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, 2006

                                       or

[ ]      Transition  Report  Pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934

              For the transition period from _________ to _________

                                       or

[ ]      Shell Company Report  Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

                         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.

                   16,559,017 COMMON SHARES AS OF MAY 31, 2006

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
    -----     -----


<PAGE>



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.

                                    GLOSSARY

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.

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.

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

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

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

GREENSCHIST                         a general  descriptive term used to describe
                                    metamorphic   rocks  comprised   largely  of
                                    parallel aligned, green platy minerals.

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



                                      -3-
<PAGE>

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.

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                                   metre

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

MAGMA                               mobile, molten rock material.

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.

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.



                                      -4-
<PAGE>



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.

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.

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.


                                      -5-
<PAGE>


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).

TONNE                               metric tonne (2,204.6 pounds).

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 Securities  Exchange  Commission  (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.


                                      -6-
<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,  2006,
2005,  and period from  February 4, 2004 to May 31,  2004,  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 15 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.

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

Interest and Other Income                 $19,455            Nil            Nil
General and Administrative Expenses    $1,194,486       $162,633        $75,974
Loss From Continuing Operations       $(1,206,667)     $(161,466)      $(75,903)
Net Loss                              $(1,206,667)     $(161,466)      $(75,903)
Total Assets                           $2,254,424       $335,943        $11,935
Net Assets (Deficiency)                $2,099,370      $(214,258)      $(69,158)
Capital Stock                          $3,490,004        $23,111         $1,349
Contributed Surplus                      $187,435            Nil         $5,396

                                      -7-
<PAGE>



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

Weighted Average Number of Shares      12,518,011      1,469,962             32
Dividends per Share                           Nil            Nil            Nil
Basic and Fully Diluted Loss Per
   Share from Continuing Operations        $(0.10)        $(0.11)    $(2,371.97)
Loss Per Share                             $(0.10)        $(0.11)    $(2,371.97)



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
                                                                    PERIOD FROM
                                                                     FEBRUARY 4,
                                                                        2004
                                      YEAR ENDED      YEAR ENDED  INCORPORATION)
                                        MAY 31,         MAY 31,      TO MAY 31,
                                         2006             2005         2004
                                           $                $            $

Loss under Canadian GAAP               (1,206,667)      (161,466)       (75,903)
Unproven mineral interests expensed      (429,774)             -              -
                                     ------------   ------------   ------------
Net loss under US GAAP                 (1,636,441)      (161,466)       (75,903)
                                     ============   ============   ============
Loss per share under US GAAP                (0.13)         (0.11)     (2,371.97)
                                     ============   ============   ============


CONSOLIDATED BALANCE SHEETS
                                        MAY 31,        MAY 31,
                                         2006           2005
                                           $              $
SHAREHOLDERS' EQUITY (DEFICIENCY)

Balance per Canadian GAAP               2,099,370        214,258
Unproven mineral interests expensed      (429,774)             -
                                     ------------   ------------
Balance per US GAAP                     1,669,596        214,258
                                     ============   ============

UNPROVEN MINERAL INTERESTS

Balance per Canadian GAAP                 803,386              -
Expensed under US GAAP                   (429,774)             -
                                     ------------   ------------
Balance per US GAAP                       373,612              -
                                     ============   ============



                                      -8-
<PAGE>




CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                    PERIOD FROM
                                                                     FEBRUARY 4,
                                                                        2004
                                      YEAR ENDED      YEAR ENDED  INCORPORATION)
                                        MAY 31,         MAY 31,      TO MAY 31,
                                         2006             2005         2004
                                           $                $            $

OPERATING ACTIVITIES
Cash used per Canadian GAAP              (917,224)       (85,261)       (51,552)
Unproven mineral interests               (157,548)             -              -
                                     ------------   ------------   ------------

Cash used per US GAAP                  (1,074,772)       (85,261)       (51,552)
                                     ============   ============   ============
INVESTING ACTIVITIES
Cash (used) provided by per
   Canadian GAAP                         (174,090)      (268,346)        55,993
Unproven mineral interests                157,548              -              -
                                     ------------   ------------   ------------
Cash (used) provided by per US GAAP       (16,542)      (268,346)        55,993
                                     ============   ============   ============

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 has adopted 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.

RECENT ACCOUNTING PRONOUNCEMENTS

UNITED STATES PRONOUNCEMENTS

In December  2004, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of Financial  Accounting  Standards  ("SFAS") No. 123R,  "Share Based
Payment"   ("SFAS  123R").   SFAS  123R   supersedes  APB  25  and  its  related
implementation  guidance by requiring entities to recognize the cost of employee
services  received in  exchange  for awards of equity  instruments  based on the
grant-date fair value of those awards (with limited exceptions) and revises SFAS
123 as follows:

(i)      Public  entities  are  required  to  measure  liabilities  incurred  to
         employees  in  share-based  payment  transactions  at  fair  value  and
         non-public entities may elect to measure their liabilities to employees
         incurred in share-based payment  transactions at their intrinsic value,
         whereas  under  SFAS  123  all  share-based  payment  liabilities  were
         measured at their intrinsic value.

(ii)     Non-public  entities  are  required  to  calculate  fair value using an
         appropriate  industry  sector index for the expected  volatility of its
         share  price,  if  it is  not  practicable  to  estimate  the  expected
         volatility of the entity's share price.

(iii)    Entities are required to estimate the number of  instruments  for which
         the  requisite  service  is  expected  to be  rendered  as  opposed  to
         accounting for forfeitures as they occur.

(iv)     Incremental  compensation  cost  for a  modifications  of the  terms or
         conditions  of an award is measured by comparing  the fair value of the
         modified award with the fair value of the award immediately  before the
         modifications,   whereas  SFAS  123  required  that  the  effect  of  a
         modification be measured as the difference


                                      -9-
<PAGE>



         between the fair value of the modified  award at the date it is granted
         and the award's value immediately  before the modification,  determined
         based on the shorter of (1) its remaining  initially estimated expected
         life or (2) the expected life of the modified awards.

SFAS 123R also  clarifies  and  expands  guidance  in several  areas,  including
measuring  fair  value,  classifying  an  award as  equity  or a  liability  and
attributing  compensation cost to reporting  periods.  SFAS 123R does not change
the accounting guidance for share-based payment  transactions with parties other
than  employees  provided in SFAS 123 as originally  issued in EITF 96-18.  SFAS
123R also does not address the  accounting for employee  share  ownership  plans
which are subject to  Statement of Position  93-6,  "Employers'  Accounting  for
Employee Stock  Ownership  Plans".  Public  entities (other than those filing as
small  business  issuers)  will be  required  to apply SFAS 123R as of the first
annual  reporting  period that begins after June 15, 2005.  Public entities that
file as small business  issuers will be required to apply SFAS 123R in the first
annual  reporting  period that begins after  December 15, 2005.  For  non-public
entities,  SFAS 123R must be applied  as of the  beginning  of the first  annual
reporting period beginning after December 15, 2005.

The adoption of this new pronouncement is not expected to have a material effect
on the Company's consolidated financial position or results of operations.

CANADIAN PRONOUNCEMENTS

The CICA has issued the following new accounting standards, effective October 1,
2006:

CICA Handbook Section 1530,  "Comprehensive  Income"  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. The adoption of this new
standard by the Company is not expected to have a material impact.

CICA Handbook Section 3251, "Equity"  establishes  standards for presentation of
equity changes in equity during the reporting  period.  The adoption of this new
standard by the Company is not expected to have a material impact.

CICA  Handbook   Section  3855,   "Financial   Instruments  -  Recognition   and
Measurement"   establishes   standards  for  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 comprehensive  income until these
assets are no longer included on the balance sheet.

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, 2006
and 2005 and period from February 4, 2004 (the date of  incorporation of 724 BC)
to May 31, 2004.

         PERIOD                                                   AVERAGE
         ------------------------------                           -------
         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, 2006.

         MONTH                              HIGH                     LOW
         --------------                    ------                  ------
         October 2006                      0.8965                  0.8784
         September 2006                    0.9048                  0.8872
         August 2006                       0.9037                  0.8840
         July 2006                         0.8999                  0.8760
         June 2006                         0.9098                  0.8896
         May 2006                          0.9100                  0.8906




                                      -10-
<PAGE>

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 November  24, 2006,  reported by the United  States
Federal  Reserve Bank of New York for the  conversion  of Canadian  dollars into
United States dollars was CDN $1.1346 (US $0.8814 = CDN$1.00).

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 October 31, 2006,  the
Company had working  capital of $400,000.  As of the date of this annual report,
the Company is not generating any cash flow from its operations to meet its 2006
exploration  expenditure  commitments  of US  $690,000  on  the  Bulakashu  Gold
Property. As of August 31, 2006, approximately $204,000 had been expended and it
is estimated  that an  additional  US $500,000  will be expended by December 31,
2006 in order to meet the 2006 work  commitment.  Contingent on  financing,  the
Company  intends to expend its 2007 work commitment of US $650,000 on Bulakashu,
combined  estimated work  commitments of US $500,000 on Eastern Sary Jaz, Kokjar
and Turgeldy  (including  Turgeldy property payment of US $30,000),  US $250,000
for other  exploration  property  evaluation  costs and US $600,000  for ongoing
corporate overhead for the next twelve months.  The Company  anticipates that it
will need to raise a minimum of $2,850,000 within the next 12 months to meet its
anticipated  expenditures.  In addition,  the Company may 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.

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.



                                      -11-
<PAGE>


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.

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 $1.53 to a low of $0.43  during the  12-month  period
ending October 31, 2006.  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 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 -


                                      -12-
<PAGE>


Compensation - Executive Compensation - Centrasia - Employment  Agreements." 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  UNLIKELY  THAT ANY OF THE  PROPERTY  INTERESTS  OWNED OR  OPTIONED BY THE
COMPANY WILL CONTAIN "RESERVES"; THEREFORE, IT IS LIKELY 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,  do
not contain any reserves  and any funds spent on  exploration  of the  Company's
property  interests  will probably 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,  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  option
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 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



                                      -13-
<PAGE>


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  exploration  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  OPERATIONS  IN THE KYRGYZ  REPUBLIC AND CENTRAL ASIA 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 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 MAY NOT HAVE PROPER TITLE TO ITS  PROPERTIES  AND, AS A RESULT,  MAY
INCUR  SIGNIFICANT  EXPENSES TO OBTAIN PROPER TITLE,  OR MAY HAVE TO ABANDON ANY
SUCH PROPERTY.

The Company  believes  that it has  diligently  investigated  all title  matters
concerning  the  ownership of all mineral  claims and plans to do so for all new
claims and rights to be acquired. To the best of the Company's knowledge,  title
to all of its  properties  is in good  standing;  however,  this  should  not be
construed as a guarantee of title.  The  properties  in which the Company has an
interest may be affected by undetected  defects in title,  such as the reduction
in size of the  mineral  claims  and other  third  party  claims  affecting  the
Company's  priority  rights.  The  Company's  interests  in mineral  tenures are
comprised  of mineral  claims and also  rights  pursuant  to option  agreements.
Maintenance  of such interests is subject to ongoing  compliance  with the terms
governing such claims and agreements.

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

Marsa Gold Corp. ("Marsa") and Kantanna Company Limited ("Kantanna") are private
companies  controlled  by or  under  the  direction  of Mr.  Oleg Kim who is the
managing  director of Marsa and  Kantanna  and a director of the  Company.  As a
result of Mr. Kim's positions with the Company, Marsa and Kantanna, conflicts of
interest  may arise  between Mr.  Kim's  duties to the Company and his duties to
other  entities  in which he is  involved,  which may  result in Mr.  Kim taking
actions which are not in the best interest of the Company  and/or the holders of
their ownership interests, including the Company's shareholders.

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.



                                      -14-
<PAGE>


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.  See "Item 4.  Information  on the  Company - Business  Overview -
Government Regulations."  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.

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  licences
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  licences 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  LICENCE RENEWAL  PROCESS FOR THE BULAKASHU,  EASTERN SARY
JAZ,  KOKJAR  AND  TURGELDY  LICENCES.  THE  EXPLORATION  LICENCES  AND  LICENCE
AGREEMENTS ARE INITIALLY ISSUED FOR A SPECIFIED PERIOD OF TIME.

Each year the  Company,  though its  subsidiary  BMC, is required to prepare and
submit  reports to the State  Agency for  Geology  under the  government  of the
Kyrgyz  Repbulic  (the "KSAG") to confirm that it has complied with the terms of
its licence agreements. Upon approval by the KSAG extensions to the licences and
licence agreements may be applied for up to a maximum of ten years. Provided the
Company  is in  compliance  with the  terms  of its  licence  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 licence  agreements.  At
the end of each  licence  period the Company may be  required  to  relinquish  a
portion of the licence  area.  The Company,  through BMC as the licence  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.  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".

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


                                      -15-
<PAGE>

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.

BECAUSE THE COMPANY IS SUBJECT TO COMPLIANCE WITH GOVERNMENTAL  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 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 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.

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  properties  in which the Company has an interest  are located in the Kyrgyz
Republic.  In  addition,  the Company is  reviewing  potential  acquisitions  of
mineral  interests  in other  countries  in Central  Asia.  Mineral  exploration
activities  may be  affected in varying  degrees by  political  instability  and
government   regulations  relating  to  the  mining  industry.  Any  changes  in
regulations  or shifts in  political  conditions  are beyond the  control of the
Company  and may  adversely  affect  its  business.  The  Company's  exploration
activities  may be affected in varying  degrees by government  regulations  with
respect to  restrictions  on price  controls,  export  controls,  income  taxes,
expropriations of property, environmental legislation and mine safety.

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


                                      -16-
<PAGE>


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 status of the  Kyrgyz  Republic  as a  developing  country  may make it more
difficult for the Company to obtain any required  exploration  financing for its
projects. 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.

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

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 British  Columbia  BUSINESS
CORPORATIONS  Act, as amended (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.

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 William
Tafuri,  none of the Company's officers or directors are residents 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


                                      -17-
<PAGE>

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.

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


                                      -18-
<PAGE>


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.


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."
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."

Pursuant  to an  Agreement  and Plan of Merger  dated July 3, 2001,  between the
Company, CalEx and QDM Acquisition Corporation (a wholly-owned subsidiary of the
Company formed for the purpose of merging into CalEx), the shareholders of CalEx
acquired control of the Company in a reverse acquisition completed September 27,
2001. As a result,  CalEx became a wholly-owned  subsidiary of the Company.  See
"Item  5.  Operating  and  Financial   Review  and  Prospects  -  Overview."  In
conjunction   with  the  merger  the  Company   changed  its  domicile   through
continuation  from British  Columbia to the Yukon  Territory  under the BUSINESS
CORPORATIONS ACT (Yukon) (the "YBCA").  As a result of the reverse  acquisition,
the Company's  activities consisted solely of the operations of CalEx, which was
a development stage independent oil and gas company.

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 May 31, 2004, the Company abandoned CalEx and no longer holds any
oil and gas interests. At the time of the abandonment,  (i) all of the Company's
petroleum and natural gas activities had been conducted through CalEx, (ii) with
impairments of the California wells and the sale of the West Ranch Field,  CalEx
had no assets  remaining and had  approximately  $205,000 of accounts payable on
account of unpaid drilling expenditures to unrelated parties, and (iii) with the
abandonment  of CalEx,  effective at May 31, 2004, the Company was not obligated
to honor (e.g.  repay) the accounts  payable  liability  to  unrelated  parties,
resulting in a gain on the  forgiveness of debt (for both Canadian and U.S. GAAP
purposes).

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

                                      -19-
<PAGE>


On March 29,  2004,  the  British  Columbia  legislature  enacted  the BCBCA and
repealed  the BC Company  Act. At the  Company's  annual and special  meeting of
shareholders  held on  November  18,  2004,  the  Company  received  shareholder
approval to continue its corporate  jurisdiction  from the Yukon  Territory into
British  Columbia  under  the  BCBCA.  See "Item 10.  Additional  Information  -
Memorandum  and Articles of  Association."  Effective  November  23,  2004,  the
Company changed its domicile  through  continuation  from the Yukon Territory to
British Columbia under the BCBCA.

On September 14, 2005,  the Company  completed the  acquisition of 724 BC 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.

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 (a "Warrant"). Two Warrants
entitle the holder to acquire one  additional  common  share at a price of $0.78
per common share on or before April 28, 2007.

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 include 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  licence,  with Eurasian  retaining a 1% Net Smelter Return royalty.
The  Company  has 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.  If the Company exercises the Turgeldy Option,
but later decides to abandon the Turgeldy  Property,  Eurasian retains the right
to have the  property  title  transferred  back at its own  expense  and with no
further  obligation  to the Company.  The  Turgeldy  Licence was issued to Altyn
Minerals on May 12, 2005, for an initial period of two years.

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".

BUSINESS OVERVIEW

The Company's  original goal was to identify,  acquire,  explore and develop oil
and natural gas reserves in the Western United States,  principally in the State
of  California.  Pursuant to an Agreement and Plan of Merger dated July 3, 2001,
between the  Company,  CalEx and QDM  Acquisition  Corporation  (a  wholly-owned


                                      -20-
<PAGE>

subsidiary  of the Company  formed for the purpose of merging into  CalEx),  the
shareholders of CalEx acquired  control of the Company in a reverse  acquisition
completed  September 27, 2001. See "Item 5.  Operating and Financial  Review and
Prospects - Overview."

From March 2001 until March  2004,  the  Company's  focus was on its oil and gas
interests,  which  consisted  solely of the operations of CalEx. On December 18,
2002, the Company  entered into a purchase and sale agreement with PNP Petroleum
Inc. ("PNP"), a private corporation at arm's-length to the Company,  whereby the
Company acquired a 3% net working interest  (2.360825% net revenue  interest) in
certain  oil and gas  leases  known as the West  Ranch  Field.  To  acquire  its
interest the Company funded US $43,500 of initial  development costs. During the
2003 fiscal  year the  Company  commenced  principal  operations  from the Texas
interest and was no longer considered a development stage company. Pursuant to a
purchase  and sale  agreement  dated March 1, 2004,  the Company sold its 3% net
working  interest  in  the  West  Ranch  Field  to  Westport   Petroleum,   Inc.
("Westport"),  a private corporation at arms-length to the Company,  for $89,814
(US $67,000) cash.

On May 31, 2004, the Company abandoned CalEx and no longer holds any oil and gas
interests.  As of the date of this annual  report the Company  does not hold any
interest in oil and gas 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.

CENTRASIA ACQUISITION

On March 17,  2005,  the Company  entered into a letter  agreement  (the "Letter
Agreement")  with 724 BC and its  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 terms of
the Letter  Agreement were finalized by a share purchase  agreement (the "Formal
Agreement") dated July 25, 2005.

