Securities.  The second  release will
occur six months following TSX-V  acceptance of the Share Purchase  Agreement in
the amount of 1/3rd of the RPIM Escrow Securities.  The third release will occur
twelve months following TSX-V acceptance of the Share Purchase  Agreement in the
amount of 1/2 of the RPIM Escrow  Securities.  The fourth and final release will
occur eighteen months following TSX-V acceptance of the Share Purchase Agreement
for the remainder of the RPIM Escrow Securities.

As of November 30,  2007,  the  following  RPIM Escrow  Securities  were held in
escrow in connection with the RPIM Acquisition:

         --------------------------------------------------------
                                                   NO. OF SHARES
         NAME OF BENEFICIAL HOLDER                 HELD IN ESCROW
         --------------------------------------------------------

         AGA Management Ltd.                           281,250
         DBM Capital Partners Limited                  468,750
         Stargate Solutions Ltd.                     9,093,750
                                                     ---------
         Total                                       9,843,750
                                                     =========

The RPIM  Escrow  Agreement  provides  that the RPIM Escrow  Securities  held in
escrow  pursuant to its terms and the  beneficial  ownership  thereof may not be
sold, assigned, hypothecated,  transferred within escrow or otherwise dealt with
in any manner  without the prior written  consent of the TSX-V.  In the event of
the bankruptcy of an escrow shareholder, provided the TSX-V does not object, the
escrowed  shares may be  transferred  to the trustees in the  bankruptcy or such
person  legally  entitled to the  escrowed  shares  which  shares will remain in
escrow subject to the escrow  agreement.  In the event of the death of an escrow
shareholder, provided the TSX-V does not object, the escrowed shares held by the
escrow shareholder will be released from escrow.

SURPLUS ESCROWED SHARES

Upon completion of the Centrasia Acquisition, a total of 3,700,100 shares of the
Company's  common  stock held by  shareholders  of 724 BC  described  below were
escrowed in  accordance  with the policies of the TSX-V (the  "Surplus  Escrowed
Securities") in connection with the Centrasia Acquisition and are subject to the
terms of a Surplus  Security Escrow  Agreement  entered into between the Issuer,
each of the individuals named below and Computershare Investor Services Inc.

The Surplus Escrowed Securities will be released from escrow on an automatic six
year time release, at six month intervals, in equal tranches of 5% for the first
four  tranches  ending on the 24th month from  September  14,  2005 and in equal
tranches of 10% for the remaining  eight tranches  ending on the 72nd month from
September  14, 2005.  As of November  30, 2007,  the  following  Value  Escrowed
Securities were held in escrow:

         --------------------------------------------------------
                                                   NO. OF SHARES
         NAME OF BENEFICIAL HOLDER                 HELD IN ESCROW
         --------------------------------------------------------

         Douglas Turnbull                              480,030
         Cary Pinkowski                                300,000
         Gregory Crowe                                  52,500
         Lindsay Bottomer                               52,500
         James Harris                                   52,500
         William J. Tafuri                             120,000
         Robin Merrifield                               52,500
                                                     ---------
         Total                                       1,110,030
                                                     =========

The escrow  agreement  provides  that the Surplus  Escrowed  Securities  held in
escrow  pursuant to its terms and the  beneficial  ownership  thereof may not be
sold, assigned, hypothecated,  transferred within escrow or otherwise dealt with
in any manner  without the prior written  consent of the TSX-V.  In the event of
the bankruptcy of an escrow shareholder, provided the TSX-V does not object, the
escrowed  shares may be  transferred  to the trustees in the  bankruptcy or such
person  legally  entitled to the  escrowed  shares  which  shares will remain in
escrow subject to the escrow agreement. In the


                                     - 74 -
<PAGE>


event of the death of an escrow shareholder, provided the TSX-V does not object,
the escrowed shares held by the escrow shareholder will be released from escrow.

Changes in Shareholdings

As a result of the Centrasia Acquisition,  Douglas Turnbull,  Cary Pinkowski and
William  Tafuri each  beneficially  owned five percent or more of the  Company's
outstanding  common  shares  at  October  31,  2006.  As a  result  of the  RPIM
Acquisition,  as of November 30, 2007, Stargate Solutions Ltd. beneficially owns
22.52% of the Company's  outstanding common shares. The beneficial  ownership of
the Company's outstanding common shares held by Douglas Turnbull, Cary Pinkowski
and Oleg Kim decreased as a result of the RPIM Acquisition. Douglas Turnbull and
Oleg Kim each hold less than 5.0% of the Company's  outstanding common shares as
of November 30, 2007.

Change of Control

As of the date of this annual  report,  there are no  arrangements  known to the
Company  which may at a  subsequent  date  result in a change of  control of the
Company.

United States Shareholders

As of November 30, 2007, there were  approximately six registered holders of the
Company's  common  shares  in the  United  States,  with  combined  holdings  of
2,253,563 shares,  representing  4.19% of the issued shares of the Company.  The
Company  does not know how many  beneficial  shareholders  it has in the  United
States, but management believes there are less than 300 such shareholders.

Control by Foreign Government or Other Persons

To the  best  of the  Company's  knowledge,  the  Company  is  not  directly  or
indirectly owned or controlled by another  corporation,  any foreign government,
or any other natural or legal person, severally or jointly.

Related Party Transactions

Other than as disclosed  below, for the period from June 1, 2006 through October
31, 2007, the Company has not entered into any transactions or loans between the
Company and any (a) enterprises that directly or indirectly  through one or more
intermediaries,  control or are controlled by, or are under common control with,
the Company; (b) associates;  (c) individuals owning, directly or indirectly, an
interest  in the  voting  power  of the  Company  that  gives  them  significant
influence over the Company,  and close members of any such individuals'  family;
(d) key management personnel and close members of such individuals' families; or
(e)  enterprises  in which a substantial  interest in the voting power is owned,
directly or indirectly, by any person described in (c) or (d) or over which such
a person is able to exercise significant influence.

1.       The Company  entered into a Management  Agreement  dated  September 14,
         2005, with Chase  Management  Ltd., a company owned by Mr. Nick DeMare,
         the Chief Financial Officer of the Company, whereby the Company pays to
         Chase  $3,000  per  month,  to  provide  financial,   accounting,   and
         management  services  to  the  Company.  The  term  of  the  Management
         Agreement  is   renewable  on  an  annual  basis   subject  to  earlier
         termination  in accordance  with the  agreement.  The Company also pays
         Chase a base amount of $2,000 per month for the services of Mr.  DeMare
         as the Company's Chief Financial Officer.

         In addition,  the Company may request that Chase perform extra services
         in which case Chase will charge the Company for its employees  services
         at competitive  rates.  Such extra  services  include  preparation  for
         annual audits,  non-routine  securities  filings and legal  assistance,
         corporate representations,  property acquisitions and public relations.
         The  Company  has  agreed to  reimburse  Chase,  at a cost equal to the
         actual  cost of the  disbursements,  for all  costs  and  disbursements
         incurred  by Chase  for or on  behalf  of the  Company  including  long
         distance  charges,  courier  charges,  photocopier and telefax charges,
         mail services and any such other charges normally  associated  directly
         and indirectly with the operation of the Company's business.

         Management  believes the arrangement  with Chase is fair to the Company
         and  similar to terms  which could be  obtained  from  unrelated  third
         parties.



                                     - 75 -
<PAGE>



         During the fiscal year ended May 31, 2007,  and the period from June 1,
         2007 to November 30, 2007,  the Company was billed by Chase $76,850 and
         $46,175, respectively.

         See "Item 6. Directors, Senior Management and Employees - Employees."

2.       Pursuant  to a  Consulting  Agreement  between  Mr.  Oleg  Kim  and the
         Company's subsidiary BMC dated November 23, 2005 (the "Kim Agreement"),
         Oleg  Kim  provides  consulting  services  to BMC.  The term of the Kim
         Agreement was  initially  for a period of one year,  subject to earlier
         termination in accordance with the agreement.  If not  terminated,  the
         Kim Agreement  will be renewed for  successive  one year periods at the
         end of the initial term of the  agreement.  The Kim  Agreement has been
         renewed annually since its inception.

         During the fiscal year ended May 31, 2007,  and the period from June 1,
         2007 to November 30,  2007,  the Company has been billed a total of US$
         36,000 and US$18,000, respectively, by Mr. Kim.

         See "Item 6. Directors, Senior Management and Employees-Compensation."

3.       Pursuant to a Consulting  Agreement  between Mr. William Tafuri and the
         Company  dated  December 1, 2005 (the "Tafuri  Agreement"),  Dr. Tafuri
         serves as the Vice-President of Exploration and Director of Operations,
         Asia for the Company. The term of the Tafuri Agreement was for a period
         of one year,  subject to earlier  termination  in  accordance  with the
         agreement. If not terminated,  the Tafuri Agreement will be renewed for
         successive  one  year  periods  at the end of the  initial  term of the
         agreement.  The Tafuri  Agreement has been renewed  annually  since its
         inception.

         During the fiscal year ended May 31, 2007,  and the period from June 1,
         2007 to November 30,  2007,  the Company has been billed a total of US$
         105,000 and US$ 52,500, respectively, by Dr. Tafuri.

         See "Item 6. Directors, Senior Management and Employees-Compensation."

4.       Mr. James Harris is associated with the law firm of James L. Harris Law
         Corporation,  a firm which provides legal services to the Company.  Mr.
         Harris is the corporate  secretary  and a  shareholder  of the Company.
         During the fiscal year ended May 31, 2007,  and the period from June 1,
         2007 to  November  30,  2007,  James L. Harris Law  Corporation  billed
         $83,278 and $103,001 to the Company, respectively.

5.       Pursuant  to the  Lakehead  Agreement  dated  September  1,  2007,  the
         Company, through Lakehead,  retains the services of Douglas Turnbull to
         act as  President  and CEO of the  Company.  The  term of the  Lakehead
         Agreement  is for a period of two years  expiring  on August 31,  2009,
         subject  to  earlier  termination  in  accordance  with the  agreement.
         Lakehead  is a private  corporation  owned by Mr.  Turnbull.  Under the
         Lakehead Agreement,  Mr. Turnbull has agreed to spend approximately 90%
         of his working hours for the Company. In consideration for the services
         provided by Mr.  Turnbull to the Company,  the Company pays  Lakehead a
         fee of $12,500 per month from July 1, 2007,  which is subject to review
         annually.  In the event that the agreement is terminated by the Company
         without  cause the Company must pay Lakehead a lump sum equal to twelve
         times the monthly fee.

         Management  believes  the  arrangement  with  Lakehead  is  fair to the
         Company and similar to terms  which  could be obtained  from  unrelated
         third parties.

         During the fiscal year ended May 31, 2007,  and the period from June 1,
         2007 to  November  30,  2007,  the  Company  has been billed a total of
         $82,975  and  $74,500,  respectively,  by Lakehead  for Mr.  Turnbull's
         services.

         See "Item 6. Directors, Senior Management and Employees-Compensation."

6.       In August of 2007, the Company entered into an amending  agreement with
         Kantanna,  pursuant to which  Kantanna  agreed to forego the  aggregate
         US$1,890,000 in exploration  expenditures  for 2007 and 2008, which was
         one of the  requirements for the Company to acquire the remaining 62.5%
         interest in the  Bulakashu  Property  that it had not acquired to date.
         The other requirement was the issuance of 375,000 shares to the vendor,
         which the Company has now issued. Kantanna is owned by Mr. Oleg Kim, an
         officer and director of the Company.  See "Item 4.  Information  on the
         Company-History and Development of the Company."



                                     - 76 -
<PAGE>


INDEBTEDNESS OF DIRECTORS, OFFICERS, PROMOTERS AND OTHER MANAGEMENT

Except as described  below, no director,  officer or promoter or other member of
management of the Company,  or any associate or affiliate of any such person, is
or has been indebted to the Company.

During the  Company's  last  completed  financial  year ended May 31,  2007,  no
current or former director,  executive officer or senior officer of the Company,
proposed  management  nominee for  election as a director or each  associate  or
affiliate of any such director,  executive or senior officer or proposed nominee
is or has been indebted to the Company or any of its  subsidiaries or is and has
been  indebted  to another  entity  where such  indebtedness  is or has been the
subject of a guarantee,  support  agreement,  letter of credit or other  similar
arrangement or understanding provided by the Company or any of its subsidiaries.

CONFLICTS OF INTEREST

The table below shows that certain  directors of the Company are also directors,
officers or shareholders of other companies which are engaged in the business of
acquiring,  developing and exploiting natural resource properties. The directors
and  officers of the Company  will not be devoting all their time to the affairs
of the Company, but will be devoting such time as required to effectively manage
the Company.  Some of the  directors and officers of the Company are engaged and
will  continue  to be engaged in the search for  property  or assets or business
prospects on their own behalf or on behalf of others. Such associations may give
rise to conflicts of interest from time to time.

Certain of the  directors,  officers  and  shareholders  of the Company are also
directors,  officers  and  shareholders  of other  companies  and  conflicts  of
interest  may arise  between  their  duties as  directors  of the Company and as
directors of other  companies.  All such  possible  conflicts are required to be
disclosed in accordance with the  requirements  of the BCBCA,  and the directors
concerned are required to govern  themselves in accordance  with the obligations
imposed on them by law.

The  directors  of the Company are  required by law to act  honestly and in good
faith with a view to the best  interests  of the  Company  and to  disclose  any
interest which they may have in any project or opportunity of the Company.  If a
conflict of interest arises at a meeting of the board of directors, any director
in a conflict will disclose his interest and abstain from voting on such matter.
The Company  does not  currently  have a right of first  refusal  pertaining  to
opportunities that come to management's  attention insofar as such opportunities
may relate to the  Company's  proposed  business  operations.  The  officers and
directors are, so long as they are officers or directors of the Company, subject
to the restriction that all opportunities  contemplated by the Company's plan of
operation  which come to their  attention,  either in the  performance  of their
duties or in any other manner, will be considered  opportunities of, and be made
available to the Company and the companies that they are  affiliated  with on an
equal basis. If the Company or the companies in which the officers and directors
are affiliated with both desire to take advantage of the opportunities, the said
officers  and  directors  would  abstain  from  negotiating  and voting upon the
opportunity.  However,  all directors may still  individually  take advantage of
opportunities  if the Company  declines to do so. Except as set forth above, the
Company  has not adopted any  conflict of interest  policy with  respect to such
transactions.  In determining whether or not the Company will participate in any
project or opportunity,  the director will primarily consider the degree of risk
which the Company may be exposed and its financial  position at the time. Except
for Mr.  Turnbull,  no members of management  have entered into  non-competition
agreements with the Company.

The following table  identifies the name of each director of the Company and any
company,  other than the Company,  which is a reporting issuer in Canada and the
United  States,  and for which such director  currently  serves as an officer or
director:

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------
DIRECTOR              NAME OF REPORTING ISSUER           CAPACITY                       TERM
----------------------------------------------------------------------------------------------------------------
<S>                  <C>                                <C>                              <C>

Douglas Turnbull      Oromin Explorations Ltd.           Director                       November 1999 to present
                      Buffalo Gold Ltd.                  Director                       June 2001 to present
                      Grizzly Explorations Ltd.          Director                       January 2004 to present

Nick DeMare           Aguila American Resources Ltd.     Director                       January 2003 to present
                      Andean American Mining Corp.       Director                       August 2002 to present
                      Astral Mining Corporation          Director                       February 2004 to present

</TABLE>


                                     - 77 -
<PAGE>

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------
DIRECTOR              NAME OF REPORTING ISSUER           CAPACITY                       TERM
----------------------------------------------------------------------------------------------------------------
<S>                  <C>                                <C>                              <C>

                      Atlas Minerals Corp.               Director                       April 2006 to present
                      Enterprise Oil Limited             Director                       April 2007 to present
                      GGL Diamonds Corp.                 Director                       May 1989 to present
                      GeoPetro Resources Company         Director                       March 2006 to present
                      Golden Peaks Resources Ltd.        Director                       January 1992 to present
                      Gold Point Energy Corp.            Director                       August 2003 to present
                                                         CFO                            June 2005 to present
                      Halo Resources Ltd.                Director                       January 1996 to present
                                                         CFO                            February 2005 to present
                      Lariat Energy Ltd.                 Director                       April 2003 to present
                      Lumex Ventures Inc.                Director, President, CEO       January 2007 to present
                                                         and CFO
                      Mawson Resources Limited           Director                       March 2004 to present
                      Mirasol Resources Ltd.             Director                       August 2005 to present
                      Rochester Resources Ltd.           Director                       January 2007 to present
                      Salazar Resources Ltd.             Director                       June 1988 to present
                      Sinchao Metals Corp.               Director                       December 2006 to present
                      Tinka Resources Limited            Director                       October 2002 to present
                      Tumi Resources Limited             Director                       January 2001 to present
                      Valor Ventures Inc.                CFO and Secretary              March 2007 to present

Brian McEwen          Buffalo Gold Ltd.                  Director                       June 2006 to present
                      Dynasty Gold Corp.                 Director                       June 2005 to present
                      Kinbauri Gold Corp.                Director                       July 2007 to present
</TABLE>

There  are no known  existing  or  potential  conflicts  of  interest  among the
Company,  promoters,  directors,  officers,  principal holders of securities and
persons providing professional services to the Company which could reasonably be
expected to affect an investor's investment decision except as described in this
section.

Except for the Lakehead Agreement,  the Kim Agreement,  the Tafuri Agreement and
the Danilov  Agreement,  the  Company  and/or its  subsidiaries  do not have any
agreements  with its officers or directors,  including any officers or directors
with a conflict of interest,  with respect to the amount of time they must spend
on the  Company's  business.  See  "Item 6.  Directors,  Senior  Management  and
Employees - Compensation."


ITEM 8.  FINANCIAL INFORMATION.
--------------------------------------------------------------------------------

Description of Financial Statements                                     Page
----------------------------------------------                      -----------
Audited Consolidated Financial Statements for
   the Years Ended May 31, 2007, 2006 and 2005.                     F-1 to F-27

Significant Changes

On September  14, 2006,  the Company  completed the  Centrasia  Acquisition  and
various  private   placement   financings.   The  completion  of  the  Centrasia
Acquisition  resulted in the  shareholders of 724 BC holding the majority of the
combined  Company's  issued and  outstanding  common  shares.  Accordingly,  the
Centrasia  Acquisition  was  treated  as a reverse  takeover  and the  financial
statements were treated, for accounting purposes, as a continuation of the legal
subsidiary,  724 BC, not the Company, the legal parent. See "Item 4. Information
on the Company."

Dividend Policy

The Company has not paid any  dividends on its common shares and does not intend
to pay dividends on its common shares in the immediate  future.  Any decision to
pay  dividends  on its common  shares in the future will be made by the board of
directors on the Company on the basis of earnings,  financial  requirements  and
other such conditions that may exist at that time.



                                     - 78 -
<PAGE>


Legal Proceedings

The  Company  knows of no  material,  active  or  pending  legal or  arbitration
proceedings  against  it; nor is the  Company  involved  as a  plaintiff  in any
material  proceeding or pending  litigation or  arbitration.  The Company is not
aware of any  governmental  proceedings  pending  or  known  to be  contemplated
against the Company.


