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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 20-F/A

AMENDMENT NO. 1





(Mark One)



o

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



OR



þ

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



For the fiscal year ended­­­­­­­­­

May 31, 2009



OR



o

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



OR



o

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



Date of event requiring this shell company report

______________________________­­­­__



For the transition period from__________________to ­­­­­____________________



Commission file number:

000-26296

Petaquilla Minerals Ltd.(Exact name of Registrant as specified in its charter)

Not applicable(Translation of Registrant's name into English)

Province of British Columbia, Canada(Jurisdiction of incorporation or organization)

Suite 410, 475 West Georgia Street, Vancouver, British Columbia, Canada V6B 4M9

(Address of principal executive offices)



Bassam Moubarak, telephone (604) 694-0021, facsimile (604) 694-0063,

Suite 410, 475 West Georgia Street,Vancouver, British Columbia, Canada V6B 4M9

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)





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



Title of each class

Name of each exchange on which registered

| |      |  |               
| | ---- |  | --------------
| | None |  | Not applicable
| |      |  |               
| |      |  |               
| |      |  |               





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



Common Shares Without Par Value

(Title of Class)



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



None

(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.

96,040,121







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

oYesþNo



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.



oYesþNo



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.



þYesoNo



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



oYesoNo





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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



o  Large accelerated filer

o  Accelerated filer

þ   Non-accelerated filer





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



oU.S. GAAP

oInternational Financial Reporting Standards

þ  Other

as issued by the International Accounting

Standards Board



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



þItem 17oItem 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).

oYesþNo

_____________________________________________________________________________________



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Explanatory Note



Petaquilla Minerals Ltd. (the Company) has filed this Amendment No. 1 (Amendment No. 1) to its Annual Report on Form 20-F for the fiscal year ended May 31, 2009, to (i) expand the Companys description of the Ley Petaquilla (as defined herein); (ii) update its risk factor disclosure; (iii) present selected financial data in Item 3.A. that has been reconciled to U.S. Generally Accepted Accounting Principles ("U.S. GAAP"); (iv) expand its disclosures to include more specific information about its senior secured notes and convertible senior secured notes; (v) add a total column to its Tabular Disclosure of Contractual Obligations; (vi) correct a typographical error in its management report on internal control over financial reporting; (vii) add disclosure in its notes to the financial statements to clarify that it changed its fiscal year end from January 31 to April 30 in 2007 and from April 30 to May 31 in 2008; (viii) update its disclosure in its financial statement notes regarding a change in the Companys accounting policy for mineral properties and to clarify the origination of the difference in accounting for mineral properties and deferred costs in the Companys U.S. GAAP reconciliation; (ix) update its disclosure in its financial statement notes regarding deferral of expenditures and recognizing revenues as a reduction of deferred expenditures in the Companys U.S. GAAP reconciliation; (x) update its disclosure in its financial statement notes regarding an inventory write-down in the Companys U.S. GAAP reconciliation; and (xi) file as exhibits certain instruments defining the rights of the Companys security holders.  The Company directs the reader of Amendment No. 1 to the following specific Items in this Amendment No. 1 for further details: Item 3.A.  Key Information  Selected Financial Data, Item 3.D.  Key Information  Risk Factors, Item 5.B.  Operating and Financial Review and Prospects  Liquidity and Capital Resources, Item 5.F.  Operating and Financial Review and Prospects  Tabular Disclosure of Contractual Obligations, Item 15  Controls and Procedures, Item 17  Financial Statements and Item 19  Exhibits.



This Amendment No. 1 sets forth the complete text of the above-referenced Items and all amendments thereto as well as updates the Companys prior responses to the other Form 20-F Items, and includes new certifications pursuant to Rules 13a-14(a) and 15d-14(a) and Rules 13a-14(b) and 15d-14(b) under the Securities Exchange Act of 1934, as amended (the Exchange Act).



The information set forth in this report on Form 20-F is as at November 6, 2009, unless an earlier or later date is indicated.



Financial information in this Amendment No. 1 is presented in accordance with accounting principles generally accepted in Canada (Canadian GAAP). Measurement differences between accounting principles generally accepted in Canada and in the United States, as applicable to the Company, are set forth in Item 3.A. and Note 29 to the accompanying financial statements of the Company.



This Amendment No. 2 contains forward-looking information and forward-looking statements as defined in applicable securities laws. These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements.



Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, silver and other minerals, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency exchange rate fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage.



Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as plans, expects or does not expect, is expected, budget, scheduled, estimates, forecasts, intends, anticipates or does not anticipate or believes, or variations of such words and phrases or state that certain actions, events or results may, could, would, might or will be taken, occur or be achieved.



Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to international operations; risks related to joint venture operations; actual results of current exploration activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold and silver; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled Risk Factors in this Amendment No. 1. Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.



Statements in this Amendment No. 1 regarding expected completion dates of feasibility studies, anticipated commencement dates of mining or metal production operations, including when our Molejon project is anticipated to begin production, projected quantities of future metal production and anticipated production rates, operating efficiencies, costs and expenditures are forward-looking statements. Actual results could differ materially depending upon the availability of materials, equipment, required permits or approvals and financing, the occurrence of unusual weather or operating conditions, the accuracy of reserve estimates, lower than expected ore grades or the failure of equipment or processes to operate in accordance with specifications. See Item 3.D.  Key Information  Risk Factors for other factors that may affect our future financial performance.



Forward-looking statements in this Amendment No. 1 are as of November 6, 2009.  We do not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.



This Amendment No. 1 contains references to United States dollars and Canadian dollars. All dollar amounts referenced, unless otherwise indicated, are expressed in United States dollars and Canadian dollars are referred to as CAD$.



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|                                   | 
|---------------------------------- | 
|PETAQUILLA MINERALS LTD.          
|SECURITIES AND EXCHANGE COMMISSION
|FORM 20-F                         
|TABLE OF CONTENTS                 
|                                  

Page No.

|        |                                                                                                                                                                                     |   
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --
|        | GLOSSARY OF MINING TERMS                                                                                                                                                            | 9 
|        | CAUTIONARY NOTE REGARDING RESOURCE AND RESERVE ESTIMATES                                                                                                                            | 11
|PART 1  |                                                                                                                                                                                     | 12
|        |                                                                                                                                                                                     |   
|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                                                                                                                               | 12
|        |                                                                                                                                                                                     |   
|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE                                                                                                                                             | 12
|        |                                                                                                                                                                                     |   
|ITEM 3. | KEY INFORMATION                                                                                                                                                                     | 12
|3.A.    | Selected Financial Data                                                                                                                                                             | 12
|3.B.    | Capitalization and Indebtedness                                                                                                                                                     | 15
|3.C.    | Reasons for The Offer and Use of Proceeds                                                                                                                                           | 15
|3.D.    | Risk Factors                                                                                                                                                                        | 15
|        | We face risks related to our operations in foreign countries.                                                                                                                       | 15
|        | Our operations are subject to environmental and other regulation.                                                                                                                   | 15
|        | We do not have probable or proven reserves.                                                                                                                                         | 16
|        | Mining is subject to various physical hazards.                                                                                                                                      | 17
|        | We do not have all of the required permits for commencement of commercial production.                                                                                               | 17
|        | Potential delays in the advancement of the Molejon gold deposit and cost overruns mayoccur.                                                                                         | 17
|        | We have limited experience with development-stage mining operations.                                                                                                                | 17
|        | Mineral prices can fluctuate dramatically and have a material adverse effect on ourresults of operations.                                                                           | 18
|        | We are dependent upon additional funding in order to sustain our operations.                                                                                                        | 18
|        | We have a history of losses, an accumulated deficit and a lack of revenue from operationsand there is substantial uncertainty regarding our ability to continue as a going concern. | 18
|        | We have a history of material weaknesses at our subsidiaries.                                                                                                                       | 19
|        | The requirements of the Ley Petaquilla may have an adverse impact on us.                                                                                                            | 19
|        | Our directors may have conflicts of interest.                                                                                                                                       | 20
|        | Increased costs to procure labour and materials may affect expenditures relating topotential future production.                                                                     | 20
|        | We face strong competition for the acquisition of mining properties.                                                                                                                | 20
|        | Our common shares are subject to penny stock rules, which could affect trading in ourshares.                                                                                        | 20
|        | U.S. investors may not be able to enforce their civil liabilities against us or our directors,controlling person and officers.                                                      | 20
|        | If we are characterized as a Passive Foreign Investment Company (PFIC), our U.S.shareholders may be subject to
    adverse U.S. federal income tax consequences.                  | 21
|ITEM 4. | INFORMATION ON THE COMPANY                                                                                                                                                          | 21
|4.A.    | History and Development of the Company                                                                                                                                              | 21
|        | Molejon Property  Panama                                                                                                                                                           | 22
|        | Principal Capital Expenditures and Divestitures Over Last Three Fiscal Years                                                                                                        | 23



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|         |                                                                                   |   
|-------- | --------------------------------------------------------------------------------- | --
|         | Current Capital Expenditures and Divestitures                                     | 23
|         | Public Takeover Offers                                                            | 23
|4.B.     | Business Overview                                                                 | 23
|4.C.     | Organizational Structure                                                          | 24
|4.D.     | Property, Plants and Equipment                                                    | 26
|         | Mineral Concession Lands                                                          | 26
|         | Introduction                                                                      | 26
|         | Property Location                                                                 | 26
|         | Location, Access & Physiography                                                   | 28
|         | Plant and Equipment                                                               | 29
|         | Title                                                                             | 29
|         | Exploration History                                                               | 30
|         | Outlook  2010                                                                    | 34
|         | Regional and Local Geology                                                        | 34
|         | Mineralization                                                                    | 35
|         | Doing Business in Panama                                                          | 35
|         |                                                                                   |   
|ITEM 4A. | UNRESOLVED STAFF COMMENTS                                                         | 38
|         |                                                                                   |   
|ITEM 5.  | OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                      | 38
|5.A.     | Operating Results                                                                 | 38
|         | 12 Months Ended May 31, 2009, Compared to 12 Months Ended May 31, 2008            | 41
|         | One Month Ended May 31, 2008, Compared to One Month Ended May 31, 2007            | 43
|         | 12 Months Ended April 30, 2008, Compared to 12 Months Ended April 30, 2007        | 44
|         | Three Months Ended April 30, 2008, Compared to Three Months Ended April 30, 2007  | 46
|         | 12 Months January 31, 2007, Compared to 12 Months Ended January 31, 2006          | 47
|5.B      | Liquidity and Capital Resources                                                   | 48
|         | May 31, 2009, Compared with May 31, 2008                                          | 49
|         | May 31, 2008, Compared with April 30, 2008                                        | 50
|         | April 30, 2008, Compared to April 30, 2007                                        | 51
|         | April 30, 2007, Compared to January 31, 2007                                      | 51
|5.C.     | Research and Development, Patents and Licenses, etc.                              | 52
|5.D.     | Trend Information                                                                 | 52
|5.E.     | Off-Balance Sheet Arrangements                                                    | 52
|5.F.     | Tabular Disclosure of Contractual Obligations                                     | 52
|         |                                                                                   |   
|ITEM 6.  | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                        | 54
|6.A.     | Directors and Senior Management                                                   | 54
|6.B.     | Compensation                                                                      | 55
|         | Cash and Non-Cash Compensation  Directors and Officers                           | 55
|         | Option Grants to Directors and Officers During Fiscal Year Ended May 31, 2009     | 56
|         | Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values | 57
|         | Defined Benefit or Actuarial Plan Disclosure                                      | 57
|         | Termination of Employment, Change in Responsibilities and Employment Contracts    | 57
|         | Directors                                                                         | 58
|6.C.     | Board Practices                                                                   | 58
|6.D.     | Employees                                                                         | 59
|6.E.     | Share Ownership                                                                   | 59
|         |                                                                                   |   
|ITEM 7.  | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                                 | 60
|7.A.     | Major Shareholders                                                                | 60
|7.B.     | Related Party Transactions                                                        | 61
|7.C.     | Interests of Experts and Counsel                                                  | 62
|ITEM 8.  | FINANCIAL INFORMATION                                                             | 62



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|           |                                                                             |   
|---------- | --------------------------------------------------------------------------- | --
|8.A.       | Consolidated Statements and Other Financial Information                     | 62
|8.B.       | Significant Changes                                                         | 62
|           |                                                                             |   
|ITEM 9.    | THE OFFER AND LISTING                                                       | 62
|9.A.       | Offer and Listing Details                                                   | 62
|9.B.       | Plan of Distribution                                                        | 64
|9.C.       | Markets                                                                     | 64
|9.D.       | Selling Shareholders                                                        | 64
|9.E.       | Dilution                                                                    | 64
|9.F.       | Expenses of the Issue                                                       | 64
|           |                                                                             |   
|ITEM 10.   | ADDITIONAL INFORMATION                                                      | 65
|10.A.      | Share Capital                                                               | 65
|10.B.      | Memorandum and Articles of Association                                      | 65
|10.C.      | Material Contracts                                                          | 66
|10.D.      | Exchange Controls                                                           | 67
|10.E.      | Taxation                                                                    | 69
|           | Material Canadian Federal Income Tax Consequences                           | 69
|           | Dividends                                                                   | 69
|           | Capital Gains                                                               | 69
|           | Material United States Federal Income Tax Consequences                      | 70
|           | U.S. Holders                                                                | 70
|           | Distributions on our Common Shares                                          | 70
|           | Disposition of our Common Shares                                            | 71
|           | Passive Foreign Investment Company                                          | 71
|           | Foreign Tax Credit                                                          | 72
|           | Controlled Foreign Corporation                                              | 73
|           | Information Reporting; Backup Withholding                                   | 73
|10.F.      | Dividends and Paying Agents                                                 | 73
|10.G.      | Statement by Experts                                                        | 73
|10.H.      | Documents on Display                                                        | 73
|10.I.      | Subsidiary Information                                                      | 74
|           |                                                                             |   
|ITEM 11.   | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                  | 74
|           |                                                                             |   
|ITEM 12.   | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                      | 75
|           |                                                                             |   
|PART II    |                                                                             | 75
|           |                                                                             |   
|ITEM 13.   | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                             | 75
|           |                                                                             |   
|ITEM 14.   | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS ANDUSE OF PROCEEDS | 75
|           |                                                                             |   
|ITEM 15.   | CONTROLS AND PROCEDURES                                                     | 76
|           |                                                                             |   
|ITEM 16.   | [RESERVED]                                                                  | 77
|ITEM 16.A. | Audit Committee Financial Expert                                            | 78
|ITEM 16.B. | Code of Ethics                                                              | 78
|ITEM 16.C. | Principal Accountant Fees and Services                                      | 78
|ITEM 16.D. | Exemptions From the Listing Standards for Audit Committees                  | 79
|ITEM 16.E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers      | 80
|ITEM 16.F. | Change in Registrants Certifying Accountant                                | 80
|16.G.      | Corporate Governance                                                        | 80



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|         |                      |    
|-------- | -------------------- | ---
|PART III |                      | 80 
|         |                      |    
|ITEM 17. | FINANCIAL STATEMENTS | 80 
|         |                      |    
|ITEM 18. | FINANCIAL STATEMENTS | 130
|         |                      |    
|ITEM 19. | EXHIBITS             | 130
|         |                      |    
|         | SIGNATURES           | 132





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GLOSSARY OF MINING TERMS

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

cutoff grade

thedeemed grade of mineralization, established by reference to economic factors, above which material is included in mineral deposit calculations and below which material is considered waste.  May be either an external cutoff grade, which refers to the grade of mineralization used to control the external or design limits of an open pit based upon the expected economic parameters of the operation, or an internal cutoff grade, which refers to the minimum grade required for blocks of mineralization present within the confines of an open pit to be included in mineral deposit estimates;

diamond drill

a machine designed to rotate under pressure an annular diamond-studded cutting tool to produce a more or less continuous solid sample (drill core) of the material that is drilled;

epithermal

a term applied to those mineral deposits formed in and along fissures or other openings in rocks by deposition at shallow depths from ascending hot solutions;



exploration Information

geological, geophysical, geochemical, sampling, drilling, trenching, analytical testing, assaying, mineralogical, metallurgical and other similar information concerning a particular property that is derived from activities undertaken to locate, investigate, define or delineate a mineral prospect or mineral deposit;

indicated mineral resource

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 mineral resource

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



junior resource company

as used herein means a company whose mineral resource properties are in the exploration phase only and which is wholly or substantially dependent on equity financing or joint ventures to fund its ongoing activities;



measured mineral resource

that part of a Mineral Resource for which quantity, grade or quality, densities, shape and 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;



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mineral deposit, deposit or mineralized material

a mineralized body which has been physically delineated by sufficient drilling,  trenching and/or underground work and found to contain a sufficient average grade of metal or metals to warrant further exploration and/or development expenditures.  Such  a deposit does not qualify under standards of the Securities Exchange Commission as a commercially mineable ore body or as containing ore reserves, until final legal, technical and economic factors have been resolved;

mineral reserve

the economically mineable part of a Measured or Indicated Mineral 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

a concentration or occurrence of diamonds, natural solid inorganic material or natural solid fossilized organic material including base and precious metals, coal and industrial minerals in or on the Earths crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction.  The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge;

open pit mining

the process of mining an ore body from the surface in progressively deeper steps.  Sufficient waste rock adjacent to the ore body is removed to maintain mining access and to maintain the stability of the resulting pit;

ore

a natural aggregate of one or more minerals which, at a specified time and place, may be mined and sold at a profit, or from which some part may be profitably separated;

ounces

troy ounces;

oz/tonne

troy ounces per metric ton;

ppb

parts per billion;

ppm

parts per million;

porphyry deposit

a disseminated mineral deposit often closely associated with porphyritic intrusive rocks;

preliminary feasibility study

a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established and an effective method of mineral processing has been determined, and includes a financial analysis based on reasonable assumptions of technical, engineering, legal, operating, economic, social and environmental factors and the evaluation of other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve;



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probable mineral reserve

the economically mineable part of an Indicated mineral resource and, in some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. Such 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;

proven mineral reserve

the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. Such 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;



qualified person

an individual who 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; has experience relevant to the subject matter of the mineral project and the technical report; and is a member or licensee in good standing of a professional association;

stockwork

a rock mass so interpenetrated by small veins of ore that the whole must be mined together.  Stockworks are distinguished from tabular or sheet deposits, (i.e. veins or beds), which have a small degree of thickness in comparison with their extension in the main plane of the deposit;

strike length

the longest horizontal dimensions of a body or zone of mineralization;

stripping ratio

the ratio of waste material to ore that is experienced in mining an ore body;

tonne

metric ton (2,204 pounds).



CAUTIONARY NOTE REGARDING RESOURCE AND RESERVE ESTIMATES



The terms mineral reserve, proven mineral reserve and probable mineral reserve are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101  Standards of Disclosure for Mineral Projects (NI 43-101) and the Canadian Institute of Mining, Metallurgy and Petroleum (the CIM) - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in SEC Industry Guide 7 under the United States Securities Act of 1993, as amended (the Securities Act). Under SEC Industry Guide 7 standards, a final or bankable feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.



In addition, the terms mineral resource, measured mineral resource, indicated mineral resource and inferred mineral resource are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. Inferred mineral resources have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of contained ounces in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute reserves by SEC Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.



Accordingly, information contained in this Amendment No. 1 contains descriptions of our mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.



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|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 11





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PART I

ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide the information called for by this item.

ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide the information called for by this item.

ITEM 3.  KEY INFORMATION

3.A.  Selected Financial Data

The following tables summarize our selected financial data prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP) and reconciled for measurement differences to United States generally accepted accounting principles (U.S. GAAP).  The information in the tables was extracted from the more detailed financial statements and related notes included with this filing and should be read in conjunction with these financial statements and with the information appearing under the heading Item 5  Operating and Financial Review and Prospects.  Note 29 of our consolidated financial statements, included with this filing, sets forth the material variations in U.S. GAAP.  Results for the periods presented are not necessarily indicative of results for future periods.

INFORMATION IN ACCORDANCE WITH CANADIAN GAAP:

|    |                                                             |               |              |               |              |               |              |             
|--- | ----------------------------------------------------------- | ------------- | ------------ | ------------- | ------------ | ------------- | ------------ | ------------
|    |                                                             | 12 Months     | 1 Month      | 12 Months     | 3 Months     | 12 Months    
|    |                                                             | Ended         | Ended        | Ended         | Ended        | Ended        
|    |                                                             | May 31        | May 31       | April 30      | April 30     | January 31   
|    |                                                             | 2009          | 2008(2)      | 2008(2)       | 2007(2)      | 2007(2)       | 2006(2)      | 2005(2)     
|(a) | Total revenue                                               | $0            | $0           | $0            | $0           | $0            | $0           | $0          
|(b) | (Loss) beforeextraordinaryitems(1)                          |               |              |               |              |               |              |             
|    | Total                                                       | $(21,099,866) | $(5,544,998) | $(16,111,007) | $(8,492,639) | $(30,712,592) | $(3,948,102) | $(1,388,449)
|    | PerShare(1)                                                 | $(0.22)       | $(0.06)      | $(0.17)       | $(0.09)      | $(0.40)       | $(0.06)      | $(0.03)     
|(c) | Total assets                                                | $81,543,823   | $71,208,177  | $58,789,331   | $24,981,649  | $22,743,078   | $9,279,398   | $1,607,006  
|(d) | Total long-termdebt                                         | $52,939,642   | $30,939,670  | $1,367,249    | $631,775     | $739,159      | $0           | $0          
|(e) | Total shareholderequity (deficiency)                        | $(8,920,288)  | $14,606,134  | $18,765,944   | $14,370,149  | $18,647,224   | $8,798,091   | $1,523,766  
|(f) | Cash dividendsdeclared per share                            | n/a           | n/a          | n/a           | n/a          | n/a           | n/a          | n/a         
|(g) | Capital stock(number of issuedand outstandingcommon shares) | 96,040,121    | 95,958,641   | 95,958,641    | 89,876,951   | 89,367,031    | 70,246,303   | 51,264,537  
|(h) | Net earnings (loss)for the period                           |               |              |               |              |               |              |             
|    | Total                                                       | $(21,099,866) | $(5,544,998) | $(16,111,007) | $(8,492,639) | $(30,712,592) | $(3,948,102) | $(1,388,449)
|    | PerShare(1)                                                 | $(0.22)       | $(0.06)      | $(0.17)       | $(0.09)      | $(0.40)       | $(0.06)      | $(0.03)     

(1)

The effect of potential share issuances pursuant to the exercise of options and warrants would be anti-dilutive and, therefore, basic and diluted losses per share are the same.

(2)Prior years numbers have been restated to reflect a change in accounting policy and change in reporting currency.  See Item 5.



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|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 12





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INFORMATION IN ACCORDANCE WITH U.S. GAAP:

|    |                                                             |               |              |               |               |               |              |             
|--- | ----------------------------------------------------------- | ------------- | ------------ | ------------- | ------------- | ------------- | ------------ | ------------
|    |                                                             | 12 Months     | 1 Month      | 12 Months     | 3 Months      | 12 Months    
|    |                                                             | Ended         | Ended        | Ended         | Ended         | Ended        
|    |                                                             | May 31        | May 31       | April 30      | April 30      | January 31   
|    |                                                             | 2009          | 2008(2)      | 2008(2)       | 2007(2)       | 2007(2)       | 2006(2)      | 2005(2)     
|(a) | Total revenue                                               | $653,941      | $0           | $0            | $0            | $0            | $0           | $0          
|(b) | (Loss) beforeextraordinaryitems                             |               |              |               |               |               |              |             
|    | Total                                                       | $(46,852,067) | $(3,597,227) | $(49,752,062) | $(14,635,836) | $(35,682,285) | $(4,120,582) | $(1,388,449)
|    | Per Share(1)                                                | $(0.49)       | $(0.04)      | $(0.53)       | $(0.16)       | $(0.46)       | $(0.07)      | $(0.03)     
|(c) | Total assets                                                | $26,542,454   | $37,419,662  | $36,108,361   | $19,470,848   | $19,202,974   | $9,106,918   | $1,607,006  
|(d) | Total long-termdebt                                         | $59,727,593   | $17,303,337  | $1,367,249    | $631,775      | $739,159      | $0           | $0          
|(e) | Totalshareholdersequity(deficiency)                        | $(70,709,608) | $(5,546,048) | $(3,915,026)  | $8,859,348    | $15,107,120   | $8,625,611   | $1,523,766  
|(f) | Cash dividendsdeclared per share                            | n/a           | n/a          | n/a           | n/a           | n/a           | n/a          | n/a         
|(g) | Capital stock(number of issuedand outstandingcommon shares) | 96,040,121    | 95,958,641   | 95,958,641    | 89,876,951    | 89,367,031    | 70,246,303   | 51,264,537  
|(h) | Net earnings(loss) for theperiod                            |               |              |               |               |               |              |             
|    | Total                                                       | $(46,852,067) | $(3,597,227) | $(49,752,062) | $(14,635,836) | $(35,682,285) | $(4,120,582) | $(1,388,449)
|    | PerShare(1)                                                 | $(0.49)       | $(0.04)      | $(0.53)       | $(0.16)       | $( 0.46)      | $(0.07)      | $(0.03)     

(1)

The effect of potential share issuances pursuant to the exercise of options and warrants would be anti-dilutive and, therefore, basic and diluted losses per share are the same.

(2)Prior years numbers have been restated to reflect a change in reporting currency.  See Item 5.

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



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|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 13





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Difference Between Canadian and United States Generally Accepted Accounting Principles

Loss for the periods

|                                                                                                         |   |                     |   |   |                 |   |   |                     |  
|-------------------------------------------------------------------------------------------------------- | - | ------------------- | - | - | --------------- | - | - | ------------------- | -
|                                                                                                         |   | Twelve months ended |   |   | One month ended |   |   | Twelve months ended |  
|                                                                                                         |   | May 31, 2009        |   |   | May 31,         |   |   | April 30,           |  
|                                                                                                         |   |                     |   |   | 2008            |   |   | 2008                |  
|                                                                                                        
|(Loss) for the period  Canadian GAAP                                                                    | $ | (21,099,866         | ) | $ | (5,544,998      | ) | $ | (16,111,007         | )
|Gain on dilution of equity investment                                                                    |   | (2,238,492          | ) |   | -               |   |   | (12,582,085         | )
|Mineral properties expensed under U.S. GAAP                                                              |   | (17,562,548         | ) |   | (1,884,160      | ) |   | (22,680,970         | )
|Revenue recognized                                                                                       |   | 653,941             |   |   | -               |   |   | -                   |  
|Cost of goods sold                                                                                       |   | (1,260,127          | ) |   | -               |   |   | -                   |  
|Amortization                                                                                             |   | (640,425            | ) |   | -               |   |   | -                   |  
|Write down of inventory in finished goods and work in progress                                           |   | (2,404,695          | ) |   | -               |   |   | -                   |  
|Change in fair value of warrants denominated in Canadian dollars under U.S.                              |   | 22,871,582          |   |   | -               |   |   | -                   |  
|Foreign exchange on difference in mineral properties expensed under U.S. GAAP                            |   | (9,639,262          | ) |   | -               |   |   | 1,622,000           |  
|Foreign exchange on difference in senior secured notes under U.S. GAAP                                   |   | 3,180,313           |   |   | -               |   |   | -                   |  
|Additional loss relating to redemption and modification of senior secured note agreement under U.S. GAAP |   | (18,712,488         | ) |   | 3,831,931       |   |   | -                   |  
|Net loss  U.S. GAAP                                                                                     | $ | (46,852,067         | ) | $ | (3,597,227      | ) | $ | (49,752,062         | )
|Basic and diluted loss per share  U.S. GAAP                                                             | $ | (0.49               | ) | $ | (0.04           | ) | $ | (0.53               | )
|                                                                                                        
|                                                                                                        
|                                                                                                         |   | Three months        |   |   | Twelve months   |   |   | Twelve months       |  
|                                                                                                         |   | ended April 30,     |   |   | ended January   |   |   | ended January 31,   |  
|                                                                                                         |   | 2007                |   |   | 31,             |   |   | 2006                |  
|                                                                                                        
|(Loss) for the period  Canadian GAAP                                                                    | $ | (8,492,639          | ) | $ | (30,712,592     | ) | $ | (3,948,102          | )
|Gain on dilution of equity investment                                                                    |   | (632,396            | ) |   | (1,701,589      | ) |   | -                   |  
|Mineral properties expensed under U.S. GAAP                                                              |   | (5,510,801          | ) |   | (3,540,104      | ) |   | (172,480            | )
|                                                                                                        
|Foreign exchange on difference in mineral properties under U.S. GAAP                                     |   | -                   |   |   | 272,000         |   |   | -                   |  
|Net loss  U.S. GAAP                                                                                     | $ | (14,635,836         | ) | $ | (35,682,285     | ) | $ | (4,120,582          | )
|Basic and diluted loss per share  U.S. GAAP                                                             | $ | (0.16               | ) | $ | (0.46           | ) | $ | (0.07               | )



|                                                                                                                             |   |             |   |   |              |   |   |                |  
|---------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ------------ | - | - | -------------- | -
|Balance Sheets                                                                                                               |   | May 31 2009 |   |   | May 31, 2008 |   |   | April 30, 2008 |  
|                                                                                                                             |   |             |   |   |              |   |   |                |  
|                                                                                                                            
|Total assets  Canadian GAAP                                                                                                 | $ | 81,543,823  |   | $ | 71,208,177   |   | $ | 58,789,331     |  
|Mineral properties expensed or charged to cost of sales and revenue under U.S. GAAP                                          |   | (55,001,369 | ) |   | (33,788,515  | ) |   | (22,680,970    | )
|Total assets  U.S. GAAP                                                                                                     | $ | 26,542,454  |   | $ | 37,419,662   |   | $ | 36,108,361     |  
|Long term debt  Canadian GAAP                                                                                               | $ | 52,939,642  |   | $ | 30,939,670   |   | $ | 1,367,249      |  
|Allocation of fair value of senior notes under U.S. GAAP                                                                     |   | -           |   |   | (13,636,333  | ) |   | -              |  
|Derivative liability  warrants                                                                                              |   | 6,292,830   |   |   | -            |   |   | -              |  
|Equity component of convertible debt treated as a liability under U.S. GAAP                                                  |   | 495,121     |   |   | -            |   |   | -              |  
|Long term debt  U.S. GAAP                                                                                                   | $ | 59,727,593  |   | $ | 17,303,337   |   | $ | 1,367,249      |  
|                                                                                                                            
|Balance Sheets (cont.)                                                                                                       |   | May 31 2009 |   |   | May 31, 2008 |   |   | April 30, 2008 |  
|                                                                                                                             |   |             |   |   |              |   |   |                |  
|                                                                                                                            
|Shareholders equity (deficit) - Canadian GAAP                                                                               | $ | (8,920,288  | ) | $ | 14,606,134   |   | $ | 18,765,944     |  
|Mineral properties expensed or charged to cost of sales and revenue under U.S. GAAP                                          |   | (55,001,369 | ) |   | (33,788,515  | ) |   | (22,680,970    | )
|(Decrease) increase in retained earnings due to translation of prior year mineral property expenses and senior secured notes |   | (4,564,949  | ) |   | 1,622,000    |   |   | -              |  
|Difference in accumulated other comprehensive income                                                                         |   | 4,564,949   |   |   | (1,622,000   | ) |   |                |  
|Increase in net income due to the change in fair value of warrants denominated in Canadian dollars under U.S. GAAP           |   | 22,871,582  |   |   | -            |   |   | -              |  
|Decrease in warrants due to fair value of warrants denominated in Canadian dollars under U.S. GAAP                           |   | (29,164,412 | ) |   | -            |   |   | -              |  
|Additional loss relating to redemption and modification of senior secured note agreement under U.S. GAAP                     |   | (14,903,816 | ) |   | 3,831,931    |   |   | -              |  
|Allocation of fair value of senior secured notes under U.S. GAAP                                                             |   | 14,903,816  |   |   | 9,804,402    |   |   | -              |  
|Equity component of convertible debenture treated as a liability under U.S. GAAP                                             |   | (495,121    | ) |   | -            |   |   | -              |  
|Shareholders equity (deficit)  U.S. GAAP                                                                                   | $ | (70,709,608 | ) | $ | (5,546,048   | ) | $ | (3,915,026     | )



|                                                                                    |   |                |   |   |                  |   |   |                  |  
|----------------------------------------------------------------------------------- | - | -------------- | - | - | ---------------- | - | - | ---------------- | -
|Balance Sheets                                                                      |   | April 30, 2007 |   |   | January 31, 2007 |   |   | January 31, 2006 |  
|                                                                                    |   |                |   |   |                  |   |   |                  |  
|                                                                                   
|Total assets  Canadian GAAP                                                        | $ | 24,981,649     |   | $ | 22,743,078       |   | $ | 9,279,398        |  
|Mineral properties expensed or charged to cost of sales and revenue under U.S. GAAP |   | (5,510,801     | ) |   | (3,540,104       | ) |   | (172,480         | )
|Total assets  U.S. GAAP                                                            | $ | 19,470,848     |   | $ | 19,202,974       |   | $ | 9,106,918        |  
|                                                                                   
|Shareholders equity (deficit) - Canadian GAAP                                      | $ | 14,370,149     |   | $ | 18,647,224       |   | $ | 8,798,091        |  
|Mineral properties expensed under U.S. GAAP                                         |   | (5,510,801     | ) |   | (3,540,104       | ) |   | (172,480         | )
|Shareholders equity (deficit)  U.S. GAAP                                          | $ | 8,859,348      |   | $ | 15,107,120       |   | $ | 8,625,611        |  



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|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 14





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3.B.  Capitalization and Indebtedness

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide the information called for by this item.

3.C.  Reasons For The Offer and Use of Proceeds

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide the information called for by this item.

3.D.  Risk Factors



We operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties.  Investors should carefully consider the risks described below before investing in our securities.  The occurrence of any of the following events could harm us.  If these events occur, the trading price of our common shares could decline, and investors may lose part or even all of their investment.

A risk analysis has as yet to be completed for the Molejon deposit.  While it is possible to speculate on possible risks associated with an open pit mining operation in Panama, there may be as yet to be identified significant risk factors.  Any as yet to be identified risks cannot be completely eliminated and it is possible that the occurrence of one or more of such factors could have a material adverse effect on our financial condition and results of operations.

We face risks related to our operations in foreign countries.

Currently our only properties are located in Panama, a country with a developing mining sector but no commercially producing mines.  Consequently, we are subject to and our mineral exploration and mining activities may be affected in varying degrees by certain risks associated with foreign ownership, including inflation, political instability, political conditions and government regulations.  Any changes in regulations or shifts in political conditions are beyond our control and may adversely affect our business.  Operations may be affected by government regulations with respect to restrictions on production, restrictions on foreign exchange and repatriation, price controls, export controls, restriction of earnings distribution, taxation laws, expropriation of property, environmental legislation, water use and mine safety and renegotiation or nullification of existing concessions, licenses, permits and contracts.  In particular, the status of Panama as a developing country may make it more difficult for us to obtain any required production financing for our properties from senior lending institutions.

Failure to comply strictly with applicable laws, regulations and local practices relating to mineral rights applications and tenure could result in loss, reduction or expropriation of entitlements or the imposition of additional local or foreign parties as joint venture partners with carried or other interests.  The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on our operations or profitability.

Our operations are subject to environmental and other regulation.

Our current or future operations, including development activities and commencement of production on our properties, require permits from various governmental authorities and such operations are and will be subject to laws and regulations governing prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety, community services and other matters.  Companies engaged in the development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits.  There can be no assurance that approvals and permits required to commence production on our various properties will be obtained.  Additional permits and studies, which may include environmental impact studies conducted before permits can be obtained, may be necessary prior to operation of the properties in which we have interests and there can be no assurance that we will be able to obtain or maintain all necessary permits that may be required to commence construction, development or operation of mining facilities at these properties on terms which enable operations to be conducted at economically justifiable costs.

Our potential mining and processing operations and exploration activities in Panama are subject to various federal and provincial laws governing land use, the protection of the environment, prospecting, development, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, mine safety, community services and other matters.  Such operations and exploration activities are also subject to substantial regulation under these laws by governmental agencies and may require that we obtain permits from various governmental agencies.  We believe we are in substantial compliance with all material laws and regulations that currently apply to our activities.  There can be no assurance, however, that all permits we may require for construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms or that such laws and regulations would not have a material adverse effect on any mining project we might undertake.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions.  Parties engaged in mining operations 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.



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|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 15





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Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on us and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or abandonment or delays in development of new mining properties.

To the best of our knowledge, we are currently operating in compliance with all applicable environmental regulations.  However, Autoridad Nacional del Ambiente (ANAM), Panamas national environmental authority, has established certain conditions to be met before we can place the Molejon property into commercial production as a mine.  We have yet to satisfy all of these conditions, and discussions are underway with ANAM to arrive at a consensus on the final conditions to be met.  Our position is that Law No. 9 of the Legislative Assembly of Panama (the Ley Petaquilla), a project-specific piece of legislation enacted in February 1997 to deal with the orderly development of the Cerro Petaquilla Concession, takes precedence over the resolutions of ANAM, and that we are in compliance with the Ley Petaquilla.  The Supreme Court of Panama has issued an order suspending the implementation of a fine levied in 2008 against us by ANAM.  There is no guarantee that ANAM will not purport to levy further fines against us, claiming breaches of the environmental statutes and policies of Panama, in the event that we proceed to commercial production without having satisfied conditions set out by ANAM.  We intend to strictly comply with the Ley Petaquilla, including the environmental provisions thereof, and will vigorously oppose any such action by ANAM.



There are currently no producing mines in Panama and various independent environmental groups or individuals would like to prevent mining in Panama.  As such, our operations could be significantly disrupted or suspended by activities such as protests or blockades that may be undertaken by such groups or individuals.



We do not have probable or proven reserves.



We are engaged in the acquisition, exploration, exploration management and sale of mineral properties, with the primary aim of developing them to a stage where they can be exploited at a profit.  Our property interests are in the exploration stage and are without a known body of commercial ore.  Although an open pit mine is planned and construction of a gold plant is nearing completion at the Molejon gold property for the processing of gold-bearing ores, there is no guarantee we will realize any profits in the short to medium term.  Any profitability in the future from our business will be dependent upon locating mineral reserves, which itself is subject to numerous risk factors.



The business of exploring for minerals and mining involves a high degree of risk.  Few properties that are explored are ultimately developed into producing mines.  Should our mineral properties reach the developing stage, we will be subjected to an array of complex economic factors and accordingly there is no assurance that a positive feasibility study or any projected results contained in a feasibility study of a mineral deposit will be attained.



Although the ore resource and mineral deposit figures included herein have been carefully prepared by us, or, in some instances have been prepared, reviewed or verified by independent mining experts, these amounts are estimates only and no assurance can be given that any particular level of recovery of minerals from ore resources will in fact be realized or that an identified mineral deposit will ever qualify as a commercially mineable (or viable) ore body which can be  legally and economically exploited.   Mineral resources are estimates of the size and grade of deposits based on limited sampling and on certain assumptions and parameters and until reserves or mineralization are actually mined and processed, the quantity of mineralization and resource grades must be considered estimates only.



Further exploration, drilling and other engineering analyses are required in order to have any of our resources classified as proven reserves.  Estimates of reserves, mineral deposits and potential future production costs can also be affected by such factors as permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions.  In addition, the grade of ore ultimately mined may differ from that indicated by drilling results.  Short-term factors relating to ore reserves, such as the need for orderly exploration of ore bodies or the processing of new or different grades, may also have an adverse effect on mining operations and on the results of operations.  There can be no assurance that minerals recovered in small-scale laboratory tests will be duplicated in large-scale tests under on-site conditions.  Material changes in ore reserves, grades, stripping ratios or recovery rates may affect the economic viability of projects.  Ore reserves are reported as general indicators of mine life.  Reserves should not be interpreted as assurances of mine life or of the profitability of current or future operations.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 16





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Mining is subject to various physical hazards.



The business of gold mining is subject to a variety of risks such as cave-ins and flooding, environmental hazards, industrial accidents, unusual or unexpected changes to rock formations, changes in the regulatory environment, the discharge of toxic chemicals, gold bullion losses and other hazards.  Such occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, delays in mining, delays in production, increased production costs, monetary losses and possible legal liability.  We have obtained insurance in amounts that we consider to be adequate to protect ourselves against certain risks of mining and  processing to the extent that is economically feasible but which may not provide adequate coverage in all circumstances.  We may become subject to liability for hazards against which we cannot insure ourselves, or against which we are inadequately insured or against which we may elect not to insure because of premium costs or other reasons.  In particular, we are not insured against all forms of environmental liability.



We do not have all of the required permits for commencement of commercial production.



Further activities on the Molejon gold property for completion of construction of mill facilities and commencement and continuation of production will require additional approvals, permits and certificates of authorization from different government agencies on an ongoing basis.  Obtaining the necessary governmental permits is a complex and time consuming process involving numerous jurisdictions and may involve public hearings and costly undertakings.  The duration and success of permitting efforts are contingent upon many variables not within our control.  Environmental protection permitting, including the approval of reclamation plans, could increase costs and cause delays in the development of the Molejon gold deposit, depending on the nature of the activity to be permitted and the interpretation of applicable requirements implemented by the permitting authority.  There can be no assurance that all necessary permits will be obtained and, if obtained, that the costs involved will not exceed those previously estimated by us.  It is possible that the costs and delays associated with the compliance with such standards and regulations could become such that we would not proceed with the development or operation of a mine or mines.

Potential delays in the advancement of the Molejon gold deposit and cost overruns may occur.

Our ability to meet timing and cost estimates for properties cannot be assured. Technical considerations, delays in obtaining governmental approvals, inability to obtain financing or other factors could cause delays in exploring properties and such delays could materially affect our financial performance.