Pursuant to the Formal  Agreement,  the Company  acquired 724 BC through a share
for share exchange  between the Company and the  shareholders of 724 BC pursuant
to which  the  Company  issued to the  shareholders  of 724 BC an  aggregate  of
3,700,100  common  shares of the Company in exchange for all of the  outstanding
shares of 724 BC. As a result,  724 BC became a  wholly-owned  subsidiary of the
Company.  Completion  of the  Centrasia  Acquisition  resulted  in  the  Company
effectively  becoming  involved in the  acquisition  and  exploration of mineral
properties in the Kyrgyz Republic,  through BMC and the Company's  obligation to
provide funds to BMC in exchange for  ownership  interests in BMC. The Centrasia
Acquisition was conducted on an arm's length basis.  See "Item 4. Information on
the Company - Business  Overview - Kantanna  Option" and "Item 4. Information on
the Company - Business Overview - Principal Properties - Bulakashu Property."

The  following  additional  matters  also  occurred  as  part  of the  Centrasia
Acquisition:

         (a)      The Company completed a financing to provide necessary ongoing
                  funding for the Company after the acquisition of 724 BC.

         (b)      As described below,  certain  outstanding  loans of 724 BC, in
                  the aggregate  principal  amount of $400,000,  were  converted
                  into shares of the Company's  common stock or units consisting
                  of shares of the Company's common stock and warrants.

         (c)      The Company changed its name to "Centrasia Mining Corp.".

         (d)      The board of directors of the Company was  reconstituted.  See
                  "Item  6.  Directors,   Senior   Management  and  Employees  -
                  Directors and Senior Management."

         (e)      Marsa  transferred  its  interests  in  all  prior  subsisting
                  agreements  between  BMC,  Marsa,  Magellan  Gold  (BVI)  Inc.
                  ("Magellan  (BVI)"),  and the  Company  to  Kantanna  and also
                  transferred its 100% participating interest in BMC to Magellan
                  (BVI).   See   "Item  4.   Information   on  the   Company   -
                  Organizational Structure."

724 BC's principal asset was an agreement (the "Marsa Option") to acquire all of
the issued and  outstanding  share  capital of BMC, a Kyrgyz  limited  liability
company, from Marsa, also a privately owned Kyrgyz company. The Marsa Option was
subsequently  replaced by the Kantanna  Option,  effective  January 6, 2006,  as
described below.


                                      -21-
<PAGE>


KANTANNA OPTION

Pursuant  to an option  agreement  dated  January 6, 2006  between  BMC,  Marsa,
Magellan (BVI), the Company and Kantanna (the "Kantanna Option"):

o        Marsa  transferred  its  interest  in all prior  subsisting  agreements
         between the parties to Kantanna.

o        Marsa  transferred its 100%  participating  interest in BMC to Magellan
         (BVI).

o        In  consideration  for Marsa (on  behalf of  Kantanna)  causing  BMC to
         acquire a new mineral exploration  property located at Kyrgyz Republic,
         Issyk-Kul province, Aksu region (the "Eastern Sary-Jaz Property"),  the
         Company has issued 200,000 shares to Kantanna on September 22, 2006.

o        BMC now holds the Bulakashu  Property in trust for  Kantanna.  In order
         for  BMC  to  acquire  a 100%  beneficial  ownership  of the  Bulakashu
         Property, the Company has done and must do the following:

         1.       issue an  aggregate  1,025,000  shares in the  capital  of the
                  Company as follows:

                  -------------------------------------------------------------
                  ISSUED OR TO BE ISSUED                                NO. OF
                  ON OR BEFORE               DETAILS                  SHARES
                  -------------------------------------------------------------

                  September 14, 2005       Issued to Marsa              200,000
                                           (transferred
                                           subsequently to
                                           Kantanna)
                  -------------------------------------------------------------
                  January 2, 2006          Issued to Marsa              200,000
                                          (transferred
                                           subsequently to
                                           Kantanna)
                  -------------------------------------------------------------
                  December 31, 2006        Issuable to Kantanna         250,000
                  -------------------------------------------------------------
                  December 31, 2007        Issuable to Kantanna         375,000
                  -------------------------------------------------------------
                  Total:                                              1,025,000
                  =============================================================


         2.       paid an aggregate US $120,000 to Marsa as follows:

                  -------------------------------------------------------------
                  PAID ON OR BEFORE                                      US $
                  -------------------------------------------------------------
                  January 2, 2005                                       $40,000
                  -------------------------------------------------------------
                  September 1, 2005                                     $40,000
                  -------------------------------------------------------------
                  January 2, 2006                                       $40,000
                  -------------------------------------------------------------
                  Total:                                               $120,000
                  =============================================================

         3.       fund  mineral  exploration  and  development  programs  on the
                  Bulakashu  Property by incurring  Mining  Expenditures  in the
                  following total amounts during the following periods:

                  -------------------------------------------------------------
                  MINING EXPENDITURES INCURRED DURING                    AMOUNT
                  -------------------------------------------------------------

                  Calendar 2004 (incurred)                          US $110,000
                  -------------------------------------------------------------
                  Calendar 2005 (incurred)                          US $160,000
                  -------------------------------------------------------------
                  Calendar 2006                                     US $690,000
                  -------------------------------------------------------------
                  Calendar 2007                                     US $650,000
                  -------------------------------------------------------------
                  Calendar 2008                                     US $750,000
                  -------------------------------------------------------------
                  Total:                                          US $2,360,000
                  =============================================================

o        As a result of the  making of the said  share and cash  payments  on or
         before January 2, 2006 and incurring of the 2004 and 2005 Calendar Year
         Mining Expenditures,  BMC has earned a 10.5% beneficial interest in the
         Bulakashu Property. It shall earn additional interests as follows:

                                      -22-
<PAGE>


         -----------------------------------------------------------------------
                                                                   BENEFICIAL
                                                                INTEREST EARNED
                                                                IN THE BULAKASHU
         EVENT                                                       PROPERTY
         -----------------------------------------------------------------------

         Initial beneficial interest that BMC has
         earned to date (as referred to above)                         10.5%
         -----------------------------------------------------------------------
         Upon the making of the share issuance to be
         made on or before December 31, 2006 and the
         incurring of the 2006 Calendar Year
         Mining Expenditures                                           27.0%
         -----------------------------------------------------------------------
         Upon the making of the share issuance to be
         made on or before December 31, 2007 and the
         incurring of the 2007 Calendar Year
         Mining Expenditures                                           30.0%
         -----------------------------------------------------------------------
         Upon the incurring of the 2008 Calendar
         Year Mining Expenditures                                      32.5%
         -----------------------------------------------------------------------
         TOTAL BENEFICIAL INTEREST EARNED                             100.0%
         =======================================================================

o        At such time as BMC has defined on the Bulakashu  Property an indicated
         reserve (as defined by JORC or CIM reserve  standards) of not less than
         300,000  ounces of gold,  the Company will  initiate a  pre-feasibility
         study as a possible  pre-cursor to production.  If Kantanna  desires to
         initiate a pre-feasibility study of the Bulakashu Property it may do so
         at any time, at its sole cost and expense.

Both Marsa and  Kantanna  are  private  companies  controlled  by Mr. Oleg Kim a
director  of the  Company.  The  consideration  paid  and to be paid  under  the
Kantanna   Option  to  Marsa  and  Kantanna  was   determined  by  arm's  length
negotiations prior to Mr. Kim becoming a director of the Company.

Pursuant to a loan agreement (the "Loan  Agreement")  among Marsa,  Aitas Mining
Corp. ("Aitas"),  BMC and 724 BC dated September 24, 2004, as amended on January
18, 2005, 724 BC advanced the amount of US $110,000 (the "Principal  Amount") to
BMC (the "BMC Loan") for the purpose of completing the  geological  appraisal of
the Bulakashu Property.

In accordance with the Loan Agreement, Marsa executed a guarantee agreement (the
"Guarantee")  dated  July 8,  2005 in  favour of 724 BC,  which  guaranteed  the
repayment of the BMC Note and any further  amounts that the Company  advanced to
BMC pursuant to the terms of the now terminated Marsa Option. In addition, Marsa
and 724 BC entered into a pledge agreement (the "Pledge  Agreement")  dated July
8, 2005,  pursuant  to which  Marsa  pledged to 724 BC all of its  participating
interest held by Marsa in BMC (the "Pledged Interest"). Pursuant to the Kantanna
Option,  the Guarantee and Pledge Agreement were terminated upon the transfer of
100% of Marsa's participating interest in BMC to Magellan (BVI).

Pursuant to the  Kantanna  Option (1) the BMC Loan was deemed to be used for the
purpose of incurring Mining Expenditures on the Bulakashu Property and therefore
is no longer due and owing and the Loan  Agreement is thus  terminated,  and (2)
the Guarantee and the Pledge Agreement were terminated.

As of the date of this annual report,  the Company's main asset is its ownership
of BMC. 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 main assets of BMC are:

(i)      the Bulakashu Licence  (formerly  referred to as the BMC Licence) which
         permits the  exploration  of the  Bulakashu  Property.  Pursuant to the
         Bulakashu  Licence,  BMC  obtained a licence  from the State Agency for
         Geology and Mineral  Resources of the Government of the Kyrgyz Republic
         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 licences: Upper Karabulak,


                                      -23-
<PAGE>

         Lower  Karabulak,  Upper Tokailu and Lower  Tokailu.  BMC  concurrently
         negotiated  the size of the property to be explored and the terms of an
         exploration  licence  agreement  with the Geology  Agency.  The Licence
         Agreement is an integral part of the Bulakashu  Licence and  determines
         the  exploration  expenditures  to be incurred by BMC on the  Bulakashu
         Property and provides details of the proposed work program.

         The Bulakashu Licence was issued for a term until December 31, 2005 and
         can be  extended  for up to ten years  subject to the  approval  of the
         State Agency for Geology and Mineral  Resources under the Government of
         the Kyrgyz  Republic  ("Geology  Agency") and  provided  that BMC is in
         compliance with the terms of the Licence  Agreement.  BMC fulfilled the
         commitments of the Licence Agreement,  and consequently,  the Bulakashu
         Licence and Licence  Agreement was 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 licence
         after  this  period has  expired.  There can be no  assurance  that the
         Bulakashu  Licence  will be renewed.  If the  Bulakashu  Licence is not
         renewed,  the Company's  investment  in the  Bulakashu  Property may be
         worthless.  BMC fulfilled its obligations  laid out in the 2005 Licence
         Agreement  with the  Geology  Agency  and as a  result,  the  Bulakashu
         licence was extended until December 31, 2006.

         Each year,  BMC is required to prepare and submit a report to the State
         Agency for Geology and Mineral  Resources  under the  Government of the
         Kyrgyz Republic (the "Geology Agency") to confirm that BMC has complied
         with the terms of the licence  agreement.  Upon approval by the Geology
         Agency,  extensions to the Bulakashu  Licence and Licence 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 Licence  Agreement,  BMC is
         required to pay to the Geology Agency approximately US $7 in payment of
         the Geology Agency's services associated with the application to extend
         the Licence  Agreement.  At the end of each annual licence period,  the
         Geology  Agency may require  that areas of the licence  which have been
         prospected  and  deemed  to  not be of  interest  by  the  licencee  be
         relinquished by BMC. BMC, as the licence holder, determines which areas
         are to be relinquished; however, BMC may have to relinquish areas which
         BMC 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 the Geology  Agency to conduct  such
         exploitation and negotiate the terms of such  exploitation,  to include
         royalties,  bonuses and other payments with the Geology  Agency.  There
         are no assurances that BMC will be able to obtain such approval.

(ii)     the Eastern Sary Jaz  Licence,  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 is without  known
         reserves  as  defined  by  Guide 7 or NI  43-101  and all  current  and
         historic work on Eastern Sary Jaz has been  exploratory in nature.  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 Licence agreement with KSAG 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 pending  approval of its
         2006 expenditures by the KSAG, the Company anticipates that the Eastern
         Sary Jaz Licence will be renewed for 2007.

(iii)    the Kokjar Licence, 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 is without known  reserves as defined by Guide 7 or NI
         43-101 and all current and  historic  work on Eastern Sary Jaz has been
         exploratory in nature.  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  licence 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 licence  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
         expenditures  on the Kokjar  Property in 2006. The Company is currently
         negotiating  with the  KSAG to  obtain  approval  for a  proposed  2007
         exploration program.

(iv)     the Turgeldy Option,  entered into by the Company in August 2006, is an
         agreement  to acquire a 100%  interest in the  Turgeldy  Property  from
         Eurasian Minerals Inc  ("Eurasian").  Terms of the agreement include 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



                                      -24-
<PAGE>

         to the Turgeldy exploration  licence,  with Eurasian retaining a 1% Net
         Smelter Return royalty.  The Company has 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.
         If the Company  exercises  the Turgeldy  Option,  but later  decides to
         abandon the Turgeldy  Property,  Eurasian retains the right to have the
         property title  transferred back at its own expense and with no further
         obligation  to the Company.  The  Turgeldy  Licence was issued to Altyn
         Minerals LLC, a wholly owned  subsidiary  of Eurasian,  on May 12, 2005
         for an initial period of two years.

GOVERNMENT REGULATION

DOING BUSINESS IN THE KYRGYZ REPUBLIC

OVERVIEW

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.

GOVERNMENT AND POLITICAL FACTORS

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  kilometres  from  the  Bulakashu
Property.  Since 2001, the Kyrgyz Republic has permitted military personnel from
the United States 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.


                                      -25-
<PAGE>

ECONOMIC FACTORS, EXCHANGE CONTROLS AND REGULATION OF BUSINESS

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 5% for 2006.

RELEVANT  KYRGYZ LAW AND THE  INVESTMENT  AGREEMENT  WITH THE  GOVERNMENT OF THE
KYRGYZ REPUBLIC

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  licences,  both of which are issued by the State  Agency on Geology  and
Mineral  Resources,  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.

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


                                      -26-
<PAGE>


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 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 or 2004. During fiscal 2005,
the Company advanced $268,346 to BMC.

No dispositions occurred during fiscal 2006, 2005 or 2004.

SALES AND REVENUE DISTRIBUTION

The Company did not generate any sales or revenue  during fiscal 2006,  2005, or
2004.

Total interest income reported for fiscal 2006, 2005 and 2004, were as follows:

                                         --------   --------    --------
                                            2006      2005        2004
                                         --------   --------    --------
         Interest Income                 $ 19,455   $    Nil    $    Nil
                                         --------   --------    --------
         Total Interest Income           $ 19,455   $    Nil    $    Nil
                                         ========   ========   =========

PLAN OF OPERATION

The Company has completed its summer field program and is currently initiating a
drill program on its Bulakashu Property in Kyrgyzstan. The drill program is part
of the phase 2 program that was  recommended in the technical  report from 2005.
The phase 1 program was  initiated in 2005 and carried over and completed in the
summer of 2006.  Based on  favourable  results  from the Severny  and  Karabulak
prospects  on the  Bulakashu  property,  the  Company  has elected to drill test
several  targets that were defined  during the phase 1 program.  It is estimated
that the cost of this program will be $400,000.  The fall drill  program will be
weather dependent,  but the Company hopes to complete the bulk of the program by
December 15, 2006.

The Company has completed its summer exploration  activities on Eastern Sary Jaz
and  Turgeldy.  Data from the summer  exploration  program will be compiled this
winter in preparation for the 2007 exploration program.

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.


                                      -27-
<PAGE>

As at October  31,  2006,  the  Company  had  working  capital of  approximately
$400,000.  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 2006 Exploration program at
   Bulakashu (1)(2)                                     $500,000       $570,000
-------------------------------------------------------------------------------
Estimated  2007 work  commitments  on Bulakashu,
   Eastern Sary Jaz,  Kokjar and Turgeldy (1)(2)      $1,150,000     $1,310,000
-------------------------------------------------------------------------------
Property Evaluation/Due Diligence costs (1)(2)          $250,000       $285,000
-------------------------------------------------------------------------------
General and Administrative Expenses for the
   Next 12 Months                                       $600,000       $684,000
-------------------------------------------------------------------------------
                                     TOTAL            $2,500,000     $2,850,000
===============================================================================

(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 $0.88 = 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

BULAKASHU PROPERTY

The  Bulakashu  Property is without  known  reserves as defined by Guide 7 or NI
43-101 and BMC's programs 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 exploration  program
and  information  contained in a report (the "Technical  Report")  entitled "The
Bulakashu  Property,  The Bulakashu  Mining District,  Chui Oblast,  Kyrgyzstan"
dated June 15, 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 the Kyrgyz  State  Agency on Geology and Mineral  Resources,
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  companies  exploration  programs are carried out under the direction of the
Company's Qualified Person and Vice President of
Exploration, Dr. William Tafuri



                                      -28-
<PAGE>


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 location of
the Bulakashu Property in the Kyrgyz Republic is shown on the following map:

                         GAPHIC OMITTED GRAPHIC OMITTED

              [Map prepared by APEX Geoscience Ltd. dated June 2005
         showing the location of the Bulakashu Property in Kyrgyzstan.]

     To view map please visit the Company's website: www.centrasiamining.com




                                      -29-
<PAGE>



The  Bulakashu  Property  is defined  by  Licence  No: AP 48 issued by the State
Agency on Geology and Mineral  Resources  of the Kyrgyz  Republic  ("KSAG")  and
comprises  240 km(2) in size.  The  boundary of the  Bulakashu  Licence  area is
defined by the following coordinates on the following map:


         Corner            North Latitude            East Longitude

         1                 42.381                    73.616

         2                 42.385                    73.907

         3                 42.294                    73.908

         4                 42.291                    73.618

The Bulakashu  exploration licence (originally referred to as the BMC Licence in
the  Company's  2005 20-F  filing)  was  issued  on March 28,  2005 for a 4-year
period;   subject  to  the  Company   fulfilling  it's  2006  licence  agreement
commitments  with the KSAG. The exploration  licence 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 Licence Agreement or any further
licence  agreements.  Kyrgyz  Subsoil  Law does not  provide  for any  automatic
procedure for renewal or obtaining of an exploration  licence after this current
licence period has expired.  See "Item 4.  Information on the Company - Business
Overview - Business of BMC."


                         GAPHIC OMITTED GRAPHIC OMITTED

       [Geologic Map prepared by APEX Geoscience Ltd. showing the geology
    and prospect location for the Bulakashu Mining District dated June 2005]

     To view map please visit the Company's website: www.centrasiamining.com




                                      -30-
<PAGE>


The Bulakashu Licence is a contiguous licence and is the subject of the Kantanna
Option.