ITEM 9.  THE OFFER AND LISTING.
--------------------------------------------------------------------------------

Price History

The  TSX-V  classifies  listed  companies  into  two  different  tiers  based on
standards, which include historical financial performance, stage of development,
and financial  resources of the listed  company.  Tier 1 is the TSX-V's  premier
tier  and is  reserved  for the  TSX-V's  most  advanced  issuers  with the most
significant  financial  resources.  Tier 1 issuers benefit from decreased filing
requirements  and improved  service  standards.  The  majority of the  companies
listed on the TSX-V are Tier 2 companies.  The Company trades on the TSX-V under
the symbol "CTM" and was upgraded to a Tier 1 company on July 17, 2007.

There  have  been no  trading  suspensions  imposed  by the  TSX-V or any  other
regulatory  authorities in the past three years. However, in connection with the
Centrasia Acquisition,  the Company's shares were halted for trading on February
26, 2005.  The Company's  common shares  resumed  trading on August 22, 2005. In
addition,  trading in the  Company's  shares was halted on December  21, 2001 to
allow for the  announcement  of a proposed  acquisition  which was not proceeded
with. The shares resumed trading on January 13, 2003.

The following tables list the volume of trading and high and low sales prices on
the TSX-V for shares of the Company's common stock for the periods indicated, as
adjusted for the Company's  one new for four old reverse  stock split  effective
June 3, 2004:

                  TSX VENTURE EXCHANGE - STOCK TRADING ACTIVITY

                                                           SALES PRICE
                                                    ---------------------------
YEAR ENDED                     VOLUME                   HIGH            LOW
                                                    ------------   ------------
May 31, 2007                 12,270,865             $1.92              $0.43
May 31, 2006                  5,212,610             $1.53              $0.50
May 31, 2005 (1)                181,441             $0.35              $0.21
May 31, 2004                  1,057,971             $0.13              $0.03
May 31, 2003 (2)                 11,966             $0.16              $0.02

(1)  Trading in the  Company's  shares was halted on February  26, 2005 to allow
     for the  announcement  of the  acquisition  of 724 BC. The  shares  resumed
     trading on August 22, 2005.
(2)  Trading in the  Company's  shares was halted on December  21, 2001 to allow
     for the  announcement  of a proposed  acquisition  which was not  proceeded
     with. The shares resumed trading on January 13, 2003.

                                                           SALES PRICE
                                                    ---------------------------
QUARTER ENDED                  VOLUME                   HIGH            LOW
                                                    ------------   ------------
August 31, 2007               8,956,233                $1.75           $0.70
May 31, 2007                  7,595,428                $1.92           $0.71
February 28, 2007             3,025,835                $1.15           $0.54
November 30, 2006             1,018,202                $0.75           $0.43
August 31, 2006                 631,400                $1.35           $0.65
May 31, 2006                  2,194,722                $1.53           $0.95
February 28, 2004             1,459,926                $1.40           $0.85
November 30, 2005             1,484,212                $1.18           $0.55
August 31, 2005(1)               73,750                $0.59           $0.50

(1)  Trading in the  Company's  shares was halted on February  26, 2005 to allow
     for the  announcement  of the  acquisition  of 724 BC. The  shares  resumed
     trading on August 22, 2005.



                                     - 79 -
<PAGE>


                                                           SALES PRICE
                                                    ---------------------------
MONTH ENDED                      VOLUME                 HIGH            LOW
                                                    ------------   ------------
October 31, 2007              3,044,793                $1.36           $1.04
September 30, 2007            7,171,866                $1.25           $0.94
August 31, 2007               2,978,085                $1.12           $0.70
July 31, 2007                 1,513,783                $1.21           $0.91
June 30, 2007                 4,464,365                $1.75           $1.15
May 31, 2007                  4,172,113                $1.92           $1.21

On January 22, 2002, the Company's  common shares were approved for quotation on
the  Over-the-Counter  Bulletin  Board  system  (the  "OTCBB")  operated  by the
National  Association of Securities Dealers. The Company currently trades on the
OTCBB under the symbol "CTMHF".  The following tables set forth the market price
ranges and the  aggregate  volume of trading of the common shares of the Company
on the OTCBB system for the periods indicated, as adjusted for the Company's one
new for four old reverse stock split effective June 3, 2004:

                   OTC BULLETIN BOARD - STOCK TRADING ACTIVITY

                                                          SALES PRICE (US$)
                                                    ---------------------------
YEAR ENDED                       VOLUME                 HIGH            LOW
                                                    ------------   ------------
May 31, 2007                    315,308                $1.95           $0.35
May 31, 2006                    102,640                $1.95           $0.06
May 31, 2005                      6,000                $0.205          $0.06
May 31, 2004                     28,000                $0.10           $0.05
May 31, 2003                      3,263                $0.60           $0.04


                                                          SALES PRICE (US$)
                                                    ---------------------------
QUARTER ENDED                    VOLUME                 HIGH            LOW
                                                    ------------   ------------
August 31, 2007                 857,520                $1.69           $0.75
May 31, 2006                    171,300                $1.51           $0.45
February 29, 2007                43,610                $0.68           $0.35
November 30, 2006                25,612                $0.62           $0.35
August 31, 2006                  74,786                $1.95           $0.60
May 31, 2006                     16,000                $1.95           $0.94
February 29, 2006                30,300                $1.11           $0.37
November 30, 2005                50,840                $1.01           $0.15
August 31, 2005                   5,500                $0.20           $0.06


                                                          SALES PRICE (US$)
                                                    ---------------------------
MONTH ENDED                      VOLUME                 HIGH            LOW
                                                    ------------   ------------
October 31, 2007              1,489,630                $1.41           $1.05
September 30, 2007            1,301,784                $1.30           $1.05
August 31, 2007                 127,100                $1.04           $0.75
July 31, 2007                   205,610                $1.20           $0.88
June 30, 2007                   524,810                $1.69           $1.08
May 31, 2007                     32,100                $1.51           $1.24

These above  quotations  reflect  inter-dealer  prices without  retail  mark-up,
markdown, or commissions and may not necessarily represent actual transactions.

The OTCBB is smaller and less liquid  than the major  securities  markets in the
United States.  The trading volume of the Company's shares on the OTCBB has been
volatile.  Consequently,  shareholders  in the United  States may not be able to
sell their shares at the time and at the price they desire.



                                     - 80 -
<PAGE>

                FRANKFURT STOCK EXCHANGE - STOCK TRADING ACTIVITY

On November 9, 2005, the Company's  common shares were approved for quotation on
the Frankfurt  Stock  Exchange  ("FSE")  under the symbol  "C8M".  The following
tables set forth the market price ranges and the aggregate  volume of trading of
the common shares of the Company on the FSE system for the periods indicated.

                                                          BID PRICE (EURO)
                                                    ---------------------------
YEAR ENDED                     VOLUME                   HIGH            LOW
                                                    ------------   ------------
May 31, 2007                Not available               1.29            0.29
May 31, 2006(1)               1,407,238                 1.05            0.54

(1) The Company's  common stock commenced  trading on the Frankfurt  Exchange on
November 9, 2005.


                                                          BID PRICE (EURO)
                                                    ---------------------------
QUARTER ENDED                  VOLUME                   HIGH            LOW
                                                    ------------   ------------
November 30, 2007             7,900,791                 0.87            0.63
August 31, 2007             Not available               1.21            0.48
May 31, 2007                Not available               1.29            0.42
February 28, 2007           Not available               0.78            0.29
November 30, 2006           Not available               0.47            0.29
August 31, 2006                  68,815                 0.92            0.45
May 31, 2006                    394,111                 1.05            0.69
February 28, 2006               992,727                 1.04            0.61
November 30, 2005                20,400                 0.84            0.54


                                                          BID PRICE (EURO)
                                                    ---------------------------
MONTH ENDED                    VOLUME                   HIGH            LOW
                                                    ------------   ------------
November 30, 2007             1,307,269                 0.81            0.40
October 31, 2007              1,274,281                 0.94            0.80
September 30, 2007            5,319,241                 0.87            0.69
August 31, 2007               1,248,381                 0.76            0.49
July 31, 2007               Not available               0.83            0.64
June 30, 2007               Not available               1.21            0.82
May 31, 2007                Not available               1.29            0.87


ITEM 10. ADDITIONAL INFORMATION.
--------------------------------------------------------------------------------

Articles of Continuance and Bylaws

The  Company  was  incorporated  under the laws of British  Columbia,  Canada on
December 10, 1999 by  registration  of its Memorandum and Articles with the B.C.
Registrar of Companies under the  incorporation  number 597349. On September 25,
2001, the Company was continued under the YBCA to the Yukon Territory, Canada by
the  registration  of its Articles of  Continuance  with the Yukon  Registrar of
Corporations.

On March 29, 2004, the British Columbia legislature enacted the British Columbia
Business  Corporations  Act, as amended (the "BCBCA"),  and repealed the British
Columbia  Company  Act (the "BC Company  Act").  The BCBCA  removes  many of the
restrictions  contained in the BC Company  Act,  including  restrictions  on the
residency of directors,  the location of annual  general  meetings and limits on
authorized share capital,  as well, the BCBCA uses new forms and terminology and
has replaced the Memorandum with a Notice of Articles.

On November 23, 2004, the Company was continued to British  Columbia,  Canada by
the  registration  of a  Continuation  Application  with  the  BC  Registrar  of
Companies.



                                     - 81 -
<PAGE>



On November  17,  2006,  the  shareholders  of the  Company  voted to approve by
Special  Resolution the replacement of the Company's  Articles with a new set of
Articles.  The  Company's   registration  number  is  C0709249.   There  are  no
restrictions  in the Company's  Articles on the business which can be carried on
by the Company.

The following is a summary of all material  provisions of the Company's Articles
and certain provisions of the BCBCA, applicable to the Company:

         A.       DIRECTOR'S  POWER  TO  VOTE  ON  A  PROPOSAL,  ARRANGEMENT  OR
                  CONTRACT IN WHICH THE DIRECTOR IS MATERIALLY INTERESTED.

                  Under the BCBCA, subject to certain exceptions,  a director or
                  senior  officer of the  Company  must  disclose  any  material
                  interest that he  personally  has, or that he as a director or
                  senior  officer of another  corporation  has in a contract  or
                  transaction  that is  material  to the  Company  and which the
                  Company has entered into or proposes to enter into.

                  A director or senior  officer of the  Company  does not hold a
                  disclosable interest in a contract or transaction if:

                  1.       the  situation  that  would  otherwise  constitute  a
                           disclosable  interest  arose  before the coming  into
                           force of the BCBCA,  and the interest  was  disclosed
                           and  approved  under,  or  was  not  required  to  be
                           disclosed  under  legislation  that  applied  to  the
                           Company before the coming into effect of the BCBCA;
                  2.       both the Company and the other party to the  contract
                           or transaction  are wholly owned  subsidiaries of the
                           same corporation;
                  3.       the Company is a wholly owned subsidiary of the other
                           party to the contract or transaction;
                  4.       the other party to the contract or  transaction  is a
                           wholly owned subsidiary of the Company; or
                  5.       the   director   or  senior   officer   is  the  sole
                           shareholder  of the  Company or of a  corporation  of
                           which the Company is a wholly owned subsidiary.

                  A director or senior  officer of the  Company  does not hold a
                  disclosable  interest  in a  contract  or  transaction  merely
                  because:

                  1.       the contract or  transaction is an arrangement by way
                           of a security granted by the Company for money loaned
                           to, or  obligations  undertaken  by, the  director or
                           senior  officer,  or a person in whom the director or
                           senior  officer  has a  material  interest,  for  the
                           benefit  of  the  Company  or  an  affiliate  of  the
                           Company;
                  2.       the contract or  transaction  relates to an indemnity
                           or insurance under the BCBCA;
                  3.       the   contract   or   transaction   relates   to  the
                           remuneration  of the director or senior  officer,  in
                           that person's capacity as director, officer, employee
                           or agent of the  Company  or of an  affiliate  of the
                           Company;
                  4.       the contract or transaction  relates to a loan to the
                           Company,  and the  director or senior  officer,  or a
                           person in whom the  director or senior  officer has a
                           material interest, is or is to be a guarantor of some
                           or all of the loan; or
                  5.       the contract or transaction  has been or will be made
                           with  or for the  benefit  of a  corporation  that is
                           affiliated  with  the  Company  and the  director  or
                           senior  officer is also a director or senior  officer
                           of  that   corporation   or  an   affiliate  of  that
                           corporation.

                  A  director  or  senior  officer  who  holds  such a  material
                  interest  must disclose the nature and extent of such interest
                  in writing.  The disclosure  must be evidenced in writing in a
                  consent  resolution,  the  minutes  of a meeting  or any other
                  record  deposited with the Company's record office. A director
                  who has a disclosable interest in a contract or transaction is
                  not entitled to vote on any  directors'  resolution to approve
                  that contract or transaction, but may be counted in the quorum
                  at the directors' meeting at which such vote is taken.



                                     - 82 -
<PAGE>


         B.       DIRECTORS' POWER, IN THE ABSENCE OF AN INDEPENDENT  QUORUM, TO
                  VOTE COMPENSATION TO THEMSELVES OR ANY MEMBERS OF THEIR BODY.

                  The  compensation of the directors is decided by the directors
                  unless the board of directors  specifically  requests approval
                  of the compensation from the shareholders.  If the issuance of
                  compensation  to the directors is decided by the directors,  a
                  quorum is the majority of the directors in office.

         C.       BORROWING  POWERS  EXERCISABLE  BY THE  DIRECTORS AND HOW SUCH
                  BORROWING POWERS MAY BE VARIED.

                  The Company, if authorized by the directors, may:

                  1.       borrow  money  in  the  manner  and  amount,  on  the
                           security,  from  the  sources  and on the  terms  and
                           conditions that they consider appropriate;
                  2.       issue bonds,  debentures  and other debt  obligations
                           either  outright or as security for any  liability or
                           obligation  of the Company or any other person and at
                           such discounts or premiums and on such other terms as
                           they consider appropriate;
                  3.       guarantee  the repayment of money by any other person
                           or the  performance  of any  obligation  of any other
                           person; and
                  4.       mortgage,  charge,  whether  by  way of  specific  or
                           floating  charge,  grant a security  interest  in, or
                           give other  security on, the whole or any part of the
                           present  and  future  assets and  undertaking  of the
                           Company.

         D.       RETIREMENT AND  NON-RETIREMENT OF DIRECTORS UNDER AN AGE LIMIT
                  REQUIREMENT.

                  There are no such  provisions  applicable to the Company under
                  the Notice of Articles, Articles or the BCBCA.

         E. NUMBER OF SHARES REQUIRED FOR A DIRECTOR'S QUALIFICATION.

                  A director of the  Company is not  required to hold a share in
                  the capital of the Company as qualification for his office.

         F. INDEMNIFICATION.

                  The  Articles  provide for  indemnification  of the  Company's
                  officers and directors.

         G. AMENDMENT OF ARTICLES.

                  The Articles  may be amended by the  directors so long as such
                  amendment does not affect the rights attached to shares.

Description of Common Shares

The authorized  capital of the Company consists of an unlimited number of common
shares without par value.  A complete  description is contained in the Company's
Notice of Articles.

Of the Company's  unlimited share capital,  a total of 53,837,457  common shares
were issued and outstanding as of November 30, 2007.

All of the common  shares are fully paid and not  subject to any future  call or
assessment.  All of the common  shares of the Company  rank equally as to voting
rights,  participation  in a  distribution  of the  assets of the  Company  on a
liquidation,  dissolution  or  winding-up  of the Company,  the  entitlement  to
dividends  and the right to share in the Company's  profits.  The holders of the
common shares are entitled to receive notice of all shareholder  meetings and to
attend and vote at such  meetings.  Shareholders  are not entitled to cumulative
voting.  Each common  share  carries  with it the right to one vote.  The common
shares do not have preemptive or conversion  rights.  In addition,  there are no
sinking fund or  redemption  provisions  applicable  to the common shares or any
provisions discriminating against any existing or prospective holders



                                     - 83 -

<PAGE>


of such securities as a result of a shareholder  owning a substantial  number of
shares.  The  Company's  board of directors  does not stand for  re-election  at
staggered intervals.

DIVIDEND RECORD

The Company has not paid any  dividends  on its common  shares and has no policy
with respect to the payment of dividends.

OWNERSHIP OF SECURITIES AND CHANGE OF CONTROL

Except for the Investment Canada Act,  discussed below, there are no limitations
on the rights to own securities, including the rights of non-resident or foreign
shareholders  to hold or exercise  voting  rights on the  securities  imposed by
foreign law or by the constituent documents of the Company.

Any person who beneficially owns or controls,  directly or indirectly, more than
10% of the Company's  voting  shares is considered an insider,  and must file an
insider  report with the British  Columbia  and Alberta  Securities  Commissions
within  ten days of  becoming  an  insider  disclosing  any  direct or  indirect
beneficial  ownership  of, or control  over  direction  over  securities  of the
Company. In addition, if the Company itself holds any of its own securities, the
Company must disclose such ownership.

There are no  provisions in the Company's  Continuation  Application,  Notice of
Articles  and  Articles  that would  have an effect of  delaying,  deferring  or
preventing a change in control of the Company  operating  only with respect to a
merger,  acquisition  or corporate  restructuring  involving  the Company or its
subsidiaries.

CHANGES TO RIGHTS AND RESTRICTIONS OF SHARES

Under the BCBCA and the Company's Articles,  if the Company wishes to change the
rights and  restrictions  of any class of shares  the  Company  must  obtain the
approval of the shareholders of that class by Special Resolution.

SHAREHOLDER MEETINGS

ANNUAL AND EXTRAORDINARY GENERAL MEETINGS

Under the BCBCA and the Company's Articles, the Company's annual general meeting
is to be held once in each  calendar  year and not more than 15 months after the
previous  meeting.  No advance  notice  will be required  to be  published  at a
meeting where directors are to be elected.  The Company,  under the BCBCA,  must
give  shareholders  not less than 21 days' notice of any general  meeting of the
shareholders.

 An extraordinary  general meeting of shareholders may be called at any time for
 the transaction of any business the general nature of which is specified in the
 notice calling the meeting.

 The BCBCA  contemplates  three ways for a general meeting of shareholders to be
 called: (a) by the directors; (b) by requisition by the shareholders; or (c) by
 court order.

         (a)      By the Directors.  The Company must give shareholders not less
                  than 21 days notice of any general meeting of the shareholders
                  and not more than two months  before the date of the  meeting.
                  The  directors  may fix in  advance a date,  which is no fewer
                  than 35 days or no more than 60 days  prior to the date of the
                  meeting,  whereby all the holders of common  shares as at that
                  date are entitled to attend and vote at a general meeting.

         (b)      Requisition by  Shareholders.  The requisition must be made by
                  shareholders  holding  not les than 1/20 of the issued  shares
                  carrying  the right to vote at a general  meeting  at the time
                  the Company receives the requisition.  If a general meeting is
                  properly  requisitioned,  the  directors  must  call a general
                  meeting to transact the business specified in the requisition,
                  to  be  held  within  four  months   after  the  date  of  the
                  requisition  is  received  by the  Company.  The notice of the
                  meeting  must be sent at least 21 days and not more  than four
                  months before the date of the meeting.