Whilst the Molejon gold deposit development is underway, costs for required equipment remain under review and may escalate beyond original estimates. This possible cost escalation, along with other as yet unresolved logistical and engineering issues relating to the Molejon development, all part of a standard building, construction and anticipated start up of a new mining operation, may result in significant cost experiences that differ from present day estimates. There is no guarantee the Molejon gold project will, after more development and engineering work is completed, together with required capital equipment purchases, be an economically feasible production opportunity.

We have limited experience with development-stage mining operations.

We have limited experience in placing resource properties into production and our ability to do so will be dependent upon using the services of appropriately experienced personnel or entering into agreements with other major resource companies that can provide such expertise.  There can be no assurance that we will have available to us the necessary expertise when and if we place our resource properties into production.  There also exists significant risk in being able to recruit experienced employees or contractors to allow us to move forward in pursuing development-stage mining operations.



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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 17





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Mineral prices can fluctuate dramatically and have a material adverse effect on our results of operations.



The mining industry in general is intensely competitive and there is no assurance that, even if commercial quantities of minerals are discovered, a profitable market will exist for the sale of same.  Factors beyond our control may affect the marketability of any substances discovered.  Gold prices have experienced volatile and significant price movements over short periods of time and are affected by numerous factors beyond our control, including international economic and political trends, expectations with respect to the rate of inflation, currency exchange rates, interest rates, global and regional consumption patterns and economic crises, speculative activities and increased production due to improved mining and production methods.  The supply of and demand for gold is affected by various factors, including political events, economic conditions and production costs in major producing regions and governmental policies with respect to gold holdings by a nation or its citizens.  The demand for and supply of gold affects gold prices but not necessarily in the same manner as demand and supply affect the prices of other commodities.  The supply of gold consists of a combination of mine production and existing stocks of bullion and fabricated gold held by governments, public and private financial institutions, industrial organizations and private individuals.  There can be no assurance that the price of recovered minerals will be such that our properties can be mined at a profit.

We are dependent upon additional funding in order to sustain our operations.

We have only generated cash of $653,941 from the sale of gold and silver in the past and, although we are preparing for production at the Molejon gold property, cash flow to satisfy our operational requirements, debt repayments and cash commitments is not guaranteed from the operations of the Molejon gold plant.  In the past, we have relied on sales of equity securities or debt financing to meet most of our cash requirements, together with project management fees, property payments and sales or joint ventures of properties.  There can be no assurance that funding from these sources will be sufficient in the future to satisfy our operational requirements, debt repayments and cash commitments.

We do not presently have sufficient financial resources to undertake all of our planned exploration and development programs.  The development of our properties depends upon our ability to obtain financing through any or all of the joint venturing of projects, debt financing, equity financing or other means. There is no assurance that we will be successful in obtaining the required financing.  Failure to obtain additional financing on a timely basis could cause us to forfeit our interest in our properties and reduce or terminate our operations on such properties.



We have a history of losses, an accumulated deficit and a lack of revenue from operations and there is substantial uncertainty regarding our ability to continue as a going concern.

In their report on the consolidated financial statements for the period ended May 31, 2009, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern.  Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.



We have incurred net losses to date.  As at May 31, 2009, we had an accumulated operating deficit of $119,774,936, a shareholders deficit of $8,920,288 and for the 12-months ended May 31, 2009, incurred a loss of $21,099,866 from continuing operations.  Continuing operations are dependent on us achieving profitable operations and being able to raise capital, if and when necessary to meet our obligations and repay liabilities when they come due.



We have not yet had any revenue from the exploration activities on our properties.  The Molejon gold property is our most advanced property.  Even if we generate future revenue from any of our properties, including the Molejon gold property, we may continue to incur losses beyond the period of commencement of such activity.  There is no certainty that we will produce revenue, operate profitably or provide a return on investment in the future and recent significant increases in gold commodity prices may not be sustainable.  As such, they may not be reliable as indicators of future consistent realizable values, should any of our mineral deposits reach commercial production.



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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 18





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We did not generate revenue from operations during the 12 months ended May 31, 2009, the one month ended May 31, 2008, the 12 months ended May 31, 2008, the three months ended April 30, 2007, and the 12 months ended January 31, 2007.  Expenses for the 12-months ended May 31, 2009, were $25,603,711, a decreasefrom $29,284,791 for the 12-months ended May 31, 2008.



We are executing a business plan to allow us to continue as a going concern, which is to achieve profitability through cost containment and increased revenues.  We have reduced our losses and intend to reduce them further, ultimately achieving profitability. There is significant uncertainty that we will be successful in executing this plan.  Should we fail to achieve profitability, or if necessary, raise sufficient capital to sustain operations, we may be forced to suspend our operations, and possibly even liquidate our assets and wind-up and dissolve.



During the fiscal year ended May 31, 2009, we raised an additional $27,750,000 in gross proceeds by completing our senior secured notes debt financing.  We followed with the completion of a supplemental senior secured notes debt financing of $20,000,000 in gross proceeds and a convertible senior secured notes debt financing of $40,000,000 in gross proceeds.  In addition, we raised $43,238,852 through the sale of our 20,418,565 common shares of Petaquilla Copper Ltd. and, thus, retired a portion ($43,238,852) of our outstanding senior secured notes.

Our consolidated financial statements are prepared on a going concern basis, which assumes that we will be able to realize our assets at the amounts recorded and discharge our liabilities in the normal course of business in the foreseeable future.  Should this assumption not be appropriate, adjustments in the carrying amounts of the assets and liabilities to their realizable amounts and the classifications thereof will be required and these adjustments and reclassifications may be material.

*We have a history of  material weaknesses at our subsidiaries.*

The requirements of the Ley Petaquilla may have an adverse impact on us.

Our operations in Panama are governed primarily by Law No. 9 of the Legislative Assembly of Panama (the Ley Petaquilla), a project-specific piece of legislation enacted in February 1997 to deal with the orderly development of the Cerro Petaquilla Concession.

The Ley Petaquilla granted a mineral exploration and exploitation concession to Minera Petaquilla, S.A. (MPSA), a Panamanian company formed in 1997 to hold the Cerro Petaquilla Concession covering approximately 136 square kilometres in north-central Panama.  Although we no longer hold an interest in the copper deposits therein, we continue to hold the rights to the Molejon gold deposit and, as the Cerro Petaquilla Concession encompasses this deposit, the Ley Petaquilla governs our exploration activities.

The Ley Petaquilla contains fiscal and legal stability clauses necessary in order to obtain project financing and includes tax exemptions on income, dividends and imports.  The Ley Petaquilla also provides for an increase in the annual available infrastructure tax credit, higher depreciation rates for depreciable assets which cannot be used in the infrastructure tax credit pool, and a favorable depletion allowance.

In order to maintain the Cerro Petaquilla Concession in good standing, MPSA must pay to the Government of Panama an annual rental fee of $1.00 per hectare during the first five years of the concession, $2.50 per hectare in the sixth to the tenth years of the concession and $3.50 per hectare thereafter.  Initially, the annual rental was approximately $13,600 payable by MPSA and funded pro rata by its shareholders.  The current annual rental is approximately $34,000.  The concession was granted for a 20-year term with up to two 20-year extensions permitted subject to the requirement to begin mine development and to make a minimum investment of $400 million in the development of the Cerro Petaquilla Concession.



Under the Ley Petaquilla, MPSA was required to begin mine development by May 2001.  However, MPSA was able to defer commencing development operations by one month for every month that the price of copper remained below $1.155 per pound for up to a further five years (i.e. until May 2006 at the latest).  In September 2005, the multi-phase Petaquilla Mine Development Plan (the Plan) submitted to the Government of Panama by us and MPSA was approved by Ministerial Resolution.  The Molejon gold mineral deposit forms part of the Cerro Petaquilla Concession and the first phase of the Plan focuses on the advancement of the Molejon gold deposit by us as commenced in 2006.  Subsequent phases of the Plan are the responsibility of MPSA.



The Ley Petaquilla also requires MPSA to (i) deliver an environmental report to the General Direction of Mineral Resources of the Ministry of Commerce and Industiries (MICI) for evaluation; (ii) submit, prior to extraction, an environmental feasibility study specific to the project area in which the respective extradition will take place; (iii) submit annually a work plan comprising the projections and approximate costs for the respective year to the MICI; (iv) post letters of credit in support of required compliance and environmental protection guarantees; (vi annually pay surface canons; (vi) annually pay royalties for extracted minerals; (vii) annually present to the MICI detailed reports covering operations and  employment and training; (viii) create and participate in the administration of a scholarship fund to finance studies and training courses or professional training for the inhabitants of the communities neighboring the Cerro Petaquilla Concession in the provinces of Cocle and Colon; and (ix) maintain all mining and infrastructure works and services of the project, always complying with the standards and regulations of general application in force that pertain to occupational safety, health and construction.



For reference, a copy of Law No. 9 as passed by the Legislative Assembly of Panama on February 26, 1997, was provided with  our Form 20-F for the fiscal year ended May 31, 2009, as Exhibit 4.V.  An English translation of the law is attached to this Amendment No. 1 as Exhibit 4.W.



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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 19





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Our directors may have conflicts of interest.

As at November 6, 2009, two of our directors, David Levy and Daniel Small, hold positions with Platinum Management (NY) LLC, an investment advising firm to Platinum Partners Value Arbitrage Fund LP, a New York based investment fund.  Platinum Partners Value Arbitrage Fund LP holds securities in our company and a portion of our debt.  However, none of our directors are directors or officers of Platinum Partners Value Arbitrage Fund LP nor are any of our directors insiders of any other reporting company.  While currently none of our directors beneficially owns a 10% or greater interest in the voting power of any other mineral resource companies, they could in the future.  To the extent that these other companies may participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation, which could result in competitive harm to us.  In the event that such a conflict of interest arises at a meeting of our directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms.  In appropriate cases we will establish a special committee of independent directors to review a matter in which several directors, or management, may have a conflict.  In accordance with the laws of the Province of British Columbia, our directors are required to act honestly, in good faith and in our best interests.  In determining whether or not we will participate in a particular program and the interest therein to be acquired by it, our directors primarily consider the potential benefits to us, the degree of risk to which we may be exposed and our financial position at that time.  Other than as indicated, we have no other procedures or mechanisms to prevent conflicts of interest.

Increased costs to procure labour and materials may affect expenditures relating to potential future production.



The mining industry has been impacted by increased demand for critical resources such as input commodities, mining equipment, milling equipment and skilled labour.  These shortages have caused unanticipated cost increases and delays in delivery times, thereby impacting capital expenditures and mine and mill completion.  These conditions may reoccur in the future and may have an effect on costs of potential future production and the achievement of production targets.

We face strong competition for the acquisition of mining properties.

Significant and increasing competition exists for the limited number of mineral property acquisition opportunities available.  As a result of this competition, some of which is with large established mining companies with substantial capabilities and greater financial and technical resources than we have, we may be unable to acquire additional attractive mineral properties on terms we consider acceptable.  Accordingly, there can be no assurance that our exploration and acquisition programs will yield any new reserves or result in any commercial mining operation.

Our common shares are subject to penny stock rules, which could affect trading in our shares.

Our common shares are classified as penny stock as defined in Rule 15g-9 promulgated under the Exchange Act.  In response to perceived abuse in the penny stock market generally, the Exchange Act was amended in 1990 to add new requirements in connection with penny stocks.  In connection with effecting any transaction in a penny stock, a broker or dealer must give the customer a written risk disclosure document that (a) describes the nature and level of risk in the market for penny stocks in both public offerings and secondary trading, (b) describes the broker's or dealer's duties to the customer and the rights and remedies available to such customer with respect to violations of such duties, (c) describes the dealer market, including bid and ask prices for penny stock and the significance of the spread between the bid and ask prices, (d) contains a toll-free telephone number for inquiries on disciplinary histories of brokers and dealers and (e) defines significant terms used in the disclosure document or the conduct of trading in penny stocks.  In addition, the broker-dealer must provide to a penny stock customer a written monthly account statement that discloses the identity and number of shares of each penny stock held in the customers account and the estimated market value of such shares.  The extensive disclosure and other broker-dealer compliance related to penny stocks may result in reducing the level of trading activity in the secondary market for our common shares, thus limiting the ability of our shareholders to sell their shares.

U.S. investors may not be able to enforce their civil liabilities against us or our directors, controlling persons and officers.

Our company and our officers and directors are residents of countries other than the United States, and all of our assets are located outside the United States.  As a result, it may not be possible for investors to effect service of process within the United States upon such persons or enforce in the United States against such persons judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of United States federal securities laws or state securities laws.



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We believe that a judgment of a United States court predicated solely upon civil liability under United States securities laws would probably be enforceable in Canada if the United States court in which the judgment was obtained has a basis for jurisdiction in the matter that was recognized by a Canadian court for such purposes.  However, there is doubt whether an action could be brought in Canada in the first instance on the basis of liability predicated solely upon such laws.



If we are characterized as a Passive Foreign Investment Company (PFIC), our U.S. shareholders may be subject to adverse U.S. federal income tax consequences.



We have not made a determination as to whether we are considered a PFIC as such term is defined in the U.S. Internal Revenue Code of 1986, as amended (the Code), for U.S. federal income tax purposes for the current tax year and any prior tax years.  A non-U.S. corporation generally will be considered a PFIC for any tax year if either (1) at least 75% of its gross income is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income.



In general, if we are or become a PFIC, any gain recognized on the sale of our common stock and any excess distributions (as specifically defined in the Code) paid on the common stock must be ratably allocated to each day in a U.S. taxpayers holding period for the common stock.  The amount of any such gain or excess distribution allocated to prior years of such U.S. taxpayers holding period for the common stock generally will be subject to U.S. federal income tax at the highest tax applicable to ordinary income in each such prior year, and the U.S. taxpayer will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year.  For more information, see Material United States Federal Income Tax Consequences-Passive Foreign Investment Company.

ITEM 4.  INFORMATION ON THE COMPANY

4.A.  History and Development of the Company

Our company, Petaquilla Minerals Ltd., is a British Columbia company engaged in the acquisition, exploration and exploration management of mineral properties with the goal of bringing properties to production.  We were incorporated under the laws of the Province of British Columbia, Canada, on October 10, 1985, by registration of our Memorandum and Articles of Association (the Articles) with the British Columbia Registrar of Companies under the name Adrian Resources Ltd.  We changed our name to Petaquilla Minerals Ltd. on October 12, 2004.

Our principal executive office address is Suite 410, 475 West Georgia Street, Vancouver, British Columbia, V6B 4M9 Canada.  Our telephone number is (604) 694-0021 and our facsimile number is (604) 694-0063.

We have eleven subsidiaries and one joint venture interest as detailed below:

(i)

We own all of the issued shares of Adrian Resources (BVI) Ltd., which was incorporated in the British Virgin Islands on December 17, 1999.

(ii)

Adrian Resources (BVI) Ltd. owns all of the issued shares of Petaquilla Minerals, S.A., which was incorporated in the Republic of Panama on April 28, 1992, and holds title to certain of our exploration concessions in the Republic of Panama.  Although originally incorporated under the name Adrian Resources, S.A., the name of such subsidiary was changed to Petaquilla Minerals, S.A. on February 3, 2005.

(iii)

Petaquilla Minerals, S.A. owns all of the issued shares of Petaquilla Gold, S.A., a Panamanian corporation formed on August 11, 2005.  Petaquilla Gold, S.A. holds the Molejon gold property interest and other potential gold deposits within the Cerro Petaquilla Concession lands.



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(iv)

Petaquilla Minerals, S.A. owns all of the issued shares of Instituto Petaquilla, S.A., a Panamanian corporation which was formed on April 23, 2007, to conduct training and education programs for our personnel.

(v)

Petaquilla Minerals, S.A. owns all of the issued shares of Brigadas Verdes, S.A., a Panamanian corporation which was formed on March 27, 2007, to coordinate and manage reforestation activities.

(vi)

Compañìa Minera Belencillo, S.A., a Panamanian corporation, was formed on September 21, 2005, in accordance with the agreement signed between Petaquilla Minerals, S.A. and Madison Enterprises (Latin American), S.A.  Petaquilla Minerals, S.A. owns 68.88% of Compañìa Minera Belencillo, S.A., which in turn holds a 100% interest in Zone 2 of the Rio Belencillo Concession and 68.88% of Zone 1, subject to an option by Madison Enterprises (Latin American), S.A. to earn a 31.12% interest in Zone 1 of the Rio Belencillo Concession.  On May 7, 2005, we entered into an option agreement with Gold Dragon Capital Management Ltd. (Gold Dragon) whereby Gold Dragon could earn a 100% interest in the concession lands by the expenditure of $500,000 over two years on mutually agreed upon property expenditures.

(vii)

Petaquilla Gold, S.A. owns 50.2% of the shares of Petaquilla Infraestructura, S.A. (formerly named Petaquilla Power & Water, S.A.), a Panamanian corporation formed on September 21, 2006, primarily for the purposes of (i) designing, constructing, operating, maintaining and installing equipment and networks for the generation, transmission and commercialization of electrical energy; and (ii) developing projects for the production, distribution and commercialization of potable water.

(viii)

Petaquilla Gold, S.A. also owns all of the issued shares of Aqua Azure, S.A., a Panamanian corporation which was formed on October 10, 2006, to purchase, sell, lease, manage, commercialize and hold investment in various moveable goods.

(ix)

We own all of the issued shares of Petaquilla Infrastructure Ltd., incorporated in British Columbia, Canada, on May 29, 2009.

(x)

Petaquilla Infrastructure Ltd. owns all of the issued shares of Petaquilla Infraestructura Ltd., which was incorporated in the British Virgin Islands on February 21, 2008.

(xi)

Petaquilla Infraestructura Ltd. owns all of the issued shares of Petaquilla Hidro, S.A., a Panamanian corporation formed on October 10, 2008.

(xii)

Petaquilla Infraestructura Ltd. owns all of the issued shares of Panama Central Electrica, S.A., a Panamanian corporation formed on February 16, 2009.



Molejon Property  Panama

Our interest in the Molejon deposit was acquired in 1992 and 1993 through two separate series of transactions and in 2005 by way of an agreement amongst the shareholders of MPSA.  Specifically,in June 2005, the shareholders of MPSA agreed to separate the gold deposit and other precious metal mineral deposits that might be developed within the Cerro Petaquilla Concession from the copper mineral deposits within the Cerro Petaquilla Concession.  The agreement provided for us, through our subsidiary, Petaquilla Gold, S.A., to own a 100% interest in the Molejon gold deposit, as well as all other gold and precious metal mineral deposits that might be developed within the Cerro Petaquilla Concession, subject to a graduated 5% - 7% Net Smelter Return, based on the future gold price at the time of production, payable to others.



In September 2005, the multi-phase Petaquilla Mine Development Plan (the Plan) submitted to the Government of Panama by us and MPSA was approved by Ministerial Resolution.  The Molejon gold mineral deposit forms part of the Cerro Petaquilla Concession lands and the first phase of the Plan focuses on the advancement of the Molejon gold deposit by us commencing in 2006.  Subsequent phases of the Plan are the responsibility of MPSA, the joint venture company in which we no longer hold an interest.



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Principal Capital Expenditures and Divestitures Over Last Three Fiscal Years

As at May 31, 2009, we incurred $60,843,501 in Molejon property expenses which have been capitalized as mineral properties as noted below.

| |                              |             |  | 
| | ---------------------------- | ----------- |  | 
| | Plant                        | $47,610,795 |  | 
| | Camp                         | 5,252,168   |  | 
| | Plant equipment              | 2,973,133   |  | 
| | Reclamation costs            | 3,458,304   |  | 
| | Capitalized interest expense | 1,549,101   |  | 
| |                              | $60,843,501 |  | 

Current Capital Expenditures and Divestitures

We have either ongoing or anticipated capital expenditures during the fiscal year ending May 31, 2010.  With respect to the planned exploration and advancement of the Molejon property, we anticipate having capital expenditures of approximately $5,000,000 to $10,000,000 during the fiscal year ending May 31, 2010.  However, such expenditures are subject to further consideration and to our ability to obtain external financing.  There is no assurance that we will be successful in obtaining  such financing.

Public Takeover Offers

During the 12 month period ended May 31, 2009, and during the current fiscal year, we did not receive any public takeover offers from third parties nor did we make any such takeover offers.

4.B.  Business Overview



Molejon Property  Panama

We currently have no significant properties in Canada and we are not actively exploring, or seeking to acquire interests in, mineral properties in Canada.  Our primary focus has been the exploration of the Molejon gold deposit and other mineral properties in the Republic of Panama.  We have not yet generated any revenue from our exploration activities and operations.

The Republic of Panama, through the Ministry of Commerce and Industry, is the regulatory body overseeing the Cerro Petaquilla Concession and potential future development thereof.  Law No. 9, the Ley Petaquilla, passed by the Legislative Assembly of Panama on February 26, 1997, is a project-specific piece of legislation dealing with the orderly development of the Cerro Petaquilla Concession, including the Molejon gold deposit.  The Ley Petaquilla could be amended by the government of Panama through the enaction of a subsequent law but no such law has been enacted since the Ley Petaquilla legislation was adopted in February 1997.  At such time, the Ley Petaquilla granted a mineral exploration and exploitation concession to MPSA, a Panamanian company which was formed in 1997 to hold the 136 square kilometer Cerro Petaquilla Concession.  Our Molejon property comprises approximately 10% of the Cerro Petaquilla lands.

The Ley Petaquilla contains fiscal and legal stability clauses necessary in order to obtain project financing and includes tax exemptions on income, dividends and imports.  The Ley Petaquilla also provides for an increase in the annual available infrastructure tax credit, higher depreciation rates for depreciable assets, which cannot be used in the infrastructure tax credit pool, and a favourable depletion allowance.

There were no competing bidders for the concession at the time the Ley Petaquilla was enacted and the concession was granted for an initial 20-year term with two 20-year extensions permissible subject to the requirements to begin mine development and to make a minimum required investment.  In 2005, we and our former partners in MPSA delivered the Plan to the Government of Panama and the Plan was approved by Ministerial Resolution in September 2005.  Development of the Molejon gold mineral deposit by us, which commenced in 2006 forms the first phase of the Plan.  Subsequent phases of the Plan will be the responsibility of MPSA.



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Such government approval of the Plan resulted in the extension of the land tenure for an initial 20-year period which commenced September 2005, subject to MPSA meeting certain other ongoing development and operational conditions.  In addition, pursuant to the Ley Petaquilla, in order to maintain the Cerro Petaquilla Concession in good standing, we and MPSA must continue to meet certain obligations.

The Ley Petaquilla comprises the agreement between the Republic of Panama and the corporation of Minera Petaquilla, S.A. and its affiliates and identifies each partys rights and obligations.  The majority of our obligations require that the Republic of Panama be provided with a variety of reports, studies and work plans, payment of surface canons, access and use of port installations, evidence of bonding, etc.  An example of an obligation that requires government approvals concerns the environment and states that an Environmental Feasibility Study specific to the project area in which the respective extradition will take place must be submitted to the General Direction of Mineral Resources of the Ministry of Commerce and Industries.  Said study shall be evaluated and its approval, modification or rejection shall be defined within a term of 45 days counted as of the date of its presentation to the General Direction of Mineral Resources.  After the end of this term, if there is no statement from the General Direction of Mining Resources, the Environmental Feasibility Study shall be considered approved.  For complete disclosure of Panamas requirements, please refer to Exhibit 4.V., Law No. 9 as passed by the Legislative Assembly of Panama on February 26, 1997, attached to our Annual Report on Form 20-F for fiscal year ended May 31, 2009. An English translation of the law is attached to this Amendment No. 1 as Exhibit 4.W.



4.C.  Organizational Structure



The following chart sets out our corporate structure and the mineral properties owned by each of our subsidiaries:



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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 25

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4.D.  Property, Plant and Equipment

All of our properties are in the exploration stage and are without a known body of commercial ore.  Although an open pit mine is planned and a gold processing plant is currently being commissioned at the Molejon gold property, we have not begun commercial production and have not generated any revenue from any mineral producing properties in the 12 months ended May 31, 2009.  See also Item 4.A.  History and Development of the Company.

To date, during the process of commissioning the Molejon gold plant, we have produced approximately 24,767 ounces of gold and 10,594 ounces of silver since April 7, 2009.  We expect commercial production to commence in fiscal 2010.

Mineral Concession Lands

Introduction

We are currently focused on bringing our Molejon gold project located on the Cerro Petaquilla Concession to commercial production.  We also hold the rights to 659 square kilometres of virtually unexplored land surrounding the known deposits of the Cerro Petaquilla Concession.

Our concession lands are located approximately 75 miles west of Panama City and six miles from the Caribbean coast within the Donoso District of the Province of Colon in the Republic of Panama.

Property Location

Figure 1
  Mineral Property Location Map

[graphicx1x1.jpg]

A map identifying the various concession lands, including the Cerro Petaquilla Concession held by MPSA and our Molejon gold deposit, follows below as Figure 2.



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Figure 2
  Concession Map

[graphicx2x1.jpg]



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Figure 3 is a diagram focusing primarily on the 136-square kilometre Cerro Petaquilla Concession with our Molejon gold deposit area cross-hatched in red:

Figure.3
  Cerro Petaquilla Concession

[graphicx3x1.jpg]

The Cerro Petaquilla Concession is largely held by MPSA although, pursuant to the Molejon Gold Project Agreement dated June 2, 2005 (the Molejon Gold Project Agreement), the full text of which was filed as Exhibit 4.T. to our Annual Report on Form 20-F for the fiscal year ended May 31, 2009, we hold the rights to the Molejon gold deposit found within the concession lands as well as to other gold and precious metal mineral deposits that might be developed within Cerro Petaquilla Concession.  This concession contains a large copper-gold porphyry system and our epithermal gold deposit, Molejon, amenable to open pit mining.  To date, exploration has identified eight copper-gold porphyry deposits along with our Molejon gold deposit.



Our activities are focused on the Molejon gold deposit and the first phase of the Plan submitted by us and MPSA and approved by the government of Panama in 2005.  We have begun construction and advancement of the area for the purposes of extracting ore from the Molejon gold deposit.  In addition, we intend to perform further exploration on other identified gold targets within the Cerro Petaquilla Concession and those within our wholly-owned properties surrounding the Cerro Petaquilla Concession.



Location, Access & Physiography

The Cerro Petaquilla Concession is located 20 kilometres inland from the Caribbean coast and elevation within the concession boundaries ranges between 70 metres and 350 metres above sea level.  The Cerro Petaquilla Concession falls within the rainfall shadow of the Continental Divide and the terrain is generally rugged and covered with heavy rainforest vegetation.  The climate of the Cerro Petaquilla Concession is characteristic of tropical rainforests.  Precipitation is high throughout the year with annual rainfall averaging at least 4,700 mm in the concession area.  The heaviest precipitation is evenly distributed from May to December and the months of January to April are typically the driest months.

The Molejon gold property within the Cerro Petaquilla Concession is accessible by road or helicopter.  We have completed construction of the 28-kilometre Llano GrandeCoclesito dirt road from Coclesito, a village of approximately 700 inhabitants, to the mine site.  As part of the Llano Grande-Coclesito Road Improvement Project, the Cascajal Bridge has been completed and was inaugurated on January 16, 2007, by the Minister of Public Works of Panama.  An additional bridge spanning the San Juan River has also been completed.  This road replaces a network of trails, which was the previous access, and the new road portion will ultimately be upgraded to rural paved status as part of ongoing development work.  While the road has initially been designed to provide access to the mine site, it will ultimately comprise part of a future expansion of the national road network connectingcommunities with the region.  Thirty kilometres of gravel road connects Coclesito with La Pintada, a town of 5,000 people on the country's paved highway network, and the Pan-American Highway to the south.  This road will also be upgraded to rural paved status as part of ongoing development work.



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Plant and Equipment



Currently, a gold-processing surface plant that will initially utilize three ball mills and a carbon-in-pulp processing facility is under construction and near completion.  Ball mills are operational, and construction of leach tanks, carbon-in pulp tanks and pulp and tailings thickeners is complete.  The adsorption, desorption, refinery (ADR) plant building and the cyanide detoxification system are 100% complete.  The carbon, acid wash and elution columns are mounted, the regeneration kiln structure and frames are mounted and six generator sets are in place and functioning.  The emergency pond is complete.  Tailings pond no. 2 is being completed in three stages, of which two have been finalized.  The final construction item  completion of the plants crushing system  is expected to be finished in fiscal 2010.  Commissioning of the Molejon gold plant is currently underway.

With respect to the planned exploration and advancement of the Molejon property, we anticipate having capital expenditures of approximately $5,000,000 to $10,000,000 during the fiscal year ending May 31, 2010, with such funds to be used for the third stage of the tailings pond construction, spare parts, supplies and other materials and equipment items as needed.  However, such expenditures are subject to further consideration and to our ability to obtain external financing.  There is no assurance that we will be successful in obtaining such financing.



Figure 4
  Molejon Gold Plant

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Title



Cerro Petaquilla Concession  Panama



Prior to October 18, 2006, we owned, through our indirect share ownership of MPSA, a 52% interest in the Cerro Petaquilla Concession.  Specifically, our 52% ownership of MPSA was held through our wholly-owned subsidiary of Georecursos Internacional, S.A. (Georecursos).  On October 18, 2006, we entered into a Plan of Arrangement with Petaquilla Copper Ltd. (Copper), whereby we effectively transferred ownership of Georecursos to Copper, and, thereby, our interest in the copper assets within the Cerro Petaquilla Concession lands to Copper.





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We retain the rights to the Molejon gold deposit as well as to other gold and precious metal mineral deposits that may be developed within the Cerro Petaquilla Concession and continue to operate under the Ley Petaquilla as does the joint venture company, MPSA.



Molejon Property  Panama

With the above noted and pursuant to the Molejon Gold Project Agreement, the shareholders of MPSA agreed to separate the gold deposit and other precious metal mineral deposits that might be developed from the copper mineral deposits within the Cerro Petaquilla Concession.  Such agreement provides for us, through our subsidiary, Petaquilla Gold, S.A., to own a 100% interest in the Molejon gold deposit, as well as all other gold and precious metal mineral deposits that might be developed within the Cerro Petaquilla Concession, subject to a graduated 1% - 5% Net Smelter Return, based on the future gold price at the time of production, payable to shareholders of MPSA.



Pursuant to the contract law under which the Cerro Petaquilla Concession was granted by the government of the Republic of Panama, we with our then partners delivered the phased Plan to the government of Panama.  In September 2005, the multi-phase Plan submitted to the Government of Panama by us and MPSA was approved by Ministerial Resolution.  This approval resulted in the extension of the land tenure for an initial 20 year period which commenced in September 2005, subject to MPSA meeting certain other development and operational conditions on an ongoing basis. The land tenure provides for two additional 20-year terms that are also subject to MPSA meeting certain other ongoing development and operational conditions.



The Molejon gold mineral deposit, owned 100% by us, forms part of the Cerro Petaquilla Concession lands and the first phase of Plan focuses on the development of the Molejon gold deposit by us which commenced in 2006.  The development of the Cerro Petaquilla copper deposit is included in subsequent phases of the Plan, and is the responsibility of MPSA.

Exploration History

Although the Cerro Petaquilla Concession has been investigated since 1968 when the potential for copper porphyry mineral deposits within the area was first recognized, no former exploration program analyzed the drilling and surface sampling for gold.  As such, the only existing gold data is that accumulated by us.  Drilling to date has shown that the distribution and intensity of gold values within mineralized zones varies directly with areas of elevated copper and depleted molybdenum contents.

Exploration - Results Obtained by Us or on Our Behalf

In October 2005, we received an NI 43-101 compliant mineral resource estimate on the Molejon gold deposit from SRK Consulting (Canada) Inc. (SRK).  SRK estimated inferred mineral resources at 0.5 g/t cutoff were 11.2 million tonnes at 2.48 g/t Au.  We used a cutoff grade at 0.5g/t for all resources estimates since other mines in the Central America region have operated profitably at a gold price of $500 per ounce using a resource estimate at such cutoff. Inferred mineral resources at 0.5, 0.6 and 0.7 g/t Au cut-offs are included in the following table.

Table:  Mineral Resource Estimate at 0.5, 0.6 and 0.7 g/t Au Cut-Offs

|                |                    |        |                      
|--------------- | ------------------ | ------ | ---------------------
|                | Inferred Resources
|Au g/t Cut -Off | Million Tonnes *   | Au g/t | Contained Ounces Au *
|0.5             | 11.2               | 2.48   | 893,000              
|0.6             | 10.8               | 2.56   | 889,000              
|0.7             | 10.1               | 2.68   | 870,000              



(* Note: Tonnes and ounces have been rounded to reflect relative accuracy of the resource estimate.)



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SRK found the drilling, sampling methods and approach, sample preparation, analysis, security (chain of custody) and quality assurance/quality control procedures (QA/QC) used during the exploration and delineation of the Molejon gold mineralization to be acceptable for resource estimation.

Based on the results of the resource estimate, SRK recommended that we proceed with the planned infill drill program, use the infill drill data along with twinned holes to revalidate the previous drilling and surface trench results and complete specific gravity and mineralogical testwork.  Upon completion of this work, a re-estimation of resources would be warranted in preparation for subsequent engineering studies.  Additional metallurgical and geotechnical work was also recommended in preparation for future engineering work.

The October 2005 SRK report represents an increase of 35% over a pre-NI 43-101 resource estimate of 7.8 million tonnes grading 2.63 grams for total contained gold of 661,000 ounces using a bottom cut-off grade of 0.500 g/t Au.

In January 2006, during a follow-up trenching program on the Molejon gold deposit, a 200-metre strike length of high-grade gold mineralization in the Central Zone was delineated.  Overall, the trenching program resulted in a significant reinterpretation of the Molejon mineralization - three or more mineralization trends in quartz breccia and silicified andesite breccia extend across the deposit.

During 2006, we also commenced and completed a 14,005-metre diamond-drilling program at the Molejon gold deposit.  The drilling program was threefold.  First, the majority of drilling, or 11,398 metres, consisted of infill drilling in the southern part (the starter pit area) of the deposit to reduce the separation between existing drill holes to 20 to 35 metres.  The Molejon gold deposit was previously diamond drilled in a 124-hole program conducted by Teck Corporation, Inmet Mining Corporation and us (formerly Adrian Resources Ltd.) in 1994-1995 on 50-metre grid lines with 40 to 70 metres between holes.  Second, additional resource drilling totaling 1,627 metres was performed on areas where trenching had identified new targets.  Third, the remainder of the drilling, which consisted of  approximately 980 metres focused on condemnation drilling and established the location for the 2,200 tonne per day plant currently being constructed.  Geotechnical drilling was also performed in order to characterize construction conditions.



One of our objectives when we commenced the 2006 drill program was to confirm the location of the starter pit and to upgrade SRKs October 2005 inferred mineral resource estimate to an indicated and measured category.  In April 2007, we received an NI 43-101 compliant gold resource estimate completed by AAT Mining Services (AquAeTer, Inc. d/b/a AAT Mining Services) that significantly upgraded the prior resource estimate of 893,000 ounces of inferred gold ounces.  The new resource calculation outlined 405,141 ounces of measured resources, 109,192 ounces of indicated resources and 361,011 ounces of inferred resources at the Molejon Gold deposit.  AAT Mining Services also estimated that 179,934 ounces of the measured and indicated ounces contained in the low-grade material have potential for blending with the high-grade to achieve an optimum mill feed without loss of resources. Moreover, drilling confirmed the high-grade area of 1.667 mm tonnes grading 5.0 g/tonne at a cutoff grade of 2.5 g/tonne.





|          |            |                    |               |        
|--------- | ---------- | ------------------ | ------------- | -------
|Category  | Tonnage    | Cut-off (g/tonnes) | Average Grade | Ounces 
|Measured  | 6.846 Mio  | 0.5                | 1.84          | 405,141
|Indicated | 3.121 Mio  | 0.5                | 1.09          | 109,192
|Inferred  | 10.473 Mio | 0.5                | 1.07          | 361,011

The 361,011 ounces of gold presently defined as inferred resources are currently being evaluated by infill drilling to 25 metre centres with an aim to convert this resource to measured and indicated resources for the Molejon Gold Plant Expansion Feasibility Study. Most of these mineralized drill holes are 50 to 75 metres away from measured and indicated mineralized resources.  The on-site Qualified Person, Sean C. Muller, P. Geo., observed and verified that the 2006 drilling and laboratory procedures on the Molejon gold project met or exceeded NI 43-101 standards.  Strict quality assurance and quality control protocols were defined and implemented under his supervision including the submission of blanks, standards and duplicate core samples to the laboratory.

More than 120 new test holes were used to update SRKs October 2005 resource estimate.





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The second objective was to test for additional mineralization.  The additional resource drilling discovered another deeper mineralization trend north of the known resource at the Molejon property. This new trend, known as the NW Deep, exhibits two cohesive blocks of mineralization, one near the surface and another at a depth of approximately 100 metres. The extension of the known mineralization trends to the NNE, and the WSW continues to be extended through step-out drilling.

The third objective was to confirm the location of the gold processing plant.  Thus, condemnation drilling was conducted to ensure that ore zones do not underlie the proposed plant, related infrastructure and tailings impoundment sites.

In addition, the results obtained from both the 1994-1995 and 2006 diamond-drilling programs will be used to assist in the completion of pit modeling and a feasibility study.

In early 2007, we continued drilling by commencing a minimum 40,000 metre exploration and development diamond-drill program focusing on the 20 square kilometer area knows as the El Real Trend, which includes our 100% owned Molejon deposit and Coppers Botija Abajo/Brazo project zones, and which is open in three directions.  In August and September 2007, we released results and details concerning this drill program along the El Real copper gold trend.  At the time, we and Copper had jointly been active in five different zones in the Cerro Petaquilla Concession with six drill rigs working on the El Real mineralized gold and copper trend between Molejon and Botija Abajo/Brazo.  Results from several drill holes indicated the zone may be much larger in size than previously estimated, that the area had a new silver zone and confirmed the mineralized trend between the Botija Abajo, Botija Abajo West, Brazo and Molejon open pit. The overall goal of this large scale, wide spaced drill program was to identify and delineate the many targets on the El Real Trend and tie the Botija Abajo/Brazo zone to the Molejon open pit gold deposit.



Two drill rigs were also working on a new extension of the Molejon deposit in the North Central zone outside of the current pit outline. Drill hole 332, included in the first results from this program and located within the south-western part of the current pit design, intercepted high grade mineralization near the surface: 9 metres @ 17.24g/t Au. In addition, deep mineralization found in several holes confirmed our structural model and indicated a significant extension of known mineralized breccias outside of the current designed pit limits. The results offered encouraging support for our stated goal of increasing resources.  The new hole locations were designed to test mineralization trends suggested by recent resource modeling.  Results from several holes located within the south-western part of the current pit indicated a significant volume of near surface, higher grade material in an area drilled previously on a wide spacing and previously interpreted as a lower grade zone. The results supported upgrading previously low grade material, with new higher grade intervals.



In October 2007, we announced the results of an updated NI 43-101 compliant gold resource estimate based on results obtained through September 2007.  AAT Mining Services has estimated a total measured resource of 532,801 ounces and an indicated resource of 223,785 ounces at the Molejon gold deposit (see table below).  Additionally, an inferred resource of 342,111 ounces at an average grade of 0.872 g/t above a cutoff of 0.5 g/t was estimated. The 123,000 indicated resource ounces of gold delineated at the nearby Botija Abajo deposit through June 2007 increases the total gold resources at the global Molejon project by 40% since the last resource estimate announced in April 2007.



|        
|--------
|Measured



|             |           |             |            |        
|------------ | --------- | ----------- | ---------- | -------
|Grade cutoff | Tonnes    | Au          | Au         | Au     
|in g/t       |           | grams/tonne | grams      | ounces 
|.5           | 7,683,176 | 1.013       | 7,784,218  | 250,272
|2.5          | 1,170,618 | 3.469       | 4,060,956  | 130,565
|5.0          | 591,315   | 7.993       | 4,726,538  | 151,964
|Total        | 9,445,109 | 1.75        | 16,571,712 | 532,801







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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 32





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|         
|---------
|Indicated



|             |           |             |           |        
|------------ | --------- | ----------- | --------- | -------
|Grade cutoff | Tonnes    | Au          | Au        | Au     
|in g/t       |           | grams/tonne | grams     | ounces 
|.5           | 5,873,534 | 0.924       | 5,426,666 | 174,474
|2.5          | 345,516   | 3.236       | 1,117,982 | 35,944 
|5.0          | 62,508    | 6.651       | 415,769   | 13,367 
|Total        | 6,281,558 | 1.11        | 6,960,417 | 223,785



|        
|--------
|Inferred



|                            |                        |                                          |                                               |                                                           
|--------------------------- | ---------------------- | ---------------------------------------- | --------------------------------------------- | ----------------------------------------------------------
|Grade Cutoff 
      g/Tonne | Inferred 
      Tonnes | Average Gold 
      Grade 
      g/Tonne | Inferred 
      Gold Grams 
      (contained) | Inferred 
      Gold Troy 
      Ounces 
      (contained)
|0.5                         | 12,190,533             | 0.869                                    | 10,589,925                                    | 340,479                                                   
|2.5                         | 18,471                 | 2.747                                    | 50,747                                        | 1,632                                                     
|Total                       | 12,209,004             | 0.872                                    | 10,640,672                                    | 342,111                                                   



Another 342,111 inferred ounces have been geostatistically shown in a new area northwest of the Molejon measured and indicated resources.



In 2006, about 500,000 ounces of gold were in the inferred category of which over 50% were converted to measured and indicated resources by infill drilling in 2007.  Over 22,000 metres were cored at Molejon in 2007 bringing the total drilling along the gold trend to about 40,000 metres since the beginning of the program in 2006.  As at October 18, 2007, seven rigs were currently drilling in the area, three in Molejon and four elsewhere along the El Real trend.