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  Licence 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-kilometre  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.

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.


                                      -31-
<PAGE>


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 metres) 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 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.


                                      -32-
<PAGE>


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.

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 metres 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  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

During 2002,  Marsa obtained an exploration  licence within the Bulakashu Mining
District and an  exploitation  licence  which  included the  Karabulak  placers.


                                      -33-
<PAGE>

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 production  started at the placer deposit (the placer  deposits and
mining  rights  are  excluded  from  the  Bulakashu  licence).  In  2004,  Marsa
established BMC as a separate company and transferred the Bulakashu  exploration
licence into BMC. BMC drilled four core holes at the Karabulak  gold prospect in
the fall of 2004. As well,  during 2004, Dr. William Tafuri,  the Company's Vice
President of Exploration and a Qualified Person,  visited the Bulakashu Property
to monitor the drill program at Karabulak and evaluate the Otradny gold prospect
and the Severny  copper/gold  prospect.  In total,  Dr. Tafuri collected 10 rock
samples during 2004.

KARABULAK GOLD PROSPECT

From 2002 to 2005,  most of the  exploration on the Bulakashu  Property has been
focused at the Karabulak  prospect.  During 2004 and 2005, more than US $110,000
was spent on the Bulakashu Property, entirely on the Karabulak prospect by BMC.

The author of the  Technical  Report,  Mr. D.  Besserer,  visited the  Karabulak
prospect on May 19, 2005. In total, three core samples and two rock grab samples
were  collected.  The results are  summarized  in the table  below.  The samples
collected  from the core closely  replicate  those results  obtained by BMC. One
grab sample from one of the  historic  trenches,  trench K1 assayed 171 g/t gold
and contained  abundant visible gold in a silicified,  propylitic  altered mafic
volcanic.

                   APEX GEOSCIENCE LTD. - ROCK SAMPLE RESULTS
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------
SAMPLE ID         LOCATION                        GOLD VALUE     DESCRIPTION
                  (UTM EASTING/NORTHING)           (g/t AU)
--------------------------------------------------------------------------------------------------------------
<S>              <C>                               <C>          <C>

05DBP050          Drill  hole 5.  Mr.  Besserer       8.7        Replicate  sample of halved  core from  drill
                  did  not   visit   the  drill                  hole  5;  29-30m   interval   sampled   which
                  collar.                                        contains 11.45 g/t Au from BMC work
--------------------------------------------------------------------------------------------------------------
05DBP051          Drill hole 4.  Collar at:           8.88       Replicate  sample of halved  core from  drill
                  Zone43T 0399306E/ 4685009N                     hole  4;  30-31m   interval   sampled   which
                  (WGS 84)                                       contains 8.14 g/t Au from BMC work
--------------------------------------------------------------------------------------------------------------
05DBP052          Drill hole 4.                       1.74       Replicate  sample of halved  core from  drill
                  Collar at:                                     hole  4;  31-32m   interval   sampled   which
                  Zone43T 0399306E/ 4685009N                     contains 1.63 g/t Au from BMC work
                  (WGS 84)
--------------------------------------------------------------------------------------------------------------
05DBP053          Zone43T 0399397E/ 4685103N         17.0        Composite  rock grab sample at adit  entrance
                  (WGS 84)                                       of  silicified,   propylitic   altered  mafic
                                                                 volcanic  with  moderate to weakly  developed
                                                                 quartz  stockwork.   3-5%  pyrite.  Thrusting
                                                                 is visible here.
--------------------------------------------------------------------------------------------------------------
05DBP054          Zone43T 0399301E/ 4685025N         171.0       Composite  rock  grab  sample  at trench 1 to
                  (WGS 84)                                       test  mineralization and replicate results of

                                                                  Soviet  era  sampling  and  724 BC  sampling
                                                                 (sample   1).   Intensely   silicified   and
                                                                 chloritized mafic volcanic. Abundant visible
                                                                 gold.  In  old  trench.
--------------------------------------------------------------------------------------------------------------
</TABLE>
*    Samples were analyzed at Alex Stewart and  Environmental  Laboratories Ltd.
     in Kara-Balta. All samples are from the Karabulak Prospect

In September 2004, Dr. Tafuri  examined the Karabulak  prospect and compared the
Soviet era geologic  maps and notes to what was observed on the ground and found
the agreement to be very good. There were some differences in  interpretation of
the geology, especially specific to structure, but the trench and adit locations
were  confirmed.  No attempt was made to go  underground  because of the lack of
proper  safety  equipment.  Dr. Tafuri did limited  re-sampling  of a high-grade
interval  in trench K1. The exact  interval  sampled by the Soviet  workers  and
later by Marsa could not be  identified  because  weathering  had  destroyed the
identifying  marks.  However,  samples taken in the same trench at approximately
the same interval  yielded high gold values.  In Trench 1, three  one-meter chip
samples were taken over  approximately  the same interval that a 1-meter  Soviet


                                      -34-
<PAGE>


era sample  yielded 122 g/t gold assay.  Samples 1-3 yielded assays ranging from
3.62 g/t gold to 42.9 g/t gold  over 1 meter.  While not as  spectacular  as the
original  Soviet era sample,  management  believes the new samples  confirm that
there  is  significant  gold  mineralization  in the zone  that  was  originally
sampled.

No airborne and/or ground  geophysical  surveying has been conducted  within the
Bulakashu Property before 2005.

OTHER PROSPECTS

During 2004,  Dr. Tafuri  examined the Severny  prospect and found the agreement
between  the  geology  and the old  data to be very  good.  The  alteration  and
mineralization  was found to be as described and the trenches were in the proper
locale from historic results. No identifying marks could be found for either the
trench or sample  numbers  from the  historic  exploration.  Four  samples  were
collected from what appeared to be typically  mineralized  rocks from zones that
were described in the historic  reports.  The samples returned assays up to 3.78
g/t gold, 154.9 g/t silver and 0.78% copper and management believes they confirm
that there is significant  gold and copper  mineralization  in the zone that was
originally sampled. No exploration has been conducted on the Severny prospect by
the Company.

Dr. Tafuri examined the Eastern extension of the Otradny  prospect,  as well. No
historic  sample data from this prospect has been  discovered.  In total,  three
rock chip  samples  were  collected  which were not  considered  anomalous  with
respect to gold and/or copper.  The following  table provides the results of the
rock chip samples.

--------------------------------------------------------------------------------
SAMPLE       AU        AG        CU       PB         PROSPECT           SAMPLE
  #         g/t       g/t       ppm      ppm
--------------------------------------------------------------------------------

  1        42.9      <1.0       118       19         Karabulak          1m, chip
--------------------------------------------------------------------------------
  2        41.9       1.2        11        7         Karabulak          1m, chip
--------------------------------------------------------------------------------
  3         3.62     <1.0        23       <3.5       Karabulak          1m, chip
--------------------------------------------------------------------------------
  4         4.08     30.1      2007    12200         Severny            1m, chip
--------------------------------------------------------------------------------
  5         0.35      2         772     1891         Severny            1m, chip
--------------------------------------------------------------------------------
  6         3.78    154.9      7831    66330         Severny            grab
--------------------------------------------------------------------------------
  7         0.97     38.8      2349    23020         Severny            4m, chip
--------------------------------------------------------------------------------
  8        <0.05     <1.0        17       55         Otradny            3m, chip
--------------------------------------------------------------------------------
  9        <0.05     <1.0        13       21         Otradny            4m, chip
--------------------------------------------------------------------------------
 10        <0.05     <1.0        18       91         Otradny           15m, chip
--------------------------------------------------------------------------------
*    Samples were analyzed at Alex Stewart and  Environmental  Laboratories Ltd.
     In Kara-Balta. No GPS coordinates were recorded.

The  Otradny  prospect is a fault  controlled  sulfide  system of large  lateral
extent and widths of about 100  meters.  The system  strikes  under the  capping
andesites on the east so the true length of it is  concealed,  but appears to be
about 1 km long.  Samples  collected by Dr. Tafuri were collected from a heavily
limonite  stained outcrop exposed by a trench.  The host rocks in the fault zone
are  brecciated  andesite and basalt.  The fault zone is not evenly  altered and
there are blocks of relatively fresh rock within it.

Soviet era reports refer to three  mineralized  zones. Dr. Tafuri only witnessed
one  zone,   about  100  meters  wide,  with  pinching  and  swelling  areas  of
alteration/mineralization  within  it.  Also,  historic  geologic  maps show the
mineralization  to be cut off by a fault  which was not  evident  from the field
visit conducted by Dr. Tafuri. Marsa has conducted no exploration at Otradny.

DRILLING

In 2004,  four core holes were drilled at the western  portion of the  Karabulak
Prospect, totaling 557.6 meters, under the direction of Dr. Oleg Kim of BMC, who
became a director of the Company effective  September 14, 2005. All drilling was
completed with NQ sized core. The table below summarizes the analytical  results
of the  drilling.  As with the adits one and two  completed  in the 1960's,  the
drilling  was  targeted to  intersect  the  vertical  downward  extension of the
western  Karabulak  zone, down dip of the surface  mineralization  but above the
workings  of adit 2. All four holes were  drilled  to the  northeast  at shallow
inclinations from the south face of the ridge immediately south of the Karabulak
zone  on  the  ridge  top.   Alteration   and   anomalous  to  economic   grades
mineralization were intersected in all four holes and over significant widths in
three of the four holes.


                                      -35-
<PAGE>


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

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

02-04       63296.05 68917.13    57-58         3049.4m, 330, -10, 137.1m       1             1.30
                                 60-66         As above.                       6             1.07
            63223.23             100-101       As above.                       1
            68881.05                                                                         0.57
--------------------------------------------------------------------------------------------------
03-04       63317.95             9-13          3074.19m, 330, 5, 140.7         4
            68937.61                                                                         8.09
--------------------------------------------------------------------------------------------------
04-04       63317.95             29-60         3050.23m, 330, -3, 136.3       31
            68937.61                                                                        *2.28
                                 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, 143.5m        1
            68861.39                                                                         0.84
                                 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 metre in length.  Interval averages
were selected using a 0.5 gm/t Au cut-off.
*    Interval includes 8.14 g/t Au over 1 metre and 12.7 g/t Au over 1 metre
**   Interval includes 11.45 g/t Au over 1 meter

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.

MINERAL RESOURCE ESTIMATES

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

FUTURE WORK - RECOMMENDATIONS FROM THE TECHNICAL REPORT

Based on the  known  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 possibly porphyry style copper-gold deposits and an aggressive comprehensive
exploration  program was warranted.  The Company  decided that it would initiate
the recommended  exploration  program proposed in the 2005 technical report. The
two phase  exploration  program  proposed  in the  technical  report  included a
regional data compilation of all known geology, geophysics and sample data. This
was to be followed by  additional  surface  sampling  and ground  geophysics  at
Karabulak in order to define  drill  targets for Phase 2 and  evaluation  of all
other  known  gold  and  copper/gold  occurrences  on  the  Bulakashu  Property.
Additional  work was also  proposed to  evaluate  the other gold and copper gold
showings on the property and included prospecting, rock grab, continuous channel
or rock chip sampling to determine the potential  size,  grade and  mineralizing
controls  at  each  occurrence  as  a  pre  cursor  to  the  Phase  2  follow-up


                                      -36-
<PAGE>

exploration. The total estimated cost of the Phase 1 program was estimated to be
$200,000.  The  recommended  Phase 1 was  designed to follow-up  exploration  at
priority gold  occurrences  discovered  and/or  advanced in the Phase 1 program.
Depending on prior work at  particular  showings,  follow-up  exploration  would
include but will not be limited to: drilling (Karabulak);  rock grab; continuous
channel and chip  sampling;  geophysical  surveying;  prospecting;  gridding and
mapping. The cost to complete the Phase 2 exploration would be contingent on the
results from Phase 1 and could not be estimated at the time of the completion of
the technical report.

PROPOSED EXPLORATION AND DEVELOPMENT PROGRAM

The  recommended  Phase 1 program was  initiated at the end of August 2005.  All
exploration  work on the  property is  conducted  under the  supervision  of Dr.
William  Tafuri,  the Company's Vice  President of  Exploration  and a Qualified
Person.  All  exploration  work on the  Bulakashu  Property is carried out staff
employed by BMC.

The recommended Phase 1 exploration  program on the Bulakashu Property commenced
in mid  September  of 2005.  Due to the late  start of the Phase 1  program  and
deteriorating fall weather conditions, field crews initially focused on a number
of  prospective  gold and copper  prospects  at higher  elevations,  leaving the
detailed  sampling program for the Karabulak  Prospect  (located at a relatively
lower elevations) until the end of the field season. A total of 604 surface grab
and chip samples were collected and submitted for analyses.  Additionally, a 112
line  kilometre,  100 metre line spaced,  ground  magnetic  survey was completed
covering a 11 square kilometre area including the Karabulak, Otradny and Severny
prospects.

Many of the showings on the project are  difficult to access on an ongoing basis
and there is very little access to contract helicopters in Kyrgyzstan. As a cost
effective  alternative to bringing in a foreign helicopter,  the Company elected
to create road access to a number of key target areas on the project. During the
fall of 2005, the Company purchased a refurbished  bulldozer and outfitted it to
work at high  elevations.  Not  only  has the road  construction  provided  fast
efficient,  4x4  vehicle  access to a number of showings  on the  project,  road
construction   has  created  new  exposure   and   identified   alteration   and
mineralization  that were not  previously  exposed.  A  bulldozer  road has been
pushed through to the Severny Porphyry Cu/Au prospect and a second road has been
pushed through to the Otradny prospect and beyond.

The Phase 1 reconnaissance prospecting, mapping and ground geophysics program to
date has now  delineated the surface trace of a north  northwest  dipping thrust
fault  associated  with the  Karabulak  prospect  over 5  kilometres.  This same
structure is associated with a number of existing and new mineral occurrences on
the property  including Otradny (Au) and Severny (Cu/Au  porphyry).  The Company
believes  that the thrust fault  associated  with  Karabulak  and other  mineral
showings on the property represents a large-scale  structural target and will be
the focus of the proposed 2006 exploration program at Bulakashu.

KARABULAK


In 2005,  additional surface sampling was conducted west- southwest of and along
strike  of the main  Karabulak  showing.  A total  of 95 grab  and 1 metre  chip
samples were  collected  from outcrops of altered,  sheared,  silicified  and/or
veined mafic volcanic rocks.  Of these samples,  17 returned assays greater than
0.10 g/t Au, ranging from nil to 2.97 g/t Au.


In August 2006,  the Company  collected an  additional  52 chip samples from the
possible extensions to the mineralization at Karabulak.  Assay results from this
sampling  ranged  from  nil to  1.68  g/t  Au.  Additionally,  a  dipole-dipole,
IP/resistivity  survey  totaling  three line  kilometres  was completed over the
Karabulak Prospect and projected extensions to the northeast and southwest along
strike.


The I.P.  survey  identified a northwest  shallow  dipping  resistivity  anomaly
coincident with the WSW trending, NNW dipping,  silicified quartz stockwork zone
exposed  on surface  at the main  Karabulak  showing.  The  resistivity  anomaly
indicates  that the quartz stock work zone remains open at least 200 metres down
dip to the northeast  and along strike to the  southwest.  These I.P.  anomalies
will be targeted for future drilling.


SEVERNY

Severny is a porphyry  copper-gold  prospect consisting of a porphyritic diorite
intruding  andesitic  volcanics.   The  andesites  are  often  metamorphosed  to
hornfelse and partially cap the diorite.  Alteration in the andesite ranges from
an outward zone,  approximately 4 square  kilometres,  of propylitic  alteration
expressed by chlorite, weak pyrite and epidote to an inward zone,  approximately
0.75  square  kilometres,  of  argillic  alteration  typified  by clay  and weak


                                      -37-
<PAGE>


sericite.  Copper-gold  mineralization is found in the diorite porphyry,  in the
contacts with the andesite,  in small dikes of the diorite  porphyry,  and along
faults that cut the andesite.

In the fall of 2005, a total of 102 one-metre chip samples were collected  along
the new  bulldozer  road cuts,  from altered and  mineralized  diorite dykes and
hornfelsed  volcanics.  Of these samples, 29 returned assays of greater than 0.1
g/t Au, and one sample  assayed  greater than 1.0 g/t Au (1.11 g/t Au). Of these
29 samples, seven samples contained greater than 0.10% Cu and averaged 0.39% Cu.

This year,  the road to Severny was extended  giving access to the upper part of
the prospect and  excellent  exposure in the  hornfelsed  volcanics  and limited
exposure of the upper most portion of the  underlying  diorite body.  Continuous
chip samples were  collected  along the road cuts where  bedrock was exposed.  A
total of 850 samples were collected to date during 2006 with assays ranging from
nil to 4.5% Cu and up to 37.7 g/t Au and one  continuous  series of 1 metre chip
samples over 48 metres of silicified  and quartz veined  andesite  returned 2.27
g/t Au over 48 metres.  A total of 357 assay  results  have been  received as of
late October 2006. Of these results, a total of 139 samples assayed greater than
0.1 g/t Au with an  additional  83 samples  assaying  greater than 1.0 g/t Au. A
total of 39 samples  assayed greater than 0.1% Cu with an additional 14 assaying
greater than 1.0% Cu. The  alteration  pattern and the  mineralization  found in
diorite dikes,  faults, and quartz veins gave rise to the speculation that there
may be a large buried  porphyry  Cu-Au target below the present  surface and the
wide-spread  vein and fracture  controlled Cu and Au  mineralization  sampled on
surface is leakage from the underlying porphyry system.

In  August  2006,  a  15  line  kilometre  dipole-dipole  IP/resistivity  survey
consisting of 200 metre spaced lines was completed over the Severny target area.
Results  of the  survey  defined a large  zone of  conductivity  (1 km by 2 km),
ranging  from 50-200  metres  from  surface and open to depth and to the NE. The
coincidence of this anomaly and the copper and gold mineralization identified on
surface further supports the exploration model of a buried porphyry Cu/Au system
at depth.

At the southwestern  side of the survey area, the I.P. survey  identified a very
strong,  steeply  dipping  resistivity  anomaly  coincident  with a shear hosted
quartz vein  system,  ranging in width from 10 to 50 metres  wide.  Early in the
summer,  four random  1-metre  chip samples  were  collected  from this zone and
returned results of 2.9, 4.1, 6.4 and 37.7 g/t Au.

Six diamond drill holes, totaling  approximately 1200 metres are planned to test
the Severny occurrence in November of 2006.

As of August 31,  2006,  the  Company  has  expended  approximately  $204,000 on
exploration activities on the Bulakashu property.