                                     - 84 -
<PAGE>



         (c)      By Court  Order.  The court may on its own  motion,  or on the
                  application  of  the  Company,  a  director  or a  shareholder
                  entitled  to vote at the  meeting,  order  that a  meeting  of
                  shareholders  be called,  held and conducted in the manner the
                  court considers appropriate, any may give instructions to that
                  effect.  The court may make this order of it is  impracticable
                  for the Company to call or conduct the meeting in the required
                  manner, if the Company fails to do so, or for any other reason
                  that the court considers appropriate.

On a show of hands,  every person who is present,  a shareholder or proxy holder
and entitled to vote shall have one vote. Whenever a vote by show of hands shall
have been taken upon a  question,  unless a ballot  thereon  is so  required  or
demanded,  a  declaration  by the Chairman of the meeting that the vote upon the
resolution has been carried or carried by the necessary  majority or is defeated
must be entered in the minutes of the meeting and shall be  conclusive  evidence
of the fact without proof of the number or  proportion of the votes  recorded in
favor of or against the  resolution and the result of the vote so taken shall be
the decision of the members upon the said question.

DIFFERENCES FROM REQUIREMENTS IN THE UNITED STATES

Except for the Company's quorum  requirements,  certain  requirements related to
related party transactions,  the requirement for notice of shareholder  meetings
and the approval of amendments to the  Company's  articles,  which are discussed
above,  there  are no  significant  differences  in the  law  applicable  to the
Company,  in the areas outlined  above,  in British  Columbia  versus the United
States. In most states in the United States, a quorum must consist of a majority
of the shares  entitled to vote. Some states allow for a reduction of the quorum
requirements  to less than a majority of the shares  entitled to vote.  Having a
lower  quorum  threshold  may  allow  a  minority  of the  shareholders  to make
decisions about the Company,  its management and operations.  In addition,  most
states  in the  United  States  require  that a notice of  meeting  be mailed to
shareholders  prior to the meeting date.  Additionally,  in the United States, a
director may not be able to vote on the approval of any transaction in which the
director has a interest.  Generally,  most states in the United  States  require
amendments  to a company's  articles of  incorporation  and certain  significant
transactions,  such as mergers and the sale or transfer of all or  substantially
all of a  company's  assets,  to be approved by at least a majority of the votes
cast by the holders of the issued and outstanding  shares.  Some states, or some
older  corporations,  may require approval of amendments and certain significant
transactions  by  2/3  of the  votes  cast  by the  holders  of the  issued  and
outstanding shares. In addition,  in the United States voting by separate voting
groups may be required on the  approval of any such  amendments  and/or  certain
significant corporate transactions.

Material Contracts

The following is a listing of contracts material to the business of the Company,
which were not entered into in the ordinary  course of business,  during the two
years preceding the date of this annual report:

(1)      In November 2005,  the Company agreed to reorganize its  arrangement to
         acquire its interest in the  Bulakashu  Gold  Property and entered into
         the  Kantanna  Option.  As a  result,  BMC  transferred  its  ownership
         interest in Bulakashu Gold Property back to Marsa.  Marsa then assigned
         all of its interests to Kantanna.  Both Marsa and Kantanna are owned by
         Mr.  Oleg Kim, a director  of the  Company.  Consequently,  BMC held an
         option to acquire a 100% interest in the  Bulakashu  Gold Property from
         Kantanna  under the same terms as  contemplated  under the Marsa Option
         and  directly  held the  exploration  licenses on the Eastern  Sary Jaz
         Property.  The  Company  issued  200,000  common  shares to Kantanna as
         consideration  for the Eastern  Sary Jaz  Property  and the transfer of
         100% ownership of BMC to the Company.  See "Item 4.  Information on the
         Company-History and Development of the Company."

         In August 2007,  the Company  entered into an amending  agreement  with
         Kantanna,  pursuant to which  Kantanna  agreed to forego the  aggregate
         US$1,890,000 in exploration  expenditures  for 2007 and 2008, which was
         one of the  requirements for the Company to acquire the remaining 62.5%
         interest in the  Bulakashu  Property  that it had not acquired to date.
         The other requirement was the issuance of 375,000 shares to the vendor,
         which the Company has now been  issued.  Thus the Company  acquired the
         remaining  62.5%  interest in the  Bulakashu  Property and now owns the
         entire Property.  See "Item 4. Information on the  Company-History  and
         Development of the Company."

(2)      Pursuant to the Kim Agreement between the Company's  subsidiary BMC and
         Oleg Kim dated  November 23,  2005,  BMC has retained Mr. Kim to act as
         its General Director effective as of December 1, 2005. The term of the



                                     - 85 -
<PAGE>


         Kim  Agreement  was for an  initial  period  of one  year  expiring  on
         December 1, 2006, subject to earlier termination in accordance with the
         agreement.  The Kim Agreement is  automatically  renewed for successive
         one-year  periods  at the end of the  initial  term  of the  agreement,
         unless either party gives to the other written notice of non-renewal at
         least 90 days in advance  of the  expiration  date of the then  current
         term.  Mr.  Kim  agreed to spend  approximately  fifty  percent  of his
         working  hours  working  for BMC.  In  consideration  for the  services
         provided  by Mr. Kim to BMC,  BMC pays Mr. Kim a base salary of $36,000
         annually.  See "Item 6.  Directors,  Senior  Management and Employees -
         Compensation."

(3)      Pursuant to the Tafuri Agreement between the Company and William Tafuri
         dated  December 1, 2005,  the Company has retained Dr. Tafuri to act as
         its  Vice-President  of Exploration  and Director of  Operations,  Asia
         effective as of December 1, 2005. The term of the Tafuri  Agreement was
         for an initial period of one year expiring on December 1, 2006, subject
         to earlier  termination in accordance  with the  agreement.  The Tafuri
         Agreement is automatically  renewed for successive  one-year periods at
         the end of the initial term of the agreement, unless either party gives
         to the other written  notice of non-renewal at least 90 days in advance
         of the  expiration  date of the then current term. Dr. Tafuri agreed to
         spend  approximately  100% percent of his working hours working for the
         Company.  In consideration  for the services  provided by Dr. Tafuri to
         the  Company,  the Company  pays Dr.  Tafuri a base salary of US $8,750
         monthly.  See "Item 6.  Directors,  Senior  Management  and Employees -
         Compensation."

(4)      Pursuant to the Danilov  Agreement  between  the  Company's  subsidiary
         Centrasia  Kazakhstan  and  Vladimir  Danilov  dated  January 31, 2006,
         Centrasia  Kazakhstan  has retained  Mr.  Danilov to act as its General
         Director  effective  as of  February  1, 2006.  The term of the Danilov
         Agreement was for an initial period of one year expiring on February 1,
         2007, subject to earlier  termination in accordance with the agreement.
         The Danilov Agreement is automatically  renewed for successive one-year
         periods at the end of the initial term of the agreement,  unless either
         party gives to the other written notice of non-renewal at least 90 days
         in advance of the expiration date of the then current term. Mr. Danilov
         agreed  to spend  approximately  fifty  percent  of his  working  hours
         working for Centrasia  Kazakhstan.  In  consideration  for the services
         provided by Mr. Danilov to Centrasia  Kazakhstan,  Centrasia Kazakhstan
         pays Mr.  Danilov  a base  salary  of  $36,000  annually.  See "Item 6.
         Directors, Senior Management and Employees - Compensation."

(5)      On May 26, 2006, the Company entered into the Kazakhstan MOU to acquire
         a 90% interest two base metal properties located in Kazakhstan for cash
         in the amount of US  $8,500,000.  However,  the Company  terminated the
         Kazakhstan  MOU on  July  12,  2006,  after  it  was  unable  to  reach
         acceptable  terms  for  the  proposed  acquisition.   .  See  "Item  4.
         Information on the Company-History and Development of the Company."

(6)      On August 25,  2006,  the  Company and BMC  entered  into the  Turgeldy
         Agreement  with  Eurasian  and Altyn  Minerals  to acquire an option to
         purchase a 100% interest in the Turgeldy Property from Eurasian.  Terms
         of the Turgeldy  Agreement included an immediate payment to Eurasian of
         60,000 common shares of the Company for the Turgeldy  Option to acquire
         all rights and title to the Turgeldy exploration license, with Eurasian
         retaining a 1% Net Smelter  Return  royalty.  The Company had up to six
         months  from the date of signing to  exercise  the  Turgeldy  Option by
         making a cash  payment of US $30,000 and issuing an  additional  90,000
         common shares to Eurasian. On February 21, 2007, the Company terminated
         its option to acquire a 100%  interest in the  Turgeldy  property.  See
         "Item 4.  Information  on the  Company-History  and  Development of the
         Company."

(7)      On May 11, 2007, the Company,  its  wholly-owned  subsidiary,  Magellan
         Holdings  (BVI) Corp.  and  Stargate  entered  into the Share  Purchase
         Agreement whereby the Company agreed to purchase 100% of the issued and
         outstanding  shares  of RPI  under  the  RPIM  Acquisition.  The  Share
         Purchase Agreement was amended on June 8, 2007, June 22, 2007, July 11,
         2007 and July 13, 2007, respectively, and the acquisition was completed
         on July 24, 2007. See "Item 4. Information on the  Company-History  and
         Development of the Company."

(8)      Pursuant to the Lakehead Agreement, by and among the Company,  Lakehead
         and Douglas  Turnbull dated September 1, 2007, the Company has retained
         Lakehead to provide management  services to the Company, to include the
         services of Douglas Turnbull as President of the Company. Lakehead is a
         private  corporation  owned by Mr.  Turnbull.  Pursuant to the Lakehead
         Agreement,  Mr.  Turnbull  has  agreed  to spend  approximately  ninety
         percent of his working hours,  or up to 36 hours per week,  working for
         the Company.  In consideration  for the services  provided by Lakehead,
         the Company will pay Lakehead $12,500 per month. The Lakehead Agreement
         expires August 31, 2009, subject to earlier termination  provisions for
         cause, in accordance with the


                                     - 86 -
<PAGE>


         agreement.  In the event that the Lakehead  Agreement is  terminated by
         the Company  without  cause,  the Company will provide  Lakehead with a
         lump sum  payment  of  twelve  times  the  monthly  fee.  See  "Item 6.
         Directors, Senior Management and Employees - Compensation."

Exchange Controls

There are no governmental  laws,  decrees,  or regulations in Canada relating to
restrictions on the export or import of capital,  or affecting the remittance of
interest,  dividends, or other payments to non-resident holders of the Company's
common  stock.  Any  remittances  of dividends to United States  residents  are,
however,  subject  to  a  15%  withholding  tax  (5%  if  the  shareholder  is a
corporation  owning at least 10% of the outstanding common stock of the Company)
pursuant to Article X of the reciprocal tax treaty between Canada and the United
States. See "Item 10. Additional Information - Taxation".

Except as  provided  in the  Investment  Canada  Act (the  "Act"),  there are no
limitations  specific to the rights of  non-Canadians to hold or vote the common
stock of the  Company  under  the laws of  Canada  or the  Province  of  British
Columbia or in the charter documents of the Company.

Management  of the  Company  considers  that the  following  general  summary is
materially  complete and fairly  describes those provisions of the Act pertinent
to an investment by an American investor in the Company.

The Act requires a non-Canadian  making an investment  which would result in the
acquisition of control of a Canadian business,  the gross value of the assets of
which  exceed  certain  threshold  levels or the  business  activity of which is
related to Canada's cultural heritage or national identity, to either notify, or
file an  application  for review with,  Investment  Canada,  the federal  agency
created by the Investment Canada Act.

The notification  procedure  involves a brief statement of information about the
investment  in a prescribed  form which is required to be filed with  Investment
Canada by the investor at any time up to 30 days following implementation of the
investment.  It is intended that investments  requiring only  notification  will
proceed without government  intervention  unless the investment is in a specific
type of business  activity  related to Canada's  cultural  heritage and national
identity.

If an investment is reviewable  under the Act, an application  for review in the
form prescribed is normally required to be filed with Investment Canada prior to
the investment  taking place and the investment may not be implemented until the
review has been completed and the Minister  responsible for Investment Canada is
satisfied that the  investment is likely to be of net benefit to Canada.  If the
Minister is not satisfied  that the investment is likely to be of net benefit to
Canada, the non-Canadian must not implement the investment or, if the investment
has been  implemented,  may be  required  to divest  himself  of  control of the
business that is the subject of the investment.

The following investments by non-Canadians are subject to notification under the
Act:

(a) an investment to establish a new Canadian business; and
(b) an  investment  to  acquire  control  of a  Canadian  business  that  is not
reviewable pursuant to the Act.

An  investment  is  reviewable  under  the Act if there is an  acquisition  by a
non-Canadian of a Canadian business and the asset value of the Canadian business
being acquired equals or exceeds the following thresholds:

(a)      for  non-WTO  Investors,  the  threshold  is  $5,000,000  for a  direct
         acquisition  and over  $50,000,000  for an  indirect  acquisition.  The
         $5,000,000  threshold will apply however for an indirect acquisition if
         the asset value of the Canadian  business being acquired exceeds 50% of
         the asset value of the global transaction;
(b)      except as specified in paragraph  (c) below,  a threshold is calculated
         for  reviewable  direct  acquisitions  by or from  WTO  Investors.  The
         threshold for 2006 is $265,000,000.  Pursuant to Canada's international
         commitments,  indirect  acquisitions  by or from WTO  Investors are not
         reviewable; and
(c)      the  limits  set  out in  paragraph  (a)  apply  to all  investors  for
         acquisitions of a Canadian business that:

         (i)      engages in the production of uranium and owns an interest in a
                  producing uranium property in Canada;
         (ii) provides any financial services; (iii) provides any transportation
         service; or (iv) is a cultural business.



                                     - 87 -
<PAGE>


Notwithstanding   the  above  limits,  any  investment  which  is  usually  only
notifiable,  including the  establishment of a new Canadian  business engaged in
the  activity  of  publication,   distribution  or  sale  of  books,  magazines,
periodicals,  newspapers,  film  or  video  recordings,  audio  or  video  music
recordings,  or music in print or machine  readable  form may be  reviewed if an
Order-in-Council directing a review is made and a notice is sent to the investor
within 21 days following the receipt of a certified complete notification.

WTO Investor as defined in the Act means:

(a)      an individual, other than a Canadian, who is a national of a WTO Member
         or who has the right of  permanent  residence  in  relation to that WTO
         Member;

(b)      a government of a WTO Member,  whether  federal,  state or local, or an
         agency thereof;

(c)      an entity that is not a  Canadian-controlled  entity, and that is a WTO
         investor-controlled entity, as determined in accordance with the Act;

(d)      a corporation or limited partnership:
         (i)      that  is  not  a  Canadian-controlled  entity,  as  determined
                  pursuant to the Act;
         (ii) that is not a WTO investor within the meaning of the Act; (iii) of
         which less than a majority of its voting interests are
                  owned by WTO investors;
         (iv)     that is not  controlled  in fact through the  ownership of its
                  voting interests; and
         (v)      of which two thirds of the members of its board of  directors,
                  or of which two thirds of its  general  partners,  as the case
                  may be, are any combination of Canadians and WTO investors;

(e) a trust:
         (i)      that  is  not  a  Canadian-controlled  entity,  as  determined
                  pursuant to the Act;
         (ii)     that is not a WTO investor within the meaning of the Act;

         (iii)    that is not  controlled  in fact through the  ownership of its
                  voting interests, and
         (iv)     of which two thirds of its  trustees  are any  combination  of
                  Canadians and WTO investors, or

(f)      any other form of business  organization  specified by the  regulations
         that is controlled by a WTO investor.

WTO Member as defined in the Act means a member of the World Trade Organization.

Generally  speaking,  an acquisition is direct if it involves the acquisition of
control of the Canadian business or of its Canadian parent or grandparent and an
acquisition  is  indirect  if  it  involves  the  acquisition  of  control  of a
non-Canadian  parent  or  grandparent  of an  entity  carrying  on the  Canadian
business.  Control may be acquired  through the acquisition of actual or de jure
voting  control  of  a  Canadian  corporation  or  through  the  acquisition  of
substantially  all of the assets of the Canadian  business.  No change of voting
control  will be deemed to have  occurred if less than  one-third  of the voting
control of a Canadian corporation is acquired by an investor.

The Act specifically  exempts certain  transactions from either  notification or
review. Included among the category of transactions is the acquisition of voting
shares or other voting  interests  by any person in the ordinary  course of that
person's business as a trader or dealer in securities.

Taxation

MATERIAL CANADIAN FEDERAL INCOME TAX CONSEQUENCES

Management of the Company considers that the following  discussion describes the
material  Canadian  federal  income tax  consequences  applicable to a holder of
Common  Stock of the Company  who is a resident of the United  States and who is
not a resident of Canada and who does not use or hold,  and is not deemed to use
or hold,  his shares of Common Stock of the Company in connection  with carrying
on a business in Canada (a "non-resident shareholder").

This summary is based upon the current provisions of the Income Tax Act (Canada)
(the  "ITA"),  the  regulations  thereunder  (the  "Regulations"),  the  current
publicly  announced  administrative  and  assessing  policies of Canada  Revenue
Agency and all specific  proposals  (the "Tax  Proposals")  to amend the ITA and
Regulations  announced  by the  Minister of Finance  (Canada)  prior to the date
hereof.  This  description  is not exhaustive of all possible  Canadian  federal
income tax


                                     - 88 -
<PAGE>


consequences  and,  except for the Tax Proposals,  does not take into account or
anticipate any changes in law, whether by legislative,  governmental or judicial
action.

DIVIDENDS

Dividends  paid on the common  stock of the  Company to a  non-resident  will be
subject  to  withholding  tax.  The  Canada-U.S.  Income Tax  Convention  (1980)
provides that the normal 25% withholding tax rate is reduced to 15% on dividends
paid on shares of a  corporation  resident  in Canada  (such as the  Company) to
residents of the United  States,  and also  provides for a further  reduction of
this rate to 5% where the  beneficial  owner of the  dividends is a  corporation
which is a resident of the United  States  which owns at least 10% of the voting
shares of the  corporation  paying  the  dividend.  In the event of the  Company
declaring and paying dividends it would withhold any applicable taxes.

CAPITAL GAINS

In general,  a  non-resident  of Canada is not subject to tax under the ITA with
respect  to a  capital  gain  realized  upon  the  disposition  of a share  of a
corporation  resident in Canada that is listed on a prescribed  stock  exchange.
For purposes of the ITA, the Company is listed on a prescribed  stock  exchange.
Non-residents  of Canada who dispose of shares of the Company will be subject to
income tax in Canada with respect to capital gains if:

         (a)      the non-resident holder;
         (b)      persons  with  whom the  non-resident  holder  did not deal at
                  arm's length; or
         (c)      the non-resident holder and persons with whom the non-resident
                  holder did not deal with at arm's length,

owned  not less  than 25% of the  issued  shares  of any  class or series of the
Company at any time during the five-year period preceding the disposition.