The recent modeling effort included a complete review of the drilling, geology, sampling methods and approach, sample preparation, analysis, security (chain of custody) and QA/QC procedures used during the exploration of the Molejon gold deposit.  The on-site independent qualified person, Sean C. Muller, P. Geo., a Qualified Person under NI 43-101, oversaw the drilling program ensuring that the appropriate quality assurance protocols were being followed and that the data was being qualified under strict quality controls. He observed and verified that recent drilling, sample preparation and ALS Chemex laboratory procedures utilized for the Molejon project meet NI 43-101 standards.  Strict QA/QC protocols have been defined and implemented under Mr. Mullers supervision, including the submission of blanks, standards and duplicate core samples to the laboratory.

In March 2008, we announced drill hole results received for 132 holes added since the last resource model update of the Molejon gold deposit in October 2007.

The two objectives of the drill program were to provide infill information to complement data obtained from previous drilling and to advance towards delineating the mineral deposit. The program succeeded in meeting both its objectives. First, the results obtained from infill drilling would allow for the conversion of inferred and indicated resources to indicated and measured resources, respectively. Second, as the condemnation holes supported the model, the results obtained from delineation drilling have verified the geologic interpretation and have also provided for important increases in geologic understanding.

The holes that did not intercept mineralization were effectively around the perimeter of the known deposit. The holes that did intersect mineralization were drilled to define the suspected high grade and, while important for increasing the high grade envelope, also verified the model. Additionally, these results provided the basis to expand the previously modeled high grade ore shell to encompass a previously undrilled region.

The independent Qualified Person, Cathryn Stewart, P. Geo., verified that recent drilling, sample preparation and laboratory procedures utilized for the Molejon project met NI 43-101 standards. Strict QA/QC protocols have been defined and implemented for the submission of blanks, standards and duplicate core samples to the laboratory.  Samples were analyzed at ALS Chemex Labs Ltd.



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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 33





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During the fiscal year ended May 31, 2009, our exploration activity decreased as the majority of our resources were focused on the construction of the Molejon gold plant. Nonetheless, we obtained permits from local environmental authorities to establish satellite exploration camps across our concessions and construction of a regional base camp and several field camps has been completed.



Outlook - 2010



We are focusing on bringing our Molejon gold deposit to production and are currently in the process of commissioning the mill.  In addition, with the establishment of base camps and logistics across our other concessions, we plan to expand our exploration efforts during the fiscal year ending May 31, 2010.



Regional and Local Geology

Panama is underlain by an island arc built upon late Cretaceous oceanic crust and is considered prospective for porphyry copper-gold-molybdenum deposits.

Andesitic tuffs and flows of presumed early to middle Tertiary age cover the majority of the Cerro Petaquilla Concession lying at the southern limit of a 400 square kilometre batholith, dated at 32.6+2 million years, which has intruded the older volcanic sequence.  The core of the batholith is composed of quartz monzonite, grading outward to granodiorite and porphyritic granodiorite.  The Petaquilla and Botija deposits are centered on porphyritic stocks and dykes lying peripheral to the southern margin of the batholith.

At the Botija deposit, the intrusive is a medium-grained, crowded porphyry composed of 25% plagioclase phenocrysts, 15% hornblende phenocrysts and 5-10% quartz grains in a feldspar rich matrix.  At the Petaquilla deposit, the intrusive is more obviously porphyritic, with a generally lower percentage of phenocrysts.  Contact phases and dykes at each deposit are finer-grained varieties of the main intrusive.  In particular, feldspar, hornblende, quartz porphyry dykes appear to be late stage phases of the granodiorite.  Most of these porphyry dykes post-date the mineralization, indicating that they were introduced during the waning stages of hydrothermal alteration and mineralization.  The youngest units encountered on the property are the unmineralized basalt and andesite dykes.

Copper-gold-molybdenum porphyry deposits have been identified and partially delineated at the Petaquilla and Botija deposits, which are centred four kilometres apart on an east-west trend within the Cerro Petaquilla Concession.  Four types of well-developed alteration have been observed within the various intrusive units:  potassic, phyllic, quartz-chloritic and propylitic.  Potassic alteration is found near the core of the porphyry system and is not extensive.  It is characterized by quartz, potassium feldspar, biotite, sericite and lesser amounts of anhydrite and magnetite.  The majority of copper mineralization is hosted in the phyllic altered rock, which is composed of quartz and sericite with minor kaolinite and K-spar.  Propylitic alteration, marked by chlorite, pyrite, calcite and epidote, marks the outer extent of alteration in a porphyry system.  The phyllic and quartz-chlonite alteration zones are usually found between the potassic core and the peripheral propylitic zone, although either may be missing.  Alteration of the andesitic volcanic units, characterized by prograde biotite hornfels and fine grained sulphide mineralization occurs when they are found to be proximal to the intrusive contact or within zones of intrusive dyking.

The Petaquilla deposit is largely hosted by porphyritic granodiorite below its intrusive contact with andesite forming a flat-lying to gently dipping sheet, trending east-west and dipping to the north.  It has been drilled for 1,600 metres along strike and remains open along strike to the south, east and west and at depth.

The Valle Grande deposit is hosted dominantly by prophyritic granodiorite and, similar to the Petaquilla deposit, is a flat-lying sheet, trending northwest-southeast and dipping to the north.  It has been drilled for 2,400 meters along strike and is considered to have limited expansion potential.

The Botija deposit trends east-west and dips 20-30 degrees to the north or northeast.  It has been intersected by drilling along strike for 1,800 metres and up to 600 metres down dip. The Botija deposit remains open near the surface to the south, along strike to the east and the west, and in many places at depth both vertically and down dip to the north.



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The general geology of the Molejon epithermal gold target is dominated by volcanic and subvolcanic intrusives, including massive andesite flows, feldspar-porphyritic andesite flows, andesitic tuffs and andesitic agglomerates.  This volcanic package has been intruded by feldspar-quartz porphyry and feldspar porphyry units.  A northeast trending fault is believed to be the major structural control for the emplacement of the hydrothermally altered quartz-carbonate breccia.

Mineralization

Mineralization at the nearby Petaquilla, Valle Grande and Botija deposits is largely concentrated within potassic or phyllic altered porphyritic intrusives of granodioritic composition.  Volcanic-hosted copper mineralization, associated with strong biotite alteration, is widespread at the Petaquilla deposit and contributes significantly to its tonnage.  Mineralization in each deposit consists of chalcopyrite and pyrite as disseminations, within quartz veinlets and filling brittle, irregular fractures.  Pyrite content generally decreases with higher grade copper mineralization and increases towards the periphery of the deposits.  Chalcopyrite occurs most commonly as very fine disseminations within an altered intrusive matrix or biotite hornfels.  It is often associated with magnetite and/or chlorite or biotite altered mafic minerals, most notably in lower-grade sections of propylitic alteration.  Stockwork quartz veinlets are best developed within potassic alteration, where they crosscut pervasive silicification.  The irregular fracture-filling style of copper mineralization, which locally approaches a sulphide net, is largely confined to biotite-altered andesite at the Petaquilla deposit.  This is cut in places by narrow quartz-chalcopyrite veins which have developed bleached selvages of biotite destruction.  A fourth style of mineralization, consisting of chalcopyrite and pyrite coatings along steep, widely spaced cooling joints is confined to granodiorite along the eastern periphery of the Botija deposit.

Molybdenite is present mainly in quartz, carbonate, chalcopyrite veinlets hosted by granodiorite within the most intensely altered and mineralized portion of each deposit.  Bornite occurs locally with chalcopyrite and contributes significantly to the copper grade in some sections, mainly within hornfelsed andesites in the Petaquilla deposit.  Although leaching is widespread throughout the upper 10 to 30 metres of the deposits, supergene copper mineralization is not present in significant amounts.  Magnetite is an important accessory in both deposits, disseminated throughout both the porphyritic intrusives and the intruded andesite.

At our Molejon deposit, epithermal gold-silver mineralization occurs within structurally controlled zones of hydrothermal quartz-carbonate breccia and the fractured and altered rocks marginal to the quartz-carbonate breccia.  Assay boundaries of gold-silver mineralization are not sharply constrained by geological contacts.  Highest grade mineralization usually occurs in the quartz-carbonate breccia but economic mineralization also occurs in feldspar-quartz porphyry, and more rarely in feldspar-porphyritic andesite flows.



Doing Business in Panama

The following briefly summarizes our understanding of the economic and political climate in Panama based on research and information compiled by us from various sources that we believe to be reliable.



Democracy was restored in Panama in December 1989, following the invasion of Panama by the U.S. military.  In May 1994, Panama held its first democratic elections in almost 30 years.  Pursuant to the constitution of Panama, the president of the country holds office for five years.  Therefore, elections were subsequently held in May 1999, 2004, and, most recently, in May 2009.   On May 3, 2009, Ricardo Martinelli won Panamas presidential election, reversing a recent trend of left-wing victories in Latin America.



Ricardo Martinelli and his right-wing alliance led by his Democratic Change party won 61% of the vote and took office on July 1, 2009.  Mr. Martinellis business experience impressed voters worried about their livelihoods in a global recession that has stunted Panamas recent strong economic growth.  Panama's U.S. dollarized economy has led Latin America with growth of near or above 10% in recent years, fueled by U.S.-Asia trade through Panamas transoceanic canal and robust banking activity.  However, Panama last year suffered its highest inflation levels since the early 1980s.  Since such time, inflation has slowed as economic growth has slowed.  Growth in 2009 could slow to 3% or less as the global crisis affects credit and shipping.



Mr. Martinelli, a U.S.-educated, political conservative and self-made businessman leads a business empire including supermarkets, banks and agricultural firms, and has promised a massive public works program to return Panama to growth.  Potential projects have included construction of ports, highways and a Panama City subway.  In general, Mr. Martinelli was viewed as more supportive of business than other candidates.



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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 35





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Although launched by the former Panamanian president, Martin Torrijos, and his Democratic Revolutionary Party, Mr. Martinelli will oversee the $5.25 billion expansion of the Panama Canal.  The expansion programme, scheduled to be completed in 2014, aims to increase the capacity of the Panama Canal, making it large enough to accommodate supertankers and the largest container ships.



Panama has long had close ties to the United States, which built the Panama Canal and ousted dictator General Manuel Noriega in 1989.

We note that the comparative sovereign rating for Panama by The Economist Intelligence Unit is in the mid-range, both globally and regionally, as shown below.  The sovereign rating measures the risk of a build-up in arrears of principal and/or interest on foreign- and/or local-currency debt that is the direct obligation of the sovereign or guaranteed by the sovereign.

|                            |                                                                                                                                            |       |                                                                   |         
|--------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ----- | ----------------------------------------------------------------- | --------
|Countries                   | Month                                                                                                                                      | Score | Overall Country Risk Rating
      (AAA=least risky, D=most risky) | Outlook 
|Argentina                   | June 2009                                                                                                                                  | 66    | CCC                                                               | Negative
|Bolivia                     | June 2009                                                                                                                                  | 58    | B                                                                 | Negative
|Brazil                      | June 2009                                                                                                                                  | 46    | BB                                                                | Stable  
|Chile                       | June 2009                                                                                                                                  | 28    | A                                                                 | Stable  
|Columbia                    | June 2009                                                                                                                                  | 47    | BB                                                                | Stable  
|Costa Rica                  | June 2009                                                                                                                                  | 52    | B                                                                 | Stable  
|Ecuador                     | June 2009                                                                                                                                  | 77    | CC                                                                | Negative
|Guatemala                   | June 2009                                                                                                                                  | 47    | BB                                                                | Stable  
|Honduras                    | June 2009                                                                                                                                  | 59    | B                                                                 | Negative
|Mexico                      | June 2009                                                                                                                                  | 42    | BBB                                                               | Negative
|Panama                      | June 2009                                                                                                                                  | 47    | BB                                                                | Negative
|Peru                        | June 2009                                                                                                                                  | 39    | BBB                                                               | Stable  
|Venezuela                   | June 2009                                                                                                                                  | 60    | B                                                                 | Negative
|Rating Band Characteristics
|AAA                         | Capacity and commitment to honour obligations not in question under any foreseeable circumstances.                                        
|AA                          | Capacity and commitment to honour obligations not in question.                                                                            
|A                           | Capacity and commitment to honour obligations strong.                                                                                     
|BBB                         | Capacity and commitment to honour obligations currently, but somewhat susceptible to changes in economic climate.                         
|BB                          | Capacity and commitment to honour obligations currently, but susceptible to changes in economic climate.                                  
|B                           | Capacity and commitment to honour obligations currently, but very susceptible to changes in economic climate                              
|CCC                         | Questionable capacity and commitment to honour obligations.  Patchy payment record.                                                       
|CC                          | Somewhat weak capacity and commitment to honour obligations.  Patchy payment record.  Likely to be in default on some obligations.        
|C                           | Weak capacity and commitment to honour obligations.  Patchy payment record.  Likely to be in default on significant amount of obligations.
|D                           | Very weak capacity and commitment to honour obligations.  Poor payment record.  Currently in default on significant amount of obligations.

Mining has not historically been a significant factor in the Panamanian economy and, consequently, Panama does not have the infrastructure and trained personnel required for modern mining operations. The government of Panama has, however, included the development of mineral resources in its economic plan to diversify the Panamanian economy and has taken steps to put in place the legislative framework needed to foster development of these resources.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 36





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The Code of Mineral Resources of the Republic of Panama has been subject to substantial modifications, among which the most important are Law No. 3 of January 28, 1988, and Law No. 32 of February 9, 1996.  The main purpose of such amendments was to simplify the procedure for filing the necessary petitions to obtain concessions, either for conducting mining exploration or mining extraction operations and property rights over the minerals extracted.  These amendments grant total exemption from import taxes and customs duties for all equipment, spare parts and materials used in the development of any type of mining operations and there are no export taxes on mineral production.

An exploration concession permits the holder to explore for the minerals specified in the concession.  The rental rates payable by the holder to the Government of Panama are $0.50 per hectare for the first two years, $1.00 per hectare for the third and fourth years and $1.50 for the fifth year and thereafter.  A 2% gross overriding royalty on the value received for all minerals of higher commercial value (e.g. gold and silver) mined from the concession is payable to the government of Panama.

The holder of an exploration concession has the exclusive right to obtain an exploitation concession for the subject area upon determining that the minerals covered by the concession may be produced in commercial quantities through a separate request to the Government of Panama.  Rental rates for exploitation concessions fluctuate, depending on the mineral concerned and the extraction period, between $0.75 and $4.00 per hectare.  Rental rates for metallic minerals such as copper, iron, zinc, aluminum and precious metals are $1.00 per hectare for the first five years, $2.00 from the sixth to the tenth year and $3.00 the eleventh year and thereafter.  A 2% gross overriding royalty on the value received for all minerals mined from the concession is payable to the Government of Panama.  However, this overriding royalty will be 4% for minerals of higher commercial value such as gold and silver.

Exploitation concessions generally permit the holder to carry out additional pre-development exploration, to construct all necessary production facilities and to extract, process, store, transport, market and export the minerals subject to the concession so long as production is ongoing.

In 1995, the Panamanian Tax Reform Law was enacted to simplify the corporate income tax rates applicable to income earned in Panama (Law No. 28 of June 20, 1995).  Since June 1995, the corporate income tax rate has been 30%.  In addition to corporate income tax, Panamanian law provides for a dividend tax.  With the exceptions provided for in the Fiscal Code of the Republic of Panama, all corporations must retain 10% of the amounts they may distribute among their shareholders as dividends or share quotas.  In case dividends are not distributed, or the entire amount distributed as dividend or share quota is less than 40% of the net profit of that fiscal period, minus taxes paid by the corporation, the corporation must cover 10% of the remainder.

The Fiscal Code of the Republic of Panama indicates certain expenses which may be deducted from the income tax, applicable to companies conducting mining activities.  Additionally, the Code of Mineral Resources establishes certain expenses related to such activities that may be deducted from income tax as well.

There are currently no significant restrictions on repatriation from Panama of earnings to foreign entities other than the income tax and the dividends tax referred to above.  There are currently no material currency exchange or foreign investment restrictions.

Based on our understanding of current Panamanian environmental laws and regulations, we do not anticipate that such laws will have an adverse material impact on the operations we may conduct in the future.  Based on geochemical analysis and reporting, we anticipate that our Molejon gold project will meet or exceed the effluent and leachate requirements of Panamanian environmental laws and regulations.  We will be using a carbon-in-pulp (CIP) floatation process, which allows in process cyanide destruction before effluent is discharged.  This process is inherently safer and more controllable than traditional acid and cyanide open-air heap leach processing.  Any acidity produced at the experimental pH is expected to be buffered by the receiving waters around the Molejon project, which have a pH between 7.4 and 7.8 and total alkalinity between 15 mg/L and 27 mg/L (as CaCO3).  Results for both tails and waste rock leachate indicate that the Molejon project will have net acid neutralizing potential.  The results of the continuous tests showed that the INCO SO2 cyanide destruction method is an efficient process for decreasing the total cyanide concentrations in the Petaquilla CIP leach pulp.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 37





---

The foregoing laws of general application apply to our Panamanian mineral properties other than the Cerro Petaquilla Concession which is governed primarily by the Ley Petaquilla.  Please refer to Item 4 - Information on Our Company - B. Business Overview.

Panama's currency, the Balboa, is at parity with the U.S. dollar.  Exchange transactions are allowed in U.S. dollars and, as a result, foreign currency fluctuations may be material for us to the extent that fluctuations between the Canadian and U.S. dollar are material.

Item 4A. UNRESOLVED STAFF COMMENTS

We have received written comments from the SEC regarding our transition reports for the 13 months ended May 31, 2008, and 15 months ended April 30, 2007, and, as a result of our subsequent review, we identified errors requiring restatement of our financial information and other disclosures.  We have incorporated in this Amendment No. 1 the changes pursuant to the SECs comments and, as a result, disclosure for the 13 months ended May 31, 2008, and 15 months ended April 30, 2007, has been amended to the one month ended May 31, 2008, 12 months ended April 30, 2008, three months ended April 30, 2007 and the 12 months ended January 31, 2007.

These comments are still unresolved.  We expect to file a Form 20-F/A for the transition period from May 1, 2007, to May 31, 2008, to respond to these comments.

ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

5.A.  Operating Results

We are in the business of the acquisition and exploration of mineral properties, with the primary aim of developing them to a stage where they can be exploited at a profit.  At that stage, our operations would, to a significant extent, be dependent on the prevailing market prices for any of the minerals produced by such operations.  We do not currently have any producing properties and our operations on our various properties are currently limited to exploratory searches for mineable deposits of minerals.  We are hopeful that our activities on the Molejon deposit will both expand the reserves and classify the reserves as proven mineral reserves.  However, there is no guarantee such results will be obtained.  During the 12 month period ended May 31, 2009, we were primarily engaged in the continued construction and advancement of our Molejon property in Panama.  As a result, our future mineral exploration and mining activities may be affected in varying degrees by Panama's political stability and government regulation, all of which are beyond our control.  See "Item 3 -  Key Information  3.D. Risk Factors.

Historically our fiscal year end was January 31.  During the period ended April 30, 2007, we changed our fiscal year end from January 31 to April 30 due to the complexities of the Plan of Arrangement with Copper.  We changed our fiscal year end again in 2008 from April 30 to May 31.  We made this change because we wanted to demonstrate to the Panamanian government that we had sufficient funds to continue work on the mine.

Prior to March 1, 2009, the Canadian dollar was determined to be the measurement currency of the Companys operations and these operations have been translated into United States dollars up until this date using the current rate method as follows:  all assets and liabilities are translated into United States dollars at the exchange rate prevailing at the balance sheet date; all revenue and expense items are translated at the average rate of exchange for the period; and the resulting translation adjustment is recorded as accumulated other comprehensive income (AOCI), a separate component of shareholders equity.  Subsequent to the change in measurement currency described below, the AOCI balance will remain the same until the entities which gave rise to the AOCI balance are disposed of.  In addition, unrealized gains and losses due to movements in exchange rates on balances held in foreign currencies are shown separately on the Consolidated Statement of Cash Flows.



Due to several financings in U.S. dollars, the most recent in March 2009, as well as the commencement of startup operations in Panama and expected revenue generation in U.S. dollars, it has been determined that as of March 1, 2009, the United States dollar is the reporting and measurement currency of the Companys operations and therefore these operations have been translated using the temporal method from that date onward.  Under this method, foreign currency monetary assets and liabilities are translated into United States dollars at the exchange rates prevailing at the balance sheet date; non-monetary assets denominated in foreign currencies are translated using the rate of exchange at the transaction date; and foreign exchange gains and losses are included in the determination of earnings.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page  38





---



Change in Reporting Currency



Effective March 1, 2009, the Company changed its reporting currency to the U.S. Dollar (USD). The change in reporting currency increases transparency of the financial results of the Company and provides better visibility for the stakeholders.



Prior to March 1, 2009, the Company reported its annual and quarterly consolidated balance sheets and the related consolidated statements of operations, deficit, comprehensive income, accumulated other comprehensive income and cash flows in Canadian dollars (CAD). In making the change in reporting currency, the Company followed the recommendations of the Emerging Issues Committee (EIC) of the Canadian Institute of Chartered Accountants (CICA), set out in EIC-130  Translation Method when the Reporting Currency Differs from the Measurement Currency or there is a Change in the Reporting Currency.



In accordance with EIC-130, the financial statements for all the years and periods presented have been translated to the new reporting currency (USD) using the current rate method. Under this method, the statements of operations, deficit and comprehensive (loss) income and cash flows statement items for each year and period have been translated into the reporting currency using the average exchange rates prevailing during each reporting period. All assets and liabilities have been translated using the exchange rate prevailing at the consolidated balance sheets dates. Shareholders equity transactions have been translated using the rates of exchange in effect as at the date of the various capital transactions.  All resulting exchange differences arising from the translation are included as a separate component of other comprehensive income. All comparative financial information has been restated to reflect the Companys results as if they had been historically reported in US dollars.



Mineral Properties



During the current fiscal year, as a result of the initiation of a new exploration program, the Company commenced its review of the impact of International Financial Reporting Standards (IFRS) on its accounting policies including an examination of the Companys current accounting policies.    Due to this review, the Company determined that it was appropriate to change its accounting policy for mineral properties whereby exploration and development costs are to be expensed until such time as reserves are proven and financing to complete development has been obtained. Previously, the Company capitalized its exploration and development expenditures as incurred, which is permitted under Canadian generally accepting accounting principles (Canadian GAAP). This change in accounting policy has also been applied to the calculation of dilution gains and equity losses from the Companys equity investment in Petaquilla Copper Ltd.



Management believes that this revised accounting policy will provide a more relevant and reliable basis of accounting. Among other benefits, the revised accounting policy aligns the accounting treatment of mineral property expenditures with standards used by producing mining companies in the resource sector and with global accounting standards. The change in accounting policy has been applied retrospectively, and the comparative statements for May 31, 2008, April 30, 2008, April 30, 2007 and January 31, 2007 have been restated.



The effect of the adjustment on the financial statements is summarized in the tables below.



|                                 |   |              |             |   |   |                  |   |   |            | 
|-------------------------------- | - | ------------ | ----------- | - | - | ---------------- | - | - | ---------- | 
|ConsolidatedbalanceSheet         |   | May31,2008as | Restatement |   |   | Changein         |   |   | May31,2008 | 
|                                 |   | previously   | Adjustment  |   |   | AccountingPolicy |   |   | restated   | 
|                                 |   | reported     | (Note28)    |   |   | Adjustment       |   |   |            | 
|Mineralproperties                | $ | 67,541,355   | -           |   | $ | (29,802,222      | ) | $ | 37,739,133 | 
|InvestmentinPetaquillaCopperLtd. |   | 9,507,564    | (1,207,000  | ) |   | (5,892,121       | ) |   | 2,408,443  | 





|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 39





---





|                                      |   |              |   |             |   |                  |   |   |            |  
|------------------------------------- | - | ------------ | - | ----------- | - | ---------------- | - | - | ---------- | -
|ConsolidatedStatementof               |   | May31,2008as |   | Restatement |   | Changein         |   |   | May31,2008 |  
|OperationsandComprehensive            |   | previously   |   | Adjustment  |   | AccountingPolicy |   |   | restated   |  
|LossandDeficit                        |   | reported     |   | (Note28)    |   | Adjustment       |   |   |            |  
|Explorationanddevelopment costs       | $ | -            |   | -           | $ | (562,237         | ) | $ | (562,237   | )
|Lossfromequityinvestment              |   | (230,752     | ) | -           |   | (549,094         | ) |   | (779,846   | )
|Netloss/comprehensivelossfortheperiod |   | (4,433,667   | ) | -           |   | (1,111,331       | ) |   | (5,544,998 | )
|Losspersharebasicanddiluted          |   | (0.05        | ) | -           |   | (0.01            | ) |   | (0.06      | )







|                            |   |                    |   |             |   |                  |   |   |             |  
|--------------------------- | - | ------------------ | - | ----------- | - | ---------------- | - | - | ----------- | -
|ConsolidatedStatementofCash |   | May31,2008as       |   | Restatement |   | Changein         |   |   | May31,2008  |  
|Flows                       |   | previouslyreported |   | Adjustment  |   | AccountingPolicy |   |   | restated    |  
|                            |   |                    |   | (Note28)    |   | Adjustment       |   |   |             |  
|Operatingactivities         | $ | (9,953,001         | ) | -           | $ | (181,315         | ) | $ | (10,134,316 | )
|Investingactivities         |   | (1,471,217         | ) | -           |   | 181,315          |   |   | (1,289,902  | )





|                                       |   |                |   |             |   |   |                  |   |   |              |  
|-------------------------------------- | - | -------------- | - | ----------- | - | - | ---------------- | - | - | ------------ | -
|ConsolidatedStatementof                |   | April30,2008as |   | Restatement |   |   | Changein         |   |   | April30,2008 |  
|OperationsandComprehensive             |   | previously     |   | Adjustment  |   |   | AccountingPolicy |   |   | restated     |  
|LossandDeficit                         |   | reported       |   | (Note28)    |   |   | Adjustment       |   |   |              |  
|Explorationanddevelopmentcosts         | $ | -              |   | -           |   | $ | (11,690,204      | ) | $ | (11,690,204  | )
|Gainondilutionofequity investment      |   | 13,011,861     |   | (529,212    | ) |   | 99,436           |   |   | 12,582,085   |  
|Lossfromequityinvestment               |   | (4,390,462     | ) | -           |   |   | (3,910,909       | ) |   | (8,301,371   | )
|Gainonsaleofequityinvestment           |   | 4,603,347      |   | (646,815    | ) |   | 390,545          |   |   | 4,347,077    |  
|Netloss/comprehensivelossfor theperiod |   | 176,152        |   | (1,176,027  | ) |   | (15,111,132      | ) |   | (16,111,007  | )
|Losspersharebasicanddiluted           |   | (0.00          | ) | (0.01       | ) |   | (0.16            | ) |   | (0.17        | )





|                            |   |                |   |             |   |                  |   |   |              |  
|--------------------------- | - | -------------- | - | ----------- | - | ---------------- | - | - | ------------ | -
|ConsolidatedStatementofCash |   | April30,2008as |   | Restatement |   | Changein         |   |   | April30,2008 |  
|Flows                       |   | previously     |   | Adjustment  |   | AccountingPolicy |   |   | restated     |  
|                            |   | reported       |   | (Note28)    |   | Adjustment       |   |   |              |  
|Operatingactivities         | $ | 1,539,335      |   | -           | $ | (8,207,195       | ) | $ | (6,667,860   | )
|Investingactivities         |   | (28,184,779    | ) | -           |   | 8,207,195        |   |   | (19,977,584  | )



|                                       |   |                    |   |   |                    |   |   |                      |  
|-------------------------------------- | - | ------------------ | - | - | ------------------ | - | - | -------------------- | -
|ConsolidatedStatementof                |   |                    |   |   |                    |   |   |                      |  
|OperationsandComprehensive             |   | April30,2007as     |   |   | ChangeinAccounting |   |   |                      |  
|LossandDeficit                         |   | previouslyreported |   |   | PolicyAdjustment   |   |   | April30,2007restated |  
|Explorationanddevelopmentcosts         | $ |                    |   | $ | (2,167,355         | ) | $ | (2,167,355           | )
|Gainondilutionofequity investment      |   | 700,626            |   |   | (68,230            | ) |   | 632,396              |  
|Lossfromequityinvestment               |   | (1,363,509         | ) |   | (694,215           | ) |   | (2,057,724           | )
|Netloss/comprehensivelossfor theperiod |   | (5,562,839         | ) |   | (2,929,800         | ) |   | (8,492,639           | )
|Losspersharebasicanddiluted           |   | (0.06              | ) |   | (0.03              | ) |   | (0.09                | )





|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 40





---



|                                 |   |                    |   |   |                  |   |   |                      |  
|-------------------------------- | - | ------------------ | - | - | ---------------- | - | - | -------------------- | -
|ConsolidatedStatementofCashFlows |   | April30,2007as     |   |   | Changein         |   |   | April30,2007restated |  
|                                 |   | previouslyreported |   |   | AccountingPolicy |   |   |                      |  
|                                 |   |                    |   |   | Adjustment       |   |   |                      |  
|Operatingactivities              | $ | (1,618,081         | ) | $ | (2,063,009       | ) | $ | (3,681,090           | )
|Investingactivities              |   | (1,838,515         | ) |   | 2,063,009        |   |   | 224,494              |  





|                                       |   |                |   |   |             |   |   |                  |   |   |                |  
|-------------------------------------- | - | -------------- | - | - | ----------- | - | - | ---------------- | - | - | -------------- | -
|ConsolidatedStatementof                |   | January31,2007 |   |   | Restatement |   |   | Changein         |   |   | January31,2007 |  
|OperationsandComprehensive             |   | aspreviously   |   |   | Adjustment  |   |   | AccountingPolicy |   |   | restated       |  
|LossandDeficit                         |   | reported       |   |   | (Note28)    |   |   | Adjustment       |   |   |                |  
|Explorationanddevelopmentcosts         | $ | -              |   | $ | -           |   | $ | (10,930,276      | ) | $ | (10,930,276    | )
|Gainondilutionofequityinvestment       |   | -              |   |   | 2,000,514   |   |   | (298,925         | ) |   | 1,701,589      |  
|Lossfromequityinvestment               |   | -              |   |   | (191,400    | ) |   | (523,356         | ) |   | (714,756       | )
|Stockbasedcompensation                 |   | (8,805,950     | ) |   | (6,156,781  | ) |   | -                |   |   | (14,962,731    | )
|Netloss/comprehensivelossfor theperiod |   | (14,612,368    | ) |   | (4,347,667  | ) |   | (11,752,557      | ) |   | (30,712,592    | )
|Losspersharebasicanddiluted           |   | (0.19          | ) |   | (0.06       | ) |   | (0.15            | ) |   | (0.40          | )





|                                 |   |                    |   |   |                  |   |   |                |  
|-------------------------------- | - | ------------------ | - | - | ---------------- | - | - | -------------- | -
|ConsolidatedStatementofCashFlows |   |                    |   |   | Changein         |   |   |                |  
|                                 |   | January31,2007as   |   |   | AccountingPolicy |   |   | January31,2007 |  
|                                 |   | previouslyreported |   |   | Adjustment       |   |   | restated       |  
|Operatingactivities              | $ | (4,103,416         | ) | $ | (10,403,459      | ) | $ | (14,506,875    | )
|Investingactivities              |   | (22,799,414        | ) |   | 10,403,459       |   |   | (12,395,955    | )



12 Months Ended May 31, 2009, Compared to 12 Months Ended May 31, 2008



|                                                         |   |            |   |   |             |   |   |             |   |   |              |   |  |   |             |  
|-------------------------------------------------------- | - | ---------- | - | - | ----------- | - | - | ----------- | - | - | ------------ | - |  | - | ----------- | -
|FinancialResultsfortheTwelveMonthsEndedMay31,2008        |   |            |   |   |             |   |   |             |   |   |             
|                                                         |   | OneMonth   |   |   | 12Months    |   |   | OneMonth    |   |   | 12Months     |   |  |   | 12Months    |  
|                                                         |   | EndedMay   |   |   | EndedApril  |   |   | EndedMay    |   |   | EndedMay     |   |  |   | EndedMay    |  
|                                                         |   | 31,2008    |   |   | 30,2008     |   |   | 31,2007     |   |   | 31,2008      |   |  |   | 31,2009     |  
|                                                         |   |            |   |   |             |   |   | (unaudited) |   |   | (unaudited)  |   |  |   |             |  
|EXPENSES                                                 |   |            |   |   |             |   |   |             |   |   |              |   |  |   |             |  
|Accountingandlegal                                       | $ | 15,536     |   | $ | 1,306,921   |   | $ | 58,159      |   | $ | 1,264,298    |   |  | $ | 1,944,302   |  
|Accretionofassetretirementobligation                     |   | 52,098     |   |   | 305,692     |   |   | 25,640      |   |   | 332,150      |   |  |   | 331,504     |  
|Consultingfees                                           |   | 21,170     |   |   | 943,250     |   |   | 90,363      |   |   | 874,057      |   |  |   | 370,248     |  
|Amortization                                             |   | 35,511     |   |   | 344,968     |   |   | 133,036     |   |   | 247,443      |   |  |   | 336,602     |  
|Filingfees                                               |   | 280        |   |   | 87,005      |   |   | 6,907       |   |   | 80,378       |   |  |   | 115,295     |  
|Investorrelationsandshareholderinformation               |   | 54,595     |   |   | 1,012,822   |   |   | 62,249      |   |   | 1,005,168    |   |  |   | 1,121,895   |  
|Officeadministration                                     |   | 177,657    |   |   | 2,366,940   |   |   | 191,333     |   |   | 2,353,264    |   |  |   | 2,152,886   |  
|Rent                                                     |   | 1,630      |   |   | 122,495     |   |   | 13,603      |   |   | 110,522      |   |  |   | 240,693     |  
|Explorationanddevelopmentcosts                           |   | 562,237    |   |   | 11,690,204  |   |   | 723,000     |   |   | 11,529,441   |   |  |   | 7,761,862   |  
|Stockbasedcompensation                                   |   | 77,890     |   |   | 5,561,247   |   |   | 641,848     |   |   | 4,997,289    |   |  |   | 898,454     |  
|Travel                                                   |   | 121,849    |   |   | 857,907     |   |   | 79,603      |   |   | 900,153      |   |  |   | 1,014,530   |  
|Debtissuancecosts                                        |   | 3,894,873  |   |   | -           |   |   | -           |   |   | 3,894,873    |   |  |   | 6,398,825   |  
|Wagesandbenefits                                         |   | 177,329    |   |   | 1,668,455   |   |   | 150,029     |   |   | 1,695,755    |   |  |   | 2,916,615   |  
|Totalexpenses                                            |   | (5,192,655 | ) |   | (26,267,906 | ) |   | (2,175,770  | ) |   | (29,284,791  | ) |  |   | (25,603,711 | )
|                                                         |   |            |   |   |             |   |   |             |   |   |              |   |  |   |             |  
|                                                         |   |            |   |   |             |   |   |             |   |   |              |   |  |   |             |  
|OTHERINCOME(EXPENSE)                                     |   |            |   |   |             |   |   |             |   |   |              |   |  |   |             |  
|Foreignexchangegain(loss)                                |   | 295,059    |   |   | 1,342,442   |   |   | (144,621    | ) |   | 1,782,122    |   |  |   | (8,157,720  | )
|Interestincome                                           |   | 78,658     |   |   | 51,926      |   |   | 8,542       |   |   | 122,042      |   |  |   | 169,366     |  
|Assetusagefees                                           |   | (695       | ) |   | 126,775     |   |   | 59,649      |   |   | 66,431       |   |  |   | (4,155      | )
|Gainonsaleofequity investment                            |   | -          |   |   | 4,347,077   |   |   | -           |   |   | 4,347,077    |   |  |   | 40,604,938  |  
|Interestonlongtermdebt                                   |   | (15,613    | ) |   | (68,465     | ) |   | -           |   |   | (84,078      | ) |  |   | (37,382     | )
|Poweranddrillingservices                                 |   | 70,094     |   |   | 76,430      |   |   | -           |   |   | 146,524      |   |  |   | 156,597     |  
|Lossfromequityinvestment                                 |   | (779,846   | ) |   | (8,301,371  | ) |   | (323,150    | ) |   | (8,758,067   | ) |  |   | (2,396,011  | )
|Gainondilutionofequity investment                        |   | -          |   |   | 12,582,085  |   |   | 2,913,982   |   |   | 9,668,103    |   |  |   | 2,238,492   |  
|Redemptionlossonseniorsecurednotes                       |   | -          |   |   | -           |   |   | -           |   |   | -            |   |  |   | (13,130,982 | )
|Marktomarketlossonseniorsecurednotes                     |   | -          |   |   | -           |   |   | -           |   |   | -            |   |  |   | (14,939,298 | )
|                                                         |   | (352,343   | ) |   | 10,156,899  |   |   | 2,514,402   |   |   | 7,290,154    |   |  |   | 4,503,845   |  
|Net(loss)incomeandcomprehensive(loss)income fortheperiod | $ | (5,544,998 | ) | $ | (16,111,007 | ) | $ | 338,632     |   |   | $(21,994,637 | ) |  | $ | (21,099,866 | )



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 41





---



We did not generate revenue from operations during the 12 months ended May 31, 2009, or the 12 months ended May 31, 2008.



Expenses for the 12 months ended May 31, 2009, were $25,603,711 compared to $29,284,791 for the 12 months ended May 31, 2008, a decrease of $3,681,080.  The decrease was attributable to a decrease in exploration and development costs due to the change in activities from exploration and development in 2008 to pre-operations and mill commissioning during the second half of fiscal 2009.  The decrease was also attributable to a decrease in stock-based compensation due to a fewer number of options vesting in fiscal 2009.  These decreases were  partially offset by an increase in debt issuance costs as a result of the issuance of the second, third and supplemental tranches of senior secured notes and the issuance of convertible senior secured notes during the current fiscal year.  Only one tranche of senior secured notes was issued in the 12 months ended 2008.



Other income for the 12 months ended May 31, 2009, was $4,503,845 compared to $7,290,154 for the 12 months ended May 31, 2008.  The decrease in other income is due to the redemption losses and mark-to-market losses on the senior secured notes and the convertible senior secured notes totalling $28,070,280 which resulted from an increase in the fair value of the senior secured notes (Notes) due to mark-to-market accounting, a change in the discount rate on the Notes from 26.65% to 20.58% as at February 28, 2009, and the partial redemption of Notes during the 12 months ended May 31, 2009.  As the Notes issued in the 12 months ended May 31, 2008, fiscal year were issued close to year end there were no such mark-to-market losses during this comparative period.  The decrease in other income was also due to a lower gain on dilution of equity investment as the equity investment was sold in the second quarter of fiscal 2009 and a foreign exchange loss of $8,157,720 compared to a foreign exchange gain of $1,782,122 in the prior 12 months.  This primarily resulted from the significant decrease in the Canadian dollar, impacting the majority of our liabilities which are denominated in United States dollars coupled with a significant increase in U.S. denominated liabilities (senior secured notes) which occurred during the first nine months of fiscal 2009, prior to the adoption of the U.S. dollar as our functional currency.

.

The decreases in other income were partially offset by a lower loss from equity investment due to the sale of the equity investment in the second quarter of fiscal 2009 as well as a higher gain on sale of the equity investment.

The net loss for the 12 months ended May 31, 2009, was $21,099,866 or $(0.22) per share compared to a net loss of $21,994,637 or $(0.24) per share for the 12 months ended May 31, 2008.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 42





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One Month Ended May 31, 2008, Compared to One Month Ended May 31, 2007



|Summarized Financial Information                            |   |               |   |   |               |  
|----------------------------------------------------------- | - | ------------- | - | - | ------------- | -
|                                                            |   | OneMonthEnded |   |   | OneMonthEnded |  
|                                                            |   | May 31,2008   |   |   | May 31,2007   |  
|                                                            |   |               |   |   | (unaudited)   |  
|EXPENSES                                                    |   |               |   |   |               |  
|Consultingfees                                              | $ | 21,170        |   | $ | 90,363        |  
|Amortization                                                |   | 35,511        |   |   | 133,036       |  
|Stockbasedcompensation                                      |   | 77,890        |   |   | 641,848       |  
|Debtissuancecosts                                           |   | 3,894,873     |   |   | -             |  
|Otherexpenses                                               |   | 1,163,211     |   |   | 1,310,523     |  
|Totalexpenses                                               |   | (5,192,655    | ) |   | (2,175,770    | )
|                                                            |   |               |   |   |               |  
|OTHERINCOME(EXPENSE)                                        |   |               |   |   |               |  
|Foreignexchangegain(loss)                                   |   | 295,059       |   |   | (144,621      | )
|Lossfromequityinvestment                                    |   | (779,846      | ) |   | (323,150      | )
|Gainondilutionofequityinvestment                            |   | -             |   |   | 2,913,982     |  
|Other                                                       |   | 132,444       |   |   | 68,191        |  
|                                                            |   | (352,343      | ) |   | 2,514,402     |  
|                                                            |   |               |   |   |               |  
|Netearnings(loss)andcomprehensiveearnings(loss)fortheperiod | $ | (5,544,998    | ) | $ | 338,632       |  
|                                                            |   |               |   |   |               |  
|Basicanddilutedearnings(loss)pershare                       | $ | (0.06         | ) | $ | 0.00          |  
|                                                            |   |               |   |   |               |  
|Basicweightedaveragenumberofcommonsharesoutstanding         |   | 93,131,030    |   |   | 90,893,766    |  
|                                                           
|Dilutedweightedaveragenumberofcommonsharesoutstanding       |   | 93,131,030    |   |   | 95,811,357    |  

We did not generate revenue from operations during the one month ended May 31, 2008 or the one month ended May 31, 2007.