EASTERN SARY JAZ PROPERTY

In November 2005,  BMC, the Company's 100%  controlled  Kyrgyz  subsidiary,  was
granted an  exploration  licence  for the Eastern  Sary Jaz  Property in Eastern
Kyrgystan  (the "Eastern Sary Jaz  Property").  The Eastern Sary Jaz Property is
defined by Licence No: AP 303,  issued by KSAG and  comprises  912 km(2) in size
(the "Eastern Sary Jaz  Licence").  The boundary of the Eastern Sary Jaz Licence
area is defined by the following coordinates on the following map:

                  Corner        North Latitude               East Longitude

                  1                 42.3611                   79.4463
                  2                 42.3673                   80.0045
                  3                 42.2156                   80.1644
                  4                 42.2081                   79.45

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


                                      -38-
<PAGE>

required  that a minimum of US $80,000 be spent on the Eastern Sary Jaz Property
by December of 2006.  The Company has met this  commitment  for 2006 and pending
approval of its 2006 expenditures by the KSAG, the Company  anticipates that the
Eastern Sary Jaz Licence will be renewed for 2007. 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.

The Eastern Sary Jaz Property covers an area of 912 square  kilometres 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  kilometres  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 metres 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.

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 kilometres, onto the Eastern Sary Jaz property.

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.  During the 2006 field season,  field crews were successful
in discovering a series of quartz stockwork occurrences within a three kilometre
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.

TURGELDY PROPERTY

As a result of the Company's early success on the Eastern Sary Jaz Property,  in
August 2006,  the Company  expanded its land position by entering into an option
agreement to acquire from Eurasian a 100% interest in an area covering 25 square
kilometres  immediately  north of, and contiguous to, the Company's Eastern Sary
Jaz Property  (the  "Turgeldy  Property").  The Turgeldy  Property is defined by
Licence  No:  AP 88,  issued  by the  KSAG to  Eurasian's  wholly  owned  Kyrgyz
subsidiary,  Altyn  Minerals  and  comprises  25  km(2) in size  (the  "Turgeldy
Licence"). The boundary of the Turgeldy Licence area is defined by the following
coordinates on the following map:

         Corner          North Latitude          East Longitude

             1             42.390                    79.664
             2             42.390                    79.700
             3             42.400                    79.700
             4             42.400                    79.749
             5             42.365                    79.749
             6             42.365                    79.664

The exploration licence gives Altyn Minerals the exclusive rights to explore the
Turgeldy  Licence for a period up to May 12, 2007,  and renewable up to a period
of ten years. If the Company exercises its option to earn a 100% interest in the
Turgeldy  Licence,  the Turgeldy  Licence will be  transferred  to the Company's
wholly  owned  Kyrgyz  subsidiary,   BMC.  BMC  will  then  assume  all  license
maintenance  obligations  to the KSAG.  The Turgeldy  Property is without  known
reserves as defined by Guide 7 or NI 43-101 and all current and historic work on
the Turgeldy Property has been exploratory in nature.


                                      -39-
<PAGE>



Soviet era work on the Turgeldy  Property  identified a tungsten  skarn prospect
and three, gold in stream sediment anomalies,  later verified by Santa Fe Mining
Company and Newmont Mining Corp. (in late 1990's). In September of 2006, Company
field crews  completed a preliminary  mapping and sampling  program at Turgeldy,
the results of which are pending. Due to winter conditions, the 2006 exploration
program at Eastern Sary Jaz and  Turgeldy  has been shut down for the winter.  A
larger, more detailed exploration program is planned for 2007.

As of August 31,  2006,  the Company has expended  approximately  $27,000 on the
Eastern Sary Jaz and Turgeldy properties.

KOKJAR PROPERTY

In February of 2006, the KSAG granted BMC an exploration  licence to explore the
Kokjar Gold Silver Property in Northern Kyrgyzstan (the "Kokjar Property").  The
Kokjar  Property  is  defined  by  Licence  No:  AP 383  issued  by the KSAG and
comprises 238 km(2) in size (the "Kokjar  Licence").  The boundary of the Kokjar
Licence area is defined by the following coordinates on the following map:

         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

The  exploration  licence 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.  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 Eastern
Sary Jaz has been exploratory in nature.

The Kokjar  Property  acquired by the Company based on its favorable  geological
and structural  setting for hosting gold, silver and base metal  mineralization.
Although the KSAG granted the Company the Kokjar Licence, the Company's proposed
2006  exploration  program for the Kokjar Property was not approved by the KSAG,
and therefore the Company and KSAG did not enter into a licence  agreement  that
specified a work  commitment on the Kokjar  Property for 2006. As a result,  the
Company  was unable to conduct  any  exploration  work or incur any  significant
expenditures   on  the  Kokjar  Property  in  2006.  The  Company  is  currently
negotiating  with the KSAG to obtain  approval for a proposed  2007  exploration
program,  which if approved,  would become the basis for a licence agreement for
2007.

A proposed 2006  exploration  program was submitted to the KSAG for approval and
issuance of its 2006 licence agreement.  Unfortunately the licence 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  local  Hakim  has  no  legal  authority  to  deny  the  Company's
exploration rights to the Kokjar Property, the Company determined it was prudent
to resolve any local community concerns prior to proceeding with its exploration
activities.  The KSAG  recognizes  our attempt to resolve any concerns the local
Akim may have with our  proposed  exploration  of the  Kokjar  Property  and has
granted a one-year extension to the Kokjar Licence. The Company will continue to
work to alleviate any concerns the local  communities  have with our exploration
activities  prior to getting  approval for an exploration  contract for the 2007
field season.

The  Kokjar  Property  covers  an  area  of  238  square  kilometres  along  the
Kyrgzstan-Kazakhstan   border.   The  property  is  located   approximately  300
kilometres  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.  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 metres 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.



                                      -40-
<PAGE>


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.   The  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 licence area. The property is located  approximately 300
kilometres  east of the Kyrgyz  capital,  Bishkek  and is road  accessible.  The
nearest  airport is 50  kilometres  to the west at Cholpan Ata; the closest rail
access is approximately 150 kilometres to the west at Balykchi. A small capacity
power line is within 1.5 kilometres of the southern border of the property.

In 1998, Cameco Corporation  ("Cameco")  acquired the Kokjar Licence 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
metres) have been completed on the Quartz and Conglomerate targets.

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.  In the coming
weeks,  the Company  will be  acquiring  more  exploration  data from the Kokjar
project  and  a  detailed  compilation  of  this  historic  work  will  commence
immediately in preparation for the coming field season.

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 metres in width and from 40 to 1,000 metres 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 metres to 10 metres in width and
                  from 100 to 400 metres 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 metres,  including a single sample of this interval
assaying 55.1 g/t Au over 1 metre.

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

A great deal of historic data exists in the State Agency of Geology's archive in
Bishkek,  Kyrgyzstan.  The Company's  exploration staff continues to acquire and
compile all  available  data from the project in order to plan for the  upcoming
2007 field season. To date, the Company has incurred nominal costs on the Kokjar
Property.

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.



                                      -41-
<PAGE>


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 five 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.  indirectly
         owns Magellan Gold (BVI) Inc.

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 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.

                              ORGANIZATIONAL CHART

                          ----------------------------
                             Centrasia Mining Corp.
                               (British Columbia)
                          ----------------------------
                                       |
                                       |
                                       |
             --------------------------------------
             |                                     |
             |100%                                 |100%
             |                                     |
------------------------------        ------------------------------
      0724000 B.C. Ltd.                Magellan Holdings (BVI) Corp.
     (British Columbia)                  (British Virgin Islands)
------------------------------        ------------------------------
                                                   |
                                                   |100%
                                                   |
                                      ------------------------------
                                          Magellan Gold (BVI) Inc.
                                          (British Virgin Islands)
                                      ------------------------------
             |                                     |
             |                                     |100%
             |                                     |
                                 ---------------------------------
                                 |                               |
                                 |100%                           |100%
                                 |                               |
                     --------------------------      --------------------------
                          Bulakashu Mining                Centrasia Mining
                            Company Ltd.                   Kazakhstan Ltd.
                          (Kyrgyz Republic)           (Republic of Kazakhstan)
                     --------------------------      --------------------------




                                      -42-
<PAGE>



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 Mr. 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."

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, 2006,  2005,  and the period  February 4, 2004 to May
31,  2004,  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 15 of the consolidated  financial statements of
the Company  included  herein.  The noon rate of exchange on November  24, 2006,
reported  by the  United  States  Federal  Reserve  Bank  of New  York,  for the
conversion of Canadian  dollars into United  States  dollars was CDN $1.1346 (US
$0.8814 = CDN $1.00).  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

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


                                      -43-
<PAGE>

         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.

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.

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, 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:



                                      -44-
<PAGE>


     -   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;
     -   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;
     -   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
         travelled to Europe to discuss financing opportunities for the Company;
     -   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;
     -   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;
     -   during 2006, the Company  incurred  corporate  development  expenses of
         $60,655 for a market awareness and promotional campaign;
     -   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;
     -   during   2006,   the   Company   paid   salaries  of  $75,193  for  the
         administrative staff in the BMC office in the Kyrgyz Republic; ? 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;
     -   incurred  professional  fees of  $151,170  (2005 - $9,514)  mainly  for
         services  provided by Mr.  William  Tafuri  (officer)  and Mr. Oleg Kim
         (director) in the office in the Kyrgyz Republic; and
     -   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.

LIQUIDITY AND CAPITAL RESOURCES

As at May 31, 2006, the Company had working  capital of $1,153,009.  The Company
may require  additional  funding to identify and acquire new mineral  properties
and  conduct   exploration   activities,   and  or   investigate   new  business
opportunities.  If needed,  the Company would be required to conduct  additional
financings;  however,  there is no  assurance  that funding will be available on
terms acceptable to the Company or at all.

The Company  does not have any loans or bank debt and there are no  restrictions
on the use of its cash resources.

Except for the Company's  commitments  under the Kantanna  Option,  there are no
material  commitments for capital  expenditures during fiscal 2007. See "Item 4.
Information on the Company - Business  Overview - Kantanna  Option" and "Item 4.
Information on the Company - Plan of Operation."

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


                                      -45-
<PAGE>


RESEARCH AND DEVELOPMENT

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 or 2004.  During  fiscal  2005,  the  Company  advanced
$268,346 to BMC.

No dispositions occurred during fiscal 2006, 2005 or 2004.

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.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The Company has obligations under the Kantanna Option.  See "Item 4. Information
on the Company - Business  Overview - Kantanna  Option".  As a result, as of May
31,  2006,  the  Company  had  the  following   remaining   option   contractual
obligations:

                                      SHARE
DATE                                ISSUANCES           COMMITMENTS
                                  --------------     ------------------

December 31, 2006                       250,000         US $   690,000
December 31, 2007                       375,000         US $   650,000
December 31, 2008                             -         US $   750,000
                                  --------------     ------------------
                                        625,000          US $2,090,000
                                  ==============     ==================

The Company may elect not to incur these expenditures or issue the common stock,
in which case Kantanna may "put" back to the Company the Purchase Shares and the
Company  may  lose  all or  some  of its  ownership  interest  in the  Bulakashu
Property.

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

In  connection  with the  Centrasia  Acquisition,  Andrew  Carter and Harvey Lim
resigned as  directors  of the  Company,  Mr.  Henstridge  resigned as Corporate
Secretary and Mr.  DeMare  resigned as President  and Chief  Executive  Officer.
Additionally, Douglas Turnbull, Gregory Crowe, Lindsay Bottomer, Cary Pinkowski,
and Oleg Kim were  appointed  to the  Board of  Directors  of the  Company,  Mr.
Turnbull was appointed as President and Chief Executive  Officer of the Company,
William  J.  Tafuri was  appointed  as the Vice  President  of  Exploration  and
Director of  Operations,  Asia,  and James  Harris was  appointed  as  Corporate
Secretary of the Company.

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:

                                      -46-
<PAGE>

<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
--------------------------------------------------------------------------------------------
Gregory Crowe        Director                          September 12, 2005 to present
--------------------------------------------------------------------------------------------
Lindsay Bottomer     Director                          September 14, 2005 to present
--------------------------------------------------------------------------------------------
Cary Pinkowski       Director                          September 14, 2005 to present
--------------------------------------------------------------------------------------------
Oleg Kim             Director                          September 14, 2005 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 43), 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 50% of his time (20 hours
per week) to the business and affairs of the Company.

NICK DEMARE (AGE 52), 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.  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


                                      -47-
<PAGE>



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."

GREGORY CROWE (AGE 53), DIRECTOR

Mr. Crowe is a registered Professional Geologist in the provinces of Alberta and
British  Columbia.  Mr.  Crowe  has  20  years  of  exploration,   business  and
entrepreneurial  experience throughout North America, Latin America,  Africa and
Southeast Asia.  After leaving Anaconda Canada in 1984, Mr. Crowe co-founded and
was  President  of  Azimuth   Geological  Inc.  This  private  company  provided
exploration and management  services to companies in the junior and major mining
sectors, including Rio Algom, Westmin Mines, Lafarge Canada and the Prime Group.
In the 1990's,  Mr. Crowe  re-focused his exploration  efforts on Latin America.
From 1994 to 1998,  Mr. Crowe was  instrumental  transforming  Yuma Copper Corp.
from a junior  exploration  company into a copper producer with two active mines
in Chile.  Since July 2002, Mr. Crowe has been the President of Entree Gold Inc.
Mr. Crowe currently serves as a director on the board of Entree Gold Inc., Acrex
Ventures  Ltd. and Altima  Resources  Ltd. See "Item 7. Major  Shareholders  and
Related  Party   Transactions  -  Related  Party  Transactions  -  Conflicts  of
Interest." Mr. Crowe is also a director of Yuma Copper Corp. an inactive company
listed on the TSX-V.  On January 2, 1998,  the BCSC  issued a cease  trade order
against Yuma Copper Corp.  for failure to file financial  statements.  The cease
trade order is still outstanding.

LINDSAY BOTTOMER (AGE 58), DIRECTOR

Mr.  Bottomer  is a  professional  geologist  with over 30 years  experience  in
mineral  exploration,  worldwide.  For the past 13 years Mr.  Bottomer  has been
based in Vancouver working with Prime Equities International  Corporation,  Echo
Bay Mines,  and as a consultant to a number of junior resource  companies.  From
July 2001 to November  2005,  Mr.  Bottomer  was the  President  of Southern Rio
Resources Ltd. Mr. Bottomer was President of the BC & Yukon (Canada)  Chamber of
Mines from 1998 to 2000. Mr.  Bottomer  currently  serves as a director of Amera
Resources  Corporation,  Entree Gold Inc.,  Silver Quest Resources  Ltd.,  Titan
Uranium Inc. and Yale Resources Ltd. See "Item 7. Major Shareholders and Related
Party Transactions - Related Party Transactions - Conflicts of Interest."

OLEG KIM (AGE 47), 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."

WILLIAM J. TAFURI (AGE 65), VICE-PRESIDENT EXPLORATION

Mr.  Tafuri has a Ph.D.  in geology and over 30 years of mining and  exploration
experience in precious and base metals.  In addition to Mr. 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, Mr. Tafuri worked primarily in


                                      -48-
<PAGE>


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,  Mr.  Tafuri  served  as  regional  geologist  for Santa Fe  Pacific  Gold
Corporation in Kazakhstan.  For the year following,  Mr. 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, Mr. Tafuri worked for Kinross Gold Corporation  principally  involved with
the evaluation of projects in Russia,  North and South America.  Since 2001, Mr.
Tafuri has  focussed on his  consulting  business,  mainly  conducting  property
evaluations  in  Kazakhstan.  Mr.  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."  Mr. Tafuri  devotes all of his time  (approximately  40
hours per week) to the affairs of the Company.

JAMES HARRIS (AGE 55), 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 an employment contract (the "Turnbull Agreement") between 724 BC and
Douglas  Turnbull  dated April 1, 2004 as amended,  the Company has employed Mr.
Turnbull to act as President and CEO of 724 BC effective as of April 1, 2004 and
as President and CEO of the Company effective as of September 14, 2005. The term
of the Turnbull  Agreement  was for an initial  period of two years  expiring on
April 1, 2006, subject to earlier  termination in accordance with the agreement.
The Turnbull 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. The Turnbull Agreement was renewed for
a one-year period on April 1, 2006.

Pursuant to the Turnbull  Agreement,  Mr. Turnbull agreed to spend approximately
fifty percent of his working hours, or up to 10 working days per month,  working
for the Company.  In consideration  for the services provided by Mr. Turnbull to
the Company, the Company pays Mr. Turnbull a base salary of $5,000 per month. In
addition,  the Company  agreed to pay to Mr.  Turnbull $500 for each full day in
excess of 10 days worked by Mr.  Turnbull  during any calendar  month during the
term of the Turnbull Agreement.

Pursuant  to the  Turnbull  Agreement,  in  the  event  that  the  agreement  is
terminated  by the Company  without  cause,  the  Company  agreed to provide Mr.
Turnbull with one week's notice, or at its election,  it may pay to Mr. Turnbull
an amount,  inclusive of all termination and severance amounts payable under the
agreement,  equal to one  week of base  salary  or such  greater  amount  as the
Company may be required to give to Mr.  Turnbull under the Employment  Standards
Act (British Columbia). The Employment Standards Act (British Columbia) provides
for  severance  payments or notice or a  combination  of both equal to two weeks
after 12 months employment and after three years  employment,  one week for each
completed year of employment to a maximum of eight weeks.

During the financial  year ended May 31, 2006,  the Company and 724 BC have been
billed a total of  $80,500  by  Lakehead  Geological  Services  Inc.,  a private
corporation owned by Mr. Turnbull, for Mr. Turnbull's services.

During fiscal 2006,  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 Mr. Tafuri to act as its  Vice-President of Exploration and Director of


                                      -49-
<PAGE>

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. Mr. Tafuri agreed to spend  approximately 100% percent
of his working hours working for the Company.  In consideration for the services
provided by Mr. Tafuri to the Company, the Company pays Mr. 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
our  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  our
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, 2006, 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,  2006,  the  Company  had two Named
Executive  Officers,  Mr. Douglas Turnbull,  the Company's President and CEO and
Mr. Nick  DeMare,  the  Company's  former  President  and CEO and the  Company's
current 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, 2004, 2005 and 2006.