In the case of a  non-resident  holder to whom shares of the  Company  represent
taxable Canadian  property and who is resident in the United States, no Canadian
taxes will be payable on a capital gain realized on such shares by reason of the
Canada-U.S. Income Tax Convention (1980) (the "Treaty") unless:

         (a)      the value of such  shares  is  derived  principally  from real
                  property situated in Canada; or
         (b)      the  non-resident  holder  is an  individual  who:  (i)  was a
                  resident of Canada for 120 months during any
                           period  of  20   consecutive   years   preceding  the
                         disposition of the shares; and
                  (ii)     was a  resident  of Canada at any time  during the 10
                           years  immediately  preceding the  disposition of the
                           property  and the  shares  (or  shares for which such
                           shares were  substituted in a disposition the gain on
                           which was not  recognized for purposes of taxation in
                           Canada) were owned by the  individual  at the time he
                           ceased to be a resident of Canada.

In such cases, certain transitional relief under the Treaty may be available.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a general  discussion of certain  possible U.S.  federal income
tax consequences,  under current law, generally  applicable to a U.S. Holder (as
hereinafter  defined) of common shares of the Company.  This  discussion is of a
general  nature  only and does not take into  account the  particular  facts and
circumstances, with respect to U.S. federal income tax issues, of any particular
U.S.  Holder.  In addition,  this discussion does not cover any state,  local or
foreign tax consequences.

The following discussion is based upon the sections of the Internal Revenue Code
of 1986,  as amended (the  "Code"),  Treasury  Regulations,  published  Internal
Revenue Service ("IRS") rulings,  published  administrative positions of the IRS
and court decisions that are currently applicable,  any or all of which could be
materially and adversely  changed,  possibly on a retroactive basis, at any time
and which are subject to differing  interpretations.  This  discussion  does not
consider the potential  effects,  both adverse and  beneficial,  of any proposed
legislation  which,  if  enacted,  could be applied,  possibly on a  retroactive
basis, at any time.



                                     - 89 -
<PAGE>


This  discussion is for general  information  only and it is not intended to be,
nor should it be  construed  to be,  legal or tax  advice to any U.S.  Holder or
prospective  U.S.  Holder of common  shares of the  Company,  and no  opinion or
representation  with respect to the U.S.  federal income tax consequences to any
such U.S. Holder or prospective U.S. Holder is made.  Accordingly,  U.S. Holders
and  prospective  U.S.  Holders of common shares of the Company  should  consult
their own financial  advisor,  legal  counsel or  accountant  regarding the U.S.
federal,  state,  local and foreign tax  consequences of purchasing,  owning and
disposing of common shares of the Company.

U.S. HOLDERS

As used herein,  a "U.S.  Holder" means a holder of common shares of the Company
who is (i) a citizen or  individual  resident  of the U.S.,  (ii) a  corporation
created  or  organized  in or under  the laws of the  U.S.  or of any  political
subdivision  thereof,  (iii) an  estate  whose  income  is  taxable  in the U.S.
irrespective  of source or (iv) a trust subject to the primary  supervision of a
court  within the U.S.  and control of a U.S.  fiduciary as described in Section
7701(a)(30) of the Code. If a partnership or other "pass-through" entity treated
as a partnership for U.S. federal income tax purposes holds common shares of the
Company, the U.S. federal income tax treatment of the partners or owners of such
partnership or other pass-through  entity generally will depend on the status of
such partners or owners and the activities of such  partnership or  pass-through
entity.

PERSONS NOT COVERED

This  summary  does not  address the U.S.  federal  income tax  consequences  to
persons  (including  persons who are U.S. Holders) subject to special provisions
of U.S. federal income tax law,  including,  but not limited to, (i) persons who
are tax-exempt organizations,  qualified retirement plans, individual retirement
accounts and other  tax-deferred  accounts,  financial  institutions,  insurance
companies,  real estate investment trusts,  regulated investment  companies,  or
brokers,  dealers or traders in securities,  (ii) persons who have a "functional
currency" other than the U.S.  dollar,  (iii) persons subject to the alternative
minimum tax,  (iv) persons who own their common shares of the Company as part of
a  straddle,  hedging,  conversion  transaction,   constructive  sale  or  other
arrangement  involving  more than one position,  (v) persons who acquired  their
common shares of the Company  through the exercise of employee  stock options or
otherwise as compensation for services,  (vi) persons that own an interest in an
entity that owns common shares of the Company (vii) persons who own, exercise or
dispose of any options, warrants or other rights to acquire common shares of the
Company,  (viii)  persons who are  partners or owners of  partnerships  or other
pass-through entities or (ix) persons who own their common shares of the Company
other than as a capital asset within the meaning of Section 1221 of the Code.

DISTRIBUTION ON COMMON SHARES OF THE COMPANY

U.S.  Holders   receiving   distributions   (including   constructive   indirect
distributions)  with  respect to common  shares of the Company  are  required to
include in gross income for U.S. federal income tax purposes the gross amount of
such distributions,  equal to the U.S. dollar value of such distributions on the
date of receipt  (based on the exchange  rate on such date),  to the extent that
the Company has current or accumulated  earnings and profits,  without reduction
for any Canadian income tax withheld from such distributions.  Such Canadian tax
withheld  may be  credited,  subject to certain  limitations,  against  the U.S.
Holder's U.S. federal income tax liability or, alternatively, may be deducted in
computing the U.S.  Holder's U.S.  federal  taxable  income by those who itemize
deductions. (See more detailed discussion at "Foreign Tax Credit" below). To the
extent  that  distributions  from the  Company  exceed  current  or  accumulated
earnings and profits of the Company, such distributions will be treated first as
a return of capital,  to the extent of the U.S.  Holder's  adjusted basis in the
common  shares,  and  thereafter as gain from the sale or exchange of the common
shares of the Company.  (See more detailed  discussion at "Disposition of Common
Shares of the Company" below)

To the extent  that the  Company is a Passive  Foreign  Investment  Company,  as
defined below, in the current or prior year as discussed below, the Company will
not be a "qualified  foreign  corporation" as defined in Section  1(h)(11)(C) of
the Code. Accordingly,  distributions from the Company received by U.S. Holders,
who are subject to tax under  Section 1 of the Code and for which the Company is
a PFIC,  would not be eligible to be taxed at the  preferred  long-term  capital
gains tax rate.

In the case of foreign currency received as a distribution that is not converted
by the recipient into U.S.  dollars on the date of receipt,  a U.S.  Holder will
have a tax basis in the foreign  currency equal to its U.S.  dollar value on the
date of receipt. Generally any gain or loss recognized upon a subsequent sale or
other  disposition  of the foreign  currency,  including  the  exchange for U.S.
dollars,  will be ordinary income or loss. However, an individual whose realized
gain



                                     - 90 -
<PAGE>


does not exceed $200 will not recognize  that gain, to the extent that there are
no expenses  associated  with the  transaction  that meet the  requirements  for
deductibility  as a trade or business  expense  (other  than travel  expenses in
connection with a business trip) or as an expense for the production of income.

Dividends  paid on the  common  shares  of the  Company  generally  will  not be
eligible  for  the   "dividends   received   deduction"   allowed  to  corporate
shareholders receiving dividends from certain U.S.  corporations.  Under certain
circumstances,  a U.S.  Holder  that  is a  corporation  and  that  owns  shares
representing  at least 10% of the total  voting power and the total value of the
Company's  outstanding  shares may be entitled to a 70%  deduction  of the "U.S.
source"  portion of  dividends  received  from the  Company  (unless the Company
qualifies  as  a  "Foreign  Personal  Holding  Company"  or a  "Passive  Foreign
Investment  Company"  as  defined  below).  The  availability  of the  dividends
received  deduction is subject to several complex  limitations  which are beyond
the scope of this  discussion,  and U.S. Holders of common shares of the Company
should  consult  their  own  financial  advisor,  legal  counsel  or  accountant
regarding the dividends received deduction.

Certain  information  reporting  and  backup  withholding  rules may apply  with
respect  to  certain  payments  related  to  the  Company's  common  shares.  In
particular,  a payor or middleman  within the U.S.,  or in certain cases outside
the U.S.,  will be required to withhold 28% of any payments to a U.S.  Holder of
the Company's  common shares of dividends on, or proceeds from the sale of, such
common  shares  within the U.S.,  if a U.S.  Holder fails to furnish its correct
taxpayer  identification  number or otherwise fails to comply with, or establish
an exemption from, the backup withholding tax requirements. Any amounts withheld
under the U.S.  backup  withholding  tax rules  will be allowed as a refund or a
credit against the U.S. Holder's U.S. federal income tax liability, provided the
required information is furnished to the IRS.

FOREIGN TAX CREDIT

A U.S.  Holder who pays (or has withheld from  distributions)  Canadian or other
foreign income tax with respect to the ownership of common shares of the Company
may be entitled, at the option of the U.S. Holder, to either receive a deduction
or a tax  credit  for U.S.  federal  income tax  purposes  with  respect to such
foreign tax paid or withheld. Generally, it will be more advantageous to claim a
credit because a credit reduces U.S. federal income taxes on a dollar-for-dollar
basis,  while a deduction  merely reduces the taxpayer'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 by (or withheld from  distributions  to) the U.S.  Holder
during that year.

There are  significant  and  complex  limitations  that apply to the foreign tax
credit,  among which is the general limitation that the credit cannot exceed the
proportionate share of the U.S. Holder's U.S. income tax liability that the U.S.
Holder's  "foreign source" income bears to his or its worldwide  taxable income.
In applying this  limitation,  the various items of income and deduction must be
classified as either  "foreign  source" or "U.S.  source."  Complex rules govern
this  classification   process.  In  addition,  this  limitation  is  calculated
separately with respect to specific classes of income such as "passive  income,"
"high withholding tax interest," "financial services income," "shipping income,"
and  certain  other  classifications  of income.  Dividends  distributed  by the
Company  will  generally   constitute  "foreign  source"  income,  and  will  be
classified  as  "passive  income"  or,  in the  case of  certain  U.S.  Holders,
"financial services income" for these purposes.

In addition,  U.S. Holders that are corporations and that own 10% or more of the
voting stock of the Company may be entitled to an "indirect"  foreign tax credit
under  Section 902 of the Code with  respect to the payment of  dividends by the
Company   under  certain   circumstances   and  subject  to  complex  rules  and
limitations.  The  availability of the foreign tax credit and the application of
the  limitations  with respect to the foreign tax credit are fact specific,  and
each U.S.  Holder  of common  shares of the  Company  should  consult  their own
financial advisor,  legal counsel or accountant regarding the foreign tax credit
rules.

DISPOSITION OF COMMON SHARES OF THE COMPANY

A U.S.  Holder  will  recognize  gain or loss  upon the  sale or  other  taxable
disposition  of common  shares of the Company equal to the  difference,  if any,
between  (i) the  amount  of cash and the  fair  market  value  of any  property
received,  and (ii) the  shareholder's  tax  basis in the  common  shares of the
Company. This gain or loss will be capital gain or loss if the common shares are
a  capital  asset in the  hands  of the U.S.  Holder,  which  generally  will be
long-term  capital gain or loss if the common shares of the Company are held for
more than one year.



                                     - 91 -
<PAGE>



Preferential tax rates apply to long-term capital gains of U.S. Holders that are
individuals, estates or trusts. If the common shares of the Company are held for
more than five years, a lower long-term capital gains tax rate may apply.  There
are currently no preferential  tax rates for long-term  capital gains for a U.S.
Holder that is a corporation  (other than a corporation  subject to Subchapter S
of the Code).  Deductions  for net  capital  losses are  subject to  significant
limitations.  For U.S. Holders that are not corporations,  any unused portion of
such net  capital  loss may be carried  over to be used in later tax years until
such  net  capital  loss  is  thereby  exhausted.  For  U.S.  Holders  that  are
corporations  (other than corporations  subject to Subchapter S of the Code), an
unused net capital loss may be carried back three years and carried forward five
years  from the loss year to be offset  against  capital  gains  until  such net
capital loss is thereby exhausted.

OTHER CONSIDERATIONS FOR U.S. HOLDERS

In the following  circumstances,  the above sections of this  discussion may not
describe the U.S. federal income tax consequences to U.S. Holders resulting from
the ownership and disposition of common shares of the Company:

Controlled Foreign Corporation

If more than 50% of the total voting  power or the total value of the  Company's
outstanding shares is owned, directly or indirectly, by citizens or residents of
the U.S.,  U.S.  partnerships  or  corporations,  or U.S.  estates or trusts (as
defined  by the Code  Section  7701(a)(30)),  each of  which  own,  directly  or
indirectly,  10% or more of the total voting power of the Company's  outstanding
shares (each a "10% Shareholder"), the Company could be treated as a "Controlled
Foreign Corporation" ("CFC") under Section 957 of the Code.

The classification of the Company as a CFC would have many complex implications,
including that 10% Shareholders of the Company would generally (i) be treated as
having received a current  distribution of the Company's  "Subpart F income" and
(ii) would also be subject to current U.S.  federal income tax on their pro rata
shares of the Company's  earnings  invested in "U.S.  property." The foreign tax
credit may  reduce the U.S.  federal  income tax on these  amounts  for such 10%
Shareholders  (See more detailed  discussion at "Foreign Tax Credit" above).  In
addition,  under  Section 1248 of the Code,  gain from the sale or other taxable
disposition  of common  shares of the Company by a U.S.  Holder that is or was a
10% Shareholder at any time during the five-year  period ending with the date of
sale is treated as ordinary  income to the extent of earnings and profits of the
Company attributable to the common shares sold or exchanged.

If the Company is classified  as both a Passive  Foreign  Investment  Company as
described  below and a CFC,  the  Company  generally  will not be  treated  as a
Passive Foreign Investment  Company with respect to 10% Shareholders.  This rule
generally  will be effective  for taxable  years of 10%  Shareholders  beginning
after 1997 and for  taxable  years of the  Company  ending  with or within  such
taxable years of 10% Shareholders.

Passive Foreign Investment Company

Certain U.S. income tax legislation  contains rules governing  "Passive  Foreign
Investment  Companies"  ("PFIC") which can have  significant tax effects on U.S.
Holders of foreign  corporations.  Section  1297 of the Code defines a PFIC as a
corporation that is not formed in the U.S. and, for any taxable year, either (i)
75% or more of its  gross  income  is  "passive  income"  or  (ii)  the  average
percentage,  by fair market value (or, if the corporation is not publicly traded
and either is a controlled foreign corporation or makes an election, by adjusted
tax  basis),  of its  assets  that  produce  or are held for the  production  of
"passive  income"  is 50% or  more.  "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,
gains resulting from commodities  transactions  are generally  excluded from the
definition of passive income if "substantially all" of a merchant's,  producer's
or  handler's  business  is as an active  merchant,  producer or handler of such
commodities.

For  purposes  of the  PFIC  income  test  and the  assets  test,  if a  foreign
corporation  owns (directly or indirectly) at least 25% by value of the stock of
another corporation, such foreign corporation shall be treated as if it (a) held
a proportionate share of the assets of such other corporation,  and (b) received
directly its proportionate share of the income of such other corporation.  Also,
for purposes of such PFIC tests,  passive  income does not include any interest,
dividends,  rents or  royalties  that are  received or accrued  from a "related"
person to the extent  such amount is  properly  allocable  to the income of such
related  person which is not passive  income.  For these  purposes,  a person is
related  with respect to a foreign  corporation  if such person  "controls"  the
foreign corporation or is controlled by the foreign corporation or by the




                                     - 92 -
<PAGE>



same persons that control the foreign corporation. For these purposes, "control"
means  ownership,  directly or indirectly,  of stock possessing more than 50% of
the total voting power of all classes of stock  entitled to vote or of the total
value of stock of a corporation.

While the Company has not  determined  whether it is a PFIC, if the Company were
to be a PFIC, a U.S.  Holder who holds stock in the Company  would be subject to
U.S.  federal income taxation under one of three  alternative  tax regimes.  The
following is a discussion of such three alternative tax regimes.

QEF ELECTION
--------------------------------------------------------------------------------

A U.S.  Holder who elects in a timely  manner to treat the  Company as a QEF (an
"Electing  U.S.  Holder")  will be subject,  under  Section 1293 of the Code, to
current  U.S.  federal  income  tax for any  taxable  year in which the  Company
qualifies  as a PFIC on his pro rata  share of the  Company's  (i) "net  capital
gain" (the excess of net  long-term  capital  gain over net  short-term  capital
loss), which will be taxed as long-term capital gain to the Electing U.S. Holder
and (ii)  "ordinary  earnings"  (the  excess of earnings  and  profits  over net
capital  gain),  which will be taxed as  ordinary  income to the  Electing  U.S.
Holder,  in each  case,  for the  shareholder's  taxable  year in which (or with
which) the Company's  taxable year ends,  regardless of whether such amounts are
actually distributed.

The effective QEF election also allows the Electing U.S. Holder to (i) generally
treat any gain realized on the  disposition  of the Company's  common shares (or
deemed to be realized on the pledge of his shares) as capital  gain;  (ii) treat
his share of the Company's  net capital gain, if any, as long-term  capital gain
instead of ordinary income;  and (iii) either avoid interest  charges  resulting
from PFIC  status  altogether,  or make an annual  election,  subject to certain
limitations,  to defer  payment of current  taxes on his share of the  Company's
annual realized net capital gain and ordinary earnings subject,  however,  to an
interest  charge.  If the Electing  U.S.  Holder is not a  corporation,  such an
interest  charge would  generally be treated as "personal  interest" that is not
deductible.

SECTION 1291 RULES
--------------------------------------------------------------------------------

If a U.S.  Holder does not make a timely QEF election  during a year in which it
holds (or is deemed to have held) the common  shares in question and the Company
is a PFIC (a  "Non-Electing  U.S.  Holder"),  then special  taxation rules under
Section 1291 of the Code will apply to (i) gains realized on the disposition (or
deemed to be realized by reasons of a pledge) of the Company's common shares and
(ii) certain "excess  distributions"  (generally,  distributions received in the
current  taxable  year that are in excess of 125% of the  average  distributions
received  during the three  preceding  years or, if shorter,  the U.S.  Holder's
holding period) by the Company.

A Non-Electing  U.S.  Holder  generally  would be required to pro rate all gains
realized  on the  disposition  of the  Company's  common  shares  and all excess
distributions  on the Company's common shares over the entire holding period for
the common shares. All gains or excess distributions allocated to prior years of
the U.S. Holder (other than years prior to the first taxable year of the Company
during such U.S. Holder's holding period and beginning after January 1, 1987 for
which it was a PFIC)  would be taxed at the highest tax rate for each such prior
year applicable to ordinary income.  The Non-Electing  U.S. Holder also would be
liable for  interest on the  foregoing  tax  liability  for each such prior year
calculated  as if such  liability  had been due with  respect to each such prior
year. A Non-Electing  U.S. Holder that is not a corporation must generally treat
this interest charge as "personal interest" which, as discussed above, is wholly
nondeductible.  The  balance  of the  gain or the  excess  distribution  will be
treated as ordinary income in the year of the disposition or  distribution,  and
no interest charge will be incurred with respect to such balance.