Expenses for the one month ended May 31, 2008, were $5,192,655 compared to $2,175,770 for the one month ended May 31, 2007, an increase of $3,016,885.  The increase was attributable to debt issuance costs of $3,894,873 related to the senior secured notes financing in May 2008.  There were no debt issuance costs during the one month ended May 31, 2007.  This increase was partially offset by a decrease of $563,958 in stock-based compensation expense.  The decrease is related to a lower number of options vesting during the one month ended May 31, 2008.

Other expense for the one month ended May 31, 2008, was $352,343 compared to income of $2,514,402 for the one month ended May 31, 2007.  The decrease in other income is largely due to the gain on dilution of equity investment of $2,913,982 recorded in the one month ended May 31, 2007.  There was no dilution gain recorded during the one month ended May 31, 2008 as there were no additional shares issued by Copper during that period.  This decrease was partially offset by a foreign exchange gain of $295,059 for the one month ended May 31, 2008 compared to a foreign exchange loss of $144,621 for the one month ended May 31, 2007.  The foreign exchange gain reflects the increase in value of the Canadian dollar relative the United States dollar, affecting the valuation of the Companys liabilities which are predominantly denominated in United States dollars.

The net loss for the one month ended May 31, 2008 was $5,544,998 or $(0.06) per share compared to net earnings of $338,632 or $0.00 per share for the one month ended May 31, 2007.





|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 43





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12 Months Ended April 30, 2008, Compared to 12 Months Ended April 30, 2007

|                                                                       |                                         
|---------------------------------------------------------------------- | ----------------------------------------
|                                                                       |                                         
|                                                                       |                                         
|                                                                       | Twelve months ended
      April 30, 2008
|EXPENSES                                                               |                                         
|Accounting and legal                                                   | 1,306,921                               
|Accretion of asset retirement obligation                               | 305,692                                 
|Consulting fees                                                        | 943,250                                 
|Amortization                                                           | 344,968                                 
|Filing fees                                                            | 87,005                                  
|Investor relations and shareholder information                         | 1,012,822                               
|Office administration                                                  | 2,366,940                               
|Rent                                                                   | 122,495                                 
|Exploration and development costs                                      | 11,690,204                              
|Stock-based compensation                                               | 5,561,247                               
|Travel                                                                 | 857,907                                 
|Wages and benefits                                                     | 1,668,455                               
|Total expenses                                                         | (26,267,906)                            
|                                                                       |                                         
|OTHER INCOME (EXPENSE)                                                 |                                         
|Foreign exchange gain (loss)                                           | 1,342,442                               
|Interest income                                                        | 51,926                                  
|Interest on long-term debt                                             | (68,465)                                
|Asset usage fees                                                       | 126,775                                 
|Gain on sale of equity investment                                      | 4,347,077                               
|Power and drilling services                                            | 76,430                                  
|Loss from equity investment                                            | (8,301,371)                             
|Gain on dilution of equity investment                                  | 12,582,085                              
|Total other income (expenses)                                          | 10,156,899                              
|Net (loss) and comprehensive (loss) for the period                     | (16,111,007)                            
|Basic and diluted (loss) per share                                     | (0.17)                                  
|Basic and diluted weighted average number of common shares outstanding | 93,131,030                              



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 44





---



Financial Results for the Twelve Months Ended April 30, 2007



|                                                              |   |                |   |   |              |   |   |              |   |   |              |  
|------------------------------------------------------------- | - | -------------- | - | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                                              |   | 12Months       |   |   | ThreeMonths  |   |   | ThreeMonths  |   |   | 12Months     |  
|                                                              |   | Ended          |   |   | Ended        |   |   | Ended        |   |   | Ended        |  
|                                                              |   | January31,2007 |   |   | April30,2007 |   |   | April30,2006 |   |   | April30,2007 |  
|                                                              |   |                |  
|                                                              |   |                |   |   |              |   |   | (unaudited)  |   |   | (unaudited)  |  
|EXPENSES                                                      |   |                |   |   |              |   |   |              |   |   |              |  
|Accountingandlegal                                            | $ | 433,266        |   | $ | 204,246      |   | $ | 82,011       |   | $ | 555,501      |  
|Consultingfees                                                |   | 667,788        |   |   | 277,051      |   |   | 135,543      |   |   | 809,296      |  
|Amortization                                                  |   | 296,442        |   |   | 116,893      |   |   | 29,063       |   |   | 384,272      |  
|Filingfees                                                    |   | 67,027         |   |   | 5,473        |   |   | 3,611        |   |   | 68,889       |  
|Investorrelationsandshareholderinformation                    |   | 979,155        |   |   | 132,438      |   |   | 130,023      |   |   | 981,570      |  
|Officeadministration                                          |   | 700,350        |   |   | 152,031      |   |   | 99,576       |   |   | 752,805      |  
|Rent                                                          |   | 124,344        |   |   | 33,074       |   |   | 15,510       |   |   | 141,908      |  
|Explorationanddevelopmentcosts                                |   | 10,930,276     |   |   | 2,167,355    |   |   | 1,954,609    |   |   | 11,143,022   |  
|Stockbasedcompensation                                        |   | 14,962,731     |   |   | 2,915,884    |   |   | 50,486       |   |   | 17,828,129   |  
|Travel                                                        |   | 1,248,787      |   |   | 230,293      |   |   | 147,563      |   |   | 1,331,517    |  
|Wagesandbenefits                                              |   | 1,591,959      |   |   | 154,811      |   |   | 144,010      |   |   | 1,602,760    |  
|Totalexpenses                                                 |   | (32,002,125    | ) |   | (6,389,549   | ) |   | (2,792,005   | ) |   | (35,599,669  | )
|                                                              |   |                |   |   |              |   |   |              |   |   |              |  
|OTHERINCOME(EXPENSE)                                          |   |                |   |   |              |   |   |              |   |   |              |  
|Foreignexchangegain(loss)                                     |   | 23,723         |   |   | (757,632     | ) |   | (30,567      | ) |   | (703,342     | )
|Gainonsaleofmarketablesecurities                              |   | 18,584         |   |   | -            |   |   | 18,584       |   |   | -            |  
|Interestincome                                                |   | 260,393        |   |   | 49,080       |   |   | 72,015       |   |   | 237,458      |  
|Interestonlongtermdebt                                        |   | -              |   |   | (59,845      | ) |   | -            |   |   | (59,845      | )
|Assetusagefees                                                |   | -              |   |   | 90,635       |   |   | -            |   |   | 90,635       |  
|Lossfromequityinvestment                                      |   | (714,756       | ) |   | (2,057,724   | ) |   | -            |   |   | (2,772,480   | )
|Gainondilutionofequityinvestment                              |   | 1,701,589      |   |   | 632,396      |   |   | -            |   |   | 2,333,985    |  
|Totalotherincome(expenses)                                    |   | 1,289,533      |   |   | (2,103,090   | ) |   | 60,032       |   |   | (873,589     | )
|                                                             
|Netlossandcomprehensivelossfortheperiod                       | $ | (30,712,592    | ) | $ | (8,492,639   | ) | $ | (2,731,973   | ) | $ | (36,473,258  | )
|Basicanddilutedlosspershare                                   |   |                |   |   |              |   |   |              |   | $ | (0.46        | )
|                                                             
|Basicanddilutedweightedaveragenumberofcommonsharesoutstanding |   |                |   |   |              |   |   |              |   |   | 79,992,262   |  
|                                                              |   |                |   |   |              |   |   |              |   |   |              |  



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 45





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Expenses for the 12 months ended April 30, 2008, decreased by $9,331,763 to $26,267,906 compared with $35,599,669 for the 12 months ended April 30, 2007, due to a decrease in stock-based compensation of $12,266,882, which is attributable to fewer options being granted and the decreasing fair market value of our common shares and a decrease in travel of $473,610 due to fewer employees and consultants traveling abroad.  These decreases were partially offset by an increase in office administration of $1,614,135 related to an increase in insurance expense, additional employees, rent for new offices in Panama and donations to local social programs, an increase in accounting and legal of $751,420 due to additional work performed as a result of the increase in activities, an increase in exploration and development costs of $547,182 related to construction of the processing mill and the mine and accretion of the asset retirement obligation of $305,692.



In the 12 months ended April 30, 2008, other income increased by $11,030,488 to $10,156,899 compared with a net expense of $873,589 for the 12 months ended April 30, 2007.  The increase in other income is due to a foreign exchange gain of $1,342,442 compared with a foreign exchange loss of $703,342 for the 12 months ended April 30, 2007, which was primarily the result of a significant increase in the exchange rate from Canadian dollars to United States dollars, a gain of $4,347,077 on the transfer of 1,815,069 Copper shares back to Copper in settlement of the amount owing to Copper as at December 31, 2007, with no such gain recorded in the prior 12 months, and a dilution gain of $12,582,085 during the 12 months ended April 30, 2008 compared with $2,333,985 during the prior 12 months.  The dilution gain resulted from the difference between our carrying cost of Copper and the amount paid up for each Copper share issued.   These income increases were partially offset by interest income of $51,926 earned during the 12 months ended April 30, 2008 compared to $237,458 for the 12 months ended April 30, 2008 due to lower cash balances on hand during the 2008 period as well as an equity loss of $8,301,371 for the 12 months ended April 30, 2008 compared to $2,772,480 for the prior 12-month period.   The equity loss reflects our portion of the losses that are attributed to our percentage ownership in Copper.



The net loss for the 12 months ended April 30, 2008, was $16,111,007 or $(0.17) per basic and diluted share compared to a net loss for the 12 months ended April 30, 2007 of $36,473,258, or $(0.46) per basic and diluted share.



Three Months Ended April 30, 2008 Compared to Three Months Ended April 30, 2007



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 45





---





Summarized Financial Information

|                                                              |   |                  |   |   |                  |  
|------------------------------------------------------------- | - | ---------------- | - | - | ---------------- | -
|                                                              |   | Threemonthsended |   |   | Threemonthsended |  
|                                                              |   | April30,2008     |   |   | April30,2007     |  
|                                                              |   | (unaudited)      |   |   |                  |  
|EXPENSES                                                      |   |                  |   |   |                  |  
|Accountingandlegal                                            | $ | 616,815          |   | $ | 204,246          |  
|Stockbasedcompensation                                        |   | 588,184          |   |   | 2,915,884        |  
|Explorationanddevelopmentcosts                                |   | 2,969,606        |   |   | 2,167,355        |  
|Travel                                                        |   | 66,593           |   |   | 230,293          |  
|Otherexpenses                                                 |   | 1,071,082        |   |   | 871,771          |  
|Totalexpenses                                                 |   | (5,312,280       | ) |   | (6,389,549       | )
|                                                              |   |                  |   |   |                  |  
|OTHERINCOME(EXPENSE)                                          |   |                  |  
|Foreignexchangegain(loss)                                     |   | (384,373         | ) |   | (757,632         | )
|Lossfromequityinvestment(Note6)                               |   | (1,666,409       | ) |   | (2,057,724       | )
|Gainondilutionofequityinvestment(Note6)                       |   | 151,331          |   |   | 632,396          |  
|Other                                                         |   | 24,071           |   |   | 79,870           |  
|Totalotherincome(expenses)                                    |   | (1,923,522       | ) |   | (2,103,090       | )
|Net(loss)andcomprehensive(loss)fortheperiod                   | $ | (7,235,802       | ) | $ | (8,492,639       | )
|                                                              |   |                  |   |   |                  |  
|Basicanddilutedearnings(loss)pershare                         | $ | (0.08            | ) | $ | (0.09            | )
|                                                             
|Basicanddilutedweightedaveragenumberofcommonsharesoutstanding |   | 95,694,330       |   |   | 89,615,924       |  
|                                                              |   |                  |   |   |                  |  
|                                                              |   |                  |   |   |                  |  

We did not generate revenue from operations during the three months ended April 30, 2008, or the three months ended April 30, 2007.

Expenses for the three months ended April 30, 2008 were $5,312,280 compared to $6,389,549 for the three months ended April 30, 2007, a decrease of $1,077,269.  This decrease was largely attributable to a decrease in stock-based compensation of $2,327,700 due to a fewer number of options vesting during the period and well as a decrease of $163,700 in travel.   This decrease was partially offset by an increase in accounting and legal of $412,569 related to higher audit fees for the 2008 year-end audit and an increase of $802,251 in exploration and development costs related to the construction of the mine and processing mill.

Other expenses for the three months ended April 30, 2008, were $1,923,522 compared to $2,103,090 for the three months ended April 30, 2007, a decrease of $179,568.  This decrease was largely attributable to a decrease of $373,259 in foreign exchange loss and a decrease of $391,315 in loss from equity investment.  The foreign exchange loss relates to the value of the Canadian dollar compared to the United States dollar and the loss from equity investment reflects our portion of the losses that are attributed to our percentage ownership in Copper.  The decreases were partially offset by a decrease of $481,065 in the gain on dilution of equity investment.  The dilution gain resulted from the difference between our carrying cost of Copper and the amount paid by other investors for additional Copper shares issued.  The dilution gain is lower for the three months ended April 30, 2008 as fewer additional shares were issued by Copper during this period.

The net loss for the three months ended April 30, 2008, was $7,235,802 or $(0.08) per share compared to $8,492,639 or $(0.09) per share for the three months ended April 30, 2007.



12 Months Ended January 31, 2007, Compared to Fiscal Year Ended January 31, 2006



We did not generate revenue from operations during the 12 months ended January 31, 2007 or during the fiscal year ended January 31, 2006.  Expenses for the 12 months ended January 31, 2007 were $32,002,125 a substantial increase from $3,923,712 for the year ended January 31, 2006.  The increase in expenses is primarily due to the escalation of our operations at the Molejon gold deposit.  Increased levels of operations including drilling, equipment procurement, plant construction, and construction of roads, bridges and other infrastructure have also led to increased general and administrative costs.  Exploration and development costs were $10,930,276 for the 12 months ended January 31, 2007 compared to $1,827,630 for the fiscal year ended January 31, 2006.  Stock-based compensation, a non-cash expense, increased to $14,962,731 compared to $340,301 in the prior year, as a result of options granted and vested during the period, options previously valued at grant date and revalued at approval date, and options arising from the Plan of Arrangement that were revalued on the Plan of Arrangement date.  Wages and benefits were $1,591,959 for the 12 months ended January 31, 2007 compared to $330,022 for the prior 12 months as a result of the increased activity during the latter period.

During the 12 months ended January 31, 2007 we recorded interest income of $260,393, a loss of $714,756 from equity investment and a gain of $1,701,589 on dilution of equity investment.  During the fiscal year ended January 31, 2006, we recorded a foreign exchange loss of $77,647 and interest income of $40,009.  There were no dilution gains or equity losses for the 12 months ended January 31, 2006 as the equity investment was not acquired until the following year.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 46





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The net loss for the 12 months ended January 31, 2007, was $30,712,592 or $(0.40) per share compared to a net loss of $3,948,102 or $(0.07) per share for the fiscal year ended January 31, 2006.

5.B.  Liquidity and Capital Resources



The Company has not generated any operating revenues to date, has experienced recurring operating losses and has accumulated an operating deficit of $119,774,936 as at May 31, 2009 (May 31, 2008 - $98,675,070, April 30, 2008 - $93,130,072 and April 30, 2007 - $77,019,064) and a shareholders deficit of $8,920,288 at May 31, 2009.  We also had a working capital deficiency of $24,386,116 at May 31, 2009 (May 31, 2008 - $3,714,457, April 30, 2008 - $27,645,485 and April 30, 2007 - $243,635 net working capital).



At May 31, 2009, the Company has $29,407,502 outstanding in senior secured notes (Notes) and $34,794,455 outstanding in convertible senior secured notes (Convertible Notes).  The Notes will mature five years from dates of issuance (May 21, 2008, July 9, 2008 and October 3, 2008) at 120% of principal. After 18 or 24 months from the date of issuance of the Notes, depending upon the agreement reached with the Note holders, the holders of the Notes can give six months notice to cause the Company to purchase all of the Notes then outstanding at a price equal to the sum of (a) 120% of the principal amount of such Notes to be purchased and (b) accrued and unpaid interest on the principal amount of the Notes.



On an annual basis, commencing November 1, 2009, the Note holders and Convertible Note holders can cause the Company to redeem an amount of Notes and Convertible Notes equal to 35% of Distributable Cash.   Distributable Cash is defined as cash available after:

a)

satisfaction of the Companys debt obligations (principal and interest);

b)

satisfaction of the Companys general and administrative expenses, capital expenditures and other expense obligations;

c)

deduction for income tax obligations; and

d)

retaining reasonable working capital or other reserves.



Reasonable working capital and other reserves are to be defined mutually between the Company and the Note holders. As of May 31, 2009 neither of these has been defined.



On a semi-annual basis, commencing September 15, 2009 for the Notes and September 15, 2010 for the Convertible Notes, the Company shall make principal payments ranging from $nil to $8,000,000 depending upon the weighted average market price of gold for the six months prior to the payment date as follows:



|                                   |                                      |          
|---------------------------------- | ------------------------------------ | ---------
|Weighted Average Market Gold Price | Aggregate Pro Rata Principal Payment
|                                  
|Over $1,000                        | $                                    | 8,000,000
|$900 to $1,000                     | $                                    | 6,000,000
|$800 to $900                       | $                                    | 4,000,000
|Less than $800                     |                                      | -        



During the fiscal year ending May 31, 2010, estimated payments on the Notes are $13,044,569 in principal, $2,608,914 in premium and $3,158,017 in interest; payments of principal and interest on bank loans total $178,760 and capital lease payments are $5,741,567.



The Company is not yet in commercial production.  If we are unable to generate positive cash flow from production activities, the Company may have to raise additional funds to continue ongoing commissioning of the Molejon project and further exploration of the surrounding concessions, and to meet its operating obligations. Management may pursue additional sources of financing and while it has been successful in the past there can be no assurance that it will be able to do so in the future.

Our principal property, the Molejon gold deposit, is located in the Cerro Petaquilla Concession in Panama and, as a result our operations on the property may be subject to additional risks as more fully described in Item 3 - Key Information  3.D. Risk Factors.

Our mineral exploration activities have been funded primarily through sales of common shares and through debt financing and we expect that we will continue to be able to utilize these sources of financing until we develop further cash flow from our operations.  We have not made use of any financial instruments for hedging purposes.

During the 12 months ended May 31, 2009, we raised $27,750,000 in gross proceeds by completing our Notes financing.  We followed with the completion of a supplemental Notes financing of $20,000,000 in gross proceeds and the Convertible Notes financing of $40,000,000 in gross proceeds. In addition, we raised $43,238,852 through the sale of our 20,418,565 common shares of Copper and, thus, retired a portion ($43,238,852) of our outstanding Notes.  However, additional funds are required to meet our planned corporate and administrative expenses for the 2010 fiscal year and to undertake ongoing advancement and further exploration of the Molejon gold deposit.  Accordingly, there is substantial doubt about our ability to continue as a going concern.

We had material commitments for capital expenditures in the amount of $950,013 at May 31, 2009.  Based on our working capital at May 31, 2009, we require additional financing for our currently held properties during the 2010 fiscal year.

Our management reviews annually the carrying value of our interest in each mineral property and where necessary, properties are written down to the estimated recoverable amount determined on a non-discounted basis after giving effect to any property option agreements and cost recovery agreements.  Costs relating to properties abandoned are written off when the decision to abandon is made.

Other than as discussed herein, we are not aware of any trends, demands, commitments, events or uncertainties that may result in our liquidity either materially increasing or decreasing at present or in the foreseeable future.  Material increases or decreases in our liquidity will be substantially determined by the timing of any production decision on the Cerro Petaquilla Concession.





|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 47





---

May 31, 2009, Compared with May 31, 2008

At May 31, 2009, our current assets totaled$5,350,239and our working capital deficiency was$24,386,116compared with current assets of $13,611,277 and a working capital deficiency of $3,714,457 at May 31, 2008, due toexpenditures required to complete the construction of the processing mill.

At May 31, 2009, total liabilities were $90,464,111 compared to $56,602,043 at May 31, 2008, due to the issue of three additional tranches of Notes and the issue of Convertible Notes in fiscal 2009.

At May 31, 2009, we had total assets of $81,543,823 compared to $71,208,177 at May 31, 2008.

Share capital at May 31, 2009, was $89,208,668 (96,040,121 shares) compared to $89,002,273 (95,958,641 shares) at May 31, 2008.

The most significant contribution to working capital in the 12 months ended May 31, 2009, came from proceeds of $43,238,852 from the sale of the equity investment, whereas, in the one month ended May 31, 2008, the most significant contribution to working capital came from the issue of senior secured notes for net proceeds of $23,517,628.



In June 2008, we closed on a gross amount of $10,000,000comprising the second tranche of our $60 million Notes financing and, in July 2008, we closed on a gross amount of $17,750,000 comprising the third tranche of our $60 million Notes financing.  The first tranche of $32,250,000 had been closed on May 21, 2008.  The Notes issued with respect to this debt financing bear interest at an annual rate of 15% and mature five years from the date of issuance at 120% of the principal and are guaranteed, on a joint and several basis, by all of our assets and by those of our subsidiaries.  After 18 or 24 months from the date of issuance of the Notes, depending upon the agreement reached with the Note holders, the holders of the Notes can give six months notice to cause the Company to purchase all of the Notes then outstanding at a price equal to the sum of (a) 120% of the principal amount of such Notes to be purchased and (b) accrued and unpaid interest on the principal amount of the Notes.  We have the right to redeem the Notes at any time at 120% of the principal amount plus any accrued or unpaid interest on the Notes.  If the Notes are redeemed within one year of issuance, all prepaid interest totalling$4,162,500shall be forfeited.  As we incurred $1,050,000 in financing costs and paid $3,000,000 in prepaid interest with respect to the second tranche, the net amount received by us for the second tranche equalled$6,000,000.  Further,we incurred$1,850,000in financing costs and $2,662,500 in prepaid interest with respect to the third tranche; thereby, the net amount received by us for the third and final tranche equalled$13,237,500.  For additional information, please refer to "Item 8 -  Financial Information  8.B .Significant Changes  Section (v).



The Company initially issued 60,000 Notes with the first, second and third tranche of the Notes financing.  Each Note was issued with 382 share purchase warrants. Each warrant entitled the holder to purchase one common share at CAD$ 2.30 for a period of five years from the date of purchase.   On April 17, 2009 the Company repriced these warrants to entitle the holder to purchase one common share at CAD $0.65 for the remainder of the warrant period with the provision that, if the closing trading price of the Companys common shares on the TSX is CAD$ 1.00 or more for a period of 30 consecutive trading days, the Company has the option to require the earlier exercise of the warrants.  The effect of repricing the warrants was an increase in the value of the warrants of $1,781,500 and a decrease to contributed surplus for the same amount.



In September 2008, we sold all 20,418,565 of our common shares of Copper at CAD$2.20 per share raising $43,238,852 which we used to retire $43,238,852 of our outstanding senior secured notes.



In October 2008, we closed a supplemental Notes financing issuing a total of 20,000 Notes and raising gross proceeds of $20,000,000.  The Notes from this supplemental financing bear the same terms as the Notes issued in our previous Notes financing except that no warrants were issued in conjunction with the supplemental financing.  As we incurred $1,125,000 in financing costs with respect to the supplemental financing and paid $3,000,000 in prepaid interest, the net amount received by us equalled $15,875,000.





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|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 48





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In March 2009, we closed the Convertible Notes financing issuing a total of 40,000 Convertible Notes and raising gross proceeds of $40,000,000.  Each note in the principal amount of $1,000 is convertible into common shares at CAD$2.25 per share. The Convertible Notes bear interest at an annual rate of 15% and mature two years from date of issuance at 110% of the principal amount of such Convertible Notes .  We may prepay the Convertible Notes at any time for an amount equal to 110% of the principal amount of such Convertible Notes and accrued and unpaid interest on the principal amount of the Convertible Notes .  The indebtedness represented by the Convertible Notes rank pari passuwith the previously issued Notes .  Holders of the previously issued Notes were offered the opportunity to exchange amounts due upon maturity of their existing Notes and participated pro rata in this Convertible Note financing up to $24,187,083.  Notes representing $21,000,000 in redemption value participated in exchange for the Convertible Notes .  As we incurred $2,140,000 in financing costs and $6,000,000 in prepaid interest with respect to the supplemental financing, the net amount received by us less the Notes exchanged equalled $10,860,000.



On an annual basis, commencing November 1, 2009, the Note holders and Convertible Note holders can cause the Company to redeem Notes and Convertible Notes equal to 35% of Distributable Cash.   Distributable Cash is defined as cash available after:

a)

satisfaction of the Companys debt obligations (principal and interest);

b)

satisfaction of the Companys general and administrative expenses, capital expenditures and other expense obligations;

c)

deduction for income tax obligations; and

d)

retaining reasonable working capital or other reserves.



Reasonable working capital and other reserves are to be defined mutually between the Company and the Note holders. As of March 31, 2009 neither of these has been defined.



On a semi-annual basis, commencing September 15, 2009 for the Notes and September 15, 2010 for the Convertible Notes, the Company shall make principal payments ranging from $nil to $8,000,000 depending upon the weighted average market price of gold for the six months prior to the payment date as follows:



|                                   |                                      |          
|---------------------------------- | ------------------------------------ | ---------
|Weighted Average Market Gold Price | Aggregate Pro Rata Principal Payment
|                                  
|Over $1,000                        | $                                    | 8,000,000
|$900 to $1,000                     | $                                    | 6,000,000
|$800 to $900                       | $                                    | 4,000,000
|Less than $800                     |                                      | -        



May 31, 2008 Compared with April 30, 2008

At May 31, 2008, our current assets totaled $13,611,277 and our working capital deficiency was $3,714,457 compared with current assets of $2,672,727 and a working capital deficiency of $27,645,485 at April 30, 2008 due to funds raised from our senior secured notes financing in May 2008.

At May 31, 2008, total liabilities were $56,602,043 compared to $40,023,388 at April 30, 2008 due to a senior secured notes balance at May 31, 2008 of $26,785,359 partially offset by a decrease of $9,917,624 in accounts payable.

At May 31, 2008, we had total assets of $71,208,177 compared to $58,789,331 at April 30, 2008.

Share capital at May 31, 2008 was $89,002,273 (95,958,641 shares) compared to $89,640,627 (95,958,641 shares) at April 30, 2008.

The most significant contribution to working capital in the one month ended May 31, 2008, came from the issue of senior secured notes for net proceeds of $23,517,628 whereas, in the 12 months ended April 30, 2008, the most significant contribution to working capital came from advances from Copper of $17,682,808 and issuance of capital stock for net proceeds of $13,309,397.



In May 2008, we closed on a gross amount of $32,250,000 comprising the first tranche of our $60 million Notes financing.  The Notes issued with respect to this debt financing bear interest at an annual rate of 15% and will mature five years from date of issuance at 120% of the principal and are guaranteed, on a joint and several basis, by all of our and our subsidiaries assets.  We have the right to redeem the Notes at any time at 120% of the principal amount plus any accrued or unpaid interest on the Notes. If the Notes are redeemed within one year of issuance, all prepaid interest totalling $4,837,500 shall be forfeited. After 24 months from the date of issuance of the Notes, holders of the N otes shall have the right to cause us to purchase all of our Notes then outstanding at a price equal to the sum of (a) 120% of the principal amount of such Notes to be purchased and (b) accrued and unpaid interest on the principal amount of the Notes.  On an annual basis, the Note holders can cause us to redeem Notes equal to 35% of free cash flow.  Each of the 32,250 Notes issued in this first tranche of the financing was issued with 382 share purchase warrants, thus, totalling 12,812,280 warrants inclusive of compensation warrants.   Each warrant entitled the holder to purchase one common share at CAD$ 2.30 for a period of five years from the date of purchase.   On April 17, 2009, the Company repriced these warrants to entitle the holder to purchase one common share at CAD $0.65 for the remainder of the warrant period with the provision that if the closing trading price of the Companys common shares on the TSX is CAD$ 1.00 or more for a period of 30 consecutive trading days, the Company has the option to require the earlier exercise of the warrants.





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|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 49





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As we incurred $3,894,872 in financing costs and $4,837,500 in prepaid interest, the net amount received by us for this first tranche equalled $23,517,628.For additional information, please refer to "Item 8 -  Financial Information  8.B.Significant Changes  Section (v).



April 30, 2008 Compared to April 30, 2007

At April 30, 2008, current assets totaled $2,672,727 compared to $6,247,576 at April 30, 2007.  The decrease is attributable to a decrease of $4,141,083 in the amount receivable from a related company.

At April 30, 2008, total liabilities were significantly higher at $40,023,388 compared to $10,611,499 as at April 30, 2007 related to the substantial increase in activity in the 12 months ended April 30, 2008.  The increases included an increase in the amount payable to a related company of $9,809,747, an increase in the operating credit line facility of $8,190,385, an increase in deferred services and materials of $4,277,501, an increase in accounts payable and accrued liabilities of $4,129,408, an increase in obligation under capital leases of $2,095,941 and an increase in bank overdraft of $1,015,627.

Our working capital deficiency was $27,645,485 at April 30, 2008 compared with working capital of $243,635 at April 30, 2007.

At April 30, 2008, we had total assets of $58,789,332 compared with $24,981,649 at April 30, 2007.  This is primarily a result of increases in capitalized project development costs and property, plant and equipment.

Share capital at April 30, 2008, and April 30, 2007, was $89,640,627 (95,958,641 shares) and $74,794,361 (89,876,951 shares), respectively.

Operating expenses for the 12 months ended April 30, 2008 and the 12 months ended April 30, 2007,were $26,267,906, inclusive of general and administrative expenses, and $35,599,669, respectively largely due to stock-based compensation expense of $17,828,129 for the 12 months ended April 30, 2007.

The most significant contributions to working capital in the 12 months ended April 30, 2008, came from advances from Copper of $17,682,808 and issuance of capital stock, which provided net proceeds of $13,309,397.  The most significant contribution to working capital in the 12 months ended April 30, 2007, came from the issuance of capital stock which provided proceeds of $26,064,602 net of share issuance costs.

In May 2007, we completed a non-brokered private placement issuing 1,387,879 units at a price of CAD$2.00 per unit and 24,033 units priced at CAD$2.02 per unit, for gross proceeds of $2,552,698.  Each unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable into a common share at a price of CAD$3.50 per share until the warrants expired on May 8, 2009.  The fair value of the warrants issued on this private placement was $263,263.

In January 2008, we completed a non-brokered private placement issuing a total of 3,140,500 units at a price of CAD$3.00 per unit and raising gross proceeds of $9,736,579.  Each unit consisted of one common share and one-half of one common share purchase warrant aggregating 1,691,875 warrants with the inclusion of the issued compensation warrants.  Each whole warrant is exercisable into a common share at a price of CAD$3.50 per share until the warrants expire on October 31, 2009 (1,120,875), December 19, 2009 (182,000) and January 9, 2010 (389,000).   We paid finders fees of $381,793 in cash and $86,439 in warrants.

April 30, 2007, Compared to January 31, 2007

At April 30, 2007, current assets totaled $6,247,576 compared to $8,386,604 at January 31, 2007.  Total liabilities were $10,611,499 at April 30, 2007 compared with $4,095,854 at January 31, 2007.  Working capital at April 30, 2007 was $243,635 compared to $5,029,909 at January 31, 2007.

At April 30, 2007, we had total assets of $24,981,649 compared with $22,743,078 at January 31, 2007.  This is primarily a result of increases in capitalized project development costs partially offset by a decrease in cash.

Share capital at April 30, 2007, and January 31, 2007, was $74,794,361 (89,876,951 shares) and $73,890,062 (89,367,031 shares), respectively.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 50





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5.C.  Research and Development, Patents and Licenses, etc.

As we are a junior resource company with no producing properties, the information required by this section is not applicable.

5.D.  Trend Information

As we are a junior resource company with no producing properties, the information required by this section is not applicable.

5.E.  Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements required to be disclosed in this Amendment No. 1 .

5.F.  Tabular Disclosure of Contractual Obligations



Commitments



As at May 31, 2009, we had the following contractual obligations:



|                                |   |             |   |            |   |         |           |   |             |   |            
|------------------------------- | - | ----------- | - | ---------- | - | ------- | --------- | - | ----------- | - | -----------
|                                |   | Less than 1 |   |            |   |         |           |   | More than 5 |   |            
|                                |   | Year        |   | 2 Years    |   | 3 Years | 4-5 Years |   | Years       |   | Total      
|                               
|Office lease                    | $ | 60,676      | $ | 60,676     | $ | 15,168  | Nil       |   | Nil         | $ | 136,520    
|Capitalexpenditure commitment   | $ | 950,013     |   | Nil        |   | Nil     | Nil       |   | Nil         | $ | 950,013    
|Equipment lease                 | $ | 5,741,567   | $ | 4,164,972  | $ | 461,907 | Nil       |   | Nil         | $ | 10,368,446 
|Senior secured notes            | $ | 18,811,500  | $ | 16,800,010 |   | Nil     | Nil       |   | Nil         | $ | 35,611,510 
|Convertible seniorsecured notes |   | Nil         | $ | 49,616,537 |   | Nil     | Nil       |   | Nil         | $ | 49,616,537 
|Long term debt                  | $ | 178,760     |   | Nil        |   | Nil     | Nil       |   | Nil         | $ | 178,760    
|Asset retirement obligation     |   | Nil         |   | Nil        |   | Nil     | Nil       | $ | 6,701,000   | $ | 6,701,000  
|                               
|Total                           | $ | 25,742,516  | $ | 70,642,195 | $ | 477,075 | Nil       | $ | 6,701,000   | $ | 103,562,786

Capital Lease Obligation



The Company entered into four capital lease arrangements with Banco Bilbao Vizcaya Argentaria (Panama) S.A. (BBVA) for the purchase of equipment to advance the Molejon project into production.



The equipment includes but is not restricted to: ball mills, a Metso crushing plant, cranes and an aggregate crushing plant.



As a condition of the leases, the equipment will serve as collateral throughout the amortization period and will be registered with the Public Registry of the Republic of Panama. Further, IMN has pledged a term deposit in the amount of $2,361,098 (May 31, 2008 - $2,361,098) as additional security.



Future minimum lease payments on the capital lease obligations are as follows:



|                        |  |  |   |             |   |   |             |  
|----------------------- |  |  | - | ----------- | - | - | ----------- | -
|                        |  |  |   |             |   |   |             |  
|                        |  |  |   |             |   |   | May 31,2008 |  
|                        |  |  |   | May 31,2009 |   |   | (Note2)     |  
|2010                    |  |  | $ | 5,741,567   |   | $ | 2,663,569   |  
|2011                    |  |  |   | 4,164,972   |   |   | 2,663,569   |  
|2012                    |  |  |   | 461,907     |   |   | 1,684,045   |  
|                        |  |  |   | 10,368,446  |   |   | 7,011,183   |  
|Lessimputedinterestof9% |  |  |   | (922,291    | ) |   | (844,537    | )
|Total                   |  |  |   | 9,446,155   |   |   | 6,166,646   |  
|Currentobligation       |  |  |   | 5,054,987   |   |   | 2,174,903   |  
|Long-termobligation     |  |  | $ | 4,391,168   |   | $ | 3,991,743   |  





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|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 51





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Operating Credit Facility



The Company has an operating credit line facility with Banco Bilbao Vizcaya Argentaria (Panama) S.A. (BBVA) up to a maximum of $13,379,554.  The facility is converted to capital leases when the asset purchases are completed.  The facility has a fixed rate of 9% on $11,018,456 and 6% on $2,361,098, is secured by the assets purchased and is registered with the Public Registry of the Republic of Panama.  At May 31, 2009 there is a remaining credit line balance of $332,511 available upon which the Company may draw.

Long-term debt



During the fiscal year ended April 30, 2007, the Company arranged bank loans totalling $1,277,230 for the purchase of equipment and vehicles.  The loans are secured by the purchased assets plus term deposits in the amount of $400,000.



The following table summarizes the loans outstanding as at May 31, 2009 and May 31, 2008:

|                                                                                       |   |             |   |   |                   |  
|-------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------------- | -
|                                                                                       |   | May 31,2009 |   |   | May 31,2008(Note2 | )
|                                                                                       |   |             |   |   |                   |  
|Equipmentloan#1,repaidMay2009                                                          | $ | -           |   | $ | 125,783           |  
|Vehicleloan#1,repaidMay2009                                                            |   | -           |   |   | 28,141            |  
|Equipmentloan#2,repayableat$7,445permonthincludinginterestat9.0%,maturingOctober2009   |   | 29,891      |   |   | 111,631           |  
|Equipmentloan#3,repayableat$18,095permonthincludinginterestat9.25%,maturingJanuary2010 |   | 125,575     |   |   | 319,176           |  
|Vehicleloan#2,repayableat$793permonth,includinginterestat9.25%,maturingJanuary2010     |   | 5,527       |   |   | 13,988            |  
|                                                                                       |   | 160,993     |   |   | 598,719           |  
|Less:currentportion                                                                    |   | (160,993    | ) |   | (436,151          | )
|                                                                                       | $ | -           |   | $ | 162,568           |  



Asset Retirement Obligation



The Companys asset retirement obligation relates to site-restoration and clean-up costs for its Molejon gold project located in Panama.



A reconciliation of the provision for asset retirement obligation is as follows (Note 2):

|                                     |   |           |  
|------------------------------------ | - | --------- | -
|                                     |   |           |  
|BalanceatApril30,2008                | $ | 4,306,000 |  
|Accretion                            |   | 52,098    |  
|Foreignexchangetranslationdifference |   | (24,882   | )
|BalanceatMay31,2008                  | $ | 4,333,216 |  
|Accretion                            |   | 331,504   |  
|BalanceatMay31,2009                  | $ | 4,664,720 |  



The provision for asset retirement obligation is based upon the following assumptions:

a)

The total undiscounted cash flow required to settle the obligation is approximately $6,701,000;

b)

Asset retirement obligation payments are expected to occur during fiscal years 2014 and 2015;

c)

A credit adjusted risk-free rate of 7.65% has been used to discount cash flows.





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|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 52





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ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A.  Directors and Senior Management

The following information regarding our directors and members of senior management, including names, business experience, offices held and outside principal business activities, is at November 6, 2009:

Raul Ferrer

Mr. Raul Ferrer (January 8, 1973) was appointed to our board of directors (the Board of Directors) on November 6, 2009.  Mr. Ferrer is a leading financial advisor to a number of businesses operating in Panama.  He is a former financial investments director with the Panamanian equity investment firm, Wall Street Securities.

Richard Fifer

Mr. Richard Fifer (born January 23, 1957) is a Panamanian citizen and a U.S.-trained geologist.  He has served on our Board of Directors from March 1993 to November 1998, July 2002 to July 2003, and from November 12, 2003, to the present.  In addition, he served as our Chief Executive Officer from December 14, 2004, to March 23, 2005, and from April 14, 2007, to September 15, 2009.  Since 1994, he has been President of Geoinfo, S.A., a Panamanian company that provides geographic mapping technology and solutions.  He was Chairman and President of CODEMIN, Panamas state mining company, from January 1997 to January 2000.  Under the Ministry of Foreign Affairs Panama, he was the President's Plenipotentiary Ambassador-at-large from March 2002 to September 2003.  He was also Governor of the Province of Cocle, Panama, from March 2002 to September 2003.  Mr. Fifer holds a B.Sc. in both Geology and Geophysical Engineering and an M.A. in Finance.

David Kaplan

Mr. David Kaplan was appointed to our Board of Directors on November 6, 2009.  He is a former key member of LIM Advisors LLC, a multi-strategy investment group, where he managed a portfolio of metal and energy futures and securities for a commodity hedge fund. He is a also a former Vice-President of Gerald Metals Inc., financial analyst with Glencore Ltd., and graduate of the Wharton School of the University of Pennsylvania .

David Levy

Mr. David Levy (born December 22, 1984) was appointed to our Board of Directors on November 6, 2009.  He is a member of the private placement group at the investment advising firm of Platinum Management (NY) LLC, where he has participated in over 25 capital raising transactions for public and private corporations. He specializes in structuring and negotiating financings at all levels of the capital structure through extensive industry research, financial analysis and modeling. Mr. Levy graduated with honors from Sy Syms School of Business of Yeshiva University.

Joao Manuel

Mr. Joao Manuel (born November 6, 1952) was appointed our President and Chief Executive Officer on November 6, 2009, after having served as our Chief Operating Officer since December 1, 2008.  Before joining us, Mr. Manuel held the position of Chief Financial Officer of Copper, which was also a reporting issuer listed on the Toronto Stock Exchange.  Mr. Manuel has over 20 years of management experience in large, multinational corporations worldwide, including General Electric Company, ITT Europe Ltd. and Nokia Consumer Electronics.  He is a former Managing Director of Inapa France S.A. and Chief Financial Officer and Deputy Chief Executive Officer of the Inapa Group, Europes fourth largest paper merchant with operations in eight countries.

Bassam Moubarak

Mr. Bassam Moubarak (born February 6, 1977), a Chartered Accountant, was appointed our Chief Financial Officer on February 11, 2008.  Before joining us, Mr. Moubarak held the position of Senior Manager with the public accounting firm of Deloitte & Touche LLP, where he led audits of public companies and oversaw implementations pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.  Prior to joining Deloitte & Touche LLP, he was responsible for audits of companies in both the public and private sectors with Grant Thornton LLP.  His expertise covers corporate financial reporting, designing financial processes and controls and risk management.  He also holds an economics degree.

Daniel Small

Mr. Daniel Small (born  April 16, 2969) was appointed to our Board of Directors on November 6, 2009.  He is a Managing Director at the investment advising firm of Platinum Management (NY) LLC (Platinum), where he leads the firms private placement group.  Prior to joining Platinum, Mr. Small was a Senior Analyst, who served on the investment committee at Glenview Capital Management, a $7 billion hedge fund. He is a former Director of the Strategic Risk Group at Merrill Lynch responsible for a $1 billion multi-strategy proprietary investing platform. As a former Director in the Mergers & Acquisitions Department at SG Cowen Securities, he advised corporations in the financing and restructuring of public and private corporations. Mr. Small is a graduate of the Wharton School of the University of Pennsylvania and earned a doctorate in law from the University of Pennsylvania Law School.