                                      -50-
<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)        2006     61,025(4)     nil        nil      300,000 / nil        n/a         n/a        nil
President & CEO            2005        n/a        n/a        n/a          n/a / n/a        n/a         n/a        n/a
                           2004        n/a        n/a        n/a          n/a / n/a        n/a         n/a        n/a
-------------------       -----     ------------------------------    ----------------------------   --------   --------

Nick DeMare(3)             2006        nil        nil        nil      275,000 / nil        n/a         n/a     86,458(5)
CFO                        2005        nil        nil        nil       75,000 / nil        n/a         n/a     69,325(5)
                           2004        nil        nil        nil          nil / nil        n/a         n/a     38,800(5)
-------------------       -----     ------------------------------    ----------------------------   --------   --------

</TABLE>

NOTES:
(1)  Fiscal year ended May 31.
(2)  Represents options granted during a particular year. See "Options and Other
     Rights to Acquire Securities".
(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  from
     September  14,  2005,  the  date  of  appointment  of Mr.  Turnbull  as the
     Company's  President  and  CEO,  to May  31,  2006.  See  also  "Management
     Contracts".
(5)  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.   See  also  "Management
     Contracts".

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,  2006 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                300,000           12.32%            0.20                  0.20              Sept.14/10

Nick DeMare                     300,000(3)        12.32%            0.20                  0.20              Sept.14/10

----------------------------------------------------------------------------------------------------------------------
</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
     TSXV. The exercise price of stock options may only be adjusted in the event
     that specified events cause dilution of the Company's share capital.
(3)  Includes 25,000 options granted to Chase.


                                      -51-
<PAGE>




The following  table sets forth details of all exercises of stock options during
the financial year ended May 31, 2006 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              150,000 / 150,000            175,500 / 175,500

Nick DeMare(2)                    nil                n/a              150,000 / 150,000            175,500 / 175,500

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

NOTES:
(1)  The closing price of the Company's shares on May 31, 2006 was $1.37.
(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
installments, exceeding $100,000.

COMPENSATION OF DIRECTORS

CASH COMPENSATION

During  the  financial  year ended May 31,  2006,  the  Company  paid a total of
$68,247 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,  2006  to the  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
Executive Officers             975,000             40.04%            0.20                  0.20             Sept.14/10

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

                                      -52-
<PAGE>


The following  table sets forth details of all exercises of stock options during
the  financial  year ended May 31, 2006 by the  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
Executive Officers                  nil               n/a             487,500 / 487,500            570,375 / 570,375

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

NOTE:
(1)  The closing price of the Company's shares on May 31, 2006 was $1.37.

INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS OF THE COMPANY

During the  Company's  last  completed  financial  year ended May 31,  2006,  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.

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:

    -    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.
    -    Review and appraise the performance of the Company's external auditors.
    -    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.



                                      -53-
<PAGE>


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).

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.


                                      -54-
<PAGE>


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                        NO                     YES
Gregory Crowe                     YES                     YES
Lindsay Bottomer                  YES                     YES
--------------------------------------------------------------------------------
(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.  Gregory  Crowe  and  Lindsay
Bottomer are mining  executives  with extensive  experience in the industry.  As
such each has acquired a 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".

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).  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 - Employees and "Item 4.  Information  on the
Company - Employees."


                                      -55-
<PAGE>


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 October 31, 2006.

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

Common Stock      Douglas Turnbull               1,925,100 (2)        11.05%
Common Stock      Nick DeMare                      736,056 (3)         4.18%
Common Stock      Gregory Crowe                    385,000 (4)         2.22%
Common Stock      Lindsay Bottomer                 375,000 (5)         2.17%
Common Stock      Cary Pinkowski                 2,704,000 (6)        15.13%
Common Stock      Oleg Kim                         925,000 (7)         5.30%
Common Stock      William J. Tafuri                725,000 (8)         4.16%
Common Stock      James Harris                     370,000 (9)         2.14%
                                                 ---------
Common Stock      TOTAL GROUP (8 persons)        8,145,156(10)        40.99%
                                                 =========
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 October 31, 2006, 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 17,120,267  shares of common stock  outstanding  as of October 31,
     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  300,000  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 315,000 shares;
     f.   options held by Chase to acquire  25,000  shares;
     g.   warrants held by Marbella to acquire 150,000 shares.
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(4)  Includes the following shares and options beneficially owned by Mr. Crowe:
     a.   200,000 shares held by Mr. Crowe; and
     b.   options held by Mr. Crowe to acquire 185,000 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.
     Bottomer:
     a.   185,000 shares held by Mr. Bottomer;
     b.   options held by Mr. Bottomer to acquire 185,000 shares; and
     c.   warrants held by Mr. Bottomer to acquire 5,000 shares..
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(6)  Includes the following shares,  options and warrants  beneficially owned by
     Mr. Pinkowski:
     a.   1,954,000 shares held by Mr. Pinkowski;
     b.   options held by Mr. Pinkowski to acquire 400,000 shares; and
     c.   warrants held by Mr. Pinkowski to acquire 350,000 shares.
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(7)  Includes the following shares and options beneficially owned by Mr. Kim:
     a.   600,000 shares held by Kantanna, a company controlled by Mr. Kim; and
     b.   options held by Mr. Kim to acquire 325,000 shares.
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(8)  Includes the following shares,  options and warrants  beneficially owned by
     Mr. Tafuri:
     a.   400,000 shares held by Mr. Tafuri; and
     b.   options held by Mr. Tafuri to acquire 325,000 shares.
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."


                                      -56-
<PAGE>


(9)  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 185,000 shares.
     See "Item 6. Directors, Senior Management and Employees - Options, Warrants
     and Other Rights to Acquire Securities."
(10) See footnotes 2 through 9 above.

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

OPTIONS, WARRANTS AND OTHER RIGHTS TO ACQUIRE SECURITIES

Pursuant to the terms of the Kantanna Option,  the Company must issue a total of
1,025,000 common shares (400,000 common shares issued to date) of the Company to
acquire a 100% interest in the Bulakashu  Property.  See "Item 4. Information on
the Company - Business  Overview - Kantanna Option." Mr. Oleg Kim, a director of
the Company, directs or controls Marsa and Kantanna.

Additionally,  as of October  31,  2006,  the  Company had granted or reserved a
number of stock options and issued a number of warrants  pursuant to which up to
10.878,373 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.

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.
The maximum of aggregate  number of common shares to be reserved and  authorized
to be issued  pursuant to options  granted  under the Plan is  2,500,000  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 October 31, 2006,  an aggregate of 2,435,000  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

</TABLE>


                                      -57-
<PAGE>

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------
                           NATURE                NO. OF        EXERCISE
OPTIONEE                   OF OPTION             OPTIONS      PRICE/SHARE   EXPIRY DATE
                                                                   $
-----------------------------------------------------------------------------------------------
<S>                       <C>                 <C>               <C>         <C>

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
Victoria Badiukova         Consultant             50,000         0.20        September 14, 2010
Dmitriy Genrihovich
   Vedeshkin-Ryabov        Consultant             50,000         0.20        September 14, 2010
Larry Aligizakis           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
Jordan Shapiro             Investor Relations    100,000         0.79        November 21, 2010
                                               ---------
TOTAL:                                         2,435,000
                                               =========

</TABLE>

In addition, as of October 31, 2006, the Company has granted, subject to Company
shareholder  approval,  an  aggregate  of  965,000  incentive  stock  options to
purchase common shares of the Company to the following persons:

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------
                           NATURE                NO. OF        EXERCISE
OPTIONEE                   OF OPTION             OPTIONS      PRICE/SHARE   EXPIRY DATE
                                                                   $
-----------------------------------------------------------------------------------------------
<S>                       <C>                   <C>            <C>          <C>
Accent Marketing Ltd.      Investor Relations    200,000        $1.15        February 8, 2011
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
Dmitriy Genrihovich
   Vedeshkin-Ryabov        Consultant             25,000        $0.70        September 14, 2011
Irina Nikolaevna 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
                                                 -------
Total:                                           965,000
                                                 =======
</TABLE>


On November 17, 2006, 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 874,000  shares,  from  2,500,000  shares
(approved at the shareholders'  meeting held on September 12, 2005) to 3,374,000
shares.

As of October 31, 2006, the directors and officers of the Company, as a group (8
persons), held, or have been granted subject to shareholder approval, options to
purchase 2,245,000 shares of the Company's common stock.



                                      -58-
<PAGE>



WARRANTS

As of October  31,  2006,  there were  non-transferable  common  share  purchase
warrants exercisable for the purchase of 7,728,373 common shares as follows:

                              EXERCISE
       NUMBER                   PRICE
                                  $                     EXPIRY DATE

    1,640,873                    0.78                   April 28, 2007
    5,837,500                    0.40                   September 14, 2007
    ---------
    7,478,373
    =========

As of October 31, 2006, the directors and officers of the Company, as a group (8
persons),  held  warrants to purchase  505,000  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 October 31,
2006.

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

Common Stock      Douglas Turnbull               1,925,000 (2)          11.05%
Common Stock      Cary Pinkowski                 2,704,000 (3)          15.13%
Common Stock      Oleg Kim                         925,000 (4)           5.30%

(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 October 31, 2006, 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 17,120,267  shares of common stock  outstanding  as of October 31,
     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  300,000  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. Pinkowski:
     a.   1,954,000 shares held by Mr. Pinkowski;
     b.   options held by Mr. Pinkowski to acquire 400,000 shares; and
     c.   warrants held by Mr. Pinkowski to acquire 350,000 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. Kim:
     a.   600,000 shares held by Kantanna , a company controlled by Mr. Kim; and
     b.   options held by Mr. Kim to acquire 325,000 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.


                                      -59-
<PAGE>


ESCROWED SHARES

CALEX ESCROWED SHARES

As of October 31,  2006,  a total of 116,176  common  shares of the Company were
held in escrow as follows:
                                                            NO. OF SHARES
        NAME OF BENEFICIAL HOLDER                           HELD IN ESCROW

        Ted Carlsen                                              32,500
        Ted Carlsen and Monica Carlsen                            1,500
        Desmond O'Kell (1)                                       82,176
                                                                -------
        Total                                                   116,176
                                                                =======

     (1)  Held by Greystoke  Investments  Inc., a private  company  owned by Mr.
          O'Kell.

The Company and the above-names  beneficial owners of common shares entered into
a  Surplus   Securities   Escrow   Agreement   dated  September  26,  2001  with
Computershare  Investor Services Inc. (the "CalEx Escrow Agreement") pursuant to
which 290,439  common shares (the "CalEx Escrow  Shares") are currently  held in
escrow.  Pursuant to the terms of the CalEx  Escrow  Agreement  the CalEx Escrow
Shares are subject to release from escrow at six-month  intervals  over a period
ending on September 27, 2007. The CalEx Escrowed  Shares are being 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  September  27, 2003,  and in
equal tranches of 10% for the remaining  eight tranches  ending on September 27,
2007.

The CalEx Escrow Agreement  provides that the CalEx Escrow Shares 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 CalEx 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 October 31,  2006,  the  following  Value  Escrowed
Securities were held in escrow:
                                                    NO. OF SHARES
         NAME OF BENEFICIAL HOLDER                 HELD IN ESCROW

         Douglas Turnbull                              1,440,090
         Cary Pinkowski                                  900,000
         Gregory Crowe                                   157,500
         Lindsay Bottomer                                157,500
         James Harris                                    157,500
         William J. Tafuri                               360,000
         Robin Merrifield                                157,500
                                                       ---------
         Total                                         3,330,090
                                                       =========

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


                                      -60-
<PAGE>


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.

VALUE ESCROWED SHARES

Upon completion of the Centrasia  Acquisition,  a total of 300,000 shares of the
Company's  common stock held by  shareholders  described  below were escrowed in
accordance with the policies of the TSX-V (the "Value  Escrowed  Securities") in
connection  with the  Centrasia  Acquisition  and are  subject to the terms of a
Value Security  Escrow  Agreement  entered into between the Issuer,  each of the
individuals named below and Computershare Investor Services Inc.

The Value  Escrowed  Securities  will be released  from  escrow on an  automatic
three-year time release,  at six month intervals,  with a first tranche released
on September  14, 2005,  of 30,000  shares and in equal  tranches of 15% for six
tranches  ending on the 36th month from  September  14, 2005.  As of October 31,
2006, the following Value Escrowed Securities were held in escrow:

                                                  NO. OF SHARES
         NAME OF BENEFICIAL HOLDER               HELD IN ESCROW

         Kantanna Company Limited                       120,000
         Douglas Turnbull                                15,000
         Gregory Crowe                                   15,000
         Lindsay Bottomer                                15,000
         James Harris                                    15,000
                                                        -------
         Total                                          180,000
                                                        =======

The escrow agreement provides that the Value 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 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

The following tables lists the  shareholders,  each of whom  beneficially  owned
five percent or more of the  Company's  outstanding  common shares as of October
31, 2006,  who acquired  their shares as a result of the Centrasia  Acquisition.
See  "Item 4.  Information  on the  Company  -  Business  Overview  -  Centrasia
Acquisition."  None of the following  shareholders  held shares of the Company's
common stock prior to the Centrasia Acquisition.

                  NAME OF SHAREHOLDER
                  -------------------
                  Douglas Turnbull
                  Cary Pinkowski
                  William Tafuri

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 October 31, 2006, there were  approximately six (6) registered  holders of
the Company's  common  shares in the United  States,  with combined  holdings of
1,600,563 shares,  representing  9.35% of the issued shares of the Company.  The


                                      -61-
<PAGE>


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 February 4, 2004 (the date of
incorporation  of 724 BC) through  October 31, 2006, 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 has entered into a Management Agreement dated September 14,
         2005,  with  Chase,  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 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.  See  "Item 6.  Directors,  Senior  Management  and
         Employees - Directors and Senior  Management"  and "Item 6.  Directors,
         Senior Management and Employees - Compensation - Executive Compensation
         - Centrasia -  Employment  Agreements."  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.  During the year ended May 31, 2006,  and the period from June
         1, 2006 to October 31,  2006,  the Company was billed by Chase  $86,458
         and  $36,100,  respectively.  During  the year  ended May 31,  2005 the
         Company paid Chase $nil. During the period from February 4, 2004 to May
         31, 2004, the Company paid Chase $nil.

2.       James Harris,  is  associated  with the law firm of James L. Harris Law
         Corporation,  a firm which  provides  legal services to the Company and
         provides  legal  services to the Company.  Mr.  Harris is the corporate
         secretary and a shareholder of the Company.

         Until  September 14, 2005,  Mr. Harris was a shareholder  of 724 BC and
         had  loaned  724 BC an  aggregate  of $5,000  as part of the  Centrasia
         Loans.

         During the fiscal  years ended May 31,  2006,  2005 and the period from
         February 4, 2004 to May 31, 2004,  James L. Harris Law  Corporation was
         paid $112,695,  $25,819 and $3,437,  respectively,  by the Company.  In
         addition,  during the period  from June 1, 2006 to  October  31,  2006,
         James L. Harris Law Corporation billed $16,000 to the Company.

3.       During the fiscal  years ended May 31,  2006,  2005 and the period from
         February  4, 2004 to May 31,  2004,  the  Company  was billed  $97,513,
         $43,467 and $6,608, respectively,  by Mr. William Tafuri, an officer of
         the Company, for supervision of the Company's  exploration projects and
         review of potential  mineral  projects.  During the period from June 1,
         2006 to October 31, 2006, the Company was billed 48,535 by Mr. Tafuri.


                                      -62-
<PAGE>


4.       Pursuant to an employment  agreement  with its  President,  Mr. Douglas
         Turnbull, during the fiscal year ended May 31, 2006, the Company paid a
         total of $80,500 management fees to Lakehead Geological Services,  Inc.
         ("Lakehead"),  a private corporation owned by Mr. Turnbull.  During the
         fiscal year ended May 31, 2005,  the Company paid  Lakehead  management
         fees totalling $60,000.  During the period from February 4, 2004 to May
         31, 2004, the Company was billed $18,000 by Lakehead. During the period
         from June 1, 2006 to October 31, 2006,  the Company was billed  $36,225
         by Lakehead.

         See "Item 6. Directors,  Senior Management and Employees - Compensation
         - Executive Compensation - Centrasia - Employment Agreements."

5.       The  Company  has  entered  into or been  assigned  various  agreements
         relating to the Company's  acquisition of an interest in BMC. See "Item
         4. Information on the Company - Business  Overview - Kantanna  Option."
         These agreements  include the Kantanna  Option,  the Loan Agreement and
         the BMC Loan.

         In order to exercise  the  Kantanna  Option in full,  the Company (as a
         result of the  acquisition of 724 BC) must make cash payments  totaling
         US $120,000  and issue  1,025,000  common  shares to Marsa as well fund
         exploration and  development  programs.  Further,  the Company has also
         agreed to initiate a pre-feasibility  study as a possible  precursor to
         production,  at such  time as the  Company  has  defined  an  indicated
         reserve (as defined by JORC or CIM reserve  standards) on the Bulakashu
         Property  of not less than  300,000  ounces  of gold.  In the event the
         Company  fails to meet any of its  commitments  or  commits a  material
         breach of the  Kantanna  Option,  Kantanna has the right to require the
         Company to return any shares  received  and  forgive  the  Commitments.
         Marsa  is a  private  company  controlled  by Mr.  Oleg  Kim who is the
         managing director and a participant of Marsa and,  effective  September
         14,  2005 was  elected  as a  director  of the  Company.  See  "Item 4.
         Information on the Company - Business  Overview - Kantanna Option" Oleg
         Kim is also  the  managing  director  of BMC.  In  connection  with the
         Centrasia Acquisition and pursuant to the terms of the Kantanna Option,
         Douglas Turnbull (an officer, director and principal shareholder of the
         Company) and William  Tafuri (an officer of the Company) were appointed
         as managers of BMC. See "Item 4.  Information on the Company - Business
         Overview - Kantanna Option" and "Item 6. Directors,  Senior  Management
         and Employees - Directors and Senior Management."

6.       Douglas Turnbull,  Lindsay Bottomer, James Harris and Gregory Crowe are
         all  directors  and/or  officers  of 724 BC and  advanced  to 724 BC an
         aggregate  of $20,000 as part of the  Centrasia  Loans.  The  following
         table  sets  forth the amount  advanced  by each of  Messrs.  Turnbull,
         Bottomer, Harris and Crowe.

                                                  AMOUNT
                                                 OF LOAN

                  Douglas Turnbull                $5,000
                  Lindsay Bottomer                $5,000
                  James Harris                    $5,000
                  Gregory Crowe                   $5,000
                                                 -------
                  Total                          $20,000
                                                 ========

         Messrs.  Turnbull,   Bottomer,  Harris  and  Crowe  are  also  officer,
         directors and/or principal  shareholders of the Company.  The Centrasia
         Loans  had an  interest  rate  of  10%  per  annum.  Pursuant  to  Debt
         Settlement Agreements between the Company, 724 BC and Messrs. Turnbull,
         Bottomer,  Harris and Crowe, all of which are dated March 30, 2005, the
         Company acquired the Centrasia Loans on September 14, 2005, in exchange
         for an aggregate of 100,000  common shares of the Company in connection
         with the Centrasia Acquisition.  See "Item 10. Additional Information -
         Material   Contracts."   The  interest  was  paid  to  the   respective
         individuals in cash by the Company on September 14, 2005.