If the Company is a PFIC for any taxable year during which a  Non-Electing  U.S.
Holder holds Company common shares, then the Company will continue to be treated
as a PFIC with respect to such Company  common  shares,  even if it is no longer
definitionally a PFIC. A Non-Electing U.S. Holder may terminate this deemed PFIC
status by  electing  to  recognize  gain  (which  will be taxed  under the rules
discussed above for Non-Electing  U.S. Holders) as if such Company common shares
had been sold on the last day of the last taxable year for which it was a PFIC.

MARK-TO-MARKET ELECTION
--------------------------------------------------------------------------------

Effective for tax years of U.S. Holders  beginning after December 31, 1997, U.S.
Holders who hold, actually or constructively,  marketable stock (as specifically
defined in the Treasury  Regulations) of a foreign corporation that qualifies as
a PFIC may  annually  elect to mark such stock to the market (a  "mark-to-market
election"). If such an



                                     - 93 -
<PAGE>



election is made,  such U.S. Holder will generally not be subject to the special
taxation  rules of Section 1291  discussed  above.  A U.S.  Holder who makes the
mark-to-market  election  will  include in income for the taxable year for which
the election was made an amount equal to the excess,  if any, of the fair market
value of the common  shares of the Company as of the close of such tax year over
such U.S. Holder's  adjusted basis in such common shares. In addition,  the U.S.
Holder may be allowed a deduction  for the lesser of (i) the excess,  if any, of
such U.S.  Holder's adjusted tax basis in the common shares over the fair market
value of such  shares as of the close of the tax year,  or (ii) the  excess,  if
any,  of (A) the  mark-to-market  gains for the  common  shares  in the  Company
included by such U.S.  Holder for prior tax years,  including  any amount  which
would  have  been  included  for any  prior  tax year but for the  Section  1291
interest on tax deferral rules discussed above with respect to Non-Electing U.S.
Holders,  over (B) the  mark-to-market  losses for shares  that were  allowed as
deductions for prior tax years. A U.S. Holder's adjusted tax basis in the common
shares of the Company  will be  adjusted  to reflect  the amount  included in or
deducted from income as a result of a mark-to-market  election. A mark-to-market
election  applies to the taxable  year in which the election is made and to each
subsequent  taxable  year,  unless  the  Company's  common  shares  cease  to be
marketable,  as specifically  defined,  or the IRS consents to revocation of the
election.  U.S. Holders should consult their tax advisor regarding the manner of
making such an election.

Inspection of Documents

Copies of the  documents  referred to in this annual  report may be inspected at
the  Company's  corporate  office  at Suite  1305 - 1090  West  Georgia  Street,
Vancouver, British Columbia V6E 3V7, during normal business hours.


ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
--------------------------------------------------------------------------------

Not applicable.


ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.
--------------------------------------------------------------------------------

Not applicable.



                                     PART II


ITEM 13.  ITEM DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.
--------------------------------------------------------------------------------

Not applicable.


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

Not applicable.


ITEM 15.  CONTROLS AND PROCEDURES.
--------------------------------------------------------------------------------

An evaluation was performed under the supervision and with the  participation of
the Company's  management,  including Mr. Turnbull,  the Company's President and
Chief Executive Officer,  and Mr. DeMare, the Company's Chief Financial Officer,
of the  effectiveness  of the design and operation of the  Company's  disclosure
controls  and  procedures  pursuant  to Rules  13a-15(b)  and  15d-15(b)  of the
Securities  Exchange Act of 1934 (the "Exchange Act") as of May 31, 2007.  Based
upon that evaluation,  Messrs. Turnbull and DeMare, concluded that the Company's
disclosure  controls and  procedures  are  effective to ensure that  information
required  to be  disclosed  by the  Company in reports  that it files or submits
under the Exchange Act is recorded,  processed,  summarized and reported  within
the time periods  specified in  Securities  and  Exchange  Commission  rules and
forms.



                                     - 94 -
<PAGE>



During  the  fiscal  year  ended May 31,  2007,  there  were no  changes  in the
Company's  internal  control  over  financial  reporting  that  have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.


ITEM 16.  [RESERVED]
--------------------------------------------------------------------------------

Not applicable.



ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT.
--------------------------------------------------------------------------------
The board of directors  has  determined  that the Company has at least one audit
committee  financial expert,  Mr. Nick DeMare, who serves on the Company's audit
committee.  Mr. DeMare is not considered to be an "independent director" as that
term is defined in Rule  4200(a)(15)  of the National  Association of Securities
Dealers.


ITEM 16B.   CODE OF ETHICS.
--------------------------------------------------------------------------------

The Company has not yet adopted a code of ethics that  applies to the  Company's
principal executive officer,  principal financial officer,  principal accounting
officer,  or controller,  or persons  performing  similar  functions.  Given the
Company's  current  operations,  management does not believe a code of ethics is
necessary at this stage of the Company's development.


ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.
--------------------------------------------------------------------------------

Audit Fees

For the  fiscal  years  ended May 31,  2007 and 2006,  the  Company's  principal
accountant billed the Company $35,000 and $5,545, respectively, for the audit of
the Company's annual financial statements or services that are normally provided
by the  accountant  in  connection  with  statutory  and  regulatory  filings or
engagements.

Audit-Related Fees

For the  fiscal  years  ended May 31,  2007 and 2006,  the  Company's  principal
accountant  billed $nil and $16,400,  respectively,  for  assurance  and related
services that were reasonably  related to the performance of the audit or review
of the Company's  financial  statements  outside of those fees  disclosed  above
under "Audit Fees".

Tax Fees

For the  fiscal  years  ended May 31,  2007 and 2006,  the  Company's  principal
accountant billed $nil and $nil, respectively,  for tax compliance,  tax advice,
and tax planning services.

All Other Fees

For the  fiscal  years  ended May 31,  2007 and 2006,  the  Company's  principal
accountant billed $nil and $nil,  respectively,  for products and services other
than those set forth above, which included  discussions and consultations on the
accounting and audit implications of the proposed Centrasia Acquisition.

Pre-Approval Policies and Procedures

Prior to engaging the Company's accountants to perform a particular service, the
Company's audit  committee  obtains an estimate for the service to be performed.
The  Company's  audit  committee   reviews  and   pre-approves   all  audit  and
audit-related  services and the fees and other compensation related thereto, and
any non-audit  services,  provided by the Company's external auditors.  Provided
the pre-approval of the non-audit services is presented to the audit committee's
first scheduled  meeting following such approval such authority may be delegated
by the audit committee to one or more



                                     - 95 -
<PAGE>


independent  members of the audit  committee.  The audit committee in accordance
with procedures for the Company approved all of the services described above.

At no time since the  commencement  of the  Company's  most  recently  completed
financial year has the Company relied on the waiver in paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X.

To the best of the Company's knowledge,  no more than fifty percent of the hours
expended on the auditors' engagement to audit the Company's financial statements
for the fiscal  year ended May 31, 2007 were  attributed  to work  performed  by
persons other than the auditor's full-time, permanent employees.


ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.
--------------------------------------------------------------------------------

Not applicable.


ITEM 16E.   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
            PURCHASERS.
--------------------------------------------------------------------------------

During the fiscal year ended May 31, 2007, there were no purchases made by or on
behalf  of  the  Company  or an  "affiliated  purchaser"  (as  defined  in  Rule
10b-18(a)(3)  adopted under the Securities Exchange Act of 1934),  including any
officer or director of the  Company,  of shares or other units of the  Company's
common shares



                                    PART III


ITEM 17.  FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------

See attached pages F-1 through F-27.


ITEM 18.  FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------

Not applicable.


ITEM 19.  EXHIBITS.
--------------------------------------------------------------------------------

      EXHIBIT
       NUMBER     DESCRIPTION
     --------     -----------

         1.1      Certificate of Continuation and Notice of Articles (1)

         1.2      Notice of Alteration - Form 11 (2)

         1.3      Articles (4)

         4.1      Stock Option Plan 2005, as amended November 21, 2007

         4.2      Surplus  Security Escrow  Agreement  among Baradero  Resources
                  Limited,   Computershare   Investor  Services  Inc.,   Douglas
                  Turnbull,  Cary Pinkowski,  Gregory Crowe,  Lindsay  Bottomer,
                  James Harris,  William J. Tafuri,  and Robin  Merrifield dated
                  September 12, 2005 (2)

         4.3      Value  Security  Escrow  Agreement  among  Baradero  Resources
                  Limited,   Computershare   Investor  Services  Inc.,   Douglas
                  Turnbull,  Gregory Crowe, Lindsay Bottomer,  James Harris, and
                  Marsa Gold Corp. dated September 12, 2005. (2)

         4.4      Management   Agreement   between  Chase  Management  Ltd.  and
                  Centrasia Mining Corp. dated September 14, 2005 (2)



                                     - 96 -
<PAGE>


      EXHIBIT
       NUMBER     DESCRIPTION
     --------     -----------

         4.5      Consulting Agreement between Bulakashu Mining Company Ltd. and
                  Oleg Kim dated November 23, 2005 (4)

         4.6      Consulting   Agreement  between  Centrasia  Mining  Corp.  and
                  William Tafuri dated December 1, 2005 (4)

         4.7      Option Agreement  between Bulakashu Mining Company Ltd., Marsa
                  Gold Corp.,  Magellan Gold (BVI) Inc.,  Centrasia Mining Corp.
                  and Kantanna Company Limited dated January 6, 2006 (3)

         4.8      Share Purchase  Agreement by and among Centrasia Mining Corp.,
                  its wholly-owned subsidiary, Magellan Holdings (BVI) Corp. and
                  Stargate  Solutions Ltd.  ("Stargate")  dated May 11, 2007 (as
                  amended on June 8, 2007, June 22, 2007, July 11, 2007 and July
                  13, 2007, respectively)

         4.9      Escrow   Agreement  by  and  among  Centrasia   Mining  Corp.,
                  Computershare Investor Services Inc., Stargate Solutions Ltd.,
                  AGA  Management  Ltd. and DBM Capital  Partners  Limited dated
                  June 28, 2007

         4.10     Amending Agreement between Centrasia Mining Corp. and Kantanna
                  Company Limited dated August 17, 2007

         4.11     Management  Services  Agreement dated September 1, 2007 by and
                  among Centrasia  Mining Corp.,  Lakehead  Geological  Services
                  Inc., and Douglas Turnbull

         8.1      List of Subsidiaries

         12.1     Certification of Douglas Turnbull Pursuant to Rule 13a-14(a)

         12.2     Certification of Nick DeMare Pursuant to Rule 13a-14(a)

         13.1     Certification  of  Douglas  Turnbull  Pursuant  to  18  U.S.C.
                  Section 1350

         13.2     Certification  of Nick DeMare  Pursuant  to 18 U.S.C.  Section
                  1350

         15.1     Property Location Maps

(1)  Previously filed as an exhibit to the Company's annual report on Form 20-F,
     filed with the Securities and Exchange Commission on December 3, 2004. File
     Number 0-30920.
(2)  Previously filed as an exhibit to the Company's annual report on Form 20-F,
     filed with the Securities and Exchange Commission on October 28, 2005. File
     Number 0-30920.
(3)  Previously  filed as an attachment to the Company's  Form 6-K dated October
     23, 2006, filed with the Securities and Exchange  Commission on October 24,
     2006. File Number 0-30920.
(4)  Previously filed as an exhibit to the Company's annual report on Form 20-F,
     filed with the Securities and Exchange Commission on December 1, 2006. File
     Number 0-30920.


                                     - 97 -
<PAGE>


                                   SIGNATURES


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.


                                            CENTRASIA MINING CORP.


Dated:  December 14, 2007                   /s/   Douglas Turnbull
                                            ------------------------------------
                                            Douglas Turnbull, President
                                            Chief Executive Officer and Director


                                     - 98 -
<PAGE>








                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)

                        CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005

            (Expressed in Canadian dollars, unless otherwise stated)










                                     F - 1
<PAGE>

--------------------------------------------------------------------------------
DAVIDSON & COMPANY LLP               A Partnership of Incorporated Professionals
--------------------------------------------------------------------------------
                   Chartered Accountants
--------------------------------------------------------------------------------


                          INDEPENDENT AUDITORS' REPORT


To the Shareholders of
Centrasia Mining Corp.

We have audited the consolidated  balance sheets of Centrasia Mining Corp. as at
May 31, 2007 and 2006 and the consolidated statements of operations, deficit and
cash flows for the years  ended May 31,  2007,  2006 and 2005.  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 May 31, 2007 and
2006 and the  results of its  operations  and cash flows for the years ended May
31,  2007,  2006  and  2005  in  accordance  with  Canadian  generally  accepted
accounting principles.


                                                /s/ DAVIDSON & COMPANY LLP

Vancouver, Canada                                   Chartered Accountants

December 12, 2007


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

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
December 12, 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.


                                                /s/ DAVIDSON & COMPANY LLP

Vancouver, Canada                                   Chartered Accountants

December 12, 2007


                          A Member of SC INTERNATIONAL
                          ============================
          1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre,
                         Vancouver, BC, Canada, V7Y 1G6
                   Telephone (604) 687-0947 Fax (604) 687-6172



                                     F - 2
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                           CONSOLIDATED BALANCE SHEETS
                                  AS AT MAY 31
            (Expressed in Canadian dollars, unless otherwise stated)



                                                       2007            2006
                                                         $               $
                                     ASSETS

CURRENT ASSETS

Cash                                                  3,581,199       1,256,758
Amounts receivable                                       52,025          14,378
Prepaids                                                 89,262          36,927
                                                   ------------    ------------
                                                      3,722,486       1,308,063

DEFERRED ACQUISITION COSTS (Note 4)                     403,975               -

EQUIPMENT (Note 5)                                      224,857         142,975

UNPROVEN MINERAL INTERESTS (Note 6)                   1,491,844         803,386
                                                   ------------    ------------
                                                      5,843,162       2,254,424
                                                   ============    ============


                                   LIABILITIES

CURRENT LIABILITIES

Accounts payable and accrued liabilities                341,115         155,054
                                                   ------------    ------------


                              SHAREHOLDERS' EQUITY

SHARE CAPITAL (Note 8)                                8,490,285       3,490,004

CONTRIBUTED SURPLUS (Note 10)                           625,900         187,435

DEFICIT                                              (3,614,138)     (1,578,069)
                                                   ------------    ------------
                                                      5,502,047       2,099,370
                                                   ------------    ------------
                                                      5,843,162       2,254,424
                                                   ============    ============


NATURE OF OPERATIONS (Note 1)

SUBSEQUENT EVENTS (Note 17)


APPROVED BY THE DIRECTORS

/s/ Douglas Turnbull    , Director
------------------------
/s/ Nick DeMare         , Director
------------------------

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


                                     F - 3
<PAGE>

                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                           FOR THE YEARS ENDED MAY 31
            (Expressed in Canadian dollars, unless otherwise stated)


<TABLE>
<CAPTION>

                                                       2007            2006            2005
                                                         $               $               $
<S>                                               <C>             <C>             <C>

EXPENSES

Accounting and administrative                            76,850          62,358               -
Amortization                                             46,518          14,435               -
Audit                                                    16,455          36,563          12,000
Corporate development                                    92,263          60,655               -
General exploration                                      23,865               -               -
Interest on indebtedness                                      -          11,532          25,062
Investor relations                                       28,300          16,250               -
Legal                                                    63,021          93,785          38,198
Management fees                                          46,214          67,438          45,500
Office                                                  122,561          63,439          17,792
Professional fees                                       224,382         151,170           9,514
Property due diligence (Note 7)                          99,242         170,217               -
Regulatory fees                                          11,942          12,555           2,449
Rent                                                     50,706          30,474           9,640
Salaries and benefits                                   238,980          75,193               -
Shareholder costs                                         4,039           1,542               -
Stock-based compensation (Note 9)                       503,400         137,250               -
Transfer agent                                           16,326          18,646               -
Travel                                                  284,729         170,984           2,478
                                                   ------------    ------------    ------------
                                                      1,949,793       1,194,486         162,633
                                                   ------------    ------------    ------------
LOSS BEFORE OTHER ITEMS                              (1,949,793)     (1,194,486)       (162,633)
                                                   ------------    ------------    ------------
OTHER ITEMS

Interest and other income                                42,993          19,455               -
Foreign exchange                                        (76,908)        (31,636)          1,167
Write-off of unproven mineral interests (Note 6(b))     (52,361)              -               -
                                                   ------------    ------------    ------------
                                                        (86,276)        (12,181)          1,167
                                                   ------------    ------------    ------------
LOSS FOR THE YEAR                                    (2,036,069)     (1,206,667)       (161,466)
                                                   ============    ============    ============


BASIC AND DILUTED LOSS PER COMMON SHARE                  $(0.10)         $(0.10)         $(0.11)
                                                   ============    ============    ============

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING                            19,576,880      12,518,011       1,469,962
                                                   ============    ============    ============

</TABLE>

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


                                     F - 4
<PAGE>

                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                       CONSOLIDATED STATEMENTS OF DEFICIT
                           FOR THE YEARS ENDED MAY 31
            (Expressed in Canadian dollars, unless otherwise stated)



<TABLE>
<CAPTION>

                                                       2007            2006            2005
                                                         $               $               $
<S>                                               <C>             <C>             <C>

DEFICIT - BEGINNING OF YEAR                          (1,578,069)       (237,369)        (75,903)

Net liabilities assumed at time of
   recapitalization (Note 3)                                  -        (134,033)              -
                                                   ------------    ------------    ------------
                                                     (1,578,069)       (371,402)        (75,903)

LOSS FOR THE YEAR                                    (2,036,069)     (1,206,667)       (161,466)
                                                   ------------    ------------    ------------
DEFICIT - END OF YEAR                                (3,614,138)     (1,578,069)       (237,369)
                                                   ============    ============    ============
</TABLE>










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


                                     F - 5
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           FOR THE YEARS ENDED MAY 31
            (Expressed in Canadian dollars, unless otherwise stated)




<TABLE>
<CAPTION>

                                                       2007            2006            2005
                                                         $               $               $
<S>                                               <C>             <C>             <C>

CASH PROVIDED FROM (USED FOR)

OPERATING ACTIVITIES

Loss for the year                                    (2,036,069)     (1,206,667)       (161,466)
Adjustments for items not involving cash
Amortization                                             46,518          14,435               -
Accrued interest on indebtedness                              -               -          25,062
Accrued management services                                   -               -          10,000
Write-off of unproven mineral interests                  52,361               -               -
Property due diligence                                        -         133,164               -
Stock-based compensation                                503,400         137,250               -
                                                   ------------    ------------    ------------
                                                     (1,433,790)       (921,818)       (126,404)
Decrease (increase) in amounts receivable               (37,647)         10,136          (1,329)
Increase in prepaids                                    (52,335)        (31,674)         (4,504)
Increase in accounts payable and
   accrued liabilities                                   59,145          26,132          46,976
                                                   ------------    ------------    ------------
                                                     (1,464,627)       (917,224)        (85,261)
                                                   ------------    ------------    ------------
INVESTING ACTIVITIES

Additions to equipment                                 (128,400)       (147,899)              -
Additions to unproven mineral interests                (395,319)       (203,988)              -
Deferred acquisition costs                             (277,059)              -               -
Advance                                                       -        (133,164)              -
Cash assumed on recapitalization and acquisition              -         404,139               -
Amounts incurred or advanced to
    BMC prior to recapitalization                             -         (93,178)       (268,346)
                                                   ------------    ------------    ------------
                                                       (800,778)       (174,090)       (268,346)
                                                   ------------    ------------    ------------
FINANCING ACTIVITIES

Issuance of common shares                             4,664,078       2,478,521           3,732
Issuance of preferred shares                                  -               -             634
Share issue costs                                       (74,232)       (219,443)              -
Advances and promissory note prior
   to recapitalization                                        -          84,485          25,000
Indebtedness                                                  -         (18,125)        335,689
                                                   ------------    ------------    ------------
                                                      4,589,846       2,325,438         365,055
                                                   ------------    ------------    ------------
INCREASE IN CASH FOR THE YEAR                         2,324,441       1,234,124          11,448

CASH - BEGINNING OF YEAR                              1,256,758          22,634          11,186
                                                   ------------    ------------    ------------
CASH - END OF YEAR                                    3,581,199       1,256,758          22,634
                                                   ============    ============    ============
</TABLE>

SUPPLEMENTAL CASH FLOW INFORMATION - Note 15


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


                                     F - 6
<PAGE>



                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



1.       NATURE OF OPERATIONS

         The Company's principal business activity is the sourcing,  exploration
         and  development  of  mineral  properties  in the Kyrgyz  Republic  and
         Russia. See also Note 3.