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|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 53





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6.B.    Compensation

During the 12 months ended May 31, 2009, we paid cash compensation to our directors and officers as described below.  No other funds were set aside or accrued by us during the 12 months period ended May 31, 2009, to provide pension, retirement or similar benefits for our directors or officers pursuant to any existing plan provided or contributed to by us or our subsidiaries under applicable Canadian laws.

We are required, under applicable securities legislation in Canada, to disclose to our shareholders details of compensation paid to our executive officers.  The following fairly reflects all material information regarding compensation paid to our executive officers and disclosed to our shareholders under applicable Canadian law.

Cash and Non-Cash Compensation - Directors and Officers

Effective June 1, 2008, we had five directors including Ralph Ansley, Robert Baxter, John Cook, Richard Fifer and Marco Tejeira and three officers including Richard Fifer as President and Chief Executive Officer, Bassam Moubarak as Chief Financial Officer and Graham Scott as Corporate Secretary.  During the course of last our fiscal year, Ralph Ansley resigned from his directorship on July 7, 2008, due to medical reasons and Marco Tejeira did not stand for re-election at our annual general meeting of shareholders held on November 18, 2008.

At our annual general meeting of shareholders, five directors namely Robert Baxter, John Cook, Richard Fifer, Gaston Araya and John Resing were elected to the board by our shareholders on November 18, 2008.  Subsequently, Christopher Davie, joined our company on September 15, 2009, in the capacity of President and Chief Executive Officer.  On November 5, 2009, Robert Baxter, John Cook, Gaston Araya and John Resing resigned from our board, Graham H. Scott resigned as Corporate Secretary and Christopher Davie resigned as President and Chief Executive Officer.  On November 6, 2009, sole director, Richard Fifer, was joined on the board by Raul Ferrer, David Kaplan, David Levy and Daniel Small to re-establish the number of directors at five.

We currently have three officers namely Joao Manuel, appointed as President and Chief Executive Officer on November 6, 2009; Bassam Moubarak, appointed as Chief Financial Officer on February 11, 2008; and Richard Fifer, appointed as Non-Executive Chairman of our Board of Directors on November 6, 2009.







|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 54





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The following table sets forth all annual and long-term compensation for services provided to us during the 12 months ended May 31, 2009, by individuals who were our directors and officers on May 31, 2009:

Summary Compensation Table

|                                                                          |                           |                      |                                                    |                                                 |                                                          |                             |                                                
|------------------------------------------------------------------------- | ------------------------- | -------------------- | -------------------------------------------------- | ----------------------------------------------- | -------------------------------------------------------- | --------------------------- | -----------------------------------------------
|Short Term Compensation                                                   | Long Term Compensation   
|                                                                          |                           |                      |                                                    | Awards                                          | Payouts                                                  |                            
|Name and Principal Position                                               | Salary
        (CAD$)     | Bonus
        (CAD$) | Other Annual Compen-
        sation
        (CAD$) | Common Shares Under Options granted
        (#) | Restricted Shares or Restricted Share Units
      (CAD$) | LTIP Payouts
        (CAD$) | All Other Compen-
        sation
        (CAD$)
|                                                                          |                           |                      |                                                    |                                                 |                                                          |                             |                                                
|Gaston Araya
      Director (1)                                           | $30,700
      $18,000 (2) | nil                  | nil                                                | 100,000 (5)
      300,000 (5)                   | n/a                                                      | n/a                         | nil                                            
|                                                                          |                           |                      |                                                    |                                                 |                                                          |                             |                                                
|Robert Baxter
      Director
      Chairman of the Board                  | $33,740                   | nil                  | nil                                                | 400,000 (5)                                     | n/a                                                      | n/a                         | nil                                            
|                                                                          |                           |                      |                                                    |                                                 |                                                          |                             |                                                
|John Cook
      Director
      Executive Vice-Chairman                    | $169,470                  | nil                  | nil                                                | 431,200 (5)                                     | n/a                                                      | n/a                         | nil                                            
|                                                                          |                           |                      |                                                    |                                                 |                                                          |                             |                                                
|Richard Fifer
      Director, President and
      Chief Executive Officer | $346,094                  | nil                  | nil                                                | 118,800
      585,000
      1,470,216 (5)       | n/a                                                      | n/a                         | nil                                            
|                                                                          |                           |                      |                                                    |                                                 |                                                          |                             |                                                
|Joao Manuel
      Chief Operating Officer (3)                             | $188,060                  | nil                  | $52,224                                            | 300,000                                         | n/a                                                      | n/a                         | nil                                            
|                                                                          |                           |                      |                                                    |                                                 |                                                          |                             |                                                
|Bassam Moubarak
      Chief Financial Officer                             | $227,917                  | $61,500              | nil                                                | 100,000 (5)
      200,000                       | n/a                                                      | n/a                         | nil                                            
|                                                                          |                           |                      |                                                    |                                                 |                                                          |                             |                                                
|John Resing (4)
      Director                                            | $22,625 (2)               | nil                  | nil                                                | 400,000                                         | n/a                                                      | n/a                         | nil                                            
|                                                                          |                           |                      |                                                    |                                                 |                                                          |                             |                                                
|Graham Scott
      Corporate Secretary                                    | nil                       | nil                  | nil                                                | 43,200
      193,664 (5)                        | n/a                                                      | n/a                         | nil                                            
|                                                                          |                           |                      |                                                    |                                                 |                                                          |                             |                                                

(1)

Gaston Araya was elected to our Board of Directors on November 18, 2008 , and resigned on November 5, 2009.

(2)

Dollar amounts shown are in United States Dollars.

(3)

Joao Manuel was appointed Chief Operating Officer on December 1, 2008 . He was appointed President and Chief Executive Officer on November 6, 2009.

(4)John Resing was elected to our Board of Directors on November 18, 2008, and resigned on November 5, 2009.

(5)Stock options cancelled effective July 31, 2009.

Option Grants to Directors and Officers During Fiscal Year Ended May 31, 2009

The table below sets forth stock options granted by us during the 12 months ended May 31, 2009, to our then directors and officers.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 55





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|                                              |                                                   |                                                               |                                                                  |                                                                                   |                  
|--------------------------------------------- | ------------------------------------------------- | ------------------------------------------------------------- | ---------------------------------------------------------------- | --------------------------------------------------------------------------------- | -----------------
|Name                                          | Common Shares Under Options Granted
      (#) (1) | % of Total Options
        Granted in
        Fiscal Year (2) | Exercise or
        Base Price
        ($/Share)(3)
      (CAD$) | Market Value of Common Shares Underlying Options on Date of Grant
      ($/Share) | Expiration Date  
|Gaston Araya (6)
      Director               | 300,000 (4)  (5)                                  | 28.04%                                                        | $1.96                                                            | nil                                                                               | May 5, 2013      
|                                              |                                                   |                                                               |                                                                  |                                                                                   |                  
|Joao Manuel
      Chief Operating Officer     | 300,000                                           | 28.04%                                                        | $0.52                                                            | nil                                                                               | December 1, 2013 
|                                              |                                                   |                                                               |                                                                  |                                                                                   |                  
|Bassam Moubarak
      Chief Financial Officer | 200,000                                           | 18.69%                                                        | $0.39                                                            | nil                                                                               | January 5, 2014  
|                                              |                                                   |                                                               |                                                                  |                                                                                   |                  
|John Resing(6)
      Director                 | 400,000                                           | 37.38%                                                        | $0.56                                                            | nil                                                                               | November 18, 2013
|                                              |                                                   |                                                               |                                                                  |                                                                                   |                  

(1)

Stock options vest over a period of 21 months.

(2)

Percentage of all options granted during the 12 months ended May 31, 2009.

(3)

The exercise price of stock options is set at not less than the Volume Weighted Average Trading Price for the five trading days immediately preceding the date of the stock option grant.

(4)

The grant date of May 5, 2008, for such options preceded our fiscal year ended May 31, 2009.  However, such options were approved by our shareholders during our fiscal year ended May 31, 2009, at our annual general meeting of shareholders held on November 18, 2008.

(5)

Stock options cancelled effective July 31, 2009.

(6)

Messrs. Araya and Resing resigned from our board of directors on November 5, 2009.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

The following table sets forth details of all exercises of stock options during the 12 months ended May 31, 2009 by our directors and officers and the value of unexercised options as of May 31, 2009:

|                |                                              |                                    |                                                                                         |                                                                                                              
|--------------- | -------------------------------------------- | ---------------------------------- | --------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------
|Name            | Common Shares Acquired on Exercise
      (#) | Aggregate Value Realized
      ($) | Unexercised Options at Fiscal Year-End
      (#)(1) (2)Exercisable/
      Unexercisable | Value of Unexercised In-the-Money Options at Fiscal Year-End
      ($)(1) (2)Exercisable/
      Unexercisable
|                |                                              |                                    |                                                                                         |                                                                                                              
|Gaston Araya    | nil                                          | nil                                | 250,000 (3) / 150,000 (3)                                                               | nil                                                                                                          
|                |                                              |                                    |                                                                                         |                                                                                                              
|Robert Baxter   | nil                                          | nil                                | 400,000 (3)  / 0                                                                        | nil                                                                                                          
|                |                                              |                                    |                                                                                         |                                                                                                              
|John Cook       | nil                                          | nil                                | 431,200 (3) / 0                                                                         | nil                                                                                                          
|                |                                              |                                    |                                                                                         |                                                                                                              
|Richard Fifer   | nil
      nil
      nil                      | nil
      nil
      nil            | 118,800 / 0
      585,000 / 0
      1,470,216 (3) / 0                                   | 43,956 / 0
      52,650 / 0
      nil / nil                                                                  
|                |                                              |                                    |                                                                                         |                                                                                                              
|Joao Manuel     | nil                                          | nil                                | 75,000 / 225,000                                                                        | 8,250 / 24,750                                                                                               
|                |                                              |                                    |                                                                                         |                                                                                                              
|Bassam Moubarak | nil
      nil                                | nil
      nil                      | 75,000 (3) / 25,000 (3)
      50,000 / 150,000                                          | nil / nil
      12,000 / 36,000                                                                              
|                |                                              |                                    |                                                                                         |                                                                                                              
|John Resing     | nil                                          | nil                                | 150,000 / 250,000                                                                       | 10,500 / 17,500                                                                                              
|                |                                              |                                    |                                                                                         |                                                                                                              
|Graham Scott    | nil
      nil                                | nil
      nil                      | 43,200 / 0
      193,664 (3)/ 0                                                         | 3,888 / 0
      nil / nil                                                                                    
|                |                                              |                                    |                                                                                         |                                                                                                              

(1)

The figures relate solely to stock options.

(2)

Value of unexercised in-the-money options calculated using the closing price of our common shares on the Toronto Stock Exchange on Friday, May 29, 2009, which was $0.63, less the exercise price of in-the-money stock options.

(3)

Stock options cancelled effective July 31, 2009.



Defined Benefit or Actuarial Plan Disclosure



We do not provide retirement benefits for our directors and officers nor do we provide compensation pursuant to any bonus or profit-sharing plan.



Termination of Employment, Change in Responsibilities and Employment Contracts





|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 56





---

We have entered into formal agreements with our President and Chief Executive Officer, our Chief Financial Officer and with the head of our Exploration and Resources Development division establishing financial arrangements that would be in effect in the event of a change of control of our company.  Each agreement provides for, in the event of the termination of the engagement of such persons following a change of control of our company, the payment of an amount equal to two times the annual compensation being paid to such person as at the time of the change of control.

Our employment agreement with our Chief Financial Officer, Bassam Moubarak, also contains a risk mitigation provision providing 12 months of compensation in the event of termination of his employment without just cause.  The 12 months of compensation provision would also apply in the event of his dismissal due to any layoff based on group restructuring or a sale of assets.

Directors

With the exception of directors whom also serve as officers, we have arrangements in place in which directors are entitled to receive an attendance fee of $1,000 per meeting of our Board of Directors  and an attendance fee of $800 per committee meeting attended during our most recently completed financial year and subsequently up to and including the date of this Amendment No. 1.  In addition, directors are entitled to compensation of $800 per day for technical or professional services performed on behalf of us and directors are also reimbursed for actual expenses incurred in the performance of their duties as directors.

Further, with the exception of directors whom also serve as officers, directors are entitled to an annual retainer of $24,000. The Non-Executive Chairman of the Board  is entitled to annual base compensation in the amount of CAD$60,000.



6.C.  Board Practices

Our Board of Directors is responsible for the stewardship of our business and affairs.   Its main role is to oversee corporate performance and to ensure that management has the talent, professionalism and integrity necessary to successfully carry out our strategic plan and achieve our corporate objectives.  Directors are elected at each annual meeting of our shareholders and serve until our next annual meeting, at which time directors may stand for re-election, or until their successors are elected or appointed.

During the 12 months ended May 31, 2009, we did not nor did any of our subsidiaries have any arrangement to provide benefits to our directors upon termination of employment.

From June 1, 2008, to July 7, 2008, our Audit Committee was comprised of Ralph Ansley, John Cook and Marco Tejeira, with John Cook serving as the Chairman.  Upon Dr. Ansleys resignation on July 7, 2008, the Audit Committee was comprised of John Cook and Marco Tejeira. From November 18, 2008, to November 5, 2009 , our Audit Committee included Gaston Araya, Robert Baxter and John Resing, with John Resing serving as the Chairman. Since November 6, 2009, our Audit Committee has been comprised of Raul Ferrer, David Kaplan and David Levy.  Each Audit Committee member is financially literate and is appointed by our Board of Directors to hold office until removed by the Board of Directors or until our next annual general meeting, at which time the appointments expire and such individuals are eligible for re-appointment.  The Audit Committee reviews our interim financial statements and annual audited consolidated financial statements, liaises with our auditors, and recommends to our Board of Directors whether or not to approve such financial statements.  Our Audit Committee must convene a meeting to consider any matters our auditor believes should be brought to the attention of the Board of Directors or our shareholders.

Our Audit Committee operates pursuant to a charter adopted by our Board of Directors.  Our Audit Committee is responsible primarily for monitoring: (i) the integrity of our financial statements; (ii) compliance with legal and regulatory requirements; and (iii) the independence and performance of our internal and external auditors.

We are currently conducting an internal investigation under the oversight of our Audit Committee and with the assistance of outside independent counsel of certain of our international operations, focusing on the material weakness identified during our assessment of internal controls as at May 31, 2009.

From November 18, 2008, to November 5, 2009 , our Compensation Committee was composed of Robert Baxter, John Cook and John Resing. Since November 6, 2009, our Compensation Committee has included Raul Ferrer, Richard Fifer and Daniel Small.  The Compensation Committee is appointed by our Board of Directors and is responsible for reviewing and approving annual salaries, bonuses and other forms and items of compensation for board members, committee members and our senior officers.  Except for plans that are, in accordance with their terms or as required by law, administered by our board of directors or another particularly designated group, the Compensation Committee also administers and implements all of our stock option and other stock-based and equity-based benefit plans, recommends changes or additions to those plans and reports to our board of directors on compensation matters. Our Chief Executive Officer does not vote upon or participate in the deliberations regarding his compensation.





|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 57





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Since November 6, 2009, our Corporate Governance Committee has been composed of Raul Ferrer, Richard Fifer and David Kaplan with David Kaplan acting as coordinator for meetings of the Corporate Governance Committee.  The primary function of our corporate governance committee is to assist our board of directors in developing our approach to corporate governance issues and monitoring performance against the defined approach.

6.D.  Employees

As at May 31, 2009, we had approximately 800 employees, including six permanent employees and three contract staff members working out of our principal executive office located in Vancouver, Canada, and approximately 790 at our various locations in Panama.  Our office in Panama City had 22 employees in the administration, accounting, legal and investor relations departments.  Our Santa Ana and La Pintada offices near Penonome, Panama, focus on logistics, engineering and accounting with approximately 65 employees.  Our geological exploration team contained approximately 20 team members and our Molejon gold plant site had approximately 680 employees.

Our subsidiary company, Petaquilla Gold, S.A. has a labor contract with union employees at our Molejon gold plant.  A single union, Sindicato de los Trabajadores de las Empresas Mineras Petaquilla, negotiates the labour contract on our workers behalf.  There are no relationships between our management and the union and we consider labour relations with our employees to be in good standing.  We have not experienced any disruptions of our operations as a result of any labour disagreements to date.

6.E.  Share Ownership

As at November 6 , 2009, the following table sets forth the share ownership of those persons listed in subsection 6.B. above and includes the details of all options or warrants to purchase our shares held by such persons:

|                |                                                       |                                                                           |                                     |                             |                                     
|--------------- | ----------------------------------------------------- | ------------------------------------------------------------------------- | ----------------------------------- | --------------------------- | ------------------------------------
|Name            | Number of Common Shares
      Held atNovember 6, 2009 | Number of Common Shares Subject to Options or Warrants atNovember 6, 2009 | Beneficial Percentage Ownership (1) | Exercise Price
      (CAD$) | Expiry Date                         
|Gaston Araya    | nil                                                   | nil                                                                       | *                                   | n/a                         | n/a                                 
|                |                                                       |                                                                           |                                     |                             |                                     
|Robert Baxter   | 87,500                                                | nil                                                                       | *                                   | n/a                         | n/a                                 
|                |                                                       |                                                                           |                                     |                             |                                     
|John Cook       | 95,000                                                | nil                                                                       | *                                   | n/a                         | n/a                                 
|                |                                                       |                                                                           |                                     |                             |                                     
|Richard Fifer   | 4,348,783                                             | 118,800
      585,000                                                     | 5.22%                               | $0.26
      $0.54           | July 11, 2010
      February 1, 2011
|                |                                                       |                                                                           |                                     |                             |                                     
|Joao Manuel     | nil                                                   | 300,000                                                                   | *                                   | $0.52                       | December 1, 2013                    
|                |                                                       |                                                                           |                                     |                             |                                     
|Bassam Moubarak | 10,000                                                | 200,000                                                                   | *                                   | $0.39                       | January 5, 2014                     
|                |                                                       |                                                                           |                                     |                             |                                     
|John Resing     | 48,500                                                | 400,000                                                                   | *                                   | $0.56                       | November 18, 2013                   
|                |                                                       |                                                                           |                                     |                             |                                     
|Graham Scott    | 28,000                                                | 43,200                                                                    | *                                   | $0.54                       | February 1, 2011                    
|                |                                                       |                                                                           |                                     |                             |                                     

*

Indicates less than 1%

(1)

Beneficial ownership is determined in accordance with the rules of the SEC.  In computing the number of shares owned by a person and the percentage ownership of that person, common shares subject to options and warrants held by that person that are currently exercisable or exercisable within 60 days of November 6 , 2009, are deemed outstanding.  Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.  This table has been prepared based on 96,040,121 common shares outstanding as of November 6 , 2009.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 58





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On June 23, 1994, we adopted a stock option plan (the "Option Plan") which authorized our Board of Directors to grant incentive stock options to our directors, officers and employees or our associated, affiliated, controlled or subsidiary companies, in accordance with the terms of the Option Plan and the rules and policies of the Toronto Stock Exchange.  Under the terms of the Option Plan, the aggregate number of our common shares reserved for issuance under the Option Plan at any time could not exceed 4,950,968.  The aggregate number of common shares reserved for issuance under the Option Plan to any person may not exceed 5% of the number of our outstanding common shares.  On July 24, 2002, our Board of Directors amended the Option Plan to increase the number of shares reserved for issuance thereunder from 4,950,968 to 7,436,158.

On December 8, 2006, we adopted a new stock option plan (the New Plan) authorizing our Board of Directors to grant incentive stock options to directors, executive officers, employees or consultants of our company or of our subsidiaries in accordance with the terms of the Option Plan and as may be acceptable pursuant to the policies of the Toronto Stock Exchange.  Under the terms of the New Plan, the aggregate number of our common shares reserved for issuance under the New Plan at any time may not exceed 10,000,000.  The approval of our disinterested shareholders must be obtained before (a) the number of common shares under option to insiders within any 12-month period; or (b) the number of common shares issuable to insiders at any time, when combined with all of our security-based compensation arrangements, may exceed 10% of our issued and outstanding common shares.  The approval of our disinterested shareholders must also be obtained for the reduction in the exercise price, or extension of the term, of options previously granted to insiders.



At our annual general meeting of shareholders held on November 18, 2008, our shareholders approved an amended and restated stock option plan (the Amended Plan) increasing the maximum number of shares that may be the subject of options at any given time from 10,000,000 to 10,700,000 common shares.  The Amended Plan also allows for cashless exercises by option holders in the event of a bona fide takeover offer of our company.

The exercise price of options issued under our Amended Plan will not be lower than the market price as defined in the Toronto Stock Exchange Company Manual, being the volume weighted average trading price on the Toronto Stock Exchange for the shares for the five trading days immediately preceding the date on which the option is granted.  Options granted must be exercised no later than 10 years after the date of grant or such lesser period as may be determined by our Board of Directors.  Our Board of Directors may at its discretion in granting any option set a vesting period whereby the option may only be exercisable in pre-determined installments.

ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A.  Major Shareholders

The following table sets forth the name of the only shareholder who, to the knowledge of our management, as at November 6
 , 2009, beneficially owns greater than 5% of any class of our voting securities:

|                                         |                                                   |                                                             
|---------------------------------------- | ------------------------------------------------- | ------------------------------------------------------------
|Name                                     | Number of Common Shares Held at November 6 , 2009 | Percentage of Common Shares Outstanding at November 6 , 2009
|                                         |                                                   |                                                             
|Walnut Street Absolute Return Fund, L.P. | 9,539,050                                         | 9.93%                                                       

There has been no significant change in the percentage ownership held by our major shareholder during the past three years and our major shareholder does not have different voting rights.

As at November 6 , 2009, there were 96,040,121 of our common shares issued and outstanding.  Based on the records of our registrar and transfer agent, Computershare Trust Company of 510 Burrard Street, Vancouver, British Columbia, Canada, as at such date there were a total of 205 holders of our common shares, of which 43 were resident in Canada holding an aggregate 82,868,260 common shares, 114 were resident in the United States holding an aggregate 11,166,447 common shares and 48 holders holding an aggregate of 2,005,414 common shares were not resident in either Canada nor the United States.  The shareholdings of United States holders represented approximately 11.6269% of our total issued and outstanding common shares as at November 6
 , 2009.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 59





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To the extent known to our management, we are not directly or indirectly owned or controlled by another corporation(s), by any foreign government or by any other natural or legal person(s) severally or jointly.  Further, we do not know of any arrangements that may, at a subsequent date, result in a change of control of our company.

7.B.  Related Party Transactions



During the twelve months ended May 31, 2009:



The Company paid consulting fees of $4,234 (one month ended May 31, 2008 - $1,890, twelve months ended April 30, 2008 - $103,965, three months ended April 30, 2007 - $13,421 and twelve months ended January 31, 2007 - $361,985) to related companies controlled by a director and a former officer.

The Company paid consulting fees and wages of $252,334 (one month ended May 31, 2008 - $9,051, twelve months ended April 30, 2008 - $140,535, three months ended April 30, 2007 - $nil and twelve months ended January 31, 2007 - $nil) to companies controlled by directors and an officer.

The Company paid legal fees of $269,526 (one month ended May 31, 2008  $nil, twelve months ended April 30, 2008 - $107,329, three months ended April 30, 2007 - $38,438 and twelve months ended January 31, 2007 - $202,536), share issue costs of $nil (one month ended May 31, 2008  $nil, twelve months ended April 30, 2008 - $162,523, three months ended April 30, 2007 - $nil and twelve months ended January 31, 2007 - $99,566) and financing costs of $104,272 (one month ended May 31, 2008 - $95,257, twelve months ended April 30, 2008  $nil, three months ended April 30, 2007 - $nil and twelve months ended January 31, 2007 - $nil) to a law firm controlled by an officer.

The Company paid for goods and services of $155,805 (one month ended May 31, 2008  $nil, twelve months ended April 30, 2008 - $127,326, three months ended April 30, 2007 - $23,110 and twelve months ended January 31, 2007 - $94,514) to a company controlled by an officer.

The Company sold dore bars containing 256 ounces to a director and officer for net proceeds of $220,060 (thirteen months ended May 31, 2008  $nil).  The sale was completed using the London Gold Market PM fix price.

At May 31, 2009, $25,925 was owed to an officer of the Company.



Other than the above transactions, there were no material transactions in the 12 months ended May 31, 2009, or proposed material transactions between us or any of our subsidiaries and:



(a)

enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, us;

(b)

associates;

(c)

individuals owning, directly or indirectly, an interest in our voting power that gives them significant influence over us, and close members of any such individual's family;

(d)

key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling our activities (or their wholly owned private companies), including directors and senior management of companies and close members of such individuals' families;

(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 including enterprises owned by our directors or major shareholders and enterprises that have a member of key management in common with us.

None of our officers or directors, or any associate of such person, was indebted to us at any time during the 12 months ended May 31, 2009, the one month ended May 31, 2008, the 12 months ended April 30, 2008, the three months ended April 30, 2007, nor during the 12 months ended January 31, 2007 .



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 60





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7.C.  Interests of Experts and Counsel

This Amendment No. 1 is being filed as an Annual Report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

ITEM 8.  FINANCIAL INFORMATION

8.A.  Consolidated Statements and Other Financial Information

This Annual Report contains our consolidated financial statements for the 12 months ended May 31, 2009, the one month ended May 31, 2008, the 12 months ended April 30, 2008, the three months ended April 30, 2007, and the 12 months ended January 31, 2007, which contains an Independent Auditors Report on Financial Statements dated September 1, 2009, comments by Auditors for U.S. Readers on Canada  U.S. Reporting Conflict, Consolidated Balance Sheets as at May 31, 2009 and May 31, 2008. Consolidated Statements of Operations and Comprehensive Loss and Deficit for the Fiscal Periods ended May 31, 2009, May 31, 2008, April 30, 2008, April 30, 2007, and January 31, 2007, Consolidated Statements of Cash Flows for the Fiscal Periods Ended May 31, 2009, May 31, 2008, April 30, 2008, April 30, 2007, and January 31, 2007, and Notes to the Consolidated Financial Statements.



Dividend Distributions



The timing, payment, form and amount of dividends paid on our common shares, if and when declared, is determined by our board of directors, based upon considerations such as our cash flow, results of operations and financial condition, the need for funds to finance ongoing operations and such other business matters as our board of directors considers relevant.



8.B.  Significant Changes



Subsequent to May 31, 2009:



1)

Our wholly-owned subsidiary Panama Central Electrica, S.A. (PCE) entered into a Memorandum of Understanding (MOU) with Generadora Hidroelectrica Santa María, S.A. ( ̈Santa Maria ̈) for the development of a 25MW hydroelectric plant (the  ̈Hydro Project ̈) in the Province of Veraguas, Panama.



2)

We granted 150,000 stock options, 60,000 options expired and 3,245,080 options were cancelled. We are currently reviewing the accounting impact of the option cancellations.



3)

We are currently cunducting an internal investigation under the oversight of our Audit Committee and with the assistance of independent counsel, of certain international operations, focusing on the material weakness identified during our management's assessment of internal controls at May 31, 2009.



4)

The Companys management conducted an assessment of the Molejon Gold Mine resulting in the identification of several deficiencies in the plant construction and operation. These deficiencies have led to several areas of the plant not operating to design specifications resulting in additional future costs to mitigate construction deficiencies. A process for estimating costs of mitigation is in the identification stage thus no amounts can be quantified at this time.



5)

The Company entered into a forward sale agreement for 7,000 ounces of gold to be delivered in October and November 2009. Disruption of plant operations from any cause may result in delivery default and result in additional cost being incurred.



6)

In September 2009, the Company made a principal, premium and interest payment of $6,208,844 on its senior secured notes pursuant to the provisions of the debt agreement (Note 12).



7)

As a result of operational issues, the Company has been unable to meet its current production targets and requires additional funding in order to continue operations.  Management is currently in substantive negotiations with lenders to secure additional financing; however, there is no guarantee that management will be successful in its efforts.



8)

On November 5, 2009, Gaston Araya, Robert Baxter, John Cook and John Resing resigned from the Companys board of directors, Christopher Davie resigned as President and Chief Executive Officer and Graham H. Scott resigned as Corporate Secretary.



9)

On November 6, 2009, Raul Ferrer, David Kaplan, David Levy and Daniel Small joined the Companys board of directors.  In addition, Richard Fifer was appointed Non-Executive Chairman of the board of directors and Joao Manuel was appointed President and Chief Executive Officer.

ITEM 9.  THE OFFER AND LISTING



9.A.  Offer and Listing Details

The high and low sale prices for our common shares on the Toronto Stock Exchange for each of the preceding six months, each fiscal quarter in each of the last two full financial years and subsequent period and each of the last five full financial years are as follows:

|               |   |             |   |           
|-------------- | - | ----------- | - | ----------
|               |   | High (CAD$) |   | Low (CAD$)
|October 2009   | $ | 0.39        | $ | 0.20      
|September 2009 | $ | 0.49        | $ | 0.31      
|August 2009    | $ | 0.65        | $ | 0.45      
|July 2009      | $ | 0.79        | $ | 0.57      
|June 2009      | $ | 0.79        | $ | 0.57      
|May 2009       | $ | 0.73        | $ | 0.53      





|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 61





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|                                        |   |             |   |           
|--------------------------------------- | - | ----------- | - | ----------
|                                        |   | High (CAD$) |   | Low (CAD$)
|June 1, 2009  May 31, 2010             |   |             |   |           
|First Quarter                           | $ | 0.79        | $ | 0.45      
|(June 1, 2009  August 31, 2009)        |   |             |   |           
|June 1, 2008  May 31, 2009             | $ | 1.98        | $ | 0.285     
|Fourth Quarter                          | $ | 0.73        | $ | 0.35      
|(March 1, 2009  May 31, 2009)          |   |             |   |           
|Third Quarter                           | $ | 0.61        | $ | 0.285     
|(December 1, 2008  February 28, 2009)  |   |             |   |           
|Second Quarter                          | $ | 1.30        | $ | 0.36      
|(September 1, 2008  November 30, 2008) |   |             |   |           
|First Quarter                           | $ | 1.98        | $ | 0.93      
|(June 1, 2008  August 31, 2008)        |   |             |   |           
|May 1, 2008  May 31, 2008              | $ | 2.32        | $ | 1.75      
|May 2007  April 2008                   | $ | 3.42        | $ | 1.87      
|Fourth Quarter                          | $ | 3.05        | $ | 1.87      
|(February 1, 2008  April 30, 2008)     |   |             |   |           
|Third Quarter                           | $ | 3.35        | $ | 2.60      
|(November 1, 2007  January 31, 2008)   |   |             |   |           
|Second Quarter                          | $ | 3.42        | $ | 2.36      
|(August 1, 2007  October 31, 2007)     |   |             |   |           
|First Quarter                           | $ | 3.23        | $ | 2.13      
|(May 1, 2007  July 31, 2007)           |   |             |   |           
|February 2007  April 2007              | $ | 2.45        | $ | 1.90      
|February 2006  January 2007            | $ | 3.04        | $ | 1.02      
|February 2005  January 2006            | $ | 1.19        | $ | 0.30      



The closing price of our common shares on the Toronto Stock Exchange on November 6
  , 2009, was CAD$0.32.

The high and low sale prices for our common shares on the Over The Counter Bulletin Board for each of the preceding six months, each fiscal quarter in each of the last two full financial years and subsequent period and each of the last five full financial years are as follows:



|                                        |   |        |   |       
|--------------------------------------- | - | ------ | - | ------
|2009                                    |   | High   |   | Low   
|October 2009                            | $ | 0.37   | $ | 0.20  
|September 2009                          | $ | 0.458  | $ | 0.2923
|August 2009                             | $ | 0.68   | $ | 0.411 
|July 2009                               | $ | 0.729  | $ | 0.4971
|June 2009                               | $ | 0.729  | $ | 0.4971
|May 2009                                | $ | 0.64   | $ | 0.4453
|June 1, 2009  May 31, 2010             |   |        |   |       
|First Quarter                           | $ | 0.729  | $ | 0.411 
|(June 1, 2009  August 31, 2009)        |   |        |   |       
|June 1, 2008  May 31, 2009             | $ | 1.99   | $ | 0.26  
|Fourth Quarter                          | $ | 0.64   | $ | 0.26  
|(March 1, 2009  May 31, 2009)          |   |        |   |       
|Third Quarter                           | $ | 0.53   | $ | 0.26  
|(December 1, 2008  February 28, 2009)  |   |        |   |       
|Second Quarter                          | $ | 1.18   | $ | 0.28  
|(September 1, 2008  November 30, 2008) |   |        |   |       
|First Quarter                           | $ | 1.99   | $ | 0.852 
|(June 1, 2008  August 31, 2008)        |   |        |   |       
|May 1, 2008  May 31, 2008              | $ | 2.349  | $ | 1.75  
|May 2007  April 2008                   | $ | 3.40   | $ | 1.80  
|Fourth Quarter                          | $ | 3.06   | $ | 1.80  
|(February 1, 2008  April 30, 2008)     |   |        |   |       
|Third Quarter                           | $ | 3.40   | $ | 2.50  
|(November 1, 2007  January 31, 2008)   |   |        |   |       
|Second Quarter                          | $ | 3.331  | $ | 2.1824
|(August 1, 2007  October 31, 2007)     |   |        |   |       
|First Quarter                           | $ | 3.08   | $ | 2.00  
|(May 1, 2007  July 31, 2007)           |   |        |   |       
|February 2007  April 2007              | $ | 2.24   | $ | 1.6398
|February 2006  January 2007            | $ | 2.7059 | $ | 0.901 
|February 2005  January 2006            | $ | 1.19   | $ | 0.30  





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The closing price of our common shares on the Over the Counter Bulletin Board on November 6
  , 2009, was $0.3025.

9.B.  Plan of Distribution

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

9.C.  Markets

Our common shares traded on the Vancouver Stock Exchange from March 29, 1988, until August 21, 1998, when they were delisted from trading at our request.  Our common shares have traded on the Toronto Stock Exchange since January 28, 1994.  We trade our shares on the Toronto Stock Exchange under the trading symbol "PTQ".  Our common shares traded on the NASDAQ Small Cap Market from February 5, 1996, until April 12, 1999, when they were delisted for failure to meet minimum bid requirements and began to trade on the Over the Counter Bulletin Board on April 13, 1999.  We trade our shares on the Over the Counter Bulletin Board under the trading symbol "PTQMF".  We commenced trading on the Frankfurt Stock Exchange under the trading symbol P7Z on October 24, 2005.

9.D.  Selling Shareholders

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

9.E.  Dilution

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

9.F.  Expenses of the Issue

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this section.



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ITEM 10.  ADDITIONAL INFORMATION

10.A.  Share Capital

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

10.B.  Memorandum and Articles of Association

We were incorporated on October 10, 1985, pursuant to the Company Act,which has been replaced by the Business Corporations Act (British Columbia) (the "Act") and are registered with the Registrar of Companies for British Columbia under incorporation number 298967.  We are not limited in our objects and purposes.

With respect to our directors, our Articles provide that a director who is, in any way, directly or indirectly interested in an existing or proposed contract or transaction with us, or who holds any office or possesses any property whereby, directly or indirectly, a duty or interest might be created to conflict with his duty or interest as a director, shall declare the nature and extent of his interest in such contract or transaction or the conflict or potential conflict with his duty and interest as a director, as the case may be, in accordance with the provisions of the Act and shall abstain from voting in respect thereof.  This prohibition does not apply to:

(i)

any such contract or transaction relating to a loan to us, which a director or a specified corporation or a specific firm in which he has an interest has guaranteed or joined in guaranteeing the repayment of the loan or any part of the loan;

(ii)

any contract or transaction made or to be made with, or for the benefit of a holding corporation or a subsidiary corporation of which a director is a director;

(iii)

any contract by a director to subscribe for or underwrite shares or debentures to be issued by  us or our subsidiary, or any contract, arrangement or transaction in which a director is, directly or indirectly interested if all the other directors are also, directly or indirectly interested in the contract, arrangement or transaction;

(iv)

determining the remuneration of the directors;

(v)

purchasing and maintaining insurance to cover directors against liability incurred by them as directors; or

(vi)

the indemnification of any director by us.

Our Articles also provide that our directors may from time to time on our behalf borrow such money in such manner and amount, on such security, from such sources and upon such terms and conditions as they think fit; issue bonds, debentures and other debt obligations, either outright or as security for any of our liabilities or obligations, or any other person; and mortgage, charge, whether by way of specific or floating charge, or give other security on the undertaking, or on the whole or any part of our property and assets (both present and future).  Variation of these borrowing powers would require an amendment to our Articles which would, in turn, require the approval of our shareholders by way of a Special Resolution, as defined hereinafter.  A Special Resolution means a resolution cast by a majority of not less than 3⁄4 of the votes cast by our shareholders who, being entitled to do so, vote in person or by proxy at our general meeting of which notice as our Articles provide and not being less than 21 days notice specifying the intention to propose the resolution as a special resolution, has been duly given (or, if every shareholder entitled to attend and vote at the meeting agrees, at a meeting of which less than 21 days notice has been given), or a resolution consented to in writing by each of our shareholders who would have been entitled to vote in person or by proxy at our general meeting, and a resolution so consented to is deemed to be a special resolution passed at our general meeting.

There is no requirement in our Articles or in the Act requiring retirement or non-retirement of directors under an age limit requirement, nor is there any minimum shareholding required for a director's qualification.

Holders of our common shares are entitled to vote at meetings of shareholders, and a Special Resolution, as described above, is required to effect a change in the rights of shareholders.  Holders of common shares are not entitled to pre-emptive rights.  Holders of common shares are entitled, ratably, to our remaining property upon our liquidation, dissolution or winding up, and such holders receive dividends if, as, and when, declared by our directors.  There are no restrictions on the purchase or redemption of common shares by us while there is an arrearage in the payment of dividends or sinking fund installments.  There is no liability on the part of any shareholder to further capital calls by us nor any provision discriminating against any existing or prospective holder of our securities as a result of such shareholder owning a substantial number of common shares.  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 the Act or by our constating documents.



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We are required to give our registered shareholders not less than 21 days notice of any general meeting held by us unless all such shareholders consent to reduce or waive the period.  In addition, we are obliged to give notice to registrants and intermediaries who hold common shares on behalf of the ultimate beneficial owners no fewer than 35 or more than 60 days prior to the date of the meeting.  We then deliver, in bulk, proxy-related materials in amounts specified by the intermediaries.  None of our common shares owned by registrants or intermediaries may be voted at our general meeting unless all proxy-related materials are delivered to the ultimate beneficial owners of such common shares.  Such ultimate beneficial owner must then deliver a proxy to us within the time limited by us for the deposit of proxies in order to vote the common shares in respect of which such person is the beneficial owner.

There is no provision in our Articles that would have an effect of delaying, deferring or preventing our change in control and that would operate only with respect to a merger, acquisition or corporate restructuring involving us (or any of our subsidiaries) other than a shareholder rights plan adopted by our Board of Directors effective March 7, 2006, and approved by our shareholders at the Annual and Special Meeting held on June 6, 2006 (the Shareholder Rights Plan).



The Shareholder Rights Plan is designed to ensure that all shareholders receive equal treatment and to maximize shareholder values in the event of a take-over bid or other acquisition that could lead to a change in control of our company.  It is not intended to deter take-over bids. Take-over bid contests for corporate control provide a singular opportunity for shareholders to obtain a one-time gain.  After the acquisition of effective control, the opportunity for this one-time gain normally does not reoccur.  As with most public companies, control of our company can probably be secured through the ownership of much less than 50% of the shares. Without a shareholder rights plan, it would be possible for a bidder to acquire effective control, over a relatively short period of time, through open market and private purchases, using various techniques permitted under the securities legislation in Canada, without making a bid available to all shareholders. Such acquisition of control would probably be an effective deterrent to other potential offerors.  The person acquiring control would probably, over a period of time, be able to consolidate and increase its control without the price for control ever being tested through an open market auction.   Shareholder rights plans are designed to prevent this occurrence by forcing all acquisitions of control into a public offer mode.  A public offer will not necessarily achieve all of the objectives of ensuring the maximum value to shareholders. A take-over bid can be completed in a time period as short as 35days. This is too short a time period to ensure that the directors can develop other competing alternatives. The Shareholder Rights Plan is intended to provide time to shareholders to properly assess any take-over bid and to provide the Board of Directors with sufficient time to explore and develop alternatives for maximizing shareholder value, including, if considered appropriate, identifying and locating other potential bidders.



Our Shareholder Rights Plan is incorporated by reference as Exhibit 2.A. to this Amendment No. 1.

10.C.  Material Contracts

We have entered into formal agreements with our President and Chief Executive Officer, our Chief Financial Officer, our Chief Operating Officer and with the head of our Exploration and Resources Development department establishing financial arrangements that would be in effect in the event of a change of control of our company.  Each agreement provides for, in the event of the termination of the engagement of such persons following a change of control of our company, the payment of an amount equal to two times the annual compensation being paid to such person as at the time of the change of control.  A copy of each of these agreements has been previously filed with the SEC.

Our Employment Agreement with our Chief Financial Officer, Bassam Moubarak, also contains a risk mitigation provision providing 12 months compensation in the event of termination of his employment without just cause.  The 12 months compensation provision will also apply in the event of his dismissal due to any layoff based on group restructuring or a sale of assets.  A copy of the Employment Agreement dated February 11, 2008, between Petaquilla Minerals Ltd. and Bassam Moubarak was filed as Exhibit 4.U. to our Annual Report on Form 20-F for the fiscal year ended May 31, 2009.



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10.D.  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 our common shares.  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 our outstanding common shares) pursuant to Article X of the reciprocal tax treaty between Canada and the United States.  See Item 10  Additional Information  E.  Taxation below.