         During the fiscal  years  ended May 31,  2005 and 2004,  724 BC did not
         make any principal or interest payment on the Centrasia Loans.



                                      -63-
<PAGE>


         During the period from June 1, 2005 to September 30, 2005,  the Company
         issued the following  shares and made the  following  cash payments for
         interest  on the  Centrasia  Loans in  connection  with  the  Centrasia
         Acquisition.

                 --------------------------------------------------------
                          PERIOD FROM JUNE 1, 2005 TO SEPTEMBER 30, 2005
                 --------------------------------------------------------
                                                           CASH PAYMENT
                                                          OF OUTSTANDING
                                        COMMON SHARES         INTEREST
                 --------------------------------------------------------
                 Douglas Turnbull            25,000             $538
                 Lindsay Bottomer            25,000             $538
                 James Harris                25,000             $474
                 Gregory Crowe               25,000             $451
                 --------------------------------------------------------

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

8.       See  also  "Item  7.   Significant   Shareholders   and  Related  Party
         Transactions - Escrowed Shares."

9.       See also "Item 4.  Information  on the  Company -  Business  Overview -
         Centrasia  Acquisition."  At the  time  of  entering  into  the  Formal
         Agreement,  the  transaction  was conducted on an  arms'-length  basis;
         however, on the effective date of the acquisition,  September 14, 2005,
         Messrs.  Turnbull and Crowe had been  appointed as members of the board
         of directors of the Company.

10.      The Company leases 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
         Mr. Turnbull. 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.  Effective  July 1, 2006,  Lakehead is no longer paid rent by the
         Company.

11.      During the fiscal years ended May 31, 2006 and 2005, Oleg Kim, received
         US $60,300  and US $3,411  respectively,  in  compensation.  During the
         period from June 1, 2006 through October 31, 2006, the Company recorded
         US $15,000 in compensation  for Mr. Kim. This amount remained unpaid as
         of  the  date  of  this  annual  report.  "Item  6.  Directors,  Senior
         Management and Employees - Compensation".

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,  2006,  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


                                      -64-
<PAGE>

disclosed in accordance with the requirements of the British  Columbia  BUSINESS
CORPORATIONS  Act, as amended (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>

----------------------------------------------------------------------------------------------------------------
NAME OF
DIRECTOR/OFFICER      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
                      Consolidated Kookaburra Resources      Director                   June 1988 to present
                      Ltd.
                      GGL Diamonds Corp.                     Director                   May 1989 to present
                      GeoPetro Resources Company             Director                   March 2006 to present
                      Gold Point Energy Corp.                Director                   August 2003 to present
                      Golden Peaks Resources Ltd.            Director                   January 1992 to present
                      Goldmarca Limited                      Director                   September 2000 to present
                      Halo Resources Ltd.                    Director                   January 1996 to present
                                                             Chairman and CFO           February 2005 to present
                      Lariat Energy Ltd.                     Director                   April 2003 to present
                      Mawson Resources Limited               Director                   March 2004 to present
                      Mirasol Resources Ltd.                 Director                   August 2005 to present
                      Mulligan Capital Corp.                 Director                   November 2005 to present
                      Tinka Resources Limited                Director                   October 2002 to present
                      Tumi Resources Limited                 Director                   January 2001 to present
----------------------------------------------------------------------------------------------------------------
Gregory Crowe         Acrex Ventures Ltd.                    Director                   June 2001 to present
                      Entree Gold Inc.                       President and CEO          July 2002 to present
                      Altima Resources Ltd.                  Director                   November 2003 to present
----------------------------------------------------------------------------------------------------------------
Lindsay Bottomer      Entree Gold Inc.                       Director                   June 2002 to present
                      Amera Resources Corporation            Director                   February 2004 to present
                      Silver Quest Resources Ltd.            Director                   December 2005 to present
                      Titan Uranium Inc.                     Director                   June 2005 to present
                      Yale Resources Ltd.                    Director                   December 2005 to present
----------------------------------------------------------------------------------------------------------------
</TABLE>

Messrs.  Oleg Kim and Cary Pinkowski are not currently  directors or officers of
any company which is a reporting  issuer in Canada or the United  States,  other
than the Company.


                                      -65-
<PAGE>


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 Turnbull Agreement,  the Kim 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  -
Executive Compensation - Centrasia - Employment Agreements."


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

DESCRIPTION OF FINANCIAL STATEMENTS                                   PAGES

Audited Consolidated Financial Statements for the
Years Ended May 31, 2006 and 2005 and the Period
February 4, 2004 to May 31, 2004.                                   F-1 to F-25

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.

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 is classified as a Tier 2 company.

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.


                                      -66-
<PAGE>


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, 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
May 31, 2002 (2)(3)             114,384                $0.70           $0.17

(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.
(3)  Trading in the Company's  shares was halted on May 3, 2001 to allow for the
     announcement of the acquisition of California  Exploration  Inc. The shares
     resumed trading on July 12, 2001.

                                                    ---------------------------
                                                           SALES PRICE
                                                    ---------------------------
QUARTER ENDED                    VOLUME                 HIGH            LOW
                                                    ------------   ------------
August 31, 2006                 631,400                $1.35           $0.65
May 31, 2006                  2,194,722                $1.53           $0.95
February 28, 2006             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
May 31, 2005(1)                       -                  -               -
February 28, 2005(1)             86,150                $0.33           $0.23
November 30, 2004                31,750                $0.29           $0.21

(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.

                                                    ---------------------------
                                                           SALES PRICE
                                                    ---------------------------
MONTH ENDED                      VOLUME                 HIGH            LOW
                                                    ------------   ------------
October 31, 2006                318,750                $0.75           $0.43
September 30, 2006              424,501                $0.72           $0.45
August 31, 2006                 159,500                $0.80           $0.65
July 31, 2006                    79,300                $0.85           $0.70
June 30, 2006                   392,600                $1.35           $0.80
May 31, 2006                  1,013,270                $1.47           $1.02

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

                                                    ---------------------------
                                                          BID PRICE (US$)
                                                    ---------------------------
YEAR ENDED                       VOLUME                 HIGH            LOW
                                                    ------------   ------------
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
May 31, 2002 (1)                632,700                $1.72           $0.04

(1)  The Company's  common stock commenced  trading on the OTC-BB on January 22,
     2002.


                                      -67-
<PAGE>


                                                    ---------------------------
                                                          BID PRICE (US$)
                                                    ---------------------------
QUARTER ENDED                    VOLUME                 HIGH            LOW
                                                    ------------   ------------
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
May 31, 2005                          -                $0.205          $0.17
February 29, 2005                     -                $0.17           $0.15
November 30, 2004                     -                $0.176          $0.15


                                                    ---------------------------
                                                          BID PRICE (US$)
                                                    ---------------------------
MONTH ENDED                      VOLUME                 HIGH            LOW
                                                    ------------   ------------
October 31, 2006                  8,500                $0.46           $0.39
September 30, 2006               14,500                $0.69           $0.46
August 31, 2006                   37,12                $0.75           $0.60
July 31, 2006                       224                $1.95           $1.95
June 30, 2006                    36,950                $1.20           $0.80
May 31, 2006                     16,000                $1.95           $1.05

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.

                FRANKFURT STOCK EXCHANGE - STOCK TRADING ACTIVITY

On November 18, 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, 2006(1)               1,407,238                 1.05            0.54

(1)  The Company's common stock commenced  trading on the Frankfurt  Exchange on
     November 7, 2005.


                                                    ---------------------------
                                                          BID PRICE (EURO)
                                                    ---------------------------
QUARTER ENDED                    VOLUME                 HIGH            LOW
                                                    ------------   ------------
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
                                                    ------------   ------------
October 31, 2006                  7,710                 0.46            0.30
September 30, 2006               34,500                 0.50            0.31
August 31, 2006                   4,415                 0.53            0.45
July 31, 2006                     3,700                 0.66            0.48
June 30, 2006                    60,700                 0.97            0.57
May 31, 2006                     63,040                 1.04            0.78


                                      -68-
<PAGE>


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 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.

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;


                                      -69-
<PAGE>

                  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.

         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.       CHANGES UNDER THE NEW ARTICLES.

                  1.       The  Company's  previous  Articles  provided  for the
                           indemnification by the Company of its directors only,
                           while  the  BCBCA  allows  for   indemnification   of
                           officers as well as directors. The new Articles allow
                           for the indemnification of the Company's officers.

                  2.       The  Company's  previous  Articles  provided that the
                           Articles   could   only  be   amended  by  a  special
                           resolution  of the  shareholders.  The  new  Articles
                           allow the directors to modify the Articles so long as
                           such amendment does not affect the rights attached to
                           shares.


                                      -70-
<PAGE>


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 17,120,267  common shares
were issued and outstanding as of October 31, 2006.

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 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.


                                      -71-
<PAGE>


 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.

         (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)      Kantanna  Option,  dated January 6, 2006 between BMC,  Marsa,  Magellan
         (BVI),  the  Company  and  Kantanna  Company  Limited.   See  "Item  4.
         Information on the Company - Business Overview - Kantanna Option."

(2)      Marsa Option, amended July 8, 2005, between 0724000 B.C. Ltd. (formerly
         Magellan Gold Corp.  and Centrasia  Mining Corp.),  BMC,  Magellan Gold
         (BVI) Inc. and Marsa Gold Corp and  subsequently  terminated  effective


                                      -72-
<PAGE>


         January  6,  2006  pursuant  to  the  Kantanna  Option.  See  "Item  4.
         Information on the Company - Business Overview - Kantanna Option."

(3)      Share Purchase  Agreement,  dated July 25, 2005 among the Company,  the
         shareholders  of 0724000 B.C. Ltd.  (formerly  Magellan Gold Corp.  and
         Centrasia Mining Corp.), and 0724000 B.C. Ltd. See "Item 4. Information
         on the Company - Business Overview -
         Centrasia Acquisition."

(4)      Assignment  Agreement  dated  September 14, 2005,  between 0724000 B.C.
         Ltd.  (formerly  Magellan Gold Corp.  and  Centrasia  Mining Corp.) and
         Magellan  Gold  (BVI) Inc.  assigning  724 BC's  interest  in the Marsa
         Option, the Loan Agreement,  the Promissory Note,  Guarantee  Agreement
         and the Pledge  Agreement to the Company.  See "Item 4.  Information on
         the Company - Business
         Overview - Kantanna Option."

(5)      Amending Agreement dated January 18, 2005 among Marsa Gold Corp., Aitas
         Mining  Company,  Bulakashu  Mining  Company LLC, and 0724000 B.C. Ltd.
         (formerly Magellan Gold Corp. and Centrasia Mining Corp.), amending the
         terms of the Loan Agreement and the Demand  Promissory  Note. See "Item
         4. Information on the Company - Business Overview - Kantanna Option."

(6)      Loan Agreement among Marsa,  Aitas, BMC and 0724000 B.C. Ltd. (formerly
         Magellan  Gold Corp.  and Centrasia  Mining Corp.) dated  September 24,
         2004,  as  amended,  on  January  18,  2005 by the  Amending  Agreement
         described above. See "Item 4. Information on
         the Company - Business Overview - Kantanna Option."

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.


                                      -73-
<PAGE>


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.

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


                                      -74-
<PAGE>


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  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


                                      -75-
<PAGE>

                           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.

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



                                      -76-
<PAGE>


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 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


                                      -77-
<PAGE>


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.

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.


                                      -78-
<PAGE>

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 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


                                      -79-
<PAGE>



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 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.




                                      -80-
<PAGE>


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, 2006.  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.

During  the  fiscal  year  ended May 31,  2006,  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,  2006 and 2005,  the  Company's  principal
accountant billed the Company $5,545 and $7,351, 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,  2006 and 2005,  the  Company's  principal
accountant  billed  $16,400 and $4,255  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".



                                      -81-
<PAGE>


TAX FEES

For the  fiscal  years  ended May 31,  2006 and 2005,  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,  2006 and 2005,  the  Company's  principal
accountant billed $nil and $1,766, 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  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, 2006 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, 2006, 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-25.


ITEM 18.  FINANCIAL STATEMENTS.
--------------------------------------------------------------------------------

Not applicable.



                                      -82-
<PAGE>


ITEM 19.  EXHIBITS.
--------------------------------------------------------------------------------

       EXHIBIT
        NUMBER    DESCRIPTION
       -------    -----------

         1.1      Certificate of Continuation and Notice of Articles (5)

         1.2      Notice of Alteration - Form 11 (6)

         1.3      Articles

         2.1      Option  Agreement,   amended  as  of  July  8,  2005,  between
                  Bulakashu  Mining Company Ltd,  Marsa Gold Corp.  0724000 B.C.
                  Ltd.  (formerly  Magellan  Gold  Corp.  and  Centrasia  Mining
                  Corp.),  Baradero  Resources  Limited and Magellan  Gold (BVI)
                  Inc. (Incorporated by Reference to Exhibit 4.13) (6)

         2.2      Loan Agreement  dated  September 24, 2004,  among 0724000 B.C.
                  Ltd. (formerly Magellan Gold Corp. and Centrasia Mining Corp.)
                  Marsa Gold Corp.,  Aitas Mining Company,  and Bulakashu Mining
                  Company,  as  amended,   January  18,  2005  (Incorporated  by
                  Reference to Exhibit 4.17). (6)

         2.3      Demand Promissory Note dated September 24, 2004  (Incorporated
                  by Reference to Exhibit 4.23) (6)

         2.4      Amending  Agreement  dated  January  18, 2005 among Marsa Gold
                  Corp., Aitas Mining Company,  Bulakashu Mining Company LLC and
                  0724000 B.C. Ltd.  (formerly Magellan Gold Corp. and Centrasia
                  Mining Corp.) (Incorporated by Reference to Exhibit 4.22) (6)

         2.5      Promissory Note from 0724000 B.C. Ltd. (formerly Magellan Gold
                  Corp.  and  Centrasia  Mining  Corp.) in the amount of $25,000
                  dated April 26,  2005.  (Incorporated  by Reference to Exhibit
                  4.21) (6)

         4.2      Escrow  Agreement  dated June 28,  2000 among the  Company and
                  each  of  Donald  W.  Busby  1999  Irrevocable   Trust,  Chase
                  Management Ltd., Nick DeMare and William Lee. (1)

         4.3      Stock Option Plan 2004 (2)

         4.8      Escrow  Agreement  dated September 26, 2001 among the Company,
                  Computershare  Trust  Company of Canada and each of  Greystoke
                  Investments Inc., Ted Carlsen and Monica Carlsen (3)

         4.10     Purchase and Sale  Agreement  dated  December 18, 2003 between
                  CalEx and PNP Petroleum Inc. (4)

         4.11     Purchase and Sale  Agreement  effective  March 1, 2004 between
                  CalEx and Westport Petroleum, Inc. (5)

         4.12     Letter  Agreement,   dated  March  17,  2005,  among  Baradero
                  Resources  Limited,  the  shareholders  of 0724000  B.C.  Ltd.
                  (formerly Magellan Gold Corp. and Centrasia Mining Corp.), and
                  0724000 B.C. Ltd. (6)

         4.13     Option  Agreement,   amended  as  of  July  8,  2005,  between
                  Bulakashu  Mining Company Ltd,  Marsa Gold Corp.  0724000 B.C.
                  Ltd.  (formerly  Magellan  Gold  Corp.  and  Centrasia  Mining
                  Corp.),  Baradero  Resources  Limited and Magellan  Gold (BVI)
                  Inc. (6)

         4.14     Sponsorship Agreement,  dated July 20, 2005, between Canaccord
                  Capital Corporation and Baradero Resources Limited. (6)

         4.15     Form of Share  Purchase  Agreement,  dated July 25, 2005 among
                  Baradero Resources  Limited,  the shareholders of 0724000 B.C.
                  Ltd.  (formerly  Magellan  Gold  Corp.  and  Centrasia  Mining
                  Corp.), and 0724000 B.C. Ltd. (6)


                                      -83-
<PAGE>

       EXHIBIT
        NUMBER    DESCRIPTION
       -------    -----------

         4.16     Debt Settlement  Agreements between the Company,  0724000 B.C.
                  Ltd. (formerly Magellan Gold Corp. and Centrasia Mining Corp.)
                  and each of certain  debtholders  of 0724000 B.C.  Ltd.  dated
                  various dates between March 30, 2005 and June 30, 2005. (6)

         4.17     Loan Agreement  dated  September 24, 2004,  among 0724000 B.C.
                  Ltd.  (formerly  Magellan  Gold  Corp.  and  Centrasia  Mining
                  Corp.),  Marsa Gold Corp., Aitas Mining Company, and Bulakashu
                  Mining Company, as amended, January 18, 2005. (6)

         4.18     Guarantee  Agreement dated July 8, 2005 executed by Marsa Gold
                  Corp.  in favor of 0724000 B.C. Ltd.  (formerly  Magellan Gold
                  Corp. and Centrasia Mining Corp.) (6)

         4.19     Pledge  Agreement  dated July 8, 2005 among  0724000 B.C. Ltd.
                  (formerly  Magellan Gold Corp.  and Centrasia  Mining  Corp.),
                  Bulakashu Mining Company Ltd., and Marsa Gold Corp. (6)

         4.20     Employment  Agreement  dated  April 1,  2004  between  Douglas
                  Turnbull and 0724000 B.C. Ltd.  (formerly  Magellan Gold Corp.
                  and Centrasia  Mining Corp.) and  Assignment  Agreement  dated
                  September 14, 2005 between  Centrasia  Mining Corp.  (formerly
                  Baradero Resources Limited). (6)

         4.21     Promissory Note from 0724000 B.C. Ltd. (formerly Magellan Gold
                  Corp.  and  Centrasia  Mining  Corp.) in the amount of $25,000
                  dated April 26, 2005 (6)

         4.22     Amending  Agreement  dated  January  18, 2005 among Marsa Gold
                  Corp., Aitas Mining Company,  Bulakashu Mining Company LLC and
                  0724000 B.C. Ltd.  (formerly Magellan Gold Corp. and Centrasia
                  Mining Corp.) (6)

         4.23     Demand Promissory Note dated September 24, 2004 (6)

         4.24     Assignment Agreement dated September 14, 2005, between 0724000
                  B.C. Ltd.  (formerly  Magellan Gold Corp. and Centrasia Mining
                  Corp.) and Magellan Gold (BVI) Inc. (6)

         4.25     Stock Option Plan 2005 (6)

         4.26     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 (6)

         4.27     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. (6)

         4.28     Management   Agreement   between  Chase  Management  Ltd.  and
                  Centrasia Mining Corp. dated September 14, 2005 (6)

         4.29     Agency Agreement  between  Centrasia Mining Corp and Canaccord
                  Capital Corporation dated September 26, 2005 (6)

         4.30     Consulting Agreement between Bulakashu Mining Company Ltd. and
                  Oleg Kim dated November 23, 2005

         4.31     Consulting   Agreement  between  Centrasia  Mining  Corp.  and
                  William Tafuri dated December 1, 2005

         4.32     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 (7)

         4.33     Consulting  Agreement between Centrasia Mining Kazakhstan Ltd.
                  and Vladimir Danilov dated January 31, 2006

         8.1      List of Subsidiaries



                                      -84-
<PAGE>


       EXHIBIT
        NUMBER    DESCRIPTION
       -------    -----------

         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     Consent of Mr. D. Besserer of APEX Geoscience Ltd. (6)

         15.2     Financial   Statements  of  Bulakashu   Mining  Company  Ltd.,
                  including Balance Sheet,  Statement of Operations and Deficit,
                  Statement of Cash Flow and the notes  thereto,  for the period
                  from June 9, 2004 (date of formation) to May 31, 2005. (6)

         15.3     Financial  Statements  of  0724000  B.C.  Limited,   including
                  Balance Sheets, Statements of Loss and Deficit,  Statements of
                  Cash Flows and the notes  thereto,  for the year ended May 31,
                  2005  and  the  period   from   February   4,  2004  (date  of
                  incorporation) to May 31, 2004. (6)

         15.4     Proforma Consolidated Financial Statements of Centrasia Mining
                  Corp., including Proforma Consolidated Balance Sheet, Proforma
                  Consolidated  Statements of Operations  and the notes thereto,
                  as at May 31, 2005. (6)

         (1)      Previously  filed as an exhibit to the Company's  registration
                  statement on Form 20-F, filed with the Securities and Exchange
                  Commission on August 31, 2000. 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 December 3, 2004. File Number 0-30920.
         (3)      Previously  filed as an exhibit to the Company's annual report
                  on  Form  20-F,   filed  with  the   Securities  and  Exchange
                  Commission on November 29, 2001. 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 January 16, 2004. File Number 0-30920.
         (5)      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.
         (6)      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.
         (7)      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.