         The Company is in the process of exploring and  evaluating  its mineral
         properties.  On the  basis  of  information  to  date,  it has  not yet
         determined  whether these properties contain  economically  recoverable
         ore reserves. The underlying value of the unproven mineral interests is
         entirely  dependent  on  the  existence  of  economically   recoverable
         reserves,  the ability of the Company to obtain the necessary financing
         to complete  development  and upon future  profitable  production.  The
         amounts  shown as unproven  mineral  interests  represent  net costs to
         date,  less  amounts  written  off,  and do not  necessarily  represent
         present or future values.

         These  consolidated  financial  statements  have  been  prepared  on  a
         going-concern  basis which  assumes  that the  Company  will be able to
         realize  assets  and  discharge  liabilities  in the  normal  course of
         business.  While the Company has been successful in securing financings
         in the past, there can be no assurance that it will be able to do so in
         the future.  Accordingly,  it does not give effect to  adjustments,  if
         any,  that would be necessary  should the Company be unable to continue
         as a going  concern and,  therefore,  be required to realize its assets
         and  liquidate  its  liabilities  in other  than the  normal  course of
         business  and at  amounts  which may  differ  from  those  shown in the
         consolidated financial statements.

         See also Note 17.


2.       SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION

         These   consolidated   financial   statements  have  been  prepared  in
         accordance  with  Canadian  generally  accepted  accounting  principles
         ("Canadian GAAP"). The significant differences between these principles
         and those that would be applied under United States generally  accepted
         accounting principles ("US GAAP") are disclosed in Note 16.

         These  consolidated  financial  statements  include the accounts of the
         Company and its wholly-owned subsidiaries,0724000 B.C. Ltd. ("724 BC"),
         a company  continued  into the Province of British  Columbia,  Magellan
         Holdings (BVI) Corp. ("Magellan Holdings") and Magellan Gold (BVI) Inc.
         ("Magellan  Gold"),  both  incorporated  under the laws of the  British
         Virgin Islands, Centrasia Mining Kazakhstan, a company formed under the
         laws of the Republic of Kazakhstan  and Bulakashu  Mining  Company Ltd.
         ("BMC"),  a  company  formed  under  the laws of the  Kyrgyz  Republic.
         Inter-company    balances   and    transactions   are   eliminated   on
         consolidation.

         USE OF ESTIMATES

         The  preparation  of financial  statements in conformity  with Canadian
         GAAP requires  management to make estimates and assumptions that affect
         the  reported  amount of  assets  and  liabilities  and  disclosure  of
         contingent liabilities at the date of the financial statements, and the
         reported  amounts of revenues and expenses during the reported  period.
         Significant  areas requiring the use of management  estimates relate to
         the  estimation  of  stock-based  compensation,  the  determination  of
         environmental  obligations,  impairment of mineral  claims and deferred
         exploration  expenditures  and  the  related  rates  of  depletion  and
         amortization. Actual results could differ from these estimates.



                                     F - 7
<PAGE>



                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         UNPROVEN MINERAL INTERESTS

         Acquisition and exploration costs directly relating to unproven mineral
         interests are deferred until the mineral interests to which they relate
         is placed into production,  sold or abandoned.  The deferred costs will
         be amortized  over the life of the orebody  following  commencement  of
         production  or  written  off if the  property  is  sold  or  abandoned.
         Administration  costs and other exploration costs that do not relate to
         any specific property are expensed as incurred.

         On a periodic basis, management reviews the carrying values of deferred
         unproven mineral interest acquisition and exploration expenditures with
         a view to assessing  whether  there has been any  impairment  in value.
         Management takes into consideration various information including,  but
         not limited to,  results of exploration  activities  conducted to date,
         estimated  future  metal  prices,  and reports and  opinions of outside
         geologists, mine engineers and consultants.  When it is determined that
         a project or interest will be abandoned or its carrying  value has been
         impaired,  a provision is made for any expected  loss on the project or
         interest.

         Although  the  Company  has  taken  steps to  verify  title to  mineral
         interests in which it has an interest,  according to the usual industry
         standards  for  the  stage  of  exploration  of such  interests,  these
         procedures do not guarantee the Company's title.  Such interests may be
         subject to prior  agreements  or transfers and title may be affected by
         undetected defects.

         From time to time,  the  Company  acquires  or  disposes  of  interests
         pursuant to the terms of option  agreements.  Options  are  exercisable
         entirely  at the  discretion  of the  optionee  and,  accordingly,  are
         recorded as mineral interests costs or recoveries when the payments are
         made or received.

         EQUIPMENT

         Equipment,  which is comprised of mobile and field equipment and office
         furniture  and  equipment,   are  recorded  at  cost  less  accumulated
         amortization  calculated  using the  straight-line  method  over  their
         estimated useful lives of between three to five years.

         ASSET RETIREMENT OBLIGATIONS

         The  Company  recognizes  the fair  value of a  liability  for an asset
         retirement  obligation  in the  year in  which  it is  incurred  when a
         reasonable  estimate of fair value can be made. The carrying  amount of
         the related  long-lived  asset is  increased  by the same amount as the
         liability.

         Changes in the liability for an asset retirement  obligation due to the
         passage of time will be measured  by  applying  an  interest  method of
         allocation.  The  amount  will  be  recognized  as an  increase  in the
         liability  and an accretion  expense in the  statement  of  operations.
         Changes  resulting  from  revisions  to the timing or the amount of the
         original  estimate  of  undiscounted  cash flows are  recognized  as an
         increase or a decrease to the carrying  amount of the liability and the
         related long-lived assets.

         As at May 31, 2007 and 2006, the Company does not have any  significant
         asset retirement obligations.



                                     F - 8
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         IMPAIRMENT OF LONG-LIVED ASSETS

         Long-lived   assets  are  assessed  for  impairment   when  events  and
         circumstances  warrant.  The carrying  value of a  long-lived  asset is
         impaired when the carrying  amount  exceeds the estimated  undiscounted
         net cash flow from use and fair  value.  In that  event,  the amount by
         which the carrying  value of an impaired  long-lived  asset exceeds its
         fair value is charged to earnings.

         STOCK-BASED COMPENSATION

         Stock-based  compensation  is accounted for at fair value as determined
         by the  Black-Scholes  option  pricing  model  using  amounts  that are
         believed to  approximate  the  volatility  of the trading  price of the
         Company's   stock,   the  expected   lives  of  awards  of  stock-based
         compensation,  the fair value of the Company's  stock and the risk-free
         interest  rate.  The  estimated  fair  value of awards  of  stock-based
         compensation  are charged to expense as awards  vest,  with  offsetting
         amounts recognized as contributed surplus.

         TRANSLATION OF FOREIGN CURRENCIES

         Integrated foreign operations are translated using the temporal method.
         Under this method, the Company translates monetary items at the rate of
         exchange in effect at the balance  sheet date.  Non-monetary  items are
         translated  at rates in effect  during  the  period in which  they were
         earned or incurred.  Revenues and  expenses are  translated  at average
         rates  in  effect  during  the  period  except  for   depreciation  and
         amortization which are translated at historical rates. Gains and losses
         resulting  from the  fluctuation  of foreign  exchange  rates have been
         included in the determination of income.

         INCOME TAXES

         Future  income  tax  assets  and  liabilities  are  recognized  for the
         estimated  future income tax  consequences  attributable to differences
         between the amounts reported in the consolidated  financial  statements
         and their  respective tax bases,  using enacted  income tax rates.  The
         effect of a change in income tax rates on future income tax liabilities
         and  assets  is  recognized  in income in the  period  that the  change
         occurs. Future income tax assets are recognized to the extent that they
         are considered more likely than not to be realized.

         LOSS PER SHARE

         Loss per share is computed by dividing loss to common  shareholders  by
         the weighted  average  number of common shares  outstanding  during the
         year.  The  computation  of  diluted  earnings  per share  assumes  the
         conversion,  exercise or contingent  issuance of  securities  only when
         such  conversion,  exercise or issuance would have a dilutive effect on
         earnings per share.  The dilutive  effect of convertible  securities is
         reflected  in  diluted  earnings  per share by  application  of the "if
         converted"  method.  The  dilutive  effect of  outstanding  options and
         warrants and their  equivalents  is  reflected in diluted  earnings per
         share by application of the treasury stock method.

         COMPARATIVE FIGURES

         Certain  comparative  figures have been  reclassified to conform to the
         current year's presentation.



                                     F - 9
<PAGE>



                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         RECENT ACCOUNTING PRONOUNCEMENTS

         CICA  Handbook  Section  1530:  "Comprehensive  Income",  effective for
         fiscal  years  beginning  on or  after  October  1,  2006,  establishes
         standards for reporting  comprehensive  income,  defined as a change in
         value of net assets that is not due to owner activities, by introducing
         a new  requirement  to  temporarily  present  certain  gains and losses
         outside of net income.

         CICA  Handbook  Section  3251:  "Equity",  effective  for fiscal  years
         beginning on or after  October 1, 2006,  establishes  standards for the
         presentation  of equity  and  changes in equity  during  the  reporting
         period.

         CICA Handbook  Section 3855:  "Financial  Instruments - Recognition and
         Measurement",  effective for fiscal years beginning on or after October
         1, 2006, establishes standards for the recognition,  classification and
         measurement of financial  instruments including the presentation of any
         resulting  gains or losses.  Assets  classified  as  available-for-sale
         securities  will have  revaluation  gains and losses  included in other
         compre-hensive  income until these assets are no longer included on the
         balance sheet.

         CICA  Handbook  Section  1506:   "Accounting  Changes"  ("CICA  1506"),
         effective  for  fiscal  years  beginning  on or after  January 1, 2007,
         establishes   standards  and  new  disclosures   requirements  for  the
         reporting  of changes in  accounting  policies  and  estimates  and the
         reporting of error  corrections.  CICA1506  clarifies  that a change in
         accounting  policy  can  be  made  only  if it is a  requirement  under
         Canadian GAAP or if it provides  reliable and more  relevant  financial
         statement information. Voluntary changes in accounting policies require
         retrospective application of prior period financial statements,  unless
         the   retrospective   effects  of  the  changes  are  impracticable  to
         determine,  in which case the retrospective  application may be limited
         to the assets and liabilities of the earliest period practicable,  with
         a corresponding adjustment made to opening retained earnings.

         The  Company  will be  required  to  adopt  the  above  new  accounting
         procedures  for its fiscal period  beginning June 1, 2007. The adoption
         of these new  pronouncements  is not  expected to have an effect on the
         Company's financial position or results of operations.


3.       RECAPITALIZATION AND ACQUISITION

         On March 17, 2005,  the Company  entered into a letter  agreement  (the
         "Letter  Agreement")  with  724 BC and its  shareholders  (the  "724 BC
         Shareholders"), pursuant to which the Company agreed to purchase all of
         the issued and  outstanding  common  shares of 724 BC in  exchange  for
         common  shares  of the  Company  on a  one-for-one  basis  (the "724 BC
         Acquisition").  The terms of the Letter  Agreement  were finalized by a
         share purchase agreement (the "Formal Agreement") dated July 25, 2005.

         724 BC's  principal  asset was an  agreement  (the  "Marsa  Option") to
         acquire all of the issued and  outstanding  share  capital of BMC, from
         Marsa Gold Corp. ("Marsa"),  a privately owned Kyrgyz company. The sole
         asset of BMC was a license permitting the exploration of an area in the
         north  central  part  of the  Kyrgyz  Republic,  (the  "Bulakashu  Gold
         Property").  The Marsa Option effectively allowed 724 BC to acquire its
         interest in the Bulakashu Gold Property, as described in Note 6(a). The
         Company also agreed to assume the share obligations of 724 BC under the
         Marsa Option upon completion of the 724 BC Acquisition.




                                     F - 10
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



3. RECAPITALIZATION AND ACQUISITION (continued)

         The Company also agreed to assume an aggregate of $400,000 principal of
         indebtedness and the accrued  interest on the indebtedness  owed by 724
         BC to its creditors (collectively the "724 BC Indebtedness"), for which
         the Company  would issue  1,900,000  units (the  "Centrasia  Units") to
         holders of $380,000 of principal,  100,000  common shares to holders of
         $20,000 of principal and repay the accrued interest in cash.

         On September 14, 2005 (the "Effective Date"), the Company completed all
         of the transactions contemplated under the 724 BC Acquisition and:

         (i)      issued 3,700,100 common shares of its capital stock to acquire
                  724 BC;

         (ii)     issued an aggregate of 1,900,000  Centrasia  Units and 100,000
                  common  shares  of the  Company  on  settlement  of the 724 BC
                  Indebtedness,  and paid $37,975 of accrued interest on the 724
                  BC Indebtedness in cash;

         (iii)    issued  233,338 common shares in respect of a finder's fee for
                  the 724 BC Acquisition; and

         (iv)     issued  200,000  common  shares of its capital  stock to Marsa
                  under its  assumption of 724 BC's share  issuance  obligations
                  pursuant to the Marsa Option.

         724 BC also acquired effective control of BMC on the Effective Date.

         The completion of the 724 BC Acquisition and issuance of Company shares
         on  purchase  of  the  724  BC  Indebtedness  resulted  in  the  former
         shareholders  of 724 BC holding the majority of the combined  Company's
         issued and outstanding common shares.  Since this transaction  resulted
         in the former  shareholders of 724 BC acquiring control of the Company,
         the 724 BC Acquisition  has been treated for  accounting  purposes as a
         recapitalization. In accounting for this transaction:

         (i)      724 BC is deemed to be the  purchaser  and parent  company for
                  accounting purposes.  Accordingly, its net assets are included
                  in the interim consolidated balance sheets at their historical
                  book value;

         (ii)     control of the net assets of the Company  was  acquired on the
                  Effective  Date.  The  transaction  has  been  accounted  as a
                  purchase of the assets and  liabilities  of the Company by 724
                  BC.  The  assets  and  liabilities  of the  Company  have been
                  recorded at their fair values, as follows:

                                                                         $

                  Cash                                                  389,631
                  Amounts receivable and prepaids                        15,566
                  Accounts payable and accrued liabilities              (20,715)
                                                                   ------------
                  Net working capital                                   384,482
                  Advances to 724 BC, eliminated on consolidation       109,485
                  Share subscriptions received                         (628,000)
                                                                   ------------
                  Net liabilities assumed                              (134,033)
                                                                   ============

         (iii)    the consolidated statements of operations and deficit and cash
                  flows  for the  year  ended  May 31,  2006,  include  724 BC's
                  results  of  operations  and cash flows for the year ended May
                  31, 2006,  and the Company's  results of  operations  and cash
                  flows from the Effective Date.


                                     F - 11
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



3.       RECAPITALIZATION AND ACQUISITION (continued)

         On completion of the 724 BC Acquisition 724 BC also acquired  effective
         control  of  BMC.  On the  date of the  724 BC  Acquisition  724 BC had
         advanced a total  amount of  $399,905  towards the Marsa  Option.  This
         acquisition  was  accounted  for by the purchase  method as  summarized
         below and the results of  operations  were  recorded from the Effective
         Date.  The assets and  liabilities  of BMC have been  recorded at their
         fair values, as follows:
                                                                         $

         Cash                                                            14,508
         Amounts receivable                                                 201
         Prepaids                                                         7,418
         Accounts payable                                                (1,131)
                                                                   ------------
         Net working capital                                             20,996
         Equipment                                                        9,511
         Unproven mineral interest                                      369,398
                                                                   ------------
         Net assets acquired                                            399,905
                                                                   ============


4.       PROPOSED ACQUISITION

         On May 11, 2007, the Company,  Magellan Holdings and Stargate Solutions
         Ltd. (the "Vendor") entered into a share purchase agreement (the "Share
         Purchase  Agreement")  whereby  the  Company  has  agreed,  subject  to
         regulatory  approval,  to purchase  100% of the issued and  outstanding
         shares of R.P.I.M.  Minerals Ltd.,  (the "RPIM  Acquisition")  a Cyprus
         company  incorporated  solely to hold a 100%  interest in the shares of
         ZAO Rudprominvest  ("RPI"). The consideration payable by the Company to
         the Vendor under the Share Purchase Agreement is:

         i)       an aggregate US $12,500,000, of which US $6,000,000 is payable
                  on closing (the  "Closing"),  US  $5,000,000 is payable on the
                  first anniversary of Closing,  and US $1,500,000 is payable on
                  the second anniversary of Closing; and
         ii)      issuance  of  12,500,000  common  shares of the  Company to be
                  issued on Closing.

         RPI owns three nickel-copper sulphide properties in Russia.

         The Company has also agreed to pay DBM Capital  Partners Ltd. ("DBM") a
         finder's fee of US $625,000 cash and 625,000 common  shares.  The share
         portion of the  finder's fee and US $300,000 of the cash fee is payable
         on Closing. The balance of the cash finder's fee will be payable as the
         Company makes the balance of the payments for the RPIM Acquisition.

         As at May 31,  2007,  the  Company  has paid a $226,860  (US  $200,000)
         non-refundable  deposit to the Vendor,  paid  $14,257  (US  $12,472) in
         advances to DBM and incurred a total of $162,858 for due  diligence and
         professional  fees.  These amounts have been recorded by the Company as
         deferred  acquisition  costs  and will be  included  in the cost of the
         acquisition when completed.

         See also Note 17(b).