Except as provided in the Investment Canada Act (the "Act"), which has provisions which govern the acquisition of a control block of voting shares by non-Canadians of a corporation carrying on a Canadian business, there are no limitations specific to the rights of non-Canadians to hold or vote our common shares under the laws of Canada or the Province of British Columbia or in our charter documents.

Our management considers that the following general summary fairly describes those provisions of the Act pertinent to an investment in us by a person who is not a Canadian resident (a "non-Canadian").

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

The notification procedure involves a brief statement of information about the investment on a prescribed form which is required to be filed with Industry Canada by the investor at any time up to 30 days following implementation of the investment.  Once the completed notice has been filed, a receipt bearing the certificate date will be issued to the non-Canadian investor.  The receipt must advise the investor either that the investment proposal is unconditionally non-reviewable or that the proposal will not be reviewed as long as notice of review is not issued within 21 days of the date certified under the receipt.  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 order for review must be issued within 21 days after the certified date on which notice of investment was received.  An application for review in the form prescribed is required to be filed with Industry Canada prior to the investment taking place.  Once the application has been filed, a receipt will be issued to the applicant, certifying the date on which the application was received.  For incomplete applications, a deficiency notice will be sent to the applicant, and if not done within 15 days of receipt of application, the application will be deemed to be complete as of the date it was received.  Within 45 days after the complete application has been received, the Minister responsible for the Investment Canada Act must notify the potential investor that the Minister is satisfied that the investment is likely to be of net benefit to Canada.  If within such 45-day period the Minister is unable to complete the review, the Minister has an additional 30 days to complete the review, unless the applicant agrees to a longer period.  Within such additional period, the Minister must advise either that he is satisfied or not satisfied that the investment is likely to be of net benefit to Canada.  If the time limits have elapsed, the Minister will be deemed to be satisfied that the investment is likely to be of net benefit to Canada.  The investment may not be implemented until the review has been completed and the Minister 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, could be penalized by being required to divest himself of control of the business that is the subject of the investment.  To date, the only types of business activities which have been prescribed by regulation as related to Canada's cultural heritage or national identity deal largely with publication, film and music industries.  Because our total assets are less than the $5 million notification threshold, and because our business activities would likely not be deemed related to Canada's cultural heritage or national identity, acquisition of a controlling interest in us by a non-Canadian investor would not be subject to even the notification requirements under theInvestment Canada Act.

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



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1.

an investment to establish a new Canadian business; and

2.

an investment to acquire control of a Canadian business that is not reviewable pursuant to the Act.

The following investments by a non-Canadian are subject to review under the Act:

1.

direct acquisition of control of Canadian businesses with assets of $5 million or more, unless the acquisition is being made by a World Trade Organization ("WTO") member country investor (the United States being a member of the WTO);

2.

direct acquisition of control of Canadian businesses with assets of $250,000,000 or more by a WTO investor;

3.

indirect acquisition of control of Canadian business with assets of $5 million or more if such assets represent more than 50% of the total value of the assets of the entities, the control of which is being acquired, unless the acquisition is being made by a WTO investor, in which case there is no review;

4.

indirect acquisition of control of Canadian businesses with assets of $50 million or more even if such assets represent less than 50% of the total value of the assets of the entities, the control of which is being acquired, unless the acquisition is being made by a WTO investor, in which case there is no review; and

5.

an investment subject to notification that would not otherwise be reviewable if the Canadian business engages 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.

Generally speaking, an acquisition is direct if it involves the acquisition of control of the Canadian business or of its Canadian parent or grandparent and an acquisition is indirect if it involves the acquisition of control of a non-Canadian parent or grandparent of an entity carrying on the Canadian business.  Control may be acquired through the acquisition of actual voting control by the acquisition of voting shares 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.

A WTO investor, as defined in the Act, includes an individual who is a national of a member country of the World Trade Organization or who has the right of permanent residence in relation to that WTO member, a government or government agency of a WTO investor-controlled corporation, limited partnership, trust or joint venture and a corporation, limited partnership, trust or joint venture that is neither WTO-investor controlled or Canadian controlled of which two-thirds of its board of directors, general partners or trustees, as the case may be, or any combination of Canadians and WTO investors.

The higher thresholds for WTO investors do not apply if the Canadian business engages in activities in certain sectors such as uranium, financial services, transportation services or communications.

The Act specifically exempts certain transactions from either notification or review.  Included among this 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.



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10.E.  Taxation

Material Canadian Federal Income Tax Consequences

Through consultation with counsel, our management believes that the following general summary accurately describes all material Canadian federal income tax consequences applicable to a holder of our common shares who is a resident of the United States, that qualifies for benefits under the Canada-United States Convention (1980), as amended (the Treaty) and who is not a resident of Canada and who does not use or hold, and is not deemed to use or hold, his common shares of us in connection with carrying on a business in Canada (a "non-resident holder").

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, Customs and 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 summary assumes that the Tax Proposals will be enacted in their form as of the date of this Annual Report.  This description, except for the Tax Proposals, does not take into account or anticipate any changes in law, whether by legislative, government or judicial action, nor does it take into account provincial, territorial, or foreign tax considerations which may differ significantly from those discussed herein.

Dividends

Dividends paid on our common shares to a non-resident holder will be subject to withholding tax.  The Treaty provides that the normal 25% withholding tax rate under the ITA is reduced to 15% on dividends paid on shares of a corporation resident in Canada (such as our company) to beneficial owners of the dividends who are residents of the United States, and may also provide for a further reduction of this rate to 5% where the beneficial owner of the dividends is a corporation that is a resident of the United States which owns at least 10% of the voting shares of the corporation paying the dividend.

No dividends have ever been paid by us.

Capital Gains

Under the ITA, a taxpayer's capital gain or capital loss from a disposition of a share of our company is the amount, if any, by which his proceeds of disposition exceed (or are exceeded by) the aggregate of his adjusted cost base of the share and reasonable expenses of disposition.  One half of a capital gain (the "taxable capital gain") is included in income, and one half of a capital loss in a year (the "allowable capital loss") is deductible from taxable capital gains realized in the same year.  The amount by which a shareholder's allowable capital loss exceeds his taxable capital gains in a year may be deducted from a taxable capital gain realized by the shareholder in the three previous or any subsequent year, subject to certain restrictions in the case of a corporate shareholder.

A non-resident holder is not subject to tax under the ITA in respect of a capital gain realized upon the disposition of a share of a public corporation unless the share represents "taxable Canadian property" to the holder thereof.  We are a public corporation for purposes of the ITA and a common share of our company will be taxable Canadian property to a non-resident holder if, at any time during the 60 month period immediately preceding the disposition, the non-resident holder, persons with whom the non-resident holder did not deal at arm's length, or the non-resident holder and persons with whom he did not deal at arm's length together owned not less than 25% of the issued shares of any class of our shares.  Our shares may also be taxable Canadian property to a holder if the holder acquired them pursuant to certain tax-deferred "rollover" transactions whereby the holder exchanged property that was taxable Canadian property for our shares.

Where a non-resident holder who is an individual ceased to be resident in Canada, he will be subject to Canadian tax on any capital gain realized on disposition of our shares at that time.

Where a non-resident holder realizes a capital gain on a disposition of our shares that constitute taxable Canadian property, the Treaty relieves the non-resident shareholder from liability for Canadian tax on such capital gains unless:

(a)

the non-resident holder is an individual who was resident in Canada for not less than 120 months during any period of 20 consecutive years preceding, and at any time during the 10 years immediately preceding, the disposition and the shares were owned by him when he ceased to be resident in Canada or are property substituted for property that was owned at that time, or

(b)

the shares formed part of the business property of a "permanent establishment" or pertained to a fixed base used for the purpose of performing independent personal services that the shareholder has or had in Canada within the 12 months preceding the disposition.





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Material United States Federal Income Tax Consequences



The following is a discussion of material U.S. federal income tax consequences that may be relevant with respect to the acquisition, ownership and disposition of our common shares by a U.S. Holder (as hereinafter defined).  This discussion does not address all potentially relevant federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as those described below as excluded from the definition of a U.S. Holder.  In addition, this discussion does not cover any state, local or foreign tax consequences.  Accordingly, holders and prospective holders of our common shares are urged to consult their own tax advisors about the specific federal, state, local and foreign tax consequences to them of acquiring, holding and disposing of our common shares, based upon their individual circumstances.



The following discussion is based upon the sections of 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.



U.S. Holders



As used in this annual report, a U.S. Holder means a holder of our common shares who is (i) a citizen or individual resident of the United States, (ii) corporation, or other entity treated as a corporation for U.S. tax purposes, created or organized in or under the laws of the United States or any state thereof (including the District of Columbia), (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if such trust was in existence on August 20, 1996 and validly elected to be treated as a United States person for U.S. federal income tax purposes or if (1) a court within the U.S. is able to exercise primary supervision over its administration and (2) one or more U.S. persons have the authority to control all of the substantial decisions of such trust.   This summary does not address the tax consequences to, and the term U.S. Holder does not include, persons subject to specific provisions of federal income tax law, such as 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, broker-dealers, non-resident alien individuals, persons or entities that have a functional currency other than the U.S. dollar, shareholders subject to the alternative minimum tax, shareholders who hold common shares as part of a straddle, hedging or conversion transaction and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services.  This summary is limited to U.S. Holders who own common shares as capital assets, within the meaning of Section 1221 of the Code, and who own (directly and indirectly, pursuant to applicable rules of constructive ownership) no more than 10% of the value of our total outstanding stock.  This summary does not address the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares.



If a partnership (or any other entity treated as a partnership for U.S. federal income tax purposes) holds our common shares, the tax treatment of a partner in such partnership will generally depend on the status of the partner and the activities of the partnership. Such a partner should consult its own tax advisors as to the U.S. tax consequences of being a partner in a partnership that acquires, holds, or disposes of our common shares.



Distributions on Our Common Shares



Subject to the discussion below under Passive Foreign Investment Company, U.S. Holders receiving dividend distributions (including constructive dividends) with respect to our common shares generally are required to include in gross income for U.S. federal income tax purposes the gross amount of such distributions (without reduction of any Canadian income or other tax withheld from such distributions), equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that we have current or accumulated earnings and profits.  Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holders federal income tax liability or, alternatively, may be deducted in computing the U.S. Holders federal taxable income by those who itemize deductions (See more detailed discussion at Foreign Tax Credit below). Dividends paid on our common shares will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain U.S. corporations.



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For taxable years beginning before January 1, 2011, dividends received by U.S. Holders that are individuals, estates or trusts from qualified foreign corporations, as defined in Section 1(h)(11) of the Code, generally are taxed at the same preferential tax rates applicable to long-term capital gains. Although not free from doubt, it appears that we are a qualified foreign corporation, as defined in Section 1(h)(11) of the Code if we are not, and have not been, a PFIC, as described below under Passive Foreign Investment Company. We have not determined whether or not we meet the definition of a PFIC for the current tax year and any prior tax years. A corporation that is a PFIC, along with other foreign corporations given special status under the Code, for its taxable year during which it pays a dividend, or for its immediately preceding taxable year, will not be treated as a qualifying foreign corporation and dividends received by U.S. Holders that are individuals, estates or trusts generally will be subject to U.S. federal income tax at ordinary income tax rates (and not at the preferential tax rates applicable to long-term capital gains).



In the case of foreign currency received as a dividend 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.



Disposition of Our Common Shares



Subject to the discussion below under Passive Foreign Investment Company, U.S. Holders will recognize gain or loss upon the sale of our common shares equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received and (ii) the shareholders tax basis in our common shares.  Preferential tax rates apply to long-term capital gains of U.S. Holders that are individuals, estates or trusts.  In general, gain or loss on the sale of our common shares will be long-term capital gain or loss if our common shares are a capital asset in the hands of the U.S. Holder and are held for more than one year.  Deductions for net capital losses are subject to significant limitations.



Passive Foreign Investment Company



We have not determined whether or not we meet the definition of PFIC, within the meaning of Sections 1291 through 1298 of the Code for the current tax year and any prior tax years.  We may or may not qualify as a PFIC in subsequent years due to changes in our assets and business operations.  A U.S. Holder who holds stock in a foreign corporation during any year in which such corporation qualifies as a PFIC is subject to numerous special U.S. federal income taxation rules.  The following is a discussion of these special rules as they apply to U.S. Holders of our common shares.



Section 1297 of the Code defines a PFIC as a corporation that is not formed in the U.S. if, for any taxable year, either (i) 75% or more of its gross income is passive income, which includes interest, dividends and certain rents and royalties 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.



U.S. Holders owning shares of a PFIC are subject to a special tax and to an interest charge based on the value of deferral of U.S. tax attributable to undistributed earnings of a PFIC for the period during which the shares of the PFIC are owned.  This special tax would apply to any gain realized on the disposition of shares of a PFIC.  In addition, the gain is subject to U.S. federal income tax as ordinary income, taxed at top marginal rates, rather than as capital gain income.  The special tax would also be payable on receipt of excess distributions (any distributions received in the current year that are in excess of 125% of the average distributions received during the 3 preceding years or, if shorter, the shareholders holding period).  However, if the U.S. Holder makes for any tax year a timely election to treat a PFIC as a qualified electing fund (QEF) with respect to such shareholders interest therein, the above-described rules generally will not apply.  Instead, the electing U.S. Holder would include annually in his gross income his pro rata share of the PFICs ordinary earnings and any net capital gain regardless of whether such income or gain was actually distributed.  Special rules apply to U.S. Holders who own their interests in a PFIC through intermediate entities or persons.  Generally, shareholders do not make a QEF election unless they have sufficient information to determine their proportionate share of a corporations net capital gain and ordinary earnings. We have not calculated these amounts for any shareholder, and do not anticipate making these calculations in the foreseeable future. Therefore, U.S. Holders of our common shares should consult their own financial advisor, legal counsel or accountant regarding the QEF election before making this election.



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U.S. Holders who hold, actually or constructively, marketable stock of a foreign corporation that qualifies as a PFIC may elect to mark such stock to the market (a mark-to-market election).  If such an election is made, such U.S. Holder will not be subject to the special taxation rules of PFIC described above for the taxable years for which the mark-to-market election is made.  A U.S. Holder who makes such an election will include in income for the taxable year an amount equal to the excess, if any, of the fair market value of our common shares as of the close of such tax year over such U.S. Holders adjusted basis in such shares.  In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any, of such U.S. Holders adjusted tax basis in the 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 our common shares included by such U.S. Holder for prior tax years, including any amount which would have been included for any prior year but for Section 1291 interest on tax deferral rules discussed above with respect to a U.S. Holder, who has not made a timely QEF election during the year in which he holds (or is deemed to have held) our common shares and we are a PFIC (Non-Electing U.S. Holder) 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 our common shares will be increased or decreased to reflect the amount included or deducted as a result of mark-to-market election.  A mark-to-market election will apply to the tax year for which the election is made and to all later tax years, unless the PFIC stock ceases to be marketable or the IRS consents to the revocation of the election.



The IRS has issued proposed regulations that, subject to certain exceptions, would treat as taxable certain transfers of PFIC stock by a Non-Electing U.S. Holder that are generally not otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations and transfers at death. Generally, in such cases, the basis of our common shares in the hands of the transferee and the basis of any property received in the exchange for those shares would be increased by the amount of gain recognized.  A U.S. Holder who has made a timely QEF election (as discussed above) would not be taxed on certain transfers of PFIC stock, such as gifts, exchanges pursuant to corporate reorganizations and transfers at death.  The transferees basis in this case will depend on the manner of the transfer. The specific tax effect to the U.S. Holder and the transferee may vary based on the manner in which the common shares are transferred.  Each U.S. Holder should consult a tax advisor with respect to how the PFIC rules affect their tax situation.



The PFIC and QEF election rules are complex.  U.S. Holders should consult a tax advisor regarding the availability and procedure for making the QEF election as well as the applicable method for recognizing gains or earnings and profits under the foregoing rules.



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 our common shares  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. Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holders U.S. federal income tax liability that such U.S. Holders foreign source taxable income bears to such U.S. Holders worldwide taxable income. In applying this limitation, a U.S. Holders various items of income and deduction must be classified, under complex rules, as either foreign source or U.S. source. In addition, this limitation is calculated separately with respect to specific categories of income including passive category income and general category income.  Gain or loss recognized by a U.S. Holder on the sale or other taxable disposition of our common shares generally will be treated as U.S. source for purposes of applying the foreign tax credit rules.  Dividends received by U.S. Holders on our common shares generally will be treated as foreign source and generally will be categorized as passive income for purposes of applying the foreign tax credit rules.  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 our common shares should consult their own financial advisor, legal counsel or accountant regarding the foreign tax credit rules.



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Controlled Foreign Corporation



If more than 50% of the total voting power or the total value of our 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 Section 7701(a)(30) of the Code), each of which own, directly or indirectly, 10% or more of the total voting power of the our outstanding shares (each a 10% Shareholder), we could be treated as a Controlled Foreign Corporation (CFC) under Section 957 of the Code.



Our classification as a CFC would effect many complex results, including that 10% Shareholders would generally (i) be treated as having received a current distribution of our Subpart F income and (ii) would also be subject to current U.S. federal income tax on their pro rata share of our 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 our common shares by a U.S. Holder that is or was a 10% Shareholder at any time during the five-year period ending with the sale is treated as a dividend to the extent of our earnings and profits attributable to the common shares sold or exchanged.



If we are classified as both a PFIC and a CFC, we generally will not be treated as a PFIC with respect to 10% Shareholders. This rule generally will be effective for taxable years of 10% Shareholders beginning after 1997 and for its taxable years ending with or within such taxable years of 10% Shareholders.



We have not determined whether we meet the definition of a CFC, and there can be no assurance that we will not be considered a CFC for the current or any future taxable year.



The CFC rules are very complicated, and U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the CFC rules and how these rules may impact their U.S. federal income tax situation.



Information Reporting; Backup Withholding



Certain information reporting and backup withholding rules may apply with respect to certain payments related to our 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 at a current rate of 28% (which rate is scheduled for periodic adjustment) of any payments to a U.S. Holder regarding dividends paid by us, 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 (generally on Form W-9) 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.  We do not assume responsibility for the withholding of tax at source.  U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the information reporting and backup withholding rules applicable to our common shares.

10.F.  Dividends and Paying Agents

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

10.G.  Statements by Experts

This Amendment No. 1 is being filed as an annual report under the Exchange Act and, as such, there is no requirement to provide any information under this section.

10.H.  Documents on Display

Any documents referred to in this Amendment No. 1 may be inspected at our head office located at Suite 410, 475 West Georgia Street, Vancouver, British Columbia, V6B 4M9 Canada, during normal business hours.



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10.I.  Subsidiary Information

There is no additional information relating to our subsidiaries, which must be provided in Canada and which is not otherwise called for by the body of Canadian GAAP used in preparing our consolidated financial statements.

ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Credit risk



Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Financial instruments that potentially subject us to credit risk consist of cash and cash equivalents, restricted cash and accounts receivable. We have reduced our credit risk by investing its cash and cash equivalents and restricted cash in term deposits with financial institutions that operate globally. Also, as the majority of its receivables are with the government of Canada in the form of sales tax and, the credit risk is minimal. Therefore, we are not exposed to significant credit risk and overall our credit risk has not changed significantly from the prior year.



Liquidity risk

Liquidity risk is the risk that we will not be able to meet our financial obligations as they fall due. We have in place a planning and budgeting process to help determine the funds required to ensure we have the appropriate liquidity to meet our operating and growth objectives.  We have historically relied on issuance of shares, senior secured debt, convertible senior secured debt and leasing arrangements to develop the Molejon gold project and may require doing so again in the future. On an annual basis we may be required to pay 35% of our distributable cash as defined in our senior secured notes and convertible senior secured notes indenture and convertible senior secured notes indenture.



Currency risk



Financial instruments that impact our net earnings or other comprehensive income due to currency fluctuations include: Canadian dollar denominated cash and cash equivalents, restricted cash, accounts receivable and accounts payable. The sensitivity of our net earnings and other comprehensive income to changes in the exchange rate between the Canadian dollar and the United States dollar is summarized in the table below:



|                                                         |   |                     |   |                     |  
|-------------------------------------------------------- | - | ------------------- | - | ------------------- | -
|                                                         |   | As at May 31, 2009  |  
|                                                         |   | 10% Increase in the |   | 10% decrease in the |  
|                                                         |   | Canadian Dollar     |   | Canadian Dollar     |  
|(Decrease) increase in net earnings                      | $ | 61,184              | $ | (61,184             | )
|(Decrease) increase in other comprehensive (loss) income |   | -                   |   | -                   |  
|Comprehensive (loss) income                              | $ | 61,184              | $ | (61,184             | )



Interest rate risk



Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Cash and cash equivalents and restricted cash bear interest at fixed rates.



Other current financial assets and liabilities are not exposed to interest rate risk because they are non-interest bearing.



The operating credit line facility, leases and long-term debt bear interest at a fixed rate and are also not exposed to interest rate risk.



Qualitative Information about Market Risk



Our objectives of capital management are intended to safeguard our ability to support our normal operating requirements on an ongoing basis, continue the development and exploration of our mineral properties and support any expansionary plans.



Our capital structure consists of long-term debt, leases, senior secured notes, convertible senior secured notes and equity attributable to common shareholders, comprised of issued capital, contributed surplus and deficit. We manage the capital structure and make adjustments in light of changes in economic conditions and the risk characteristics of our assets.



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To effectively manage our capital requirements, we have in place a planning and budgeting process to help determine the funds required to ensure we have the appropriate liquidity to meet our operating and growth objectives.  We have historically relied on issuance of shares, senior secured debt, convertible senior secured debt and leasing arrangements to develop the project and may require doing so again in the future.



We are monitoring market conditions to secure funding at the lowest cost of capital.  We are exposed to various funding and market risks which could curtail our access to funds.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

This Amendment No. 1 is being filed as an annual report under the Exchange Act for a fiscal year ending before December 15, 2009, and, as such, there is no requirement to provide any information under this item.

PART II

ITEM 13.  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

There has not been a material default in the payment of principal, interest, a sinking or purchase fund installment, or any other material default not cured within thirty days, relating to our indebtedness or any of our significant subsidiaries.  There are no payments of dividends by us in arrears, nor has there been any other material delinquency relating to any class of our preference shares.

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

Effective March 7, 2006, our Board of Directors adopted a shareholder rights plan, which was subsequently approved by our shareholders at our Annual and Special Meeting held on June 6, 2006.



The Shareholder Rights Plan is designed to ensure that all shareholders receive equal treatment and to maximize shareholder values in the event of a take-over bid or other acquisition that could lead to a change in control of our company.  It is not intended to deter take-over bids. Take-over bid contests for corporate control provide a singular opportunity for shareholders to obtain a one-time gain.  After the acquisition of effective control, the opportunity for this one-time gain normally does not reoccur.  As with most public companies, control of our company can probably be secured through the ownership of much less than 50% of our shares. Without a shareholder rights plan, it would be possible for a bidder to acquire effective control, over a relatively short period of time, through open market and private purchases, using various techniques permitted under the securities legislation in Canada, without making a bid available to all shareholders. Such acquisition of control would probably be an effective deterrent to other potential offerors.  The person acquiring control would probably, over a period of time, be able to consolidate and increase its control without the price for control ever being tested through an open market auction.   Shareholder rights plans are designed to prevent this occurrence by forcing all acquisitions of control into a public offer mode.  A public offer will not necessarily achieve all of the objectives of ensuring the maximum value to shareholders. A take-over bid can be completed in a time period as short as 35 days. This is too short a time period to ensure that the directors can develop other competing alternatives. The Shareholder Rights Plan is intended to provide time to shareholders to properly assess any take-over bid and to provide our Board of Directors with sufficient time to explore and develop alternatives for maximizing shareholder value, including, if considered appropriate, identifying and locating other potential bidders.



Our Shareholder Rights Plan was filed as Exhibit 4.W to our Annual Report on Form 20-F for the fiscal year ended May 31, 2009.



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ITEM 15.  CONTROLS AND PROCEDURES



Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SECs rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our President (serving as our principal executive officer) and Chief Financial Officer (serving as our principal financial officer), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this report (the Evaluation Date).  Based upon that evaluation, our President and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the SECs rules and forms, and accumulated and communicated to our management, including our President and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Managements Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act.  Our internal control system was designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

An internal control material weakness is a deficiency, or aggregation of deficiencies, such that the risk of material misstatements in financial statements will not be prevented or detected on a timely basis by employees in the normal course of their work. An internal control significant deficiency, or aggregation of deficiencies, is one that could result in a misstatement of the financial statements that is more than inconsequential.

During the transition period ended May 31, 2008, we identified material weaknesses in internal controls.



These material weaknesses were as follows:



·

We did not have sufficient accounting resources at one of our subsidiaries in order to account for and apply internal control to transactions originating at the subsidiary.



·

Our IT configuration at one of our subsidiaries does not have the appropriate system privileges set up for each job function; and



·

We had a lack of detective and preventative controls with regard to oversight of recorded transactions at one of our operating subsidiaries



On September 1, 2008 we transitioned to new accounting software that established appropriate system privileges for each job function. This allowed us to resolve the material weakness relating to our IT configuration at one of our subsidiaries.



In March 2009, we upgraded the skills of the accounting staff by recruiting staff that are qualified accountants to oversee the recording of transactions for all of our operating subsidiaries. Detective controls at our head office were implemented in order to mitigate the risk of transactions not being recorded appropriately. This allowed us to resolve the material weakness relating to sufficiency of accounting resources to apply internal controls to transactions originating at the subsidiary and to implement detective controls with respect to oversight of recorded transactions at one of our operating subsidiaries.



Our management assessed the effectiveness of our internal control over financial reporting as of May 31, 2009, and this assessment identified the following material weakness in our internal control over financial reporting:



·

Our policies and procedures relating to cash disbursements at one of our operating subsidiaries were not followed.



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In making our assessment of internal control over financial reporting management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal ControlIntegrated Framework.  Because of the material weakness described in the preceding paragraph, our management believes that, as of May 31, 2009, our internal control over financial reporting was not effective as of the Evaluation Date based on those criteria.

Our Audit Committee has been provided information on the deficiency.  Together, our Audit Committee, Board of Directors, and our management continue to work to mitigate the risk of a material misstatement in our financial statements.  Subsequent to year-end, we redesigned the internal controls for our operating subsidiaries by replacing all signing authorities at these operations with senior level employees from the parent company.   We are currently conducting an internal investigation under the oversight of our Audit Committee and with the assistance of outside independent counsel of certain of our international operations, focusing on the material weakness identified above.



Other than the foregoing, d uring the period covered by this report, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



Our independent registered public accounting firm has issued an opinion on the effectiveness of our internal control over financial reporting as of May 31, 2009.  The report can be found in the Independent Auditors Report on Internal Controls under Standards of the Public Company Accounting Oversight board (United States of America).



Attestation Report of our External Auditor



The effectiveness of our internal control over financial reporting as of May 31, 2009, has been audited by our independent registered chartered accountants, Ernst & Young LLP, who also audited our consolidated financial statements for the year ended May 31, 2009.  Ernst & Young LLP have expressed an adverse opinion on the effectiveness of our internal control over financial reporting as of May 31, 2009, and their report is included on page 85 of this Amendment No. 1 .



Changes in Internal Control Over Financial Reporting



During the period covered by this report, other than the changes discussed under Management's Annual Report on Internal Control Over Financial Reporting, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



Inherent Limitations on Effectiveness of Controls



Internal control over financial reporting has inherent limitations.  Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures.  Internal control over financial reporting also can be circumvented by collusion or improper management override.  Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting.  However, these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

ITEM 16.  [RESERVED]



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16.A.  AUDIT COMMITTEE FINANCIAL EXPERT



Our Board of Directors has determined that it does have at least one audit committee financial expert serving on our Audit Committee.  John Resing, a Certified Public Accountant and member of the American Institute of Certified Public Accountants (AICPA), serves as the Chairman of our Audit Committee.  He has over 15 years experience as an outside director of a number of public and private U.S. firms and extensive experience in strategic planning, annual operating plans, financial oversight, SEC reporting, board governance and financing strategy.  He has held Chief Financial Officer and Managing General Partner positions and is a former partner of the accounting and auditing firm of Coopers & Lybrand (now Pricewaterhouse Coopers LLP).  Further, John Resing is considered to be independent, as defined in National Instrument 52-110, Audit Committees, as adopted by the Canadian Securities Administrators.

16.B.  CODE OF ETHICS

Effective May 31, 2008 , our Board of Directors adopted an updated Code of Business Ethics and Conduct that applies to, among other persons, our President and Chief Executive Officer, being our principal executive officer, and our Chief Financial Officer, being our principal financial officer, and our controller, as well as persons performing similar functions.  As adopted, our Code of Business Ethics and Conduct sets forth written standards that are designed to deter wrongdoing and to promote:

(1)

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

(2)

full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in other public communications made by us;

(3)

compliance with applicable governmental laws, rules and regulations;

(4)

the prompt internal reporting of violations of the Code of Business Ethics and Conduct to an appropriate person or persons identified in the Code of Business Ethics and Conduct; and

(5)

accountability for adherence to the Code of Business Ethics and Conduct.

Our Code of Business Ethics and Conduct requires, among other things, that all of our personnel shall be accorded full access to our President and Chief Executive Officer and Chief Financial Officer with respect to any matter which may arise relating to the Code of Business Ethics and Conduct.  Further, all of our personnel are to accorded full access to our Board of Directors if any such matter involves an alleged breach of the Code of Business Ethics and Conduct by our President and Chief Executive Officer or Chief Financial Officer.

In addition, our Code of Business Ethics and Conduct emphasizes that all employees, and particularly managers and/or supervisors, have a responsibility for maintaining our financial integrity, consistent with generally accepted accounting principles, and federal, provincial and state securities laws.  Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to our Chairman of the Audit Committee or Chief Financial Officer or, if anonymity is preferred, to an independent whistle-blower hotline operated and controlled by a third party.  It is against our policy to retaliate against any individual who reports in good faith the violation or potential violation of our Code of Business Ethics and Conduct by another.

Our Code of Business Ethics and Conduct and our Whistle-Blower Policy are filed as Exhibits 11.A and 11.B to our Annual Report on Form 20-F for the period ended May 31, 2008.  The full text of our Code of Business Ethics and Conduct and our Whistle-Blower Policy can be viewed on our website at www.petaquilla.com and we will provide a copy of each document to any person without charge, upon request.  Requests can be sent to: Petaquilla Minerals Ltd., Suite 410 - 475 West Georgia Street, Vancouver, BC, Canada V6B 4M9.

16.C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

The aggregate amounts billed by our auditors to us for (i) the period covered by the 12 months ended May 31, 2009 and (ii) the period covered by the one month ended May 31, 2008, and 12 months ended April 30, 2008, for audit fees, audit-related fees, tax fees and all other fees are set forth below:

|                    |   |               |     |   |                           
|------------------- | - | ------------- | --- | - | --------------------------
|                    |   | 12MonthsEnded |     |   | OneMonthEndedMay31,2008   
|                    |   | May 3,2009    |     |   | and                       
|                    |   | (CAD$)        |     |   | 12MonthsEndedApril 30,2008
|                    |   |               |     |   | (CAD$)                    
|AuditFees(1)        | $ | 791,298       | (5) | $ | 571,675                   
|AuditRelatedFees(2) | $ | 40,000        | (5) | $ | 35,110                    
|TaxFees(3)          | $ | 20,000        | (5) | $ | 17,616                    
|AllOtherFees(4)     |   |               |     | $ | 130,000                   
|Totals              | $ | 851,298       | (5) | $ | 754,401                   
|                    |   |               |     |   |                           





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(1)

Audit Fees" represent the aggregate fees billed for professional services rendered by our principal accountant for the audit of our annual financial statements or services that are normally provided by our accountant in connection with statutory and regulatory filings or engagements.



(2)

Audit-Related Fees" represent the aggregate fees billed for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements and are not reported under Audit Fees above.

(3)

Tax Fees" represent the aggregate fees for professional services rendered by our principal accountant for tax compliance, tax advice and tax planning.

(4)

All Other Fees" represent the aggregate fees billed for products and services provided by our principal accountant, other than the services reported under Audit Fees, Audit-Related Fees and Tax Fees above.

(5)

Fees for the 12 months ended May 31, 2009, are estimated.

The Audit Committee has adopted procedures requiring Audit Committee review and approval in advance of all particular engagements for services provided by our independent auditor.  Consistent with applicable laws, the procedures permit limited amounts of services, other than audit, review or attest services, to be approved by one or more members of the Audit Committee pursuant to authority delegated by the Audit Committee, provided the Audit Committee is informed of each particular service.  All of the engagements (i.e. 100%) and fees for the 12 months ended May 31, 2009, the one month ended May 31, 2008, and the 12 months ended April 30, 2008, were approved by the Audit Committee and all such engagements were completed by our independent auditor with no work performed by persons other than our independent auditors full-time, permanent employees.  The Audit Committee reviews with our auditor whether the non-audit services to be provided are compatible with maintaining the auditor's independence.  The Board has determined that, starting in the fiscal year ended January 31, 2005, fees paid to our independent auditors for non-audit services in any year would not exceed the fees paid for audit services during the year.  Permissible non-audit services will be limited to fees for tax services, accounting assistance or audits in connection with acquisitions, and other services specifically related to accounting or audit matters such as audits of employee benefit plans.

16.D.  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not Applicable.





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16.E.  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

No purchases were made by us or on our behalf or any affiliated purchaser, as defined in §240.10b-18(a)(3), of shares or other units of any class of our equity securities that is registered pursuant to Section 12 of the Exchange Act.

16.F.  CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT

Not Applicable.

16.G.  CORPORATE GOVERNANCE

Not Applicable.



PART III

ITEM 17.  FINANCIAL STATEMENTS

Please see the Financial Statements and Exhibits listed in Item 19 hereof and filed as part of this Amendment No. 1 .  These consolidated financial statements were prepared in accordance with Canadian GAAP and are expressed in United States dollars.  Such consolidated financial statements have been reconciled to U.S. GAAP (see Note 29 therein).













PETAQUILLA MINERALS LTD.

(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008,
  Twelve Months Ended April 30, 2008, and Three Months Ended April 30, 2007



















|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 79





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PETAQUILLA MINERALS LTD.



CONSOLIDATED FINANCIAL STATEMENTS

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007

















|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 80





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Management Report on Internal Control over Financial Reporting

The management of Petaquilla Minerals Ltd. (Petaquilla or the Company) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act.  Petaquillas internal control system was designed to provide reasonable assurance to the Companys management and board of directors regarding the preparation and fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

An internal control material weakness is a deficiency, or aggregation of deficiencies, such that the risk of material misstatements in financial statements will not be prevented or detected on a timely basis by employees in the normal course of their work. An internal control significant deficiency, or aggregation of deficiencies, is one that could result in a misstatement of the financial statements that is more than inconsequential.

During the prior year, the Company identified material weaknesses in internal controls.

These material weaknesses were as follows:

§

The Company did not have sufficient accounting resources at one of its subsidiaries in order to account for and apply internal controls to transactions originating at the subsidiary.



§

The Company’s IT configuration at one of its subsidiaries did not have the appropriate system privileges set up for each job function.



§

There was a lack of detective and preventative controls with regard to oversight of recorded transactions at one of the Company’s operating subsidiaries.



On September 1, 2008, the Company transitioned to new accounting software that resulted in appropriate system privileges being set up for each job function.  This allowed the Company to resolve the material weakness relating to the IT configuration at one of its subsidiaries.



In March 2009, the Company upgraded the skills of the accounting staff by recruiting qualified accountants to oversee the recording of transactions for all of its operating subsidiaries.  Detective controls at head office were implemented in order to mitigate the risk of transactions not being recorded appropriately.  This allowed the Company to resolve the material weakness relating to sufficiency of accounting resources to apply internal controls to transactions originating at the subsidiary and to implement detective controls with respect to the oversight of recorded transactions at one of its subsidiaries.



The Companys management assessed the effectiveness of Petaquillas internal controls over financial reporting as of May 31, 2009 and this assessment identified the following material weakness:



·

The Company’s policies and procedures relating to cash disbursements at one of the Company’s operating subsidiaries were not followed.



In making the assessment of internal control over financial reporting, the Company’s management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal ControlIntegrated Framework. Because of the material weakness described in the preceding paragraph, Petaquillas management believes that, as of May 31, 2009 (the Evaluation Date), the Companys internal control over financial reporting was not effective as of the Evaluation Date based on those criteria.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 81





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The Audit Committee has been provided information on the deficiency.  Together, the Companys Audit Committee, Board of Directors, and management continue to work to mitigate the risk of a material misstatement in the Companys financial statements.  Subsequent to year-end, Petaquilla redesigned the internal controls at the operating subsidiaries by replacing all signing authorities at these operations with senior level employees from the parent company.  The Company is currently conducting an internal investigation, under the oversight of the Audit Committee and with the assistance of independent counsel, of certain of the Companys international operations, focusing on the material weakness identified above.

Other than the foregoing, during the period covered by this report, 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.

PETAQUILLA MINERALS LTD.



|                                                     |  |                                              
|---------------------------------------------------- |  | ---------------------------------------------
|By: /s/ Richard Fifer                                |  | By: /s/ Bassam Moubarak                      
|Richard Fifer, President and Chief Executive Officer |  | Bassam Moubarak, Chief Financial Officer     
|(principal executive officer)                        |  | (principal financial and accounting  officer)





|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 82





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INDEPENDENT AUDITORS REPORT ON
  FINANCIAL STATEMENTS

To the Shareholders of Petaquilla Minerals Ltd.

We have audited the consolidated balance sheets of Petaquilla Minerals Ltd.(the Company) as at May 31, 2009 and 2008 and the consolidated statements of operations and comprehensive loss and deficit and cash flows for the year ended May 31, 2009, the one month period ended May 31, 2008, the year ended April 30, 2008, the three month period ended April 30, 2007 and the year ended January 31, 2007. 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 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. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company, as at May 31, 2009 and 2008, and the results of its operations and its cash flows for the year ended May 31, 2009, the one month period ended May 31, 2008, the year ended April 30, 2008, the three month period ended April 30, 2007 and the year ended January 31, 2007 in conformity with Canadian generally accepted accounting principles.

As discussed in note 2, during 2009 the Company changed its accounting policy for mineral properties. Also, as discussed in note 2 to the consolidated financial statements, during 2009 the Company changed its reporting currency to U.S. dollars.

As discussed in notes 28 and 29, the Company has restated the accompanying consolidated financial statements as at and for the periods ended May 31, 2008, April 30, 2008, April 30, 2007 and January 31, 2007 to correct errors in the accounting for its equity method investment and mineral properties. Also, as discussed in note 29, the Company has restated the accompanying consolidated financial statements as at and for the period ended May 31, 2008 to correct an error in the accounting for debt issue costs.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Companys internal control over financial reporting as at May 31, 2009, based on criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 1, 2009 expressed an adverse opinion thereon.



|                                                                                           |                       
|------------------------------------------------------------------------------------------ | ----------------------
|Vancouver, Canada, September 1, 2009. (except for Note 27 which is as of November 6, 2009) | [indepauditrep002.jpg]
|                                                                                           | [indepauditrep004.jpg]





|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 83





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COMMENTS BY AUDITORS FOR U.S. READERS ON
CANADA  U.S. REPORTING CONFLICT

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 consolidated financial statements. Our report to the shareholders dated September 1, 2009 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.

|                                                                                           |                       
|------------------------------------------------------------------------------------------ | ----------------------
|Vancouver, Canada,
September 1, 2009. (except for Note 27 which is as of November 6, 2009) | [indepauditrep006.jpg]



[indepauditrep008.jpg]



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 84





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INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROLS
  UNDER STANDARDS OF THE PUBLIC COMPANY ACCOUNTING
  OVERSIGHT BOARD (UNITED STATES)

To the Shareholders of Petaquilla Minerals Ltd.

We have audited Petaquilla Minerals Ltd.s(the Company) internal control over financial reporting as at May 31, 2009 based on criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Companys management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control, based on the assessed risk and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records, that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Companys assets that could have a material effect on the financial statements.

[auditrep002.jpg]







|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 85





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

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Companys annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness was identified and included in managements assessment: the Companys policies and procedures relating to cash disbursements at one of its subsidiaries were not followed.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the May 31, 2009 consolidated financial statements and this report does not affect our report dated September 1, 2009 on those consolidated financial statements.