                                      -85-
<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:   NOVEMBER 29, 2006                 /S/   DOUGLAS TURNBULL
         -----------------                 ------------------------------------
                                           Douglas Turnbull, President
                                           Chief Executive Officer and Director



                                      -86-

<PAGE>






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



                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004

            (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, 2006 and 2005 and the consolidated statements of operations, deficit and
cash flows for the years  ended May 31,  2006 and 2005 and for the  period  from
February  4,  2004  to  May  31,  2004.  These  financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  these consolidated  financial statements present fairly, in all
material respects,  the financial position of the Company as at May 31, 2006 and
2005 and the  results of its  operations  and cash flows for the years ended May
31,  2006 and 2005 and for the period  from  February 4, 2004 to May 31, 2004 in
accordance with Canadian generally accepted accounting principles.


                                                      /s/ DAVIDSON & COMPANY LLP

Vancouver, Canada                                          Chartered Accountants

September 20, 2006 (except as to Note 16
which is as of November 29, 2006)


                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
September  20, 2006  (except as to Note 16 which is as of November  29, 2006) 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
September 20, 2006 (except as to Note 16
which is as of November 29, 2006)




                          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.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEETS
                                  AS AT MAY 31
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


                                                      MAY 31,          MAY 31,
                                                       2006             2005
                                                         $                $

                                     ASSETS

CURRENT ASSETS

Cash                                                  1,256,758          22,634
Amounts receivable                                       14,378           1,329
Prepaids                                                 36,927           5,253
                                                   ------------    ------------
                                                      1,308,063          29,216

EQUIPMENT (Note 4)                                      142,975               -

OPTION ON BMC (Notes 3 and 5)                                 -         306,727

UNPROVEN MINERAL INTERESTS (Note 5)                     803,386               -
                                                   ------------    ------------
                                                      2,254,424         335,943
                                                   ============    ============


                                   LIABILITIES

CURRENT LIABILITIES

Accounts payable and accrued liabilities                155,054         107,076
Indebtedness (Note 3)                                         -         418,125
                                                   ------------    ------------
                                                        155,054         525,201
PROMISSORY NOTE (Note 3)                                      -          25,000
                                                   ------------    ------------
                                                        155,054         550,201
                                                   ------------    ------------

                        SHAREHOLDERS' EQUITY (DEFICIENCY)

SHARE CAPITAL (Note 7)                                3,490,004          23,111

CONTRIBUTED SURPLUS (Note 9)                            187,435               -

DEFICIT                                              (1,578,069)       (237,369)
                                                   ------------    ------------
                                                      2,099,370        (214,258)
                                                   ------------    ------------
                                                      2,254,424         335,943
                                                   ============    ============

CHANGE OF NAME AND NATURE OF OPERATIONS (Note 1)

RECAPITALIZATION AND ACQUISITION (Note 3)

SUBSEQUENT EVENTS (Note 16)



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.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                          FOR THE PERIODS ENDED MAY 31
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


                                                                   PERIOD FROM
                                                                    FEBRUARY 4,
                                                                       2004
                                    YEAR ENDED      YEAR ENDED   (INCORPORATION)
                                      MAY 31,         MAY 31,        TO MAY 31,
                                       2006            2005            2004
                                         $               $               $

EXPENSES

Accounting and administrative            62,358               -               -
Amortization                             14,435               -               -
Audit                                    36,563          12,000           5,000
Corporate development                    60,655               -               -
Interest on indebtedness                 11,532          25,062           1,381
Investor relations                       16,250               -               -
Legal                                    93,785          38,198           9,596
Management fees                          67,438          45,500          18,000
Office                                   63,439          17,792           6,230
Professional fees                       151,170           9,514          15,128
Property due diligence (Note 6)         170,217               -               -
Regulatory fees                          12,555           2,449           1,600
Rent                                     30,474           9,640           2,247
Salaries and benefits                    75,193               -               -
Shareholder costs                         1,542               -               -
Stock-based compensation (Note 8)       137,250               -               -
Transfer agent                           18,646               -               -
Travel                                  170,984           2,478          16,792
                                   ------------    ------------    ------------
                                      1,194,486         162,633          75,974
                                   ------------    ------------    ------------
LOSS BEFORE OTHER ITEMS              (1,194,486)       (162,633)        (75,974)
                                   ------------    ------------    ------------
OTHER ITEMS

Interest and other income                19,455               -               -
Foreign exchange                        (31,636)          1,167              71
                                   ------------    ------------    ------------
                                        (12,181)          1,167              71
                                   ------------    ------------    ------------
LOSS FOR THE PERIOD                  (1,206,667)       (161,466)        (75,903)
                                   ============    ============    ============

BASIC AND DILUTED
   LOSS PER COMMON SHARE                 $(0.10)         $(0.11)     $(2,371.97)
                                   ============    ============    ============

WEIGHTED AVERAGE NUMBER OF
     COMMON SHARES OUTSTANDING       12,518,011       1,469,962              32
                                   ============    ============    ============


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


                                      F-4
<PAGE>



                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                       CONSOLIDATED STATEMENTS OF DEFICIT
                          FOR THE PERIODS ENDED MAY 31
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)



                                                                   PERIOD FROM
                                                                    FEBRUARY 4,
                                                                       2004
                                    YEAR ENDED      YEAR ENDED   (INCORPORATION)
                                      MAY 31,         MAY 31,        TO MAY 31,
                                       2006            2005            2004
                                         $               $               $

DEFICIT - BEGINNING OF PERIOD          (237,369)        (75,903)              -

Net liabilities assumed at time
   of recapitalization (Note 3)        (134,033)              -               -
                                   ------------    ------------    ------------
                                       (371,402)        (75,903)              -
LOSS FOR THE PERIOD                  (1,206,667)       (161,466)        (75,903)
                                   ------------    ------------    ------------
DEFICIT - END OF PERIOD              (1,578,069)       (237,369)        (75,903)
                                   ============    ============    ============









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

                                      F-5

<PAGE>




                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          FOR THE PERIODS ENDED MAY 31
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)

<TABLE>
<CAPTION>

                                                                                                   PERIOD FROM
                                                                                                    FEBRUARY 4,
                                                                                                       2004
                                                                    YEAR ENDED      YEAR ENDED   (INCORPORATION)
                                                                      MAY 31,         MAY 31,        TO MAY 31,
                                                                       2006            2005            2004
                                                                         $               $               $
<S>                                                              <C>             <C>             <C>

CASH PROVIDED FROM (USED FOR)

OPERATING ACTIVITIES

Loss for the period                                                  (1,206,667)       (161,466)        (75,903)
Adjustments for items not involving cash
    Amortization                                                         14,435               -               -
    Accrued interest on indebtedness                                          -          25,062           1,381
    Accrued management services                                               -          10,000           2,000
    Property due diligence                                              133,164               -               -
    Stock-based compensation                                            137,250               -               -
                                                                   ------------    ------------    ------------
                                                                       (921,818)       (126,404)        (72,522)
Decrease (increase) in amounts receivable                                10,136          (1,329)              -
Increase in prepaids                                                    (31,674)         (4,504)           (749)
Increase in accounts payable and accrued liabilities                     26,132          46,976          21,719
                                                                   ------------    ------------    ------------
                                                                       (917,224)        (85,261)        (51,552)
                                                                   ------------    ------------    ------------
INVESTING ACTIVITIES

Advance                                                                (133,164)              -          55,993
Cash assumed on recapitalization and acquisition                        404,139               -               -
Amounts incurred or advanced to
    BMC prior to recapitalization                                       (93,178)       (268,346)              -
Additions to equipment                                                 (147,899)              -               -
Additions to unproven mineral interests                                (203,988)              -               -
                                                                   ------------    ------------    ------------
                                                                       (174,090)       (268,346)         55,993
                                                                   ------------    ------------    ------------
FINANCING ACTIVITIES

Advances and promissory note prior to recapitalization                   84,485          25,000               -
Indebtedness                                                            (18,125)        335,689               -
Issuance of common shares                                             2,478,521           3,732               1
Issuance of preferred shares                                                  -             634           6,744
Share issue costs                                                      (219,443)              -               -
                                                                   ------------    ------------    ------------
                                                                      2,325,438         365,055           6,745
                                                                   ------------    ------------    ------------
INCREASE IN CASH FOR THE PERIOD                                       1,234,124          11,448          11,186

CASH - BEGINNING OF PERIOD                                               22,634          11,186               -
                                                                   ------------    ------------    ------------
CASH - END OF PERIOD                                                  1,256,758          22,634          11,186
                                                                   ============    ============    ============
</TABLE>

SUPPLEMENTARY CASH FLOW INFORMATION - Note 14

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


                                      F-6
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


1.       CHANGE OF NAME AND NATURE OF OPERATIONS

         On September 14, 2005,  Baradero  Resources Limited changed its name to
         Centrasia Mining Corp. (the "Company"). With the acquisition of 0724000
         B.C. Ltd.  ("724 BC"), as discussed in Note 3, the Company's  principal
         business  activity is the  sourcing,  exploration  and  development  of
         mineral  properties  in the  Kyrgyz  Republic  and other  countries  in
         Central Asia.

         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  mineral  properties  and
         related  deferred  costs 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 mineral  properties  and
         deferred  exploration  costs  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.


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 15.

         These  consolidated  financial  statements  include the accounts of the
         Company and its wholly-owned subsidiaries,  724 BC, a company continued
         into the Province of British  Columbia,  Magellan  Holdings (BVI) Corp.
         and Magellan Gold (BVI) Inc. ("Magellan Gold"), both incorporated under
         the laws of the British Virgin  Islands,  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 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.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (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 fair value of a liability  for an asset  retirement  obligation  is
         recognized  when a reasonable  estimate of fair value can be made.  The
         asset  retirement   obligation  is  recorded  as  a  liability  with  a
         corresponding increase to the carrying amount of the related long-lived
         asset. Subsequently, the asset retirement cost is allocated to expenses
         using a  systematic  and  rational  method and is  adjusted  to reflect
         period-to-period changes in the liability resulting from the passage of
         time and  revisions  to  either  timing or the  amount of the  original
         estimate of the  undiscounted  cash flow.  As at May 31, 2006 and 2005,
         the Company does not have any asset retirement obligations.

         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.



                                      F-8
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)



2.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         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.




                                      F-9
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


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
         "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. See Note
         4. 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 5.
         The Company also agreed to assume the share obligations of 724 BC under
         the Marsa Option upon completion of the Acquisition.

         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 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 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  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
         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;


                                      F-10
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


3. RECAPITALIZATION AND ACQUISITION (continued)

         (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. 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.

         Prior  to  completion  of  the  corporate  reorganization  the  Company
         incurred general and  administration  costs totalling  $134,047 for the
         period June 1, 2005 to September 14, 2005.

         On completion of the Acquisition 724 BC also acquired effective control
         of BMC.  On the date of the  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
                                                                   ============



                                      F-11
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


4.       EQUIPMENT
                                                                      MAY 31,
                                                                       2006
                                                                         $

         Mobile and field equipment                                     121,951
         Office furniture and equipment                                  35,459
                                                                   ------------
                                                                        157,410
         Less accumulated amortization                                  (14,435)
                                                                   ------------
                                                                        142,975
                                                                   ============


5.       UNPROVEN MINERAL INTERESTS
                                   --------------------------------------------
                                                   MAY 31, 2006
                                   --------------------------------------------
                                    ACQUISITION    EXPLORATION
                                       COSTS       EXPENDITURES        TOTAL
                                         $               $               $

         Bulakashu Gold Property        645,838         133,654         779,492
         Other                                -          23,894          23,894
                                   ------------    ------------    ------------
                                        645,838         157,548         803,386
                                   ============    ============    ============

         By agreement  dated  September  24, 2004 and amended July 8, 2005,  the
         Company,  Magellan  Gold,  724 BC, Marsa and BMC entered into the Marsa
         Option  whereby  Marsa  granted  to 724 BC the option to acquire a 100%
         interest in BMC from Marsa.  BMC's sole assets are its unproven mineral
         interests located in the Kygryz Republic.

         In order to exercise the Marsa  Option in full,  724 BC was required to
         make cash  payments  totalling US $120,000 and issue  1,025,000  common
         shares to Marsa 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:
<TABLE>
<CAPTION>

                                     CASH             SHARE
         DATE                      PAYMENTS         ISSUANCES               COMMITMENTS
                                 ------------     ------------     -----------------------------
                                     US $                              US $               $
        <S>                     <C>              <C>              <C>              <C>

         Signing of agreements              -                -          110,000                -
         January 2, 2005               40,000                -                -                -
         September 1, 2005             40,000                -                -                -
         Closing of Acquisition             -          200,000                -                -
         December 31, 2005                  -                -                -          200,000
         January 2, 2006               40,000          200,000                -                -
         December 31, 2006                  -                -          690,000                -
         January 2, 2007                    -          250,000                -                -
         December 31, 2007                  -                -          650,000                -
         January 2, 2008                    -          375,000                -                -
         December 31, 2008                  -                -          750,000                -
                                 ------------     ------------     ------------     ------------
                                      120,000        1,025,000        2,200,000          200,000
                                 ============     ============     ============     ============
</TABLE>



                                      F-12
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


5.       UNPROVEN MINERAL INTERESTS (continued)

         As at May 31, 2005, 724 BC had advanced a total of $306,727 towards the
         Marsa Option. See also Note 3.

         The Marsa Option  provided for staged  conversions  of advances made by
         724 BC to BMC into a  participating  interest in BMC at the end of each
         calendar year,  beginning  December 31, 2005. In the event 724 BC fails
         to meet any of its  commitments  or  commits a  material  breach of the
         agreement,  Marsa  has  the  right  to  require  724 BC to  return  any
         participating interest of BMC received and forgive the Commitments. The
         Company  has assumed  the share  obligations  of 724 BC under the Marsa
         Option.  As at May 31,  2006,  the  Company  has  made  all of the cash
         payments and issued 400,000 common shares.

         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  November  23,  2005,  the
         Company,  Magellan  Gold,  BMC and Marsa  entered into a memorandum  of
         understanding (the "MOU"),  replacing the Marsa Option, whereby BMC has
         agreed  to  transfer  its  ownership  interest  in the  Bulakashu  Gold
         Property  back to  Marsa.  As a result  BMC will now hold an  option to
         aquire a 100% interest in the Bulakashu  Gold Property from Marsa under
         the same terms as  contemplated  under the Marsa  Option,  and directly
         hold the  exploration  licenses on the Eastern Sary Jaz  Property.  The
         Company has agreed,  upon  receipt of  regulatory  approval  and formal
         documentation,  to issue 200,000  common shares of its capital stock to
         Marsa. On December 29, 2005, the Company received  regulatory  approval
         to complete the terms of the MOU.  The Company is currently  completing
         formal agreements whereby Marsa will assign its beneficial interests in
         the MOU to Kantanna  Company Limited,  a private company  controlled by
         the principals of Marsa.

         See also Note 16.


6.       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.  The Company has written-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.


7.       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.



                                      F-13
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


7.       SHARE CAPITAL (continued)

         (b) Issued and allotted:


<TABLE>
<CAPTION>

                                                                                     ADDITIONAL
                                                                                      PAID-IN
                                                    NUMBER OF        PAR VALUE         CAPITAL           TOTAL
                                                      SHARES             $                $                $
        <S>                                      <C>              <C>              <C>              <C>

         COMMON SHARES

         Balance, February 4, 2004                           -                                 -                -
         Issued for cash                                   100                1                -                1
                                                  ------------     ------------     ------------     ------------
         Balance, May 31, 2004                             100                1                -                1
                                                  ------------     ------------     ------------     ------------
         Issued for cash                               600,000              746            2,986            3,732
         Issued for services (Note 10)               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 5)                        400,000          230,000                -          230,000
         Issued for 724 BC indebted-
             ness (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
                                                  ============     ============     ============     ============

         PREFERRED SHARES

         Balance,February 4, 2004                            -                                 -                -
         Issued for cash                             1,000,000            1,348            5,396            6,744
                                                  ------------     ------------     ------------     ------------
         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 and 2006                      -                -                -                -
                                                  ============     ============     ============     ============
</TABLE>



                                      F-14
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


7.       SHARE CAPITAL (continued)

         (c)      On September 14, 2005, 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);

                  ii) completed  a  non-brokered  private  placement  and issued
                      4,375,000  units,  for total gross  proceeds of  $875,000.
                      Each unit comprised of 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; and

                  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 of one common
                      share and one warrant, with the same terms as the warrants
                      described under Note 7(c)(ii).