                                     F - 12
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



5.       EQUIPMENT
                                                       2007            2006
                                                         $               $
         Mobile and field equipment                     232,532         121,951
         Office furniture and equipment                  53,278          35,459
                                                   ------------    ------------
                                                        285,810         157,410
         Less accumulated amortization                  (60,953)        (14,435)
                                                   ------------    ------------
                                                        224,857         142,975
                                                   ============    ============


6.       UNPROVEN MINERAL INTERESTS
<TABLE>
<CAPTION>

                                                       2007                                     2006
                                    ----------------------------------------  ----------------------------------------
                                     ACQUISITION   EXPLORATION                 ACQUISITION   EXPLORATION
                                        COSTS     EXPENDITURES      TOTAL         COSTS     EXPENDITURES      TOTAL
                                          $             $             $             $             $             $
        <S>                        <C>           <C>            <C>          <C>           <C>          <C>

         Bulakashu Gold Property         853,338       437,687     1,291,025       645,838      133,654        779,492
         Eastern Sary Jaz                 96,000       104,413       200,414             -       23,894         23,894
         Other                                 -           405           405             -            -              -
                                    ------------  ------------  ------------  ------------  ------------  ------------
                                         949,338       542,506     1,491,844       645,838      157,548        803,386
                                    ============  ============  ============  ============  ============  ============
</TABLE>

         (a)      Bulakashu Gold Property and Eastern Sary Jaz Property

                  On September  24, 2004 and amended  July 8, 2005,  the Company
                  entered into the Marsa Option with Marsa whereby Marsa granted
                  an option to the  Company to acquire a 100%  interest  in BMC.
                  BMC's sole assets were its unproven mineral  interests located
                  in the Kyrgyz  Republic.  In November 2005, Marsa arranged for
                  the  recording of an  exploration  license on the Eastern Sary
                  Jaz Property, located in the northeastern region of the Kyrgyz
                  Republic, in BMC.

                  On January 6, 2006, the Company,  Magellan Gold, BMC and Marsa
                  entered  into  an  option  agreement  (the  "Bulakashu  Option
                  Agreement"),   replacing   the  Marsa   Option,   whereby  BMC
                  transferred  its  ownership  interest  in the  Bulakashu  Gold
                  Property  back  to  Marsa.  Marsa  then  assigned  all  of its
                  interests  to  Kantanna  Company  Limited  ("Kantanna").  As a
                  result BMC now holds an option to acquire a 100%  interest  in
                  the Bulakashu Gold Property from Kantanna under the same terms
                  as contemplated under the Marsa Option, and directly holds the
                  exploration licenses on the Eastern Sary Jaz Property.  During
                  fiscal 2007, the Company  issued  200,000 common shares,  at a
                  fair value of $96,000,  to Kantanna as  consideration  for the
                  Eastern Sary Jaz  Property and the transfer of 100%  ownership
                  of BMC to the Company.

                  On December 14,  2006,  the  Bulakashu  Option  Agreement  was
                  modified  to extend the timing of certain of the  Commitments.
                  In order to exercise the Bulakashu  Option  Agreement in full,
                  the Company has made cash  payments  totalling US $120,000 and
                  is  required  to  issue  1,025,000  common  shares  as well as
                  provide advances to BMC or incur  exploration  expenditures on
                  the Bulakashu Gold Property  (collectively the  "Commitments")
                  of US $2,200,000 and $200,000, as follows:


                                     F - 13
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



6.       UNPROVEN MINERAL INTERESTS (continued)
<TABLE>
<CAPTION>

                                                   SHARE
                  DATE                           ISSUANCES                 COMMITMENTS
                                                                   ----------------------------
                                                                       US $              $
                 <S>                        <C>                   <C>             <C>

                  Signing of agreements                   -             110,000               -
                  Closing of acquisition            200,000(issued)           -               -
                  December 31, 2005                       -                   -         200,000
                  January 2, 2006                   200,000(issued)           -               -
                  December 31, 2006                 250,000(issued)     200,000               -
                  December 31, 2007                 375,000           1,140,000               -
                  December 31, 2008                       -             750,000               -
                                               ------------        ------------    ------------
                                                  1,025,000           2,200,000         200,000
                                               ============        ============    ============
</TABLE>

                  Marsa  and  Kantanna  are  private  corporations  owned  by  a
                  director of the Company.

                  See also Note 17(c).

         (b)      Turgeldy Property

                  On August 25,  2006,  the Company  entered into a property and
                  option  agreement  (the  "Turgeldy  Option") to acquire a 100%
                  interest  in  all  rights  and  title  to  the  Turgeldy  (the
                  "Turgeldy  Property"),  subject to a 1% net smelter royalty to
                  the  optionor.  The Turgeldy  Property is located  immediately
                  north of and is contiguous with the Eastern Sary Jaz Property.
                  Under the terms of the Turgeldy  Option the Company has issued
                  60,000  common  shares,  at a fair value of  $42,000,  and had
                  until  February 25, 2007,  to exercise the Turgeldy  Option by
                  payment of US $30,000  and  issuance of an  additional  90,000
                  common  shares.  During fiscal 2007, the Company has withdrawn
                  from the Turgeldy  Option and,  accordingly,  has  written-off
                  $52,361 in costs.


7.       PROPERTY DUE DILIGENCE

         During fiscal 2006, the Company  actively  reviewed  potential  mineral
         property acquisitions in Central Asia. In May 2006, the Company entered
         into a memorandum of  understanding  with respect to a mineral property
         in Kazakhstan. The Company advanced $133,164 (US $120,000) under a loan
         agreement  for  costs  incurred  on  the  property  while  the  Company
         continued  formal  negotiations.  The Company was  unsuccessful  in its
         formal  negotiations  and,  in July 2006,  terminated  negotiations  to
         acquire the  property.  During fiscal 2006,  the Company  wrote-off the
         $133,164  advance as part of its due  diligence  costs to  reflect  the
         uncertainty  of  collection  of the  advance.  The  Company is actively
         attempting to seek repayment of the advance.

         During fiscal 2007, the Company incurred additional due diligence costs
         of $99,242.



                                     F - 14
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



8.       SHARE CAPITAL

         (a)      Authorized Capital:

                  The  Company's   authorized  capital  stock  is  comprised  of
                  unlimited common shares without par value.

                  The  authorized  capital  stock  of  724  BC is  comprised  of
                  100,000,000 common shares with par value of US$0.001 per share
                  and  100,000,000  preferred  shares with par value of US$0.001
                  per share.

         (b)      Issued and allotted:
<TABLE>
<CAPTION>

                                                                                                    ADDITIONAL
                                                                                                      PAID-IN
                                                                     NUMBER OF       PAR VALUE        CAPITAL          TOTAL
                                                                      SHARES             $               $               $
        <S>                                                       <C>             <C>             <C>             <C>

         COMMON SHARES

         Balance, May 31, 2004                                              100               1               -               1
                                                                   ------------    ------------    ------------    ------------
         Issued for cash                                                600,000             746           2,986           3,732
         Issued for services (Note 11)                                2,000,000           2,432           9,568          12,000
         Share exchange from preferred shares                         1,100,000           1,475           5,903           7,378
                                                                   ------------    ------------    ------------    ------------
                                                                      3,700,000           4,653          18,457          23,110
                                                                   ------------    ------------    ------------    ------------
         Balance, May 31, 2005                                        3,700,100           4,654          18,457          23,111
                                                                   ------------    ------------    ------------    ------------
         Adjustment of shares to reflect shares
            of the legal parent at time of recapitalization           2,101,523               -               -               -
         Adjustment                                                           -          18,457         (18,457)              -
         Issued for cash
            Private placement                                         4,375,000         875,000               -         875,000
            Offering                                                  3,076,923       2,000,000               -       2,000,000
            Exercise of warrants                                        246,603         140,100               -         140,100
            Exercise of agent's option                                  126,974          91,421               -          91,421
         Reallocation from contributed surplus
            on exercise of agent's option                                     -          19,046               -          19,046
         Issued for agent's commission                                  198,556         129,061               -         129,061
         Issued for corporate finance fee                               100,000          65,000               -          65,000
         Issued for unproven mineral interests (Note 6)                 400,000         230,000               -         230,000
         Issued for 724 BC indebtedness (Note 3)                      2,000,000         400,000               -         400,000
         Issued for finder's fee (Note 3)                               233,338          46,668               -          46,668
                                                                   ------------    ------------    ------------    ------------
                                                                     12,858,917       4,014,753         (18,457)       3,996,296
         Share issue costs incurred on recapitalization                       -        (233,672)              -        (233,672)
         Share issue costs on private placement and offering                  -        (295,731)              -        (295,731)
                                                                   ------------    ------------    ------------    ------------
                                                                     12,858,917       3,485,350         (18,457)      3,466,893
                                                                   ------------    ------------    ------------    ------------
         Balance, May 31, 2006                                       16,559,017       3,490,004               -       3,490,004
                                                                   ------------    ------------    ------------    ------------
</TABLE>





                                     F - 15
<PAGE>



                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



8.       SHARE CAPITAL (continued)

<TABLE>
<CAPTION>

                                                                                                    ADDITIONAL
                                                                                                      PAID-IN
                                                                     NUMBER OF       PAR VALUE        CAPITAL          TOTAL
                                                                      SHARES             $               $               $
        <S>                                                       <C>             <C>             <C>             <C>


         Balance, May 31, 2006                                       16,559,017       3,490,004               -       3,490,004
                                                                   ------------    ------------    ------------    ------------
         Issued for cash
            Private placement                                         4,000,000       2,000,000               -       2,000,000
            Exercise of options                                          50,000          10,000               -          10,000
            Exercise of warrants                                      4,674,145       2,523,962               -       2,523,962
            Exercise of agent's option                                  180,718         130,116               -         130,116
         Reallocation from contributed surplus
            on exercise of stock options                                      -          14,750               -          14,750
         Reallocation from contributed surplus
           on exercise of agent's option                                      -          50,185               -          50,185
         Issued for unproven mineral interests (Note 6)                 510,000         345,500               -         345,500
         Issued for finder's fee                                        113,750          56,875               -          56,875
                                                                   ------------    ------------    ------------    ------------
                                                                      9,528,613       5,131,388               -       5,131,388
         Share issue costs on private placement                               -        (131,107)              -        (131,107)
                                                                   ------------    ------------    ------------    ------------
                                                                      9,528,613       5,000,281               -       5,000,281
                                                                   ------------    ------------    ------------    ------------
         Balance, May 31, 2007                                       26,087,630       8,490,285               -       8,490,285
                                                                   ============    ============    ============    ============

         PREFERRED SHARES

         Balance, May 31, 2004                                        1,000,000           1,348           5,396           6,744
                                                                   ------------    ------------    ------------    ------------
         Issued for cash                                                100,000             127             507             634
         Share exchange for common shares                            (1,100,000)         (1,475)         (5,903)         (7,378)
                                                                   ------------    ------------    ------------    ------------
                                                                     (1,000,000)         (1,348)         (5,396)         (6,744)
                                                                   ------------    ------------    ------------    ------------
         Balance, May 31, 2005, 2006 and 2007                                 -               -               -               -
                                                                   ============    ============    ============    ============
</TABLE>

         (c)      During  fiscal  2007,  the Company  completed  a  non-brokered
                  private  placement of 4,000,000  units at a price of $0.50 per
                  unit, for gross  proceeds of  $2,000,000.  Each unit comprised
                  one common share and one-half  share  purchase  warrant,  with
                  each  full  warrant   entitling   the  holder  to  acquire  an
                  additional  common  share at a price of $0.75  per share on or
                  before June 20, 2008.

                  The Company has paid $56,875 in cash and issued 113,750 units,
                  at a fair value of $56,875 as finders'  fees. The units issued
                  have the same  terms as the units  issued  under  the  private
                  placement.  The Company also  incurred  $17,357 costs in legal
                  and filing fees associated with the private placement.

                  2,120,000  units were  purchased by a director or a company of
                  which a director is a principal.

         (d)      During fiscal 2006, the Company:

                  i)       completed the recapitalization with 724 BC and issued
                           3,700,100 common shares of its share capital for 100%
                           of the issued and outstanding common shares of 724 BC
                           (Note 3);


                                     F - 16
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



8.       SHARE CAPITAL (continued)

                  ii)      completed a non-brokered private placement and issued
                           4,375,000   units,   for  total  gross   proceeds  of
                           $875,000. Each unit comprised one common share of the
                           Company  and one  warrant,  entitling  the  holder to
                           purchase  an  additional  common  share at a price of
                           $0.40 per share on or before September 14, 2007;

                  iii)     issued  1,900,000  Centrasia Units and 100,000 common
                           shares of the Company on the  settlement  of $400,000
                           of  indebtedness.  Each  Centrasia Unit comprised one
                           common  share and one warrant  with the same terms as
                           the warrants described in Note 7(b)(ii); and

                  iv)      completed a short form offering (the  "Offering")  of
                           3,076,923  units,  at a price of $0.65 per unit,  for
                           $2.0 million gross proceeds.  Each unit comprised one
                           common  share  and  one  transferable   warrant.  Two
                           warrants entitled the holder to acquire an additional
                           common  share  at a price of  $0.78  per  share on or
                           before April 28, 2007.

                           The Company paid the agent a commission  of $150,000,
                           of which  $20,939 was paid in cash and  $129,061  was
                           paid through the issuance of 198,556  units, a $7,500
                           administration  fee and a  corporate  finance  fee of
                           100,000 units at a fair value of $65,000. The Company
                           also  issued  options  to the agent  entitling  it to
                           acquire  307,692  units at a price of $0.72 per unit,
                           for a period of 18  months.  The units  issued to the
                           agent  have the same term as the units  issued  under
                           the  Offering.  The fair value of the agent's  option
                           have been estimated  using the  Black-Scholes  option
                           pricing model.  The assumptions  used were:  dividend
                           yield - 0%;  expected  volatility  - 79%; a risk-free
                           interest rate of 3.19%;  and an expected life of nine
                           months.  The value assigned to the agent's option was
                           $69,231.

                           During fiscal 2006, the agent exercised the option to
                           acquire 126,974 units and, in fiscal 2007,  exercised
                           the option to acquire the remaining 180,718 units.

         (e)      A summary of the number of common shares reserved  pursuant to
                  the  Company's  outstanding  warrants at May 31, 2007 and 2006
                  and the changes for fiscal 2007 and fiscal 2006 is as follows:

<TABLE>
<CAPTION>

                                                                2007                          2006
                                                    ---------------------------   ---------------------------
                                                                     WEIGHTED                      WEIGHTED
                                                                      AVERAGE                       AVERAGE
                                                                     EXERCISE                      EXERCISE
                                                       NUMBER          PRICE         NUMBER          PRICE
                                                                         $                             $
                 <S>                               <C>            <C>            <C>            <C>

                  Balance, beginning of year           7,779,623        0.48                 -         -
                  Issued                               2,147,234        0.75         8,026,226        0.48
                  Exercised                           (4,674,145)       0.54          (246,603)       0.57
                  Expired                                (26,750)       0.78                 -         -
                                                    ------------                  ------------
                  Balance, end of year                 5,225,962        0.54         7,779,623        0.48
                                                    ============                  ============
</TABLE>


                                     F - 17
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



8.       SHARE CAPITAL (continued)

                  The following table summarizes information about the number of
                  common shares reserved  pursuant to the Company's  outstanding
                  warrants at May 31, 2007:

                                        EXERCISE
                      NUMBER              PRICE               EXPIRY DATE
                                            $

                     3,186,587             0.40               September 14, 2007
                     2,039,375             0.75               June 20, 2008
                  ------------
                     5,225,962
                  ============


         (f)      As at May 31, 2007, an aggregate  3,338,173 common shares were
                  held in escrow in accordance with the rules of the TSX Venture
                  Exchange.

         (g)      See also Note 17.


9.       STOCK OPTIONS AND STOCK-BASED COMPENSATION

         The Company has  established  a stock  option plan (the  "Plan")  which
         allows  the  Company  to grant a  maximum  number  of  3,274,000  stock
         options.

         During  fiscal 2007,  the Company  granted  965,000  (2006 - 2,435,000)
         stock options to the Company's  directors,  employees and  consultants.
         The  stock  options  vest  over  18  months  and the  Company  recorded
         compensation  expense  of  $503,400  (2006 -  $137,250)  on the  vested
         portions.

         The fair value of stock  options  granted to  directors,  employees and
         consultants  is estimated on the date of grant using the  Black-Scholes
         option pricing model with the following assumptions used for the grants
         made during fiscal 2007 and 2006:

                                                  2007                 2006

         Risk-free interest rate              3.97% - 4.08%            3.21%
         Estimated volatility                   76% - 82%               79%
         Expected life                           5 years             2.5 years
         Expected dividend yield                   0%                   0%

         The weighted  average fair value of stock  options  granted  during the
         year to the Company's  directors,  employees and  consultants was $0.45
         (2006 - $0.10) per share .

         Option-pricing  models  require the use of  estimates  and  assumptions
         including   the  expected   volatility.   Changes  in  the   underlying
         assumptions  can  materially  affect  the  fair  value  estimates  and,
         therefore,  existing models do not necessarily provide reliable measure
         of the fair value of the Company's stock options.


                                     F - 18

<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



9.       STOCK OPTIONS AND STOCK-BASED COMPENSATION (continued)

         A summary of the  Company's  outstanding  stock options at May 31, 2007
         and 2006 and the changes for fiscal 2007 and 2006 is as follows:

<TABLE>
<CAPTION>

                                                 2007                          2006
                                     ---------------------------   ---------------------------
                                                      WEIGHTED                      WEIGHTED
                                                       AVERAGE                       AVERAGE
                                        OPTIONS       EXERCISE        OPTIONS       EXERCISE
                                      OUTSTANDING       PRICE       OUTSTANDING       PRICE
                                                          $                             $
        <S>                         <C>              <C>          <C>              <C>

         Balance, beginning of year     2,435,000        0.22                 -           -
         Granted                          965,000        0.80         2,435,000        0.22
         Exercised                        (50,000)       0.20                 -           -
         Cancelled / Expired             (100,000)       0.79                 -           -
                                     ------------                  ------------
         Balance, end of year           3,250,000        0.38         2,435,000        0.22
                                     ============                  ============
</TABLE>

         The Company has also agreed,  subject to Company shareholder  approval,
         to  grant  stock  options  to  certain  directors  of the  Company  and
         consultants  to  purchase  500,000  common  shares,  at prices  ranging
         between $0.60 and $1.71 per share,  for a term of five years. As at May
         31,  2007,  the  Company  has  not  yet  obtained  Company  shareholder
         approval.

         The  following  table  summarizes  information  about the stock options
         outstanding and exercisable at May 31, 2007:

           NUMBER           NUMBER        EXERCISE
         OUTSTANDING     EXERCISABLE        PRICE            EXPIRY DATE
                                              $

          2,285,000        2,285,000         0.20            September 14, 2010
            200,000          100,000         1.15            February 8, 2011
            100,000           50,000         0.73            February 17, 2011
            665,000          332,500         0.70            September 14, 2011
         ----------       ----------
          3,250,000        2,767,500
         ==========       ==========

         See also Note 17(d).