In our opinion, because of the effect of the material weakness described above on the achievement of the objectives of the control criteria, Petaquilla Minerals Ltd.has not maintained effective internal control over financial reporting as at May 31, 2009, based on the COSO criteria.

|                                      |                  
|------------------------------------- | -----------------
|Vancouver, Canada,
September 1, 2009. | [auditrep004.jpg]



[auditrep006.jpg]



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 86





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|                                                                                          
|------------------------------------------------------------------------------------------
|PETAQUILLA MINERALS LTD.                                                                  
|CONSOLIDATED BALANCE SHEETS                                                               
|(in United States Dollars) (See Note 1 Nature of Operations and Going Concern Uncertainty)





|                                                                            |   |              |   |  |   |                  |  
|--------------------------------------------------------------------------- | - | ------------ | - |  | - | ---------------- | -
|                                                                            |   | May 31,      |   |  |   | May 31,          |  
|                                                                            |   | 2009         |   |  |   | 2008             |  
|                                                                            |   |              |   |  |   | (Notes 2 and 29) |  
|ASSETS (Notes 14 and 15)                                                    |   |              |   |  |   |                  |  
|Current                                                                     |   |              |   |  |   |                  |  
|Cash and cash equivalents (Notes 9 and 24)                                  | $ | 3,575,168    |   |  | $ | 12,850,137       |  
|Receivables                                                                 |   | 144,225      |   |  |   | 450,885          |  
|Inventory (Note 3)                                                          |   | 1,038,999    |   |  |   | -                |  
|Prepaid expenses                                                            |   | 591,847      |   |  |   | 310,255          |  
|Total current assets                                                        |   | 5,350,239    |   |  |   | 13,611,277       |  
|Restricted cash(Note 8)                                                     |   | 707,480      |   |  |   | 670,175          |  
|Investment in Petaquilla Copper Ltd.(Note 7)                                |   | -            |   |  |   | 2,408,443        |  
|Deposit on equipment and construction materials                             |   | 1,762,945    |   |  |   | -                |  
|Property and equipment(Notes 4 and 13)                                      |   | 12,879,658   |   |  |   | 16,779,149       |  
|Mineral properties(Note 5)                                                  |   | 60,843,501   |   |  |   | 37,739,133       |  
|Total assets                                                                | $ | 81,543,823   |   |  | $ | 71,208,177       |  
|                                                                            |   |              |   |  |   |                  |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                        |   |              |   |  |   |                  |  
|Current                                                                     |   |              |   |  |   |                  |  
|Bank overdraft (Note 9)                                                     | $ | -            |   |  | $ | 2,100,000        |  
|Operating credit line facility (Note 10)                                    |   | -            |   |  |   | 3,872,434        |  
|Accounts payable and accrued liabilities                                    |   | 8,746,892    |   |  |   | 8,493,460        |  
|Current portion of deferred services and materials (Note 12)                |   | 120,000      |   |  |   | 248,786          |  
|Current portion of obligations under capital leases (Note 13)               |   | 5,054,987    |   |  |   | 2,174,903        |  
|Current portion of long-term debt (Note 11)                                 |   | 160,993      |   |  |   | 436,151          |  
|Current portion of senior secured notes (Note 14)                           |   | 15,653,483   |   |  |   | -                |  
|Total current liabilities                                                   |   | 29,736,355   |   |  |   | 17,325,734       |  
|                                                                            |   |              |   |  |   |                  |  
|Deferred services and materials(Note 12)                                    |   | 3,123,394    |   |  |   | 4,003,423        |  
|Asset retirement obligation(Note 25)                                        |   | 4,664,720    |   |  |   | 4,333,216        |  
|Senior secured notes(Note 14)                                               |   | 13,754,019   |   |  |   | 26,785,359       |  
|Convertible senior secured notes(Note 15)                                   |   | 34,794,455   |   |  |   | -                |  
|Long-term debt(Note 11)                                                     |   | -            |   |  |   | 162,568          |  
|Obligations under capital leases(Note 13)                                   |   | 4,391,168    |   |  |   | 3,991,743        |  
|Total liabilities                                                           |   | 90,464,111   |   |  |   | 56,602,043       |  
|Commitments and contingencies(Notes 22 and 26)                              |   |              |   |  |   |                  |  
|Shareholders' (deficit) equity                                              |   |              |   |  |   |                  |  
|Share capital                                                               |   |              |   |  |   |                  |  
|Authorized                                                                  |   |              |   |  |   |                  |  
|Unlimited common shares and preferred shares without par value (Note 16)    |   |              |   |  |   |                  |  
|Issued and outstanding 96,040,121 (May 31, 2008  95,958,641) common shares |   | 89,208,668   |   |  |   | 89,002,273       |  
|Treasury shares, at cost 44,200 (May 31, 2008  44,200) common shares       |   | (122,193     | ) |  |   | (122,193         | )
|Warrants (Notes 16 and 18)                                                  |   | 14,109,097   |   |  |   | 11,771,374       |  
|Contributed surplus (Note 16)                                               |   | 13,897,197   |   |  |   | 14,714,276       |  
|Equity component of convertible senior secured notes (Note 15)              |   | 495,121      |   |  |   | -                |  
|Accumulated comprehensive income (Note 2)                                   |   | (6,733,242   | ) |  |   | (2,084,526       | )
|Deficit                                                                     |   | (119,774,936 | ) |  |   | (98,675,070      | )
|Total shareholders (deficit) equity                                        |   | (8,920,288   | ) |  |   | 14,606,134       |  
|Total liabilities and shareholders (deficit) equity                        | $ | 81,543,823   |   |  | $ | 71,208,177       |  



|                        |           |             |          
|----------------------- | --------- | ----------- | ---------
|On behalf of the Board: |           |             |          
|                        |           |             |          
|Richard Fifer         | -Director | John Cook | -Director



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



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 87





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PETAQUILLA MINERALS LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS AND DEFICIT

(in United States Dollars)



|                                                                                               |   |               |   |  |   |                  |   |  |   |                |   |  |   |                |   |  |   |                  |  
|---------------------------------------------------------------------------------------------- | - | ------------- | - |  | - | ---------------- | - |  | - | -------------- | - |  | - | -------------- | - |  | - | ---------------- | -
|                                                                                               |   | Twelve months |   |  |   | One month        |   |  |   | Twelve months  |   |  |   | Three months   |   |  |   | Twelve months    |  
|                                                                                               |   | ended May 31  |   |  |   | ended May 31     |   |  |   | ended April 30 |   |  |   | ended April 30 |   |  |   | ended January 31 |  
|                                                                                               |   | 2009          |   |  |   | 2008             |   |  |   | 2008           |   |  |   | 2007           |   |  |   | 2007             |  
|                                                                                               |   |               |   |  |   | (Notes 2 and 29) |   |  |   | (Note 2)       |   |  |   | (Note 2)       |   |  |   | (Notes 2 and 29) |  
|                                                                                               |   |               |   |  |   |                  |   |  |   |                |   |  |   |                |   |  |   |                  |  
|EXPENSES                                                                                       |   |               |   |  |   |                  |   |  |   |                |   |  |   |                |   |  |   |                  |  
|Accounting and legal (Note 19)                                                                 | $ | 1,944,302     |   |  | $ | 15,536           |   |  | $ | 1,306,921      |   |  | $ | 204,246        |   |  | $ | 433,266          |  
|Accretion of asset retirement obligation (Note 25)                                             |   | 331,504       |   |  |   | 52,098           |   |  |   | 305,692        |   |  |   | -              |   |  |   | -                |  
|Consulting fees (Note 19)                                                                      |   | 370,248       |   |  |   | 21,170           |   |  |   | 943,250        |   |  |   | 277,051        |   |  |   | 667,788          |  
|Amortization                                                                                   |   | 336,602       |   |  |   | 35,511           |   |  |   | 344,968        |   |  |   | 116,893        |   |  |   | 296,442          |  
|Filing fees                                                                                    |   | 115,295       |   |  |   | 280              |   |  |   | 87,005         |   |  |   | 5,473          |   |  |   | 67,027           |  
|Investor relations and shareholder information                                                 |   | 1,121,895     |   |  |   | 54,595           |   |  |   | 1,012,822      |   |  |   | 132,438        |   |  |   | 979,155          |  
|Office administration                                                                          |   | 2,152,886     |   |  |   | 177,657          |   |  |   | 2,366,940      |   |  |   | 152,031        |   |  |   | 700,350          |  
|Rent                                                                                           |   | 240,693       |   |  |   | 1,630            |   |  |   | 122,495        |   |  |   | 33,074         |   |  |   | 124,344          |  
|Exploration and development costs (Note 6)                                                     |   | 7,761,862     |   |  |   | 562,237          |   |  |   | 11,690,204     |   |  |   | 2,167,355      |   |  |   | 10,930,276       |  
|Stock-based compensation (Note 17)                                                             |   | 898,454       |   |  |   | 77,890           |   |  |   | 5,561,247      |   |  |   | 2,915,884      |   |  |   | 14,962,731       |  
|Travel                                                                                         |   | 1,014,530     |   |  |   | 121,849          |   |  |   | 857,907        |   |  |   | 230,293        |   |  |   | 1,248,787        |  
|Debt issuance costs (Notes 14 and 15)                                                          |   | 6,398,825     |   |  |   | 3,894,873        |   |  |   | -              |   |  |   | -              |   |  |   | -                |  
|Wages and benefits (Note 19)                                                                   |   | 2,916,615     |   |  |   | 177,329          |   |  |   | 1,668,455      |   |  |   | 154,811        |   |  |   | 1,591,959        |  
|Total expenses                                                                                 |   | (25,603,711   | ) |  |   | (5,192,655       | ) |  |   | (26,267,906    | ) |  |   | (6,389,549     | ) |  |   | (32,002,125      | )
|OTHER INCOME (EXPENSE)                                                                         |   |               |   |  |   |                  |   |  |   |                |   |  |   |                |   |  |   |                  |  
|Foreign exchange (loss) gain                                                                   |   | (8,157,720    | ) |  |   | 295,059          |   |  |   | 1,342,442      |   |  |   | (757,632       | ) |  |   | 23,723           |  
|Gain on sale of marketable securities                                                          |   | -             |   |  |   | -                |   |  |   | -              |   |  |   | -              |   |  |   | 18,584           |  
|Interest income                                                                                |   | 169,366       |   |  |   | 78,658           |   |  |   | 51,926         |   |  |   | 49,080         |   |  |   | 260,393          |  
|Interest on long-term debt                                                                     |   | (37,382       | ) |  |   | (15,613          | ) |  |   | (68,465        | ) |  |   | (59,845        | ) |  |   | -                |  
|Asset usage fees                                                                               |   | (4,155        | ) |  |   | (695             | ) |  |   | 126,775        |   |  |   | 90,635         |   |  |   | -                |  
|Gain on sale of equity investment (Note 7)                                                     |   | 40,604,938    |   |  |   | -                |   |  |   | 4,347,077      |   |  |   | -              |   |  |   | -                |  
|Power and drilling services                                                                    |   | 156,597       |   |  |   | 70,094           |   |  |   | 76,430         |   |  |   | -              |   |  |   | -                |  
|Loss from equity investment (Note 7)                                                           |   | (2,396,011    | ) |  |   | (779,846         | ) |  |   | (8,301,371     | ) |  |   | (2,057,724     | ) |  |   | (714,756         | )
|Gain on dilution of equity investment (Note 7)                                                 |   | 2,238,492     |   |  |   | -                |   |  |   | 12,582,085     |   |  |   | 632,396        |   |  |   | 1,701,589        |  
|Redemption loss on senior secured notes                                                        |   | (13,130,982   | ) |  |   | -                |   |  |   | -              |   |  |   | -              |   |  |   | -                |  
|Mark-to-market loss on senior secured notes and convertible senior secured notes               |   | (14,939,298   | ) |  |   | -                |   |  |   | -              |   |  |   | -              |   |  |   | -                |  
|Total other income (expenses)                                                                  |   | 4,503,845     |   |  |   | (352,343         | ) |  |   | 10,156,899     |   |  |   | (2,103,090     | ) |  |   | 1,289,533        |  
|                                                                                               |   |               |   |  |   |                  |   |  |   |                |   |  |   |                |   |  |   |                  |  
|Net loss for the period                                                                        |   | (21,099,866   | ) |  |   | (5,544,998       | ) |  |   | (16,111,007    | ) |  |   | (8,492,639     | ) |  |   | (30,712,592      | )
|Other comprehensive (loss) gain:                                                               |   |               |   |  |   |                  |   |  |   |                |   |  |   |                |   |  |   |                  |  
|Unrealized (loss) gain on translating financial statements to U.S. reporting currency (Note 2) |   | (4,648,716    | ) |  |   | 487,574          |   |  |   | 716,555        |   |  |   | 923,990        |   |  |   | (598,731         | )
|                                                                                               |   |               |   |  |   |                  |   |  |   |                |   |  |   |                |   |  |   |                  |  
|Comprehensive loss for the year                                                                | $ | (25,748,582   | ) |  | $ | (5,057,424       | ) |  | $ | (15,394,452    | ) |  | $ | (7,568,649     | ) |  | $ | (31,311,323      | )
|                                                                                               |   |               |   |  |   |                  |   |  |   |                |   |  |   |                |   |  |   |                  |  
|Basic and diluted loss per share                                                               | $ | (0.22         | ) |  | $ | (0.06            | ) |  | $ | (0.17          | ) |  | $ | (0.09          | ) |  | $ | (0.40            | )
|                                                                                               |   |               |   |  |   |                  |   |  |   |                |   |  |   |                |   |  |   |                  |  
|Weighted average number of common shares outstanding                                           |   | 96,019,488    |   |  |   | 93,131,030       |   |  |   | 93,131,030     |   |  |   | 89,615,924     |   |  |   | 77,695,782       |  





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



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 88





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PETAQUILLA MINERALS LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

(in United States dollars)



|                                                                                      |            |   |               |   |   |             |   |   |            |   |   |                 |   |   |                   |  
|------------------------------------------------------------------------------------- | ---------- | - | ------------- | - | - | ----------- | - | - | ---------- | - | - | --------------- | - | - | ----------------- | -
|                                                                                      |            |   |               |   |   |             |   |   |            |   |   | Accumulated     |   |   |                   |  
|                                                                                      | Number     |   | Amount of     |   |   | Contributed |   |   |            |   |   | Other           |   |   | Retained Earnings |  
|                                                                                      | of Common  |   | Common Shares |   |   | Surplus     |   |   | Warrants   |   |   | Comprehensive   |   |   | (Accumulated      |  
|                                                                                      | Shares     |   | (Note 2)      |   |   | (Note 2)    |   |   | (Note 2)   |   |   | Income (Note 2) |   |   | Deficit) (Note 2) |  
|Balance as at January 31, 2006                                                        | 70,246,303 | $ | 48,567,732    |   | $ | 762,248     |   | $ | 1,018,052  |   | $ | (3,613,914      | ) | $ | (37,813,834       | )
|Non-brokered private placement, net of finders fees                                  | 9,400,000  |   | 10,296,327    |   |   | -           |   |   | 8,687,152  |   |   | -               |   |   | -                 |  
|Exercise of stock options                                                             | 4,737,893  |   | 9,904,961     |   |   | (7,618,555  | ) |   | -          |   |   | -               |   |   | -                 |  
|Exercise of warrants                                                                  | 4,982,835  |   | 6,368,665     |   |   | -           |   |   | (1,018,052 | ) |   | -               |   |   | -                 |  
|Stock-based compensation                                                              | -          |   | -             |   |   | 15,066,563  |   |   | -          |   |   | -               |   |   | -                 |  
|Share issuance costs                                                                  | -          |   | (1,247,623    | ) |   | -           |   |   | 721,018    |   |   | -               |   |   | -                 |  
|Net loss                                                                              | -          |   | -             |   |   | -           |   |   | -          |   |   | -               |   |   | (30,712,592       | )
|Exchange difference from translation of financial statements to US reporting currency | -          |   | -             |   |   | -           |   |   | -          |   |   | (598,731        | ) |   | -                 |  
|Balance as at January 31, 2007                                                        | 89,367,031 | $ | 73,890,062    |   | $ | 8,210,256   |   | $ | 9,408,170  |   | $ | (4,212,645      | ) | $ | (68,526,426       | )
|Exercise of stock options                                                             | 509,920    |   | 904,299       |   |   | (658,177    | ) |   | -          |   |   | -               |   |   | -                 |  
|Stock-based compensation                                                              | -          |   | -             |   |   | 2,915,884   |   |   | -          |   |   | -               |   |   | -                 |  
|Net loss                                                                              | -          |   | -             |   |   | -           |   |   | -          |   |   | -               |   |   | (8,492,639        | )
|Exchange difference from translation of financial statements to US reporting currency | -          |   | -             |   |   | -           |   |   | -          |   |   | 923,990         |   |   | -                 |  
|                                                                                      |            |   |               |   |   |             |   |   |            |   |   |                 |   |   |                   |  
|Balance as at April 30, 2007                                                          | 89,876,951 | $ | 74,794,361    |   | $ | 10,467,963  |   | $ | 9,408,170  |   | $ | (3,288,655      | ) | $ | (77,019,065       | )
|Non-brokered private placement, net of finders fees                                  | 4,552,412  |   | 10,953,460    |   |   | -           |   |   | 1,335,817  |   |   | -               |   |   | -                 |  
|Exercise of stock options                                                             | 1,055,883  |   | 3,047,984     |   |   | (1,986,003  | ) |   | -          |   |   | -               |   |   | -                 |  
|Exercise of warrants                                                                  | 373,395    |   | 1,142,295     |   |   | -           |   |   | (517,130   | ) |   | -               |   |   | -                 |  
|Share issue relating to legal settlement                                              | 100,000    |   | 264,438       |   |   | -           |   |   | -          |   |   | -               |   |   | -                 |  
|Stock-based compensation                                                              | -          |   | -             |   |   | 6,154,426   |   |   | -          |   |   | -               |   |   | -                 |  
|Share issuance costs                                                                  | -          |   | (561,911      | ) |   | -           |   |   | 86,439     |   |   | -               |   |   | -                 |  
|Net loss                                                                              | -          |   | -             |   |   | -           |   |   | -          |   |   | -               |   |   | (16,111,007       | )
|Exchange difference from translation of financial statements to US reporting currency | -          |   | -             |   |   | -           |   |   | -          |   |   | 716,555         |   |   | -                 |  
|                                                                                      |            |   |               |   |   |             |   |   |            |   |   |                 |   |   |                   |  
|Balance as at April 30, 2008                                                          | 95,958,641 | $ | 89,640,627    |   | $ | 14,636,386  |   | $ | 10,313,296 |   | $ | (2,572,100      | ) | $ | (93,130,072       | )
|Stock-based compensation                                                              | -          |   | -             |   |   | 77,890      |   |   | -          |   |   | -               |   |   | -                 |  
|Senior secured notes warrants                                                         | -          |   | -             |   |   | -           |   |   | 819,724    |   |   | -               |   |   | -                 |  
|Share issuance costs                                                                  | -          |   | (638,354      | ) |   | -           |   |   | 638,354    |   |   | -               |   |   | -                 |  
|Net loss                                                                              | -          |   | -             |   |   | -           |   |   | -          |   |   | -               |   |   | (5,544,998        | )
|Exchange difference from translation of financial statements to US reporting currency | -          |   | -             |   |   | -           |   |   | -          |   |   | 487,574         |   |   | -                 |  
|                                                                                      |            |   |               |   |   |             |   |   |            |   |   |                 |   |   |                   |  
|Balance as at May 31, 2008                                                            | 95,958,641 | $ | 89,002,273    |   | $ | 14,714,276  |   | $ | 11,771,374 |   | $ | (2,084,526      | ) | $ | (98,675,070       | )
|Exercise of stock options                                                             | 81,480     |   | 206,395       |   |   | (168,732    | ) |   | -          |   |   | -               |   |   | -                 |  
|Stock-based compensation                                                              | -          |   | -             |   |   | 869,890     |   |   | -          |   |   | -               |   |   | -                 |  
|Senior secured notes finders warrants                                                 | -          |   | -             |   |   | -           |   |   | 215,230    |   |   | -               |   |   | -                 |  
|Senior secured notes warrants                                                         | -          |   | -             |   |   | -           |   |   | 706,802    |   |   | -               |   |   | -                 |  
|Expiration of warrants                                                                | -          |   | -             |   |   | 263,263     |   |   | (263,263   | ) |   | -               |   |   | -                 |  
|Warrant issue costs                                                                   |            |   |               |   |   |             |   |   | (102,546   | ) |   | -               |   |   | -                 |  
|Repricing of senior secured notes warrants                                            | -          |   | -             |   |   | (1,781,500  | ) |   | 1,781,500  |   |   | -               |   |   | -                 |  
|Net loss                                                                              | -          |   | -             |   |   | -           |   |   | -          |   |   | -               |   |   | (21,099,866       | )
|Exchange difference from translation of financial statements to US reporting currency | -          |   | -             |   |   | -           |   |   | -          |   |   | (4,648,716      | ) |   | -                 |  
|Balance as at May 31, 2009                                                            | 96,040,121 | $ | 89,208,668    |   | $ | 13,897,197  |   | $ | 14,109,097 |   | $ | (6,733,242      | ) | $ | (119,774,936      | )



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



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 89





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|                                     
|-------------------------------------
|PETAQUILLA MINERALS LTD.             
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(in United States Dollars)           

|                                                                                 |   |               |   |   |              |   |   |                |   |   |                |   |   |                  |  
|-------------------------------------------------------------------------------- | - | ------------- | - | - | ------------ | - | - | -------------- | - | - | -------------- | - | - | ---------------- | -
|                                                                                 |   | Twelve months |   |   | One          |   |   | Twelve         |   |   | Three          |   |   | Twelve           |  
|                                                                                 |   | ended May     |   |   | month ended  |   |   | months ended   |   |   | months ended   |   |   | months ended     |  
|                                                                                 |   | 31,2009       |   |   | May 31, 2008 |   |   | April 30, 2008 |   |   | April 30, 2007 |   |   | January 31, 2007 |  
|                                                                                 |   |               |   |   | (Note 2)     |   |   | (Note 2)       |   |   | (Note 2)       |   |   | (Notes 2 and 29) |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                             |   |               |   |   |              |   |   |                |   |   |                |   |   |                  |  
|Loss for the period                                                              | $ | (21,099,866   | ) | $ | (5,544,998   | ) | $ | (16,111,007    | ) | $ | (8,492,639     | ) | $ | (30,712,592      | )
|Items not affecting cash:                                                        |   |               |   |   |              |   |   |                |   |   |                |   |   |                  |  
|Accretion of asset retirement obligation                                         |   | 331,504       |   |   | 52,098       |   |   | 305,692        |   |   | -              |   |   | -                |  
|Amortization                                                                     |   | 336,602       |   |   | 35,511       |   |   | 344,968        |   |   | 116,893        |   |   | 296,442          |  
|Gain on dilution of equity investment                                            |   | (2,238,492    | ) |   | -            |   |   | (12,582,085    | ) |   | (632,396       | ) |   | (1,701,589       | )
|Gain on sale of equity investment                                                |   | (40,604,938   | ) |   | -            |   |   | (4,347,077     | ) |   | -              |   |   | -                |  
|Loss from equity investment                                                      |   | 2,396,011     |   |   | 779,846      |   |   | 8,301,371      |   |   | 2,057,724      |   |   | 714,756          |  
|Stock-based compensation                                                         |   | 898,454       |   |   | 77,890       |   |   | 5,561,247      |   |   | 2,915,884      |   |   | 14,962,731       |  
|Stock-based compensation included in exploration and development expenses        |   | (28,564       | ) |   | 12,113       |   |   | 581,068        |   |   | -              |   |   | 103,832          |  
|Amortization included in exploration and development expenses                    |   | 4,033,720     |   |   | 368,809      |   |   | 2,901,942      |   |   | 104,346        |   |   | 422,985          |  
|Debt issuance costs                                                              |   | 6,398,825     |   |   | 3,894,872    |   |   | -              |   |   | -              |   |   | -                |  
|Redemption loss on senior secured notes                                          |   | 13,130,982    |   |   | -            |   |   | -              |   |   | -              |   |   | -                |  
|Mark-to-market loss on senior secured notes and convertible senior secured notes |   | 14,939,298    |   |   | -            |   |   | -              |   |   | -              |   |   | -                |  
|Gain on sale of marketable securities                                            |   | -             |   |   | -            |   |   | -              |   |   | -              |   |   | (18,584          | )
|Unrealized foreign exchange (gain) loss                                          |   | 8,648,330     |   |   | -            |   |   | -              |   |   | -              |   |   | -                |  
|Unrealized loss on restricted cash                                               |   | 2,695         |   |   | -            |   |   | 90,696         |   |   | 48,822         |   |   | (24,240          | )
|Unrealized foreign exchange loss on asset retirement obligation                  |   | -             |   |   | (81,014      | ) |   | (366,857       | ) |   | -              |   |   | -                |  
|Unrealized foreign exchange loss on capital leases and lease credit facility     |   | -             |   |   | (155,700     | ) |   | 98,636         |   |   | -              |   |   | -                |  
|Unrealized foreign exchange loss on senior secured notes                         |   | -             |   |   | (155,332     | ) |   | 3,080          |   |   | -              |   |   | -                |  
|Unrealized foreign exchange loss on long-term debt                               |   | -             |   |   | (5,707       | ) |   | (60,303        | ) |   | 67,137         |   |   | (37,149          | )
|Changes in non-cash working capital items:                                       |   |               |   |   |              |   |   |                |   |   |                |   |   |                  |  
|Decrease (increase) in receivables                                               |   | 306,660       |   |   | (187,614     | ) |   | (153,297       | ) |   | 6,827          |   |   | (67,022          | )
|(Increase) decrease in prepaid expenses                                          |   | (281,592      | ) |   | 343,861      |   |   | (202,481       | ) |   | 204,092        |   |   | (574,406         | )
|(Increase) in inventory                                                          |   | (1,038,999    | ) |   | -            |   |   | -              |   |   | -              |   |   | -                |  
|Deferred services and materials                                                  |   | (156,597      | ) |   | (70,094      | ) |   | (76,430        | ) |   | -              |   |   | -                |  
|(Decrease) increase in accounts payable and accrued liabilities                  |   | (1,984,118    | ) |   | (9,498,857   | ) |   | 9,042,977      |   |   | (77,780        | ) |   | 2,127,961        |  
|Net cash used in operating activities                                            |   | (16,010,085   | ) |   | (10,134,316  | ) |   | (6,667,860     | ) |   | (3,681,090     | ) |   | (14,506,875      | )
|CASH FLOWS FROM FINANCING ACTIVITIES                                             |   |               |   |   |              |   |   |                |   |   |                |   |   |                  |  
|Net proceeds from exercise of warrants and options                               |   | 37,662        |   |   | -            |   |   | 1,625,520      |   |   | 172,358        |   |   | 7,641,542        |  
|Proceeds from shares subscribed                                                  |   | -             |   |   | -            |   |   | 12,142,274     |   |   | 129,500        |   |   | 19,782,532       |  
|Share issuance costs                                                             |   | -             |   |   | -            |   |   | (458,397       | ) |   | -              |   |   | (1,359,473       | )
|Advances from (to) Petaquilla Copper Ltd.                                        |   | -             |   |   | -            |   |   | 17,682,808     |   |   | (2,105,813     | ) |   | (1,887,290       | )
|(Repayment of) proceeds from bank overdraft                                      |   | (2,100,000    | ) |   | (32,125      | ) |   | 896,935        |   |   | 1,040,648      |   |   | -                |  
|Proceeds of long term debt                                                       |   | -             |   |   | -            |   |   | -              |   |   | -              |   |   | 1,277,230        |  
|Proceeds from senior secured notes                                               |   | 40,587,300    |   |   | 27,412,500   |   |   | -              |   |   | -              |   |   | -                |  
|Repayment of senior secured notes                                                |   | (64,238,852   | ) |   | -            |   |   | -              |   |   | -              |   |   | -                |  



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 90





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|                                                              |   |             |   |   |            |   |   |             |   |   |            |   |   |             |  
|------------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ----------- | - | - | ---------- | - | - | ----------- | -
|Proceeds from convertible senior secured                      |   | 34,000,000  |   |   | -          |   |   | -           |   |   | -          |   |   | -           |  
|Payment of capital lease obligations                          |   | (2,824,140  | ) |   | (60,390    | ) |   | (700,022    | ) |   | -          |   |   | -           |  
|Debt issuance costs                                           |   | (6,286,138  | ) |   | (3,894,872 | ) |   | -           |   |   | -          |   |   | -           |  
|Repayment of long-term debt                                   |   | (436,230    | ) |   | (45,005    | ) |   | (534,993    | ) |   | (92,202    | ) |   | (105,331    | )
|Net cash provided by financing activities                     |   | (1,260,198  | ) |   | 23,380,108 |   |   | 30,654,125  |   |   | (855,509   | ) |   | 25,349,210  |  
|                                                              |   |             |   |   |            |   |   |             |   |   |            |   |   |             |  
|CASH FLOWS FROM INVESTING ACTIVITIES                          |   |             |   |   |            |   |   |             |   |   |            |   |   |             |  
|Acquisition of property and equipment                         |   | (1,631,883  | ) |   | -          |   |   | (6,579,011  | ) |   | (109,962   | ) |   | (5,064,168  | )
|Deposit on equipment                                          |   | (1,762,945  | ) |   | -          |   |   | -           |   |   | -          |   |   | -           |  
|Investment in mineral properties                              |   | (31,679,647 | ) |   | (1,289,902 | ) |   | (13,909,888 | ) |   | -          |   |   | (6,130,457  | )
|Redemption (purchase) of performance bond and restricted cash |   | -           |   |   | -          |   |   | 511,315     |   |   | 334,456    |   |   | (780,000    | )
|Proceeds from sale of marketable securities                   |   | -           |   |   | -          |   |   | -           |   |   | -          |   |   | 18,656      |  
|Proceeds (purchase) from sale of equity investment            |   | 43,238,852  |   |   | -          |   |   | -           |   |   | -          |   |   | (439,986    | )
|Net cash used in investing activities                         |   | 8,164,377   |   |   | (1,289,902 | ) |   | (19,977,584 | ) |   | 224,494    |   |   | (12,395,955 | )
|Impact of exchange rate changes on cash and cash equivalents  |   | (169,063    | ) |   | (872,009   | ) |   | (3,849,118  | ) |   | 31,097     |   |   | (610,758    | )
|Change in cash and cash equivalents                           |   | (9,274,969  | ) |   | 11,083,881 |   |   | 159,563     |   |   | (4,281,008 | ) |   | (2,164,378  | )
|Cash and cash equivalents, beginning of period                |   | 12,850,137  |   |   | 1,766,256  |   |   | 1,606,693   |   |   | 5,887,701  |   |   | 8,052,079   |  
|Cash and cash equivalents, end of period                      | $ | 3,575,168   |   | $ | 12,850,137 |   | $ | 1,766,256   |   | $ | 1,606,693  |   | $ | 5,887,701   |  
|Supplemental disclosure with respect to cash flows(Note 24)   |   |             |   |   |            |   |   |             |   |   |            |   |   |             |  





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



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 91





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





1.

NATURE OF OPERATIONS AND GOING CONCERN UNCERTAINTY



Petaquilla Minerals Ltd. (the Company) was incorporated in the Province of British Columbia.



The Company is engaged in mine development and mineral exploration activities of gold-bearing mineral properties in Panama.  The Company operates under the rules and regulations of Ley Petaquilla No. 9 and accordingly requires approval from the Ministry of Industry and Commerce in Panama before commercial production may commence.   The Companys main focus has been the development of the Molejon Gold Project which is expected to be in commercial production in fiscal 2010.   Exploration activities have centered on the Companys 659 square kilometre concessions surrounding the Petaquilla concession located in the Province of Colon, Panama.



These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles 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 for the foreseeable future. The Company has not generated any operating revenues to date, has experienced recurring operating losses and has accumulated an operating deficit of $119,774,936 as at May 31, 2009 (May 31, 2008 - $98,675,070) and a shareholders deficit of $8,920,288 at May 31, 2009 (May 31, 2008  shareholders equity of $14,606,134).  Also the Company had a working capital deficiency of $24,386,116 at May 31, 2009 (May 31, 2008 - $3,714,457). Working capital is defined as current assets less current liabilities and provides a measure of the Companys ability to settle liabilities that are due within one year with assets that are also expected to be converted to cash within one year.



The Company has a scheduled senior secured notes repayment of $6,000,000 on September 15, 2009. Managements plan in this regard is to raise equity, debt financing and cash from forward gold sales as required. There are no assurances that the Company will be successful in achieving these goals.



These factors raise substantial doubt about the Companys ability to continue as a going concern. The Companys continued operations, as intended, are dependent upon its ability to raise additional funding to meet its obligations and to attain profitable operations. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.



The operating cash flow and profitability of the Company are also affected by various factors, including the amount of gold produced and sold, the market price of gold, operating costs, interest rates, environmental costs, the level of exploration activity, labour risk, environmentalist risk and political risk.  The Company seeks to manage the risks associated with its business; however, many of the factors affecting these risks are beyond the Companys control.



Change in fiscal year ends

In 2007, the Company changed its fiscal year end from January 31 to April 30.  This change resulted from the fact that the Company wanted to change its audit firm to an international company due to the increased complexity of its organization. Because the operations of Petaquilla Copper Ltd. were intertwined with that of the Company, due to the fact that their properties were contiguous with those of the Company, the sharing of resources and the fact that development costs would likely be shared in the future, it was decided that the two companies should have the same audit firm.  It was not possible to obtain acceptance of the audit engagement for both companies by an international firm in time to meet the filing deadline for the January 31 year end and, therefore, the fiscal year end was changed to April 30.

In 2008, the Company changed its fiscal year end from April 30 to May 31.  This change occurred because the Company was in the midst of obtaining financing to complete mine construction and did not want to show a cash shortfall in its April 30 financial balance sheet for fear of jeopardizing the mine development agreement with the Government of Panama.  Financing was obtained May 22, 2008, and the decision was therefore made to change the fiscal year end to May 31.

2.

SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements and accompanying notes have been prepared in conformity with Canadian Generally Accepted Accounting Principles (GAAP). For a description of the differences between Canadian GAAP and United States GAAP for the Company, see note 29.

These consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries Adrian Resources (BVI) Ltd. (a British Virgin Island corporation), Petaquilla Minerals, S.A. (a Panama corporation), Instituto Petaquilla, S.A. (a Panama corporation), Petaquilla Gold, S.A. (a Panama corporation), Brigadas Verdes, S.A. (a Panama corporation), Aqua Azure, S.A. (a Panama corporation), Petaquilla Infrastructure Ltd. (a Canadian corporation), Petaquilla Infraestructura Ltd. (a British Virgin Island corporation), Petaquilla Hidro, S.A. (a Panama corporation), Panama Central Electrica, S.A. (a Panama corporation) and a 51% interest in Petaquilla Infraestructura, S.A. (a Panama corporation).  The Company proportionately consolidates its 69% interest in a joint venture investment, Compania Minera Belencillo, S.A. (Belencillo) (a Panama corporation).



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 92





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





2.

SIGNIFICANT ACCOUNTING POLICIES(continued)

All inter-company transactions and balances have been eliminated upon consolidation.



Use of estimates

The preparation of consolidated financial statements in accordance with Canadian GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amount of revenues and expenses reported during the period. Actual results could differ from these estimates.



Significant estimates used in the preparation of the consolidated financial statements include, but are not limited to, recoverability of accounts receivable and  investments, estimates of the useful life of properties and equipment, the future cost of asset retirement obligations, the amount and likelihood of contingencies, the discount rate used for valuation of senior secured and convertible senior secured notes, the valuation allowance for future income tax assets and the accounting for stock-based compensation and warrants.

Cash and cash equivalents



Cash and cash equivalents are classified as held for trading and include short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. The Company places its deposits with financial institutions with high credit standings. The Company regularly maintains cash balances in financial institutions in excess of insured limits.



Inventory



Materials and supplies inventory are valued at the lower of cost and net realizable value. Net realizable value is determined based on current replacement cost.



Property and equipment



Equipment is recorded at cost less accumulated amortization, which is provided on the declining balance basis at rates as follows:

| |                               |    
| | ----------------------------- | ---
| | Furniture and fixtures        | 20%
| | Office equipment              | 20%
| | Computer equipment            | 30%
| | Equipment under capital lease | 30%
| | Equipment                     | 30%
| | Vehicles                      | 30%
| | Computer software             | 50%
| | Buildings                     | 4% 





|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 93





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





2.

SIGNIFICANT ACCOUNTING POLICIES(continued)

Mineral properties

Exploration and development costs are expensed until such time as reserves are proven and financing to complete development has been obtained. Acquisition costs of mineral properties and tangible development costs incurred thereon, are deferred until the property to which they relate is placed into production, sold or abandoned. The carrying values of mineral properties are, where necessary, written down to fair value if carrying value is not recoverable. Costs relating to properties abandoned are written off when the decision to abandon is made.  Capitalized costs are depleted using a unit-of-sale method over the estimated economic life of the mine to which they relate.

The Company follows the cost reduction method of accounting for the receipt of property option and similar payments. Cash and other property payments received from the Companys exploration partners are credited to the respective property until all capitalized costs are recovered; thereafter, such payments are included in income. Option payments are exercisable at the discretion of the optionee and are only recognized when received.

Restricted cash



The Company has elected to classify restricted cash as held for trading.



Receivables



Receivables are classified as loans and receivables and are measured at amortized costs. Receivables consist of refundable government value added taxes and travel advances.



Asset retirement obligation



An asset retirement obligation is a legal obligation associated with the retirement of tangible long-lived assets that the Company is required to settle. The Company recognizes the fair value of a liability for an asset retirement obligation in the period in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased by the same amount as the liability. Subsequently, these capitalized asset retirement costs will be amortized to expense over the life of the related assets using the unit-of-sale method. At the end of each period, the liability is increased to reflect the passage of time (accretion expense) and adjusted for changes in the estimated future cash flows underlying any initial fair value measurements (an increase or decrease in asset retirement costs).

Impairment of long-lived assets

A long-lived asset which includes property and related costs and equipment is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds its fair value. For purposes of recognition and measurement of an impairment loss, a long-lived asset is grouped with other assets and liabilities to form an asset group, at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Estimates of future cash flows used to test recoverability of a long-lived asset include only the future cash flows that are directly associated with, and that are expected to arise as a direct result of, its use and eventual disposition.

Foreign currency translation



Prior to March 1, 2009, the Canadian dollar was determined to be the measurement currency of the Companys operations and these operations have been translated into United States dollars up until this date using the current rate method as follows:  all assets and liabilities are translated into United States dollars at



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 94





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





2.

SIGNIFICANT ACCOUNTING POLICIES(continued)



the exchange rate prevailing at the balance sheet date; all revenue and expense items are translated at the average rate of exchange for the period; and the resulting translation adjustment is recorded as accumulated other comprehensive income (AOCI), a separate component of shareholders equity.  Subsequent to the change in measurement currency described below, the AOCI balance will remain the same until the entities which gave rise to the AOCI balance are disposed of.  In addition, unrealized gains and losses due to movements in exchange rates on balances held in foreign currencies are shown separately on the Consolidated Statement of Cash Flows.



Due to several financings in U.S. dollars, the most recent in March 2009, as well as the commencement of startup operations in Panama and expected revenue generation in U.S. dollars, it has been determined that as of March 1, 2009, the United States dollar is the reporting and measurement currency of the Companys operations and therefore these operations have been translated using the temporal method from that date onward.  Under this method, foreign currency monetary assets and liabilities are translated into United States dollars at the exchange rates prevailing at the balance sheet date; non-monetary assets denominated in foreign currencies are translated using the rate of exchange at the transaction date; and foreign exchange gains and losses are included in the determination of earnings.



Revenue Recognition

Revenue from the sale of metals is recognized in the accounts when persuasive evidence of an arrangement exists, title and risk passes to the buyer, collection is reasonably assured and the price is reasonably determinable.  During the pre-operating period, revenues and related expenses are recognized as a reduction / increase to mineral properties.



Debt issuance costs



Debt issuance costs, which include legal fees, trustee fees, due diligence fees, finders fees, and finders warrants, are expensed in the year that they are incurred.



Interest expense



Interest expense on financing related to project development, construction and mill equipment is capitalized to mineral properties to be amortized over the recoverable reserves on a unit-of-sale basis.  Interest on operating long-term debt is expensed to operations as it is incurred since it relates to the acquisition of equipment used for general corporate purposes rather than for production.



Loss per share

The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on loss per share is recognized as a result of the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the period. For all periods presented, all outstanding options and warrants were anti-dilutive since the proceeds to be received would be below the market value of the Companys shares.

Stock-based compensation

The Company accounts for all stock-based payments and awards using the fair value-based method.

Under the fair value-based method, stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable. The fair value of stock-based payments to non-employees is periodically remeasured until counterparty performance is complete, and any change therein is recognized



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 95





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





2.

SIGNIFICANT ACCOUNTING POLICIES(continued)

over the vesting period of the award and in the same manner as if the Company had paid cash instead of paying with or using equity instruments. The cost of stock-based payments to non-employees that are fully vested and non-forfeitable at the grant date is measured and recognized at that date. Compensation cost attributable to awards to employees is measured at fair value at the grant date and recognized over the vesting period.

Income taxes

Future income taxes are recorded using the liability method under which future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income or loss in the period that substantive enactment or enactment occurs. To the extent that the Company does not consider it more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess.



Adoption of new accounting policies



On June 1, 2008, the Company adopted new accounting standards related to general standards of financial statement presentation, capital disclosure and financial instruments that were issued by the Canadian Institute of Chartered Accountants (CICA). The new CICA standards are as follows:



Section 1400, General Standards of Financial Statement Presentation



This Section specifies the requirements for assessing an entitys ability to continue as a going concern and disclosing any material uncertainties that cast doubt on its ability to continue as a going concern. The Companys disclosure reflects such assessment.



Section 1535, Capital Disclosures



This Section specifies the disclosure of information that enables users of an entitys financial statements to evaluate its objectives, policies and processes for managing capital such as qualitative information about these objectives, policies and processes for managing capital, summary quantitative data about what the entity manages as capital, whether it has complied with any capital requirements and, if it has not complied, the consequences of non-compliance. Disclosure requirements pertaining to this Section are contained in Note 23.



Section 3862, Financial Instruments  Disclosures

Section 3863, Financial Instruments  Presentation



These Sections replace Section 3861, Financial Instruments  Disclosure and Presentation, revising and enhancing disclosure requirements while carrying forward its presentation requirements. These new sections place increased emphasis on disclosure about the nature and extent of risk arising from financial instruments and how the entity manages those risks. Disclosure requirements pertaining to this section are contained in Note 23.



In January 2009, the CICA issued Emerging Issues Committee (EIC) Abstract 173 - Credit Risk and the Fair Value of Financial Assets and Financial Liabilities (EIC-173). EIC-173 provides guidance on how to take into account credit risk of an entity and counterparty when determining the fair value of financial assets and financial liabilities, including derivative instruments. EIC-173 is applicable for the Companys annual consolidated financial statements for its fiscal year ending May 31, 2009, with retroactive application. The adoption of EIC-173 did not result in a material impact on the Companys consolidated financial statements.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 96





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





2.