         (d)      On  October  28,  2005,  the  Company  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  of one common share and one  transferable  warrant.
                  Two warrants  will entitle 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  granted  an  option 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.  As
                  at May 31, 2006, the agent's  option to acquire  180,718 units
                  remained unexercised.

                  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.

         (e)      A summary of the number of common shares reserved  pursuant to
                  the  Company's  outstanding  warrants  at May 31, 2006 and the
                  changes for fiscal 2006 is as follows:

                                                                     WEIGHTED
                                                                      AVERAGE
                                                      NUMBER      EXERCISE PRICE
                                                                        $

                  Balance, beginning of year                  -          -
                  Issued                              8,026,226         0.48
                  Exercised                            (246,603)        0.57
                                                   ------------
                  Balance, end of year                7,779,623         0.48
                                                   ============



                                      F-15
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


7.       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, 2006:

                                           EXERCISE
                      NUMBER                 PRICE            EXPIRY DATE
                                               $

                     1,642,123                0.78            April 28, 2007
                     6,137,500                0.40            September 14, 2007
                  ------------
                     7,779,623
                  ============

         (f)      As at May 31, 2006, an aggregate  3,515,095 common shares were
                  held in escrow in accordance with the rules of the TSX Venture
                  Exchange.

         (g)      See also Notes 3, 5 and 16.


8.       STOCK OPTIONS AND STOCK-BASED COMPENSATION

         On August 11,  2005,  the Company  received  shareholder  approval of a
         stock option (the  "Plan")  which allows the Company to grant a maximum
         number of 2,500,000  stock  options.  During  fiscal 2006,  the Company
         granted stock options to its  employees,  directors and  consultants to
         purchase  2,435,000 common shares,  vesting over periods between twelve
         to  eighteen  months.  The  Company  recorded  compensation  expense of
         $137,250 on the vested portion.

         The fair value of stock  options  granted to  employees,  directors 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 2006:

                Risk-free interest rate                   3.21%
                Estimated volatility                       79%
                Expected life                           2.5 years
                Expected dividend yield                    0%

         The weighted average fair value of all stock options granted during the
         period to the Company's employees,  directors and consultants was $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.

         The Company has also agreed,  subject to Company shareholder  approval,
         to grant stock options to consultants to purchase 300,000 common shares
         at a price of $1.15 per share for a term of five  years.  As at May 31,
         2006, the Company had not yet obtained Company shareholder approval.



                                      F-16
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


8.       STOCK OPTIONS AND STOCK-BASED COMPENSATION (continued)

         A summary of the  Company's  outstanding  stock options at May 31, 2006
         and the changes for fiscal 2006 is as follows:


                                                                    WEIGHTED
                                                                     AVERAGE
                                                     OPTIONS         EXERCISE
                                                   OUTSTANDING        PRICE
                                                                        $

         Balance, beginning of year                          -          -
         Granted                                     2,435,000        0.22
                                                  ------------
         Balance, end of year                        2,435,000        0.22
                                                  ============

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


             NUMBER            NUMBER        EXERCISE
          OUTSTANDING        EXERCISABLE       PRICE          EXPIRY DATE
                                                 $

            2,335,000          1,167,500        0.20          September 14, 2010
              100,000             50,000        0.79          November 21, 2010
         ------------       ------------
            2,435,000          1,217,500
         ============       ============

         See also Note 16.


9.       CONTRIBUTED SURPLUS

         A summary of the Company's  contributed surplus at May 31, 2006 and the
         changes for fiscal 2006 is as follows:

                                                                         $

         Balance, beginning of year                                           -
             Stock-based compensation on stock options (Note 8)         137,250
             Stock-based compensation on agent's option (Note 7(d))      69,231
             Agent's option exercised                                   (19,046)
                                                                   ------------
         Balance, end of year                                           187,435
                                                                   ============



                                      F-17
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


10.      RELATED PARTY TRANSACTIONS

         During fiscal 2006,  the Company  incurred a total of $447,245  (2005 -
         $143,845;  2004  -  $18,000)  for  accounting,  administrative,  legal,
         management  and  professional  services  provided by current and former
         directors and officers of the Company of which $51,146 was  capitalized
         to unproven  mineral  interests and $38,000 was recorded as share issue
         costs incurred on recapitalization. As at May 31, 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.


11.      INCOME TAXES

         Future income tax assets and liabilities of the Company are as follows:

                                                      MAY 31,          MAY 31,
                                                       2006            2005
                                                         $               $
         Future income tax assets
              Loss carry forwards                       476,000          84,600
              Other                                     154,800               -
                                                   ------------    ------------
                                                        630,800          84,600
         Valuation allowance                           (630,800)        (84,600)
                                                   ------------    ------------
         Net future income tax asset                          -               -
                                                   ============    ============

         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>

                                                                                    PERIOD FROM
                                                                                    FEBRUARY 4,
                                                                                        2004
                                                    YEAR ENDED      YEAR ENDED   (INCORPORATION)
                                                      MAY 31,         MAY 31,        TO MAY 31,
                                                       2006            2005            2004
                                                         $               $               $
        <S>                                       <C>             <C>             <C>

         Income tax rate reconciliation

         Combined federal and provincial
              income tax rate                            34.12%          35.62%            34%
                                                   ============    ============    ============

         Expected income tax recovery                   411,700          57,600          25,800
         Non-deductible stock-based compensation        (46,800)              -               -
         Other                                           34,200               -               -
         Unrecognized benefit of income tax losses     (399,100)        (57,600)        (25,800)
                                                   ------------    ------------    ------------
         Actual income tax recovery                           -               -               -
                                                   ============    ============    ============
</TABLE>

         As at May 31, 2006, the Company has non-capital losses of approximately
         $1.4 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 2016.



                                      F-18
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


12.      SEGMENTED INFORMATION

         The Company  operates  in one  industry  segment,  the  exploration  of
         unproven  mineral  interests.  The Company's  current  unproven mineral
         interests  are  located in Central  Asia and its  corporate  assets are
         located in Canada.

                                   --------------------------------------------
                                              YEAR ENDED MAY 31, 2006
                                   --------------------------------------------
                                   IDENTIFIABLE
                                       ASSETS        REVENUES          LOSS
                                         $               $               $

         Exploration activities
            (Central Asia)              985,119               -        (116,057)
         Corporate (Canada)           1,269,305          19,455      (1,090,610)
                                   ------------    ------------    ------------
                                      2,254,424          19,455      (1,206,667)
                                   ============    ============    ============

                                   --------------------------------------------
                                              YEAR ENDED MAY 31, 2005
                                   --------------------------------------------
                                   IDENTIFIABLE
                                       ASSETS        REVENUES          LOSS
                                         $               $               $

         Exploration activities
            (Central Asia)              306,727               -               -
         Corporate (Canada)              29,216               -        (161,466)
                                   ------------    ------------    ------------
                                        335,943               -        (161,466)
                                   ============    ============    ============

         All of the Company's  assets and operations in fiscal 2004 were located
         in Canada.


13.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         The fair values of financial instruments is estimated based on relevant
         market  information and the nature and terms of financial  instruments.
         Management is not aware of any factors which would significantly affect
         the estimated fair market amounts,  however, such amounts have not been
         comprehensively revalued for purposes of these financial statements.

         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-19
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


14.      SUPPLEMENTARY CASH FLOW INFORMATION

         Non-cash activities conducted by the Company are as follows:
<TABLE>
<CAPTION>

                                                                                                    PERIOD FROM
                                                                                                    FEBRUARY 4,
                                                                                                       2004
                                                                    YEAR ENDED      YEAR ENDED   (INCORPORATION)
                                                                      MAY 31,         MAY 31,        TO MAY 31,
                                                                       2006            2005            2004
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>

         Financing activities

             Common shares issued for subscriptions previously
                received, mineral properties, indebtedness and
                exchange of preferred shares                          1,258,000           7,378               -
             Common shares issued for finder's fees, corporate
                finance fee and agent's commission                      240,729               -               -
             Contributed surplus for agent's option                      69,231               -               -
             Share issue costs from common shares issued and
                agent's option                                         (309,960)              -               -
             Indebtedness exchanged for common shares                  (400,000)              -               -
             Subscriptions received previously exchanged for
                common shares                                          (628,000)              -               -
             Common shares issued for services rendered                       -          12,000               -
             Preferred shares exchanged for common shares                     -          (7,378)              -
                                                                   ------------    ------------    ------------
                                                                        230,000          12,000               -
                                                                   ============    ============    ============
         Investing activities

             Unproven mineral interests                                (230,000)        (38,381)              -
                                                                   ============    ============    ============
         Operating activities

             Services rendered                                                -         (12,000)              -
             Increase in accounts payable and accrued liabilities             -          38,381               -
                                                                   ------------    ------------    ------------
                                                                              -          26,381               -
                                                                   ============    ============    ============
</TABLE>

         Other supplementary cash flow information:
<TABLE>
<CAPTION>

                                                                                                    PERIOD FROM
                                                                                                    FEBRUARY 4,
                                                                                                       2004
                                                                    YEAR ENDED      YEAR ENDED   (INCORPORATION)
                                                                      MAY 31,         MAY 31,        TO MAY 31,
                                                                       2006            2005            2004
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>

         Interest paid in cash                                           37,975               -               -
                                                                   ============    ============    ============
         Income taxes paid in cash                                            -               -               -
                                                                   ============    ============    ============
</TABLE>




                                      F-20
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


15.      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>

                                                                                                    PERIOD FROM
                                                                                                    FEBRUARY 4,
                                                                                                       2004
                                                                    YEAR ENDED      YEAR ENDED   (INCORPORATION)
                                                                      MAY 31,         MAY 31,        TO MAY 31,
                                                                       2006            2005            2004
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>


                  Loss under Canadian GAAP                           (1,206,667)       (161,466)        (75,903)
                  Unproven mineral interests expensed                  (429,774)              -               -
                                                                   -------------   ------------    ------------
                  Loss under US GAAP                                 (1,636,441)       (161,466)        (75,903)
                                                                   ============    ============    ============
                  Loss per share under US GAAP                            (0.13)          (0.11)      (2,371.97)
                                                                   ============    ============    ============
</TABLE>

                  CONSOLIDATED BALANCE SHEETS

                                                      MAY 31,         MAY 31,
                                                       2006            2005
                                                         $               $
                  SHAREHOLDERS' EQUITY (DEFICIENCY)

                  Balance per Canadian GAAP           2,099,370        (214,258)
                  Unproven mineral interests
                       expensed                        (429,774)              -
                                                   ------------    ------------
                  Balance per US GAAP                 1,669,596        (214,258)
                                                   ============    ============


                  UNPROVEN MINERAL INTERESTS

                  Balance per Canadian GAAP             803,386               -
                  Expensed under US GAAP               (429,774)              -
                                                   ------------    ------------
                  Balance per US GAAP                   373,612               -
                                                   ============    ============



                                      F-21
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


15.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

                  CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                                    PERIOD FROM
                                                                                                    FEBRUARY 4,
                                                                                                       2004
                                                                    YEAR ENDED      YEAR ENDED   (INCORPORATION)
                                                                      MAY 31,         MAY 31,        TO MAY 31,
                                                                       2006            2005            2004
                                                                         $               $               $
        <S>                                                       <C>             <C>             <C>

                  OPERATING ACTIVITIES

                  Cash used per Canadian GAAP                          (917,224)        (85,261)        (51,552)
                  Unproven mineral interests                           (157,548)              -               -
                                                                   ------------    ------------    ------------
                  Cash used per US GAAP                              (1,074,772)        (85,261)        (51,552)
                                                                   ============    ============    ============
                  INVESTING ACTIVITIES

                  Cash( used) provided by per Canadian GAAP            (174,090)       (268,346)         55,993
                  Unproven mineral interests                            157,548               -               -
                                                                   ------------    ------------    ------------
                  Cash ( used) provided by per US GAAP                  (16,542)       (268,346)         55,993
                                                                   ============    ============    ============
</TABLE>

                  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  has
                  adopted 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.




                                      F-22
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)


15.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

         (b)      Recent Accounting Pronouncements

                  UNITED STATES PRONOUNCEMENTS

                  In December 2004,  the Financial  Accounting  Standards  Board
                  ("FASB") issued  Statement of Financial  Accounting  Standards
                  ("SFAS") No. 123R,  "Share Based Payment" ("SFAS 123R").  SFAS
                  123R supersedes APB 25 and its related implementation guidance
                  by  requiring  entities  to  recognize  the  cost of  employee
                  services received in exchange for awards of equity instruments
                  based on the  grant-date  fair  value of  those  awards  (with
                  limited exceptions) and revises SFAS 123 as follows:

                  (i)      Public  entities are required to measure  liabilities
                           incurred  to   employees   in   share-based   payment
                           transactions  at fair value and  non-public  entities
                           may elect to measure their  liabilities  to employees
                           incurred in share-based payment transactions at their
                           intrinsic   value,   whereas   under   SFAS  123  all
                           share-based  payment  liabilities  were  measured  at
                           their intrinsic value.

                  (ii)     Non-public  entities are  required to calculate  fair
                           value using an appropriate  industry sector index for
                           the expected  volatility of its share price, if it is
                           not  practicable to estimate the expected  volatility
                           of the entity's share price.

                  (iii)    Entities  are  required  to  estimate  the  number of
                           instruments  for  which  the  requisite   service  is
                           expected to be rendered as opposed to accounting  for
                           forfeitures as they occur.

                  (iv)     Incremental  compensation cost for a modifications of
                           the terms or  conditions  of an award is  measured by
                           comparing  the fair value of the modified  award with
                           the fair  value of the award  immediately  before the
                           modifications,  whereas  SFAS 123  required  that the
                           effect  of  a   modification   be   measured  as  the
                           difference  between  the fair  value of the  modified
                           award at the date it is granted and the award's value
                           immediately before the modification, determined based
                           on  the  shorter  of  (1)  its  remaining   initially
                           estimated  expected  life or (2) the expected life of
                           the modified awards.

                  SFAS 123R also  clarifies  and  expands  guidance  in  several
                  areas, including measuring fair value, classifying an award as
                  equity or a liability  and  attributing  compensation  cost to
                  reporting  periods.  SFAS 123R does not change the  accounting
                  guidance for  share-based  payment  transactions  with parties
                  other than employees provided in SFAS 123 as originally issued
                  in EITF 96-18.  SFAS 123R also does not address the accounting
                  for  employee  share  ownership  plans  which are  subject  to
                  Statement  of  Position  93-6,   "Employers'   Accounting  for
                  Employee Stock Ownership  Plans".  Public entities (other than
                  those filing as small  business  issuers)  will be required to
                  apply SFAS 123R as of the first annual  reporting  period that
                  begins after June 15, 2005. Public entities that file as small
                  business  issuers  will be  required to apply SFAS 123R in the
                  first annual  reporting  period that begins after December 15,
                  2005. For non-public entities, SFAS 123R must be applied as of
                  the beginning of the first annual  reporting  period beginning
                  after December 15, 2005.

                  The adoption of this new pronouncement is not expected to have
                  a  material  effect on the  Company's  consolidated  financial
                  position or results of operations.



                                      F-23
<PAGE>


                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  FOR THE YEARS ENDED MAY 31, 2006 AND 2005 AND
          PERIOD FROM FEBRUARY 4, 2004 (INCORPORATION) TO MAY 31, 2004
            (EXPRESSED IN CANADIAN DOLLARS, UNLESS OTHERWISE STATED)



15.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

                  CANADIAN PRONOUNCEMENTS

                  The CICA has issued the  following new  accounting  standards,
                  effective October 1, 2006:

                  CICA Handbook Section 1530, "Comprehensive Income" 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.  The
                  adoption of this new  standard by the Company is not  expected
                  to have a material impact.

                  CICA Handbook Section 3251, "Equity" establishes standards for
                  presentation  of equity changes in equity during the reporting
                  period.  The  adoption of this new  standard by the Company is
                  not expected to have a material impact.

                  CICA   Handbook   Section  3855,   "Financial   Instruments  -
                  Recognition  and   Measurement"   establishes   standards  for
                  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
                  comprehensive income until these assets are no longer included
                  on the balance sheet.


16.      SUBSEQUENT EVENTS

         (a) Subsequent to May 31, 2006, the Company:

                  i)   agreed, subject to Company shareholder approval, to grant
                       665,000 stock  options at an exercise  price of $0.70 per
                       share for a term of five years;

                  ii)  issued 301,250  common shares for proceeds of $120,975 on
                       the exercise of warrants; and

                  iii) issued 200,000 common shares pursuant to the terms of the
                       MOU.

         (b)      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  issued
                  60,000 common shares, at a value of $42,000, and has up to six
                  months  to  exercise  the  Turgeldy  Option by  payment  of US
                  $30,000 and issuance of an additional 90,000 common shares.


                                      F-24
<PAGE>


                                                                      SCHEDULE I

                             CENTRASIA MINING CORP.
                      (FORMERLY BARADERO RESOURCES LIMITED)
                         (AN EXPLORATION STAGE COMPANY)
               CONSOLIDATED SCHEDULE OF UNPROVEN MINERAL INTERESTS
                         AND DEFERRED EXPLORATION COSTS
                         FOR THE YEAR ENDED MAY 31, 2006



                                   BULAKASHU          OTHER            TOTAL
                                       $                $                $
BALANCE - BEGINNING OF YEAR                 -                -                -
                                 ------------     ------------     ------------
EXPENDITURES DURING THE YEAR

EXPLORATION COSTS
    Consultants                         1,644                -            1,644
    Field supplies                        873                -              873
    Fuel                               12,951                -           12,951
    Geological                         49,268           23,894           73,162
    Geophysics                         13,333                -           13,333
    Laboratory and sampling             9,552                -            9,552
    Other                              10,815                -           10,815
    Repair and maintenance              1,245                -            1,245
    Salaries and benefits              30,071                -           30,071
    Travel                              3,902                -            3,902
                                 ------------     ------------     ------------
                                      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         230,000                -          230,000
                                 ------------     ------------     ------------
                                      645,838                -          645,838
                                 ------------     ------------     ------------
                                      779,492           23,894          803,386
                                 ------------     ------------     ------------
BALANCE - END OF YEAR                 779,492           23,894          803,386
                                 ============     ============     ============




                                      F-25
<PAGE>