10.      CONTRIBUTED SURPLUS

         A summary of the  Company's  contributed  surplus  at May 31,  2007 and
         2006, and the changes for fiscal 2007 and fiscal 2006 is as follows:

<TABLE>
<CAPTION>

                                                                       2007           2006
                                                                         $              $
        <S>                                                       <C>            <C>

         Balance, beginning of year                                     187,435              -

            Stock-based compensation on stock options (Note 9)          503,400        137,250
            Stock-based compensation on agent's option                        -         69,231
            Stock options exercised                                     (14,750)             -
            Agent's options exercised                                   (50,185)       (19,046)
                                                                   ------------   ------------
         Balance, end of year                                           625,900        187,435
                                                                   ============   ============
</TABLE>


                                     F - 19
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



11.      RELATED PARTY TRANSACTIONS

         The  Company  has  incurred  fees  to its  directors  and  officers  or
         corporations controlled by its directors or officers, as follows:
<TABLE>
<CAPTION>

                                                       2007            2006            2005
                                                         $               $               $
       <S>                                        <C>            <C>              <C>

         Management fees                                 82,975          80,500          60,000
         Legal                                           66,393         112,695          25,819
         Accounting and administrative                   76,850          86,458               -
         Professional fees                              183,209         167,592          58,026
                                                   ------------    ------------    ------------
                                                        409,427         447,245         143,845
                                                   ============     ===========    ============
</TABLE>

         Management  fees have either been expensed to operations or capitalized
         to unproven mineral  interests,  deferred amounts or share issue costs,
         based on the nature of the expenditure.

         As at May 31, 2007,  $86,758 (2006 - $76,688;  2005 - $88,755) remained
         outstanding   and  was   included  in  accounts   payable  and  accrued
         liabilities.

         During fiscal 2005, the Company issued  2,000,000  common shares to the
         President of the Company in satisfaction of $12,000 of services.

         These  transactions  are in the  normal  course of  operations  and are
         measured at the exchange  amount,  which is the amount of consideration
         established and agreed to by the related parties.

         See also Notes 6(a) and 8(c).


12.      INCOME TAXES

         Future income tax assets and  liabilities  of the Company as at May 31,
         2007 and 2006 are as follows:
                                                        2007           2006
                                                          $              $

         Future income tax assets

         Loss carry forwards                            926,000         476,000
         Other                                          145,000         154,800
                                                   ------------    ------------
                                                      1,071,000         630,800
         Valuation allowance                         (1,071,000)       (630,800)
                                                   ------------    ------------
         Net future income tax asset                          -               -
                                                   ============    ============


                                     F - 20
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



12.      INCOME TAXES (continued)

         The recovery of income taxes shown in the  consolidated  statements  of
         operations  and deficit  differs from the amounts  obtained by applying
         statutory  rates to the  loss  before  provision  for  income  taxes as
         follows:
<TABLE>
<CAPTION>

                                                                       2007            2006            2005
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>

         Income tax rate reconciliation

         Combined federal and provincial income tax rate                 34.12%          34.12%          35.62%
                                                                   ============    ============    ============

         Expected income tax recovery                                   718,500         411,700          57,600
         Non-deductible stock-based compensation                       (177,600)        (46,800)              -
         Other                                                           21,400          34,200               -
         Unrecognized benefit of income tax losses                     (562,300)       (399,100)        (57,600)
                                                                   ------------    ------------    ------------
         Actual income tax recovery                                           -               -               -
                                                                   ============    ============    ============
</TABLE>

         As at May 31, 2007, the Company has non-capital losses of approximately
         $3.1 million  carried  forward for Canadian income tax purposes and are
         available to reduce  taxable  income of future years.  The  non-capital
         losses expire commencing in 2008 through 2027.


13.      SEGMENTED INFORMATION

         The Company  operates solely within the mineral  exploration  industry.
         The Company's capital assets are located geographically as follows:

<TABLE>
<CAPTION>

                                                 2007                          2006
                                     ---------------------------   ---------------------------
                                                      UNPROVEN                      UNPROVEN
                                                       MINERAL                       MINERAL
                                       EQUIPMENT      INTERESTS      EQUIPMENT      INTERESTS
                                           $              $              $              $
        <S>                         <C>            <C>            <C>            <C>

         Canada                             5,120              -          7,912              -
         Kyrgyz Republic                  219,737      1,491,844        135,063        803,386
                                     ------------   ------------   ------------   ------------
                                          224,857      1,491,844        142,975        803,386
                                     ============   ============   ============   ============
</TABLE>


14.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         Fair  value   approximates  the  amounts  reflected  in  the  financial
         statements  for cash,  amounts  receivable  and  accounts  payable  and
         accrued liabilities.

         The Company may be subject to currency risk due to the  fluctuations of
         exchange   rates   between  the  Canadian   dollar  and  other  foreign
         currencies. However, the Company is not subject to significant interest
         and credit risks arising from these instruments.



                                     F - 21
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)

15.      SUPPLEMENTAL CASH FLOW INFORMATION

         Non-cash activities conducted by the Company are as follows:
<TABLE>
<CAPTION>


                                                                       2007            2006            2005
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>

         Financing activities

         Common shares issued for subscriptions previously
            received, mineral properties and indebtedness               345,500       1,258,000           7,378
         Common shares issued for finder's fees, corporate
            finance fee and agent's commission                          121,810         240,729               -
         Common shares issued for services rendered                           -               -          12,000
         Preferred shares exchanged for common shares                         -               -          (7,378)
         Contributed surplus for agent's options and warrants           (64,935)         69,231               -
         Share issue costs from common shares issued and
            agent's option                                              (56,875)       (309,960)              -
         Indebtedness exchanged for common shares                             -        (400,000)              -
         Subscriptions received previously exchanged for
            common shares                                                     -        (628,000)              -
                                                                   ------------    ------------    ------------
                                                                        345,500         230,000          12,000
                                                                   ============    ============    ============
         Investing activities

         Deferred acquisition costs included in accounts payable       (126,916)              -               -
         Common shares issued for unproven mineral interests           (345,500)       (230,000)        (38,381)
                                                                   ------------    ------------    ------------
                                                                       (472,416)       (230,000)        (38,381)
                                                                   ============    ============    ============
         Operating activities

         Services rendered                                                    -               -         (12,000)
         Increase in accounts payable and accrued liabilities           126,916               -          38,381
                                                                   ------------    ------------    ------------
                                                                        126,916               -          26,381
                                                                   ============    ============    ============

         Other supplemental cash flow information:
                                                                       2007            2006            2005
                                                                         $               $               $

         Interest paid in cash                                                -          37,975               -
                                                                   ============    ============    ============
         Income taxes paid in cash                                            -               -               -
                                                                   ============    ============    ============
</TABLE>



                                     F - 22
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



16.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES

         (a)      The consolidated financial statements of the Company have been
                  prepared in  accordance  with  Canadian  GAAP.  Canadian  GAAP
                  differs  in  certain  material  respects  from  US  GAAP.  The
                  material  differences  between  Canadian and US GAAP and their
                  effect on the Company's  consolidated financial statements are
                  summarized in the tables below.

                  CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                       2007            2006            2005
                                                                         $               $               $

                 <S>                                              <C>             <C>             <C>

                  Loss under Canadian GAAP                           (2,036,069)     (1,206,667)       (161,466)
                  Unproven mineral interests expensed                  (384,958)       (429,774)              -
                                                                   ------------    ------------    ------------
                  Loss under US GAAP                                 (2,421,027)     (1,636,441)       (161,466)
                                                                   ============    ============    ============

                  Loss per share under US GAAP                            (0.12)          (0.13)          (0.11)
                                                                   ============    ============    ============

                  CONSOLIDATED BALANCE SHEETS
                                                                                       2007            2006
                                                                                         $               $
                  SHAREHOLDERS' EQUITY

                  Balance per Canadian GAAP                                           5,502,047       2,099,370
                  Unproven mineral interests expensed                                  (814,732)       (429,774)
                                                                                   ------------    ------------
                  Balance per US GAAP                                                 4,687,315       1,669,596
                                                                                   ============    ============

                  UNPROVEN MINERAL INTERESTS

                  Balance per Canadian GAAP                                           1,491,844         803,386
                  Expensed under US GAAP                                               (814,732)       (429,774)
                                                                                   ------------    ------------
                  Balance per US GAAP                                                   677,112         373,612
                                                                                   ============    ============

                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                       2007            2006            2005
                                                                         $               $               $

                  OPERATING ACTIVITIES

                  Cash used per Canadian GAAP                        (1,464,627)       (917,224)        (85,261)
                  Unproven mineral interests                           (395,319)       (157,548)              -
                                                                   ------------    ------------    ------------
                  Cash used per US GAAP                              (1,859,946)     (1,074,772)        (85,261)
                                                                   ============    ============    ============
                  INVESTING ACTIVITIES

                  Cash used provided by per Canadian GAAP              (800,778)       (174,090)       (268,346)
                  Unproven mineral interests                            395,319         157,548               -
                                                                   ------------    ------------    ------------
                  Cash used per US GAAP                                (405,459)        (16,542)       (268,346)
                                                                   ============    ============    ============
</TABLE>


                                    F - 23
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)


16.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

                  Unproven Mineral Interests

                  Mineral  property costs and related  exploration  expenditures
                  are  accounted  for  in  accordance   with  Canadian  GAAP  as
                  disclosed in Note 2. For US GAAP purposes the Company  follows
                  the  provisions  of EITF  04-02  "Whether  Mineral  Rights are
                  Tangible or Intangible  Assets" which  concluded  that mineral
                  rights  are   tangible   assets.   Accordingly,   the  Company
                  capitalizes  certain  costs  related  to  the  acquisition  of
                  mineral  rights.  The  Company  expenses,  as  incurred,   the
                  exploration  costs  relating to unproven  mineral  properties.
                  When  proven  and  probable  reserves  are  determined  for  a
                  property and a feasibility  study  prepared,  then  subsequent
                  exploration  and  development  costs of the property  would be
                  capitalized.  The capitalized  costs of such properties  would
                  then be amortized using the unit of production method over the
                  estimated  life of the ore body based on proven  and  probable
                  reserves and would be measured periodically for recoverability
                  of carrying values.

         (b)      Stock-Based Compensation

                  Effective  June 1,  2006,  the  Company  adopted  SFAS No. 123
                  (revised),  "Share-Based  Payment" ("SFAS 123(R)"),  utilizing
                  the modified prospective approach. The impact of adopting this
                  standard did not materially affect the Company's  consolidated
                  financial  position,  results  of  operations  or  cash  flows
                  because  the Company  previously  applied the fair value based
                  method of accounting for stock options prescribed by SFAS 123,
                  "Accounting for Stock-Based Compensation".

                  Under SFAS 123 the Company used the fair value based method of
                  accounting  for   stock-based   employee   compensation.   The
                  Company's  results  for the year  ended May 31,  2007 were not
                  significantly  affected as a result of adopting SFAS 123(R) on
                  June 1, 2006.

                  Under  Canadian  GAAP,  the Company  accounts for  stock-based
                  compensation  using the fair value method as disclosed in Note
                  2. Accordingly,  there is no difference  between Canadian GAAP
                  and US GAAP on the  accounting  for stock- based  compensation
                  for the years ended May 31, 2007, 2006 and 2005.

         (c)      Recent Accounting Pronouncements

                  United States Pronouncements

                  In July 2006,  the FASB issued  Financial  Instrument  No. 48,
                  "Accounting   for   Uncertainty   in   Income   Taxes   -   an
                  Interpretation of FASB Statement No. 109" ("FIN 48"), which is
                  a change in accounting for income taxes.  FIN 48 specifies how
                  tax benefits for uncertain tax positions are to be recognized,
                  measured and  derecognized  in financial  statements;  require
                  certain  disclosures  of uncertain tax matters;  specifies how
                  reserves for uncertain  tax positions  should be classified on
                  the balance sheet; and provides  transition and interim period
                  guidance,  among other  provisions.  FIN 48 is  effective  for
                  fiscal years  beginning  after December 15, 2006. The adoption
                  of the new  pronouncement  is not  expected to have a material
                  effect on the  Company's  consolidated  financial  position or
                  results of operations.



                                    F - 24
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



16.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

                  In September  2006,  the FASB issued SFAS No. 157, "Fair Value
                  Measurements"  ("SFAS  157").  SFAS 157  defines  fair  value,
                  establishes a framework for measuring fair value in accordance
                  with  US  GAAP  and  expands   disclosures  about  fair  value
                  measurements. SFAS 157 is effective for fiscal years beginning
                  after  November  15,  2007.  Any  cumulative  effect  will  be
                  recorded as an adjustment to the opening  accumulated  deficit
                  balance, or other appropriate component of equity. The Company
                  is  currently  evaluating  the effect of SFAS 157 will have on
                  the Company's  consolidated  financial position and results of
                  operations.

                  In February  2007,  the FASB  issued  SFAS No. 159,  "The Fair
                  Value Option for Financial Assets and Financial  Liabilities -
                  Including  an  Amendment  of FASB  Statement  No.  115" ("SFAS
                  159"),  which  permits  entities  to  choose to  measure  many
                  financial  instruments  and certain other items at fair value.
                  The fair value  option  established  by SFAS 159  permits  all
                  entities to choose to measure  eligible items at fair value at
                  specified  election  dates.  A business  entity  shall  report
                  unrealized  gains and losses on items for which the fair value
                  option  has  been  elected  in  earnings  at  each  subsequent
                  reporting   date.   Adoption  is  required  for  fiscal  years
                  beginning after November 15, 2007. Early adoption is permitted
                  as of the  beginning of a fiscal year that begins on or before
                  November  15,  2007,  provided the entity also elects to apply
                  the   provisions   of  SFAS  157.  The  Company  is  currently
                  evaluating  the  impact  of  SFAS  159  on  its   consolidated
                  financial statements and is currently not yet in a position to
                  determine such effects.


17.      SUBSEQUENT EVENTS

         (a)      On July 10,  2007,  the Company  completed a brokered  private
                  placement   of   10,500,000    subscription    receipts   (the
                  "Subscription Receipts") at $1.20 per Subscription Receipt for
                  gross proceeds of $12,600,000.  Each Subscription  Receipt was
                  subsequently exchanged, without additional consideration,  for
                  one common  share of the Company and one-half  share  purchase
                  warrant. Each whole warrant entitles the holder to acquire one
                  common  share at a price of $1.70 per share on or before  July
                  10, 2010.  The Company has paid the agents  $945,000  cash and
                  issued 840,000  warrants as commission.  Each warrant entitles
                  the agents to acquire one common share at a price of $1.50 per
                  share on or before  July 24,  2009.  The  Company  also paid a
                  corporate  finance  fee of  100,000  common  shares and issued
                  100,000  warrants,  with each warrant  entitling  the agent to
                  purchase  one common share at a price of $1.70 per share on or
                  before July 10, 2010.

         (b)      On July 24, 2007, the Company  completed the RPIM  Acquisition
                  whereby it completed the initial cash payment of US $6,000,000
                  and  issued  12,500,000  common  shares of the  Company to the
                  Vendor. In addition, the Company paid the initial finder's fee
                  of US $300,000 and issued 625,000 common shares to DBM.

                  The Company  also  issued  82,615  common  shares to a company
                  controlled  by a  director  of  the  Company  as a  bonus  for
                  providing a loan of US $500,000 to RPI.

         (c)      On August 17, 2007,  the Company and Kantanna  entered into an
                  amending  agreement  pursuant  to  which  the  Company  issued
                  375,000  common shares of the Company to Kantanna and Kantanna
                  agreed  to  forego  the  aggregate  US  $1,890,000   remaining
                  Commitments  to acquire the  remaining  62.5%  interest in the
                  Bulakashu Gold Property.  The Company now owns a 100% interest
                  in the Bulakashu Gold Property.


                                     F - 25
<PAGE>


                             CENTRASIA MINING CORP.
                         (an Exploration Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE YEARS ENDED MAY 31, 2007, 2006 AND 2005
            (Expressed in Canadian dollars, unless otherwise stated)



17.      SUBSEQUENT EVENTS (continued)

         (d)      Subsequent to May 31, 2007, the Company:

                  i)       increased  the  number  of  shares  issuable  on  the
                           exercise  of  options  under  the  Plan by  7,503,000
                           shares,  from 3,274,000 shares to 10,777,000  shares.
                           The Company  subsequently  granted  stock  options to
                           officers,  directors and employees of the Company and
                           consultants to acquire  3,080,000  common shares at a
                           price of $1.20 for a term of five years; and

                  ii)      issued  3,517,212 common shares of the Company on the
                           exercise  of  warrants  for  $1,522,604,  and  50,000
                           common  shares on the  exercise of stock  options for
                           $10,000.


                                    F - 26
<PAGE>



                                                                      SCHEDULE I

                             CENTRASIA MINING CORP.
               CONSOLIDATED SCHEDULE OF UNPROVEN MINERAL INTERESTS
                    FOR THE YEARS ENDED MAY 31, 2007 AND 2006


<TABLE>
<CAPTION>

                                                      2007                                         2006
                               -------------------------------------------------   ------------------------------------
                                              EASTERN                                             EASTERN
                                BULAKASHU    SARY JAZ       OTHER        TOTAL      BULAKASHU    SARY JAZ       TOTAL
                                    $            $            $            $            $            $            $
<S>                           <C>          <C>          <C>          <C>          <C>          <C>          <C>

BALANCE - BEGINNING OF YEAR       779,492       23,894            -      803,386            -            -            -
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
EXPENDITURES DURING THE YEAR

EXPLORATION COSTS

Consultants                             -            -            -            -        1,644            -        1,644
Drilling                           69,765            -            -       69,765            -            -            -
Exploration site costs              5,801        4,646        1,063       11,510       10,815            -       10,815
Field supplies                      1,370          356           97        1,823          873            -          873
Fuel                               38,358        1,493          443       40,294       12,951            -       12,951
Geological                         16,799        4,380          686       21,865       49,268       23,894       73,162
Geophysics                         42,210            -            -       42,210       13,333            -       13,333
Laboratory and sampling            36,833        7,907        1,510       46,250        9,552            -        9,552
Mapping                             8,188        5,672            -       13,860            -            -            -
Repair and maintenance              3,672            -            -        3,672        1,245            -        1,245
Salaries and benefits              71,200       55,147        6,350      132,697       30,071            -       30,071
Travel                              9,837          919          617       11,373        3,902            -        3,902
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
                                  304,033       80,520       10,766      395,319      133,654       23,894      157,548
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
ACQUISITION COSTS

Option payment                          -            -            -            -       46,440            -       46,440
Acquisition of BMC                      -            -            -            -      369,398            -      369,398
Issuance of common shares         207,500       96,000       42,000      345,500      230,000            -      230,000
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
                                  207,500       96,000       42,000      345,500      645,838            -      645,838
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
                                  511,533      176,520       52,766      740,819      779,492       23,894      803,386
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
BALANCE BEFORE WRITE-OFF        1,291,025      200,414       52,766    1,544,205      779,492       23,894      803,386

WRITE-OFF                               -            -      (52,361)     (52,361)           -            -            -
                               ----------   ----------   ----------   ----------   ----------   ----------   ----------
BALANCE - END OF YEAR           1,291,025      200,414          405    1,491,844      779,492       23,894      803,386
                               ==========   ==========   ==========   ==========   ==========   ==========   ==========

</TABLE>



                                     F - 27
<PAGE>