SIGNIFICANT ACCOUNTING POLICIES(continued)



In March 2009, the CICA issued EIC Abstract 174 - Mining Exploration Costs (EIC-174) which supercedes EIC Abstract 126 -Accounting by Mining Enterprises for Exploration Costs (EIC-126), to provide additional guidance for mining exploration enterprises on the accounting for capitalization of exploration costs and when an impairment test of these costs is required. EIC 174 is applicable for the Companys annual consolidated financial statements for its fiscal year ending May 31, 2009, with retroactive application. The adoption of EIC  174 did not result in a material impact on the Companys consolidated financial statements.



Accounting Policies to be Implemented Effective June 1, 2009



In February 2008, the CICA issued a new Handbook Section 3064 - Goodwill and Intangible Assets(Section 3064), which replaces CICA Handbook Sections 3062 - Goodwill and Other Intangible Assets(Section 3062) and 3450 - Research and Development Costs. Various changes have been made to other sections of the CICA Handbook for consistency purposes. Section 3064 establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets. Standards concerning goodwill are unchanged from the standards included in Section 3062.  The new Section is applicable to the Companys financial statements for its fiscal year beginning June 1, 2009. The adoption of this section in fiscal 2010 will not have a material impact on the Companys consolidated financial statements.



Accounting Policies to be Implemented Effective June 1, 2011



In January 2009, the CICA issued Handbook Sections 1582  Business Combinations (Section 1582), 1601  Consolidated Financial Statements (Section 1601) and 1602  Non-controlling Interests (Section 1602) which replaces CICA Handbook Sections 1581  Business Combinations and 1600  Consolidated Financial Statements. Section 1582 establishes standards for the accounting for business combinations that is equivalent to the business combination accounting standard under International Financial Reporting Standards (IFRS). Section 1582 is applicable for the Companys business combinations with acquisition dates on or after January 1, 2011.  Early adoption of this Section is permitted.  Section 1601, together with Section 1602, establishes standards for the preparation of consolidated financial statements.  Section 1601 is applicable for the Companys interim and annual consolidated financial statements for its fiscal year beginning June 1, 2011.  Early adoption of this Section is permitted.  If the Company chooses to early adopt any one of these Sections, the other two sections must also be adopted at the same time.



Convergence with International Financial Reporting Standards (IFRS)



In February 2008, Canadas Accounting Standards Board ratified a strategic plan that will result in Canadian GAAP, as used by public companies, being evolved and converged with International Financial Reporting Standards (IFRS) over a transitional period to be complete by 2011. The Company will be required to report using the converged standards effective for interim and annual financial statements relating to fiscal years beginning on or after June 1, 2011.



Canadian GAAP will be converged with IFRS through a combination of two methods: as current joint-convergence projects of the United States Financial Accounting Standards Board and the International Accounting Standards Board are agreed upon, they will be adopted by Canadas Accounting Standards Board and may be introduced in Canada before the complete changeover to IFRS; and standards not subject to a joint-convergence project will be exposed in an omnibus manner for introduction at the time of the complete changeover to IFRS. Also the United States Financial Accounting Standards Board and the International Accounting Standards Board have completed a joint-project on business combinations and non-controlling interests.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 97





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





2.

SIGNIFICANT ACCOUNTING POLICIES(continued)



The conversion to IFRS will impact the Companys accounting policies, information technology and data systems, internal control over financial reporting and disclosure controls and procedures.  The transition may also impact business activities such as certain contractual arrangements, capital requirements and compensation arrangements.



Changes in Accounting Policies



(a)

Change in Reporting Currency



Effective March 1, 2009, the Company changed its reporting currency to the U.S. Dollar (USD). The change in reporting currency increases transparency of the financial results of the Company and provides better visibility for the stakeholders.



Prior to March 1, 2009, the Company reported its annual and quarterly consolidated balance sheets and the related consolidated statements of operations, deficit, comprehensive income, accumulated other comprehensive income and cash flows in Canadian dollars (CAD). In making the change in reporting currency, the Company followed the recommendations of the Emerging Issues Committee (EIC) of the Canadian Institute of Chartered Accountants (CICA), set out in EIC-130  Translation Method when the Reporting Currency Differs from the Measurement Currency or there is a Change in the Reporting Currency.



In accordance with EIC-130, the financial statements for all the years and periods presented have been translated to the new reporting currency (USD) using the current rate method. Under this method, the statements of operations, deficit and comprehensive (loss) income and cash flows statement items for each year and period have been translated into the reporting currency using the average exchange rates prevailing during each reporting period. All assets and liabilities have been translated using the exchange rate prevailing at the consolidated balance sheets dates. Shareholders equity transactions have been translated using the rates of exchange in effect as at the date of the various capital transactions.



All resulting exchange differences arising from the translation are included as a separate component of other comprehensive income. All comparative financial information has been restated to reflect the Companys results as if they had been historically reported in US dollars.



(b)

Mineral Properties



During the current fiscal year, as a result of the initiation of a new exploration program, the Company commenced its review of the impact of International Financial Reporting Standards (IFRS) on its accounting policies including an examination of the Companys current accounting policies.  Due to this review, the Company determined that it was appropriate to change its accounting policy for mineral properties whereby exploration and development costs are to be expensed until such time as reserves are proven and financing to complete development has been obtained. Previously, the Company capitalized its exploration and development expenditures as incurred, which is permitted under Canadian generally accepting accounting principles (Canadian GAAP). Under the new accounting policy, the Company capitalizes only costs relating to plant, plant equipment, camp, asset retirement obligation, and interest expense as mineral properties. This change in accounting policy has also been applied to the calculation of dilution gains and equity losses from the Company's equity investment in Petaquilla Copper Ltd.



Management believes that this revised accounting policy will provide a more relevant and reliable basis of accounting. Among other benefits, the revised accounting policy aligns the accounting treatment of mineral property expenditures with standards used by producing mining companies in the resource sector and with global accounting standards. The change in accounting policy has been applied retrospectively, and the comparative statements for May 31, 2008, April 30, 2008, April 30, 2007 and January 31, 2007 have been restated.



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 98





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





2.

SIGNIFICANT ACCOUNTING POLICIES(continued)



The effect of the adjustment on the financial statements is summarized in the tables below.



| |                                            |   |                     |   |             |   |   |                   |   |   |                |  
| | ------------------------------------------ | - | ------------------- | - | ----------- | - | - | ----------------- | - | - | -------------- | -
| | Consolidated balance Sheet                 |   | May 31, 2008 as     |   | Restatement |   |   | Change in         |   |   |                |  
| |                                            |   | previously          |   | Adjustment  |   |   | Accounting Policy |   |   | May 31, 2008   |  
| |                                            |   | reported            |   | (Note 28)   |   |   | Adjustment        |   |   | restated       |  
| | Mineral properties                         | $ | 67,541,355          |   | -           |   | $ | (29,802,222       | ) | $ | 37,739,133     |  
| | Investment in Petaquilla Copper Ltd.       |   | 9,507,564           |   | (1,207,000  | ) |   | (5,892,121        | ) |   | 2,408,443      |  
| |                                            |   |                     |   |             |   |   |                   |   |   |                |  
| | Consolidated Statement of                  |   | May 31, 2008 as     |   | Restatement |   |   | Change in         |   |   |                |  
| | Operations and Comprehensive               |   | previously          |   | Adjustment  |   |   | Accounting Policy |   |   | May 31, 2008   |  
| | Loss and Deficit                           |   | reported            |   | (Note 28)   |   |   | Adjustment        |   |   | restated       |  
| | Exploration and development costs          | $ | -                   |   | -           |   | $ | (562,237          | ) | $ | (562,237       | )
| | Loss from equity investment                |   | (230,752            | ) | -           |   |   | (549,094          | ) |   | (779,846       | )
| | Net loss/comprehensive loss for the period |   | (4,433,667          | ) | -           |   |   | (1,111,331        | ) |   | (5,544,998     | )
| | Loss per share  basic and diluted         |   | (0.05               | ) | -           |   |   | (0.01             | ) |   | (0.06          | )
| |                                            |   |                     |   |             |   |   |                   |   |   |                |  
| | Consolidated Statement of Cash             |   |                     |   | Restatement |   |   | Change in         |   |   |                |  
| | Flows                                      |   | May 31, 2008 as     |   | Adjustment  |   |   | Accounting Policy |   |   | May 31, 2008   |  
| |                                            |   | previously reported |   | (Note 28)   |   |   | Adjustment        |   |   | restated       |  
| | Operating activities                       | $ | (9,953,001          | ) | -           |   | $ | (181,315          | ) | $ | (10,134,316    | )
| | Investing activities                       |   | (1,471,217          | ) | -           |   |   | 181,315           |   |   | (1,289,902     | )
| |                                            |   |                     |   |             |   |   |                   |   |   |                |  
| | Consolidated Statement of                  |   | April 30, 2008 as   |   | Restatement |   |   | Change in         |   |   |                |  
| | Operations and Comprehensive               |   | previously          |   | Adjustment  |   |   | Accounting Policy |   |   | April 30, 2008 |  
| | Loss and Deficit                           |   | reported            |   | (Note 28)   |   |   | Adjustment        |   |   | restated       |  
| | Exploration and development costs          | $ | -                   |   | -           |   | $ | (11,690,204       | ) | $ | (11,690,204    | )
| | Gain on dilution of equity investment      |   | 13,011,861          |   | (529,212    | ) |   | 99,436            |   |   | 12,582,085     |  
| | Loss from equity investment                |   | (4,390,462          | ) | -           |   |   | (3,910,909        | ) |   | (8,301,371     | )
| | Gain on sale of equity investment          |   | 4,603,347           |   | (646,815    | ) |   | 390,545           |   |   | 4,347,077      |  
| | Net loss/comprehensive loss for the period |   | 176,152             |   | (1,176,027  | ) |   | (15,111,132       | ) |   | (16,111,007    | )
| | Loss per share  basic and diluted         |   | (0.00               | ) | (0.01       | ) |   | (0.16             | ) |   | (0.17          | )
| |                                            |   |                     |   |             |   |   |                   |   |   |                |  
| | Consolidated Statement of Cash             |   |                     |   | Restatement |   |   | Change in         |   |   |                |  
| | Flows                                      |   | April 30, 2008 as   |   | Adjustment  |   |   | Accounting Policy |   |   | April 30, 2008 |  
| |                                            |   | previously reported |   | (Note 28)   |   |   | Adjustment        |   |   | restated       |  
| | Operating activities                       | $ | 1,539,335           |   | -           |   | $ | (8,207,195        | ) | $ | (6,667,860     | )
| | Investing activities                       |   | (28,184,779         | ) | -           |   |   | 8,207,195         |   |   | (19,977,584    | )



|                                                          |        
|--------------------------------------------------------- | -------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 99





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





2.

SIGNIFICANT ACCOUNTING POLICIES(continued)

| |                                            |   |                     |   |   |                      |   |   |                         |  
| | ------------------------------------------ | - | ------------------- | - | - | -------------------- | - | - | ----------------------- | -
| | Consolidated Statement of                  |   |                     |   |   |                      |   |   |                         |  
| | Operations and Comprehensive               |   | April 30, 2007 as   |   |   | Change in Accounting |   |   |                         |  
| | Loss and Deficit                           |   | previously reported |   |   | Policy Adjustment    |   |   | April 30, 2007 restated |  
| | Exploration and development costs          | $ | -                   |   | $ | (2,167,355           | ) | $ | (2,167,355              | )
| | Gain on dilution of equity investment      |   | 700,626             |   |   | (68,230              | ) |   | 632,396                 |  
| | Loss from equity investment                |   | (1,363,509          | ) |   | (694,215             | ) |   | (2,057,724              | )
| | Net loss/comprehensive loss for the period |   | (5,562,839          | ) |   | (2,929,800           | ) |   | (8,492,639              | )
| | Loss per share  basic and diluted         |   | (0.06               | ) |   | (0.03                | ) |   | (0.09                   | )

| |                                      |   |                     |   |   |                   |   |   |                         |  
| | ------------------------------------ | - | ------------------- | - | - | ----------------- | - | - | ----------------------- | -
| | Consolidated Statement of Cash Flows |   |                     |   |   | Change in         |   |   |                         |  
| |                                      |   | April 30, 2007 as   |   |   | Accounting Policy |   |   |                         |  
| |                                      |   | previously reported |   |   | Adjustment        |   |   | April 30, 2007 restated |  
| | Operating activities                 | $ | (1,618,081          | ) | $ | (2,063,009        | ) | $ | (3,681,090              | )
| | Investing activities                 |   | (1,838,515          | ) |   | 2,063,009         |   |   | 224,494                 |  

| |                                            |   |                  |   |   |             |   |   |                   |   |   |                  |  
| | ------------------------------------------ | - | ---------------- | - | - | ----------- | - | - | ----------------- | - | - | ---------------- | -
| | Consolidated Statement of                  |   | January 31, 2007 |   |   | Restatement |   |   | Change in         |   |   |                  |  
| | Operations and Comprehensive               |   | as previously    |   |   | Adjustment  |   |   | Accounting Policy |   |   | January 31, 2007 |  
| | Loss and Deficit                           |   | reported         |   |   | (Note 28)   |   |   | Adjustment        |   |   | restated         |  
| | Exploration and development costs          | $ | -                |   | $ | -           |   | $ | (10,930,276       | ) | $ | (10,930,276      | )
| | Gain on dilution of equity investment      |   | -                |   |   | 2,000,514   |   |   | (298,925          | ) |   | 1,701,589        |  
| | Loss from equity investment                |   | -                |   |   | (191,400    | ) |   | (523,356          | ) |   | (714,756         | )
| | Stock-based compensation                   |   | (8,805,950       | ) |   | (6,156,781  | ) |   | -                 |   |   | (14,962,731      | )
| | Net loss/comprehensive loss for the period |   | (14,612,368      | ) |   | (4,347,667  | ) |   | (11,752,557       | ) |   | (30,712,592      | )
| | Loss per share  basic and diluted         |   | (0.19            | ) |   | (0.06       | ) |   | (0.15             | ) |   | (0.40            | )

| |                                      |   |                     |   |   |                   |   |   |                  |  
| | ------------------------------------ | - | ------------------- | - | - | ----------------- | - | - | ---------------- | -
| | Consolidated Statement of Cash Flows |   |                     |   |   | Change in         |   |   |                  |  
| |                                      |   | January 31, 2007 as |   |   | Accounting Policy |   |   | January 31, 2007 |  
| |                                      |   | previously reported |   |   | Adjustment        |   |   | restated         |  
| | Operating activities                 | $ | (4,103,416          | ) | $ | (10,403,459       | ) | $ | (14,506,875      | )
| | Investing activities                 |   | (22,799,414         | ) |   | 10,403,459        |   |   | (12,395,955      | )

3.

INVENTORY

| |                            |   |              |   |             
| | -------------------------- | - | ------------ | - | ------------
| |                            |   | May 31, 2009 |   | May 31, 2008
| | Raw materials and supplies | $ | 1,038,999    | $ | -           





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 100





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





4.

PROPERTY AND EQUIPMENT

| |                                |   |            |   |                          |   |            |   |            |   |                          |   |               
| | ------------------------------ | - | ---------- | - | ------------------------ | - | ---------- | - | ---------- | - | ------------------------ | - | --------------
| |                                |   |            |   | May 31,                  |   |            |   |            |   | May 31,                  |   |               
| |                                |   |            |   | 2009                     |   |            |   |            |   | 2008 (Note 2)            |   |               
| |                               
| |                                |   | Cost       |   | Accumulated Amortization |   | Book Value |   | Cost       |   | Accumulated Amortization |   | Net Book Value
| |                               
| | Computer equipment             | $ | 221,489    | $ | 69,909                   | $ | 151,580    | $ | 59,776     | $ | 40,850                   | $ | 18,926        
| | Computer software              |   | 201,187    |   | 129,915                  |   | 71,272     |   | 168,826    |   | 112,481                  |   | 56,345        
| | Equipment under capital leases |   | 10,808,072 |   | 3,956,113                |   | 6,851,959  |   | 10,988,907 |   | 1,648,336                |   | 9,340,571     
| | Equipment                      |   | 7,922,073  |   | 3,421,173                |   | 4,500,900  |   | 9,450,318  |   | 2,601,201                |   | 6,849,117     
| | Furniture and fixtures         |   | 822,714    |   | 316,311                  |   | 506,403    |   | 21,123     |   | 7,227                    |   | 13,896        
| | Vehicles                       |   | 25,016     |   | 8,752                    |   | 16,264     |   | -          |   | -                        |   | -             
| | Office equipment               |   | 167,499    |   | 27,257                   |   | 140,242    |   | -          |   | -                        |   | -             
| | Land                           |   | 189,353    |   | -                        |   | 189,353    |   | 126,172    |   | -                        |   | 126,172       
| | Buildings                      |   | 472,783    |   | 21,098                   |   | 451,685    |   | 382,888    |   | 8,766                    |   | 374,122       
| |                                | $ | 20,830,186 | $ | 7,950,528                | $ | 12,879,658 | $ | 21,198,010 | $ | 4,418,861                | $ | 16,779,149    



5.

MINERAL PROPERTIES



The Company has capitalized $60,843,501 in mineral property costs, net of revenue of $653,941 as at May 31, 2009 and $37,739,133 as at May 31, 2008:



| |                                       |   |              |   |                      
| | ------------------------------------- | - | ------------ | - | ---------------------
| |                                       |   | May 31, 2009 |   | May 31, 2008 (Note 2)
| | Plant                                 | $ | 47,610,795   | $ | 22,402,691           
| | Plant equipment                       |   | 2,973,133    |   | 3,950,618            
| | Camp                                  |   | 5,252,168    |   | 6,189,910            
| | Asset retirement obligation (Note 25) |   | 3,458,304    |   | 4,425,669            
| | Capitalized interest expense          |   | 1,549,101    |   | 770,245              
| |                                       | $ | 60,843,501   | $ | 37,739,133           



Molejon Property  Panama

The Molejon Property is located in the District of Donoso, Province of Colon, Panama. The project forms part of the Petaquilla Concession.   The Company, through Petaquilla Gold, S.A., owns a 100% interest in the Molejon gold deposit, as well as all other gold and precious metal mineral deposits that might be developed within the Petaquilla Concession, subject to a graduated 5% - 7% net smelter return, based on the future gold price at the time of production.



A phased Mine Development Plan was approved by Ministerial Resolution of the Government of Panama in September 2005. The Company proceeded with the development of the property and construction of the processing mill commenced in July of 2007.  Mill commissioning was initiated in November 2008 and the first gold pour occurred on April 7, 2009.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 101





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





6.

EXPLORATION AND DEVELOPMENT COSTS



Exploration and development costs incurred to develop the Companys Molejon property and for exploration of other properties are detailed below:

| |                                     |   |                    |   |   |                 |   |                     |  
| | ----------------------------------- | - | ------------------ | - | - | --------------- | - | ------------------- | -
| |                                     |   | Twelve months      |   |   | One month ended |   | Twelve months ended |  
| |                                     |   | ended May 31, 2009 |   |   | May 31, 2008    |   | April 30, 2008      |  
| | Drilling costs                      | $ | 1,410,591          |   | $ | 3,842           | $ | 4,992,578           |  
| | Trenching                           |   | 78,024             |   |   | 22,862          |   | 370,845             |  
| | Engineering and consulting          |   | 979,463            |   |   | 1,186           |   | 640,722             |  
| | Geologist                           |   | 201,258            |   |   | 37,921          |   | 417,351             |  
| | Property permits                    |   | -                  |   |   | 33,818          |   | -                   |  
| | Environment                         |   | 162,859            |   |   | 8,153           |   | 117,545             |  
| | Logistics                           |   | 153,229            |   |   | 7,921           |   | 85,810              |  
| | Indirect drilling costs             |   | 192,953            |   |   | 36,739          |   | 852,446             |  
| | Engineering and design              |   | 145,285            |   |   | 25,224          |   | 335,193             |  
| | Transportation                      |   | -                  |   |   | -               |   | 102,686             |  
| | Communications                      |   | 49,396             |   |   | -               |   | 62,370              |  
| | Topography                          |   | 7,531              |   |   | 1,956           |   | 37,797              |  
| | Technical support                   |   | 68                 |   |   | -               |   | 9,824               |  
| | Bridges                             |   | 353,468            |   |   | -               |   | (12,810             | )
| | Roads                               |   | 22,581             |   |   | 1,693           |   | 8,727               |  
| | Amortization on operating equipment |   | 4,033,720          |   |   | 368,809         |   | 2,901,942           |  
| | Stock-based compensation (Note 16)  |   | (28,564            | ) |   | 12,113          |   | 581,068             |  
| | Capitalized interest expense        |   | -                  |   |   | -               |   | 186,110             |  
| |                                     | $ | 7,761,862          |   | $ | 562,237         | $ | 11,690,204          |  



| |                                     |   |                    |   |   |                    
| | ----------------------------------- | - | ------------------ | - | - | -------------------
| |                                     |   | Three months ended |   |   | Twelve months ended
| |                                     |   | April 30, 2007     |   |   | January 31, 2007   
| | Drilling costs                      | $ | 764,340            |   | $ | 4,358,203          
| | Trenching                           |   | 1,162,227          |   |   | 1,595,877          
| | Engineering and consulting          |   | 101,475            |   |   | 1,036,658          
| | Geologist                           |   | 432,252            |   |   | 149,757            
| | Property permits                    |   | 1,004              |   |   | 256,359            
| | Environment                         |   | 13,958             |   |   | 265,305            
| | Logistics                           |   | 112,109            |   |   | 150,935            
| | Indirect drilling costs             |   | 156,399            |   |   | 18,314             
| | Engineering and design              |   | 53,041             |   |   | 77,975             
| | Transportation                      |   | 34,103             |   |   | 93,365             
| | Communications                      |   | 11,000             |   |   | 107,314            
| | Topography                          |   | 13,926             |   |   | 85,181             
| | Technical support                   |   | 18,010             |   |   | 78,677             
| | Bridges                             |   | 10,247             |   |   | 45,295             
| | Roads                               |   | (821,082           | ) |   | 2,084,244          
| | Amortization on operating equipment |   | 104,346            |   |   | 422,985            
| | Stock-based compensation (Note 16)  |   | -                  |   |   | 103,832            
| |                                     | $ | 2,167,355          |   | $ | 10,930,276         





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 102





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





7.

INVESTMENT IN PETAQUILLA COPPER LTD.

The Company initially owned 22,233,634 of the issued shares of Copper at a cost of $439,367 (CAD$ 500,000).  Subsequent to the spin out of Copper, the Company accounted for Copper on an equity basis. Under the equity method, the Company recorded the percentage of net income (loss) that would be attributed to the investment by adjusting the carrying value of the investment. If the percentage of loss from the investee was greater than the carrying cost, the amount was not reduced below zero. Dilution gains arose whenever Copper issued equity at a price greater than the carrying value of the equity investment.



On September 19, 2008, the Company disposed of its 20,418,565 common shares of Copper to a wholly-owned subsidiary of Inmet Mining Corporation at a price of CAD$ 2.20 per common share, for proceeds of $43,238,852 (CAD$ 44,920,843). The Company did not incur any transaction costs in disposing of the shares.





8.

RESTRICTED CASH



The Company has $707,480 in term deposits (May 31, 2008 - $670,175) which are being held to guarantee debt financings and a performance bond for compliance with environmental laws in Panama. Interest rates on these deposits range from 0.05% to 4.875%.





9.

BANK OVERDRAFT



The Company had a bank overdraft facility with one of its financial institutions.  The balance was $nil at May 31, 2009 (May 31, 2008 - $2,100,000).  The overdraft bore fixed interest of 7.5% per annum and was secured by one of the Companys savings accounts up to $1,175,098.  This facility was terminated in June 2008 at the Companys request.





10.

OPERATING CREDIT LINE FACILITY



The Company has an operating credit line facility with Banco Bilbao Vizcaya Argentaria (Panama) S.A. (BBVA) up to a maximum of $13,379,554.  The facility is converted to capital leases when the asset purchases are completed.  The facility has a fixed rate of 9% on $11,018,456 and 6% on $2,361,098, is secured by the assets purchased and is registered with the Public Registry of the Republic of Panama.  At May 31, 2009 there is a remaining credit line balance of $332,511 available upon which the Company may draw.





11.

LONG-TERM DEBT



During the fiscal year ended April 30, 2007, the Company arranged bank loans totalling $1,277,230 for the purchase of equipment and vehicles.  The loans are secured by the purchased assets plus term deposits in the amount of $400,000.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 103





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





11.

LONG-TERM DEBT(continued)



The following table summarizes the loans outstanding as at May 31, 2009 and May 31, 2008:



| |                                                                                                      |   |              |   |   |                      |  
| | ---------------------------------------------------------------------------------------------------- | - | ------------ | - | - | -------------------- | -
| |                                                                                                      |   | May 31, 2009 |   |   | May 31, 2008 (Note 2 | )
| |                                                                                                     
| | Equipment loan #1, repaid May 2009                                                                   | $ | -            |   | $ | 125,783              |  
| | Vehicle loan #1, repaid May 2009                                                                     |   | -            |   |   | 28,141               |  
| | Equipment loan #2, repayable at $7,445 per month including interest at 9.0%, maturing October 2009   |   | 29,891       |   |   | 111,631              |  
| | Equipment loan #3, repayable at $18,095 per month including interest at 9.25%, maturing January 2010 |   | 125,575      |   |   | 319,176              |  
| | Vehicle loan #2, repayable at $793 per month, including interest at 9.25%, maturing January 2010     |   | 5,527        |   |   | 13,988               |  
| |                                                                                                      |   | 160,993      |   |   | 598,719              |  
| | Less: current portion                                                                                |   | (160,993     | ) |   | (436,151             | )
| |                                                                                                      | $ | -            |   | $ | 162,568              |  





12.

DEFERRED SERVICES AND MATERIALS TO BE PROVIDED TO IMN RESOURCES INC.



On September 30,2007, Petaquilla Gold S.A. (Gold), a subsidiary of the Company entered into a Service Agreement with Minera Panama S.A. (MPSA) (formerly Petaquilla Copper S.A.) to provide electric generation, aggregate for construction and the rental of a drill machine (collectively, the services) for a 3-year period.  In return for receiving certain benefits and assurances, payment for services was assumed and prepaid by IMN Resources Inc. (IMN) (formerly Petaquilla Copper Ltd.), a wholly owned subsidiary of Inmet Mining Corporation, in the amount of $4,404,000.   Services provided to date include the rental of a drill and the generation of electricity.



| |                     |   |              |   |                      
| | ------------------- | - | ------------ | - | ---------------------
| |                     |   | May 31, 2009 |   | May 31, 2008 (Note 2)
| |                     | $ | 3,243,394    | $ | 4,252,209            
| | Current portion     |   | 120,000      |   | 248,786              
| | Non-current portion | $ | 3,123,394    | $ | 4,003,423            





13.

CAPITAL LEASE OBLIGATIONS



The Company entered into four capital lease arrangements with Banco Bilbao Vizcaya Argentaria (Panama) S.A. (BBVA) for the purchase of equipment to advance the Molejon project into production.



The equipment includes but is not restricted to: ball mills, a Metso crushing plant, cranes and an aggregate crushing plant.



As a condition of the leases, the equipment will serve as collateral throughout the amortization period and will be registered with the Public Registry of the Republic of Panama. Further, IMN has pledged a term deposit in the amount of $2,361,098 (May 31, 2008 - $2,361,098) as additional security.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 104





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





13.

CAPITAL LEASE OBLIGATIONS(continued)



Future minimum lease payments on the capital lease obligations are as follows:



| |                             |   |              |   |   |              |  
| | --------------------------- | - | ------------ | - | - | ------------ | -
| |                             |   |              |   |   | May 31, 2008 |  
| |                             |   | May 31, 2009 |   |   | (Note 2)     |  
| | 2010                        | $ | 5,741,567    |   | $ | 2,663,569    |  
| | 2011                        |   | 4,164,972    |   |   | 2,663,569    |  
| | 2012                        |   | 461,907      |   |   | 1,684,045    |  
| |                             |   | 10,368,446   |   |   | 7,011,183    |  
| | Less imputed interest of 9% |   | (922,291     | ) |   | (844,537     | )
| | Total                       |   | 9,446,155    |   |   | 6,166,646    |  
| | Current obligation          |   | 5,054,987    |   |   | 2,174,903    |  
| | Long- term obligation       | $ | 4,391,168    |   | $ | 3,991,743    |  



14.

SENIOR SECURED NOTES



| |                                                                                                                                 |   |              |   |             
| | ------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | - | ------------
| |                                                                                                                                 |   | May 31, 2009 |   | May 31, 2008
| |                                                                                                                                 |   |              |   | (Note 2)    
| | Senior secured notes                                                                                                            | $ | 29,407,502   | $ | 26,785,359  
| | Less estimated current portion based on a projected gold price from $900 to $1,000 as noted below and earliest redemption dates |   | 15,653,483   |   | -           
| |                                                                                                                                 | $ | 13,754,019   | $ | 26,785,359  



At May 31, 2009, there are 26,467.624 senior secured notes (Notes) outstanding (May 31, 2008  32,250).  The Notes bear interest at an annual rate of 15%. Semi-annual principal repayments on the Notes range from $nil to $8,000,000 depending upon the weighted average market price of gold during the six months prior to the payment date as follows:



| |                                    |   |                                     
| | ---------------------------------- | - | ------------------------------------
| | Weighted Average Market Gold Price |   | Aggregate Pro Rata Principal Payment
| |                                    |   |                                     
| |                                   
| | Over $1,000                        | $ | 8,000,000                           
| | $900 to $1,000                     | $ | 6,000,000                           
| | $800 to $900                       | $ | 4,000,000                           
| | Less than $800                     |   | -                                   



The Notes will mature five years from date of issuance at 120% of principal. The Company has the right to redeem the Notes at any time at 120% of the principal amount plus any accrued or unpaid interest on the Notes. If the Notes are redeemed within one year of issuance, all prepaid interest of $12,000,000 is forfeited. After 18 or 24 months from the date of issuance of the Notes, depending upon the agreement reached with the Note holders, the holders of the Notes can give six months notice to cause the Company to purchase all of the Notes then outstanding at a price equal to the sum of (a) 120% of the principal amount of such Notes to be purchased and (b) accrued and unpaid interest on the principal amount of the Notes.  On an annual basis, the Note holders can cause the Company to redeem Notes equal to 35% of Distributable Cash.

Distributable Cash is defined as cash available after:

a)

satisfaction of the Companys debt obligations (principal and interest);

b)

satisfaction of the Companys general and administrative expenses, capital expenditures and other expense obligations;

c)

deduction for income tax obligations; and

d)

retaining reasonable working capital or other reserves.



Reasonable working capital and other reserves are to be defined mutually between the Company and the Note holders. As of May 31, 2009 neither of these has been defined.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 105





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





14.

SENIOR SECURED NOTES(continued)



The Company initially issued 60,000 Notes. Each Note was issued with 382 share purchase warrants. Each warrant entitled the holder to purchase one common share at CAD$ 2.30 for a period of five years from the date of purchase.   On April 17, 2009 the Company repriced these warrants to entitle the holder to purchase one common share at CAD $0.65 for the remainder of the warrant period with the provision that, if the closing trading price of the Companys common shares on the TSX is CAD$ 1.00 or more for a period of 30 consecutive trading days, the Company has the option to require the earlier exercise of the warrants.  The effect of repricing the warrants was an increase in the value of the warrants of$1,781,500 and a decrease in contributed surplus for the same amount.



On September 30, 2008 the Company redeemed 36,032.376 Notes at 120% of their principal value for a total payment of $43,238,852, resulting in a loss of $10,983,735.



On October 1, 2008, the Company issued an additional 20,000 Notes under the $60 million senior secured notes indenture for net proceeds of $15,874,958. These Notes contain the same terms and conditions as the previous issue under the indenture with the exception of the 382 share purchase warrants. These Notes did not include any warrants.



On March 25, 2009, the Company redeemed 17,500 Notes at 120% of their principal value for a total payment of $21,000,000, resulting in a loss of $2,147,247.



The Notes have been accounted for in accordance with HB 3855 Financial Instruments  Recognition and Measurement, HB 3862 Financial Instruments  Disclosure and HB 3863 Financial Instruments  Presentation. Under this guidance, the Company valued the liability component of the Notes and assigned the difference to the warrants. On the valuation dates, the value of the Notes was calculated to be $58,474,937 and the amount allocated to the warrants was $1,525,063.  Prepaid interest of $9,000,000 was applied as a reduction of the Notes. The liability component was calculated using a discount rate of 26.65% and a maturity date of two years from date of issue. The senior secured notes contain an embedded derivative as a result of the call and put options. The Company is unable to fair value the embedded derivative component separately and thus has classified the combined contract as a financial liability that is held for trading.   On February 28, 2009 the discount rate on the Notes was reduced to 20.58% from 26.65% due to mark-to-market accounting.  This resulted in a loss of $3,863,189.   At May 31, 2009, the Notes have been adjusted to their fair market value of $29,407,502



During the fiscal year ended May 31, 2009 the Company incurred $3,931,861 (thirteen months ended May 31, 2008  $3,894,873) in financing costs related to the Notes. These costs were expensed in the period in which they were incurred in accordance with the Companys accounting policy.



The Notes are guaranteed, on a joint and several basis, by all of the assets of the Company and of the Companys subsidiaries.



Estimated principal repayments, assuming a future gold price from $900 to $1,000 and earliest redemption dates, are as follows:



| |      |   |           
| | ---- | - | ----------
| | 2010 | $ | 15,653,483
| | 2011 |   | 16,107,666
| |      | $ | 31,761,149





15.

CONVERTIBLE SENIOR SECURED NOTES



| |                                  |   |              |  |   |             
| | -------------------------------- | - | ------------ |  | - | ------------
| |                                  |   | May 31, 2009 |  |   | May 31, 2008
| | Convertible senior secured notes | $ | 34,794,455   |  | $ | -           
| | Less estimated current portion   |   | -            |  |   | -           
| |                                  | $ | 34,794,455   |  | $ | -           





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 106





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





15.

CONVERTIBLE SENIOR SECURED NOTES(continued)



On March 25, 2009 the Company closed $40,000,000 of a convertible senior secured note (Convertible Notes) financing. The Convertible Notes bear interest at an annual rate of 15%, of which the first year is prepaid. The Convertible Notes mature two years from the date of issuance at 110% of the principal. The Company has the right to redeem the notes at any time at 110% of the principal amount plus any accrued or unpaid interest. If the Convertible Notes are redeemed within one year of issuance, all prepaid interest is forfeited. Each Convertible Note in the principal amount of $1,000 is convertible into common shares at CAD$ 2.25 per share.



On an annual basis, the Convertible Note holders can cause the Company to redeem Convertible Notes equal to 35% of Distributable Cash.   Distributable Cash is defined as cash available after:

a)

satisfaction of the Companys debt obligations (principal and interest);

b)

satisfaction of the Companys general and administrative expenses, capital expenditures and other expense obligations;

c)

deduction for income tax obligations; and

d)

retaining reasonable working capital or other reserves.



Reasonable working capital and other reserves are to be defined mutually between the Company and the Note holders. As of May 31, 2009 neither of these has been defined.



On a semi annual basis, commencing September 15, 2010, the Company shall make principal payments under each holders Convertible Notes ranging from $nil to $8,000,000 depending upon the weighted average market price of gold for the six months prior to the payment date as follows:



| |                                    |   |                                     
| | ---------------------------------- | - | ------------------------------------
| | Weighted Average Market Gold Price |   | Aggregate Pro Rata Principal Payment
| |                                   
| | Over $1,000                        | $ | 8,000,000                           
| | $900 to $1,000                     | $ | 6,000,000                           
| | $800 to $900                       | $ | 4,000,000                           
| | Less than $800                     |   | -                                   



The Convertible Notes have been accounted for in accordance with HB 3855 Financial Instruments  Recognition and Measurement, HB 3862 Financial Instruments  Disclosure, HB 3863 Financial Instruments  Presentation and EIC 164 Convertible and Other Debt Instruments with Embedded Derivatives. Under this guidance, the Company valued the liability component of the Convertible Notes and assigned the difference to the conversion feature. On the valuation date, the value of the liability component of the Convertible Notes was calculated to be $39,504,879.  The conversion feature was valued at $495,121. Prepaid interest of $6,000,000 was applied as a reduction of the Convertible Notes. The liability component was calculated using a discount rate of 20.58%. The convertible senior secured notes contained an embedded derivate as a result of the call option. The Company is unable to fair value the embedded derivative component separately and thus has classified the combined contract as a financial liability that is held for trading.



The Company incurred $2,466,964 in financing costs related to the Convertible Notes. These costs have been expensed in the period in which they were incurred in accordance with the Companys accounting policy.



The Convertible Notes are guaranteed, on a joint and several basis, by all of the assets of the Company and of the Companys subsidiaries. The indebtedness represented by the Convertible Notes is senior to all other indebtedness of the Company and ranks pari passu with the previously issued senior secured notes.



Estimated principal payments are as follows:



| |      |   |           
| | ---- | - | ----------
| | 2010 | $ | -         
| | 2011 |   | 44,000,000
| |      | $ | 44,000,000





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 107





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





16.

SHARE CAPITAL, WARRANTS AND CONTRIBUTED SURPLUS

At May 31, 2009, the Company had unlimited authorized common shares without par value and unlimited authorized preference shares without par value.  The Board of Directors will assign the rights and privileges to each series of preference shares upon issue.

In May 2007, the Company closed a non-brokered private placement comprising 1,387,879 units at CAD$ 2.00 per unit and 24,033 units at CAD$ 2.02 per unit for gross proceeds of $2,552,698. Each unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable into a common share at a price of CAD$ 3.50 per share for a period of two years following the close of the private placement. The fair value of the warrants issued on this private placement was $263,263.



In October 2007, the Company closed the first tranche of a non-brokered private placement comprising 2,093,500 units at CAD$ 3.00 per unit for gross proceeds of $6,611,749.  Each unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable into a common share at a price of CAD$ 3.50 per share for a period of two years following the close of the private placement. The Company paid $234,104 and agreed to issue 74,125 share purchase warrants as finders fees in connection with part of the private placement. The fair value of the finders warrants was $55,357.



In December 2007, the Company closed the second tranche of the non-brokered private placement announced in October 2007 comprising 339,000 units at CAD$ 3.00 per unit for gross proceeds of $1,018,732.  Each unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable into a common share at a price of CAD$ 3.50 per share for a period of two years following the close of the private placement.



The Company paid $43,574 and agreed to issue 12,500 share purchase warrants as finders fees in connection with part of the private placement.  The fair value of the finders warrants was $8,318.



In January 2008, the Company closed the third tranche of the non-brokered private placement announced in October 2007 comprising 708,000 units at CAD$ 3.00 per unit for gross proceeds of $2,106,098.  Each unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable into a common share at a price of CAD$ 3.50 per share for a period of two years following the close of the private placement.  The Company paid $104,115 and agreed to issue 35,000 share purchase warrants as finders fees in connection with part of the private placement.  The fair value of the finders warrants was $22,764.



In May 2008, the Company closed the first tranche of its senior secured notes issuing 32,250 units for gross proceeds of $32,250,000.  Each unit of $1,000 consisted of one Note and a warrant to purchase 382 common shares. Each warrant entitled the holder to purchase one common share at CAD$ 2.30 for a period of five years from the date of purchase.  The Company agreed to issue 492,780 share purchase warrants as finders fees in connection with this tranche of the private placement. The fair value of the finders warrants was $638,354.



In June 2008, the Company closed the second tranche of its senior secured notes issuing 10,000 units for gross proceeds of $10,000,000.  Each unit of $1,000 consisted of one Note and a warrant to purchase 382 common shares. Each warrant entitled the holder to purchase one common share at CAD$ 2.30 for a period of five years from the date of purchase. The Company agreed to issue 152,800 share purchase warrants as finders fees in connection with this tranche of the private placement. The fair value of the finders warrants was $104,496.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 108





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





16.

SHARE CAPITAL, WARRANTS AND CONTRIBUTED SURPLUS(continued)



In July 2008, the Company closed the third tranche of its senior secured notes issuing 17,750 units for gross proceeds of $17,750,000.  Each unit of $1,000 consisted of one Note and a warrant to purchase 382 common shares. Each warrant entitled the holder to purchase one common share at CAD$ 2.30 for a period of five years from the date of purchase.  The Company agreed to issue 271,220 share purchase warrants as finders fees in connection with this tranche of the private placement. The fair value of the finders warrants was $110,736.



On April 17, 2009 the Company repriced the warrants issued with the Notes to allow the holder to purchase one common share at CAD $0.65 for the remainder of the warrant period with the provision that, if the closing trading price of the Companys common shares on the TSX is CAD$ 1.00 or more for a period of 30 consecutive trading days, the Company has the option to require the earlier exercise of the warrants.  The effect of repricing the warrants was an increase in the value of the warrants by$1,781,500 and a decrease in contributed surplus by the same amount.



17.

STOCK OPTIONS

During the twelve months ended January 31, 2007, the Company received approval for its stock option plan (the New Plan) which authorizes the board of directors to grant incentive stock options to directors, officers and employees. The maximum number of shares reserved for issuance under the Companys Plan is 10,000,000.



The aggregate number of common shares reserved for issuance to any person may not exceed 5% of the number of outstanding common shares. The exercise price of the options will be determined by the five day volume weighted average price of the Companys shares prior to the date of the grant. Options granted must be exercised no later than 10 years after the date of grant or such lesser period as may be determined by the Board. The Board may at its discretion in any granting of an option set a vesting period whereby the option may only be exercisable in pre-determined instalments.



Stock option transactions are summarized as follows:



| |                                     |            |   |                      
| | ----------------------------------- | ---------- | - | ---------------------
| |                                     |            |   |                      
| |                                     | Number     |   | Weighted Average     
| |                                     | of Shares  |   | Exercise Price (CAD$)
| | Balance at April 30, 2007           | 8,115,767  |   | 1.76                 
| | Granted                             | 1,375,000  |   | 2.41                 
| | Exercised                           | (1,055,883 | ) | 0.53                 
| | Expired                             | (319,750   | ) | 2.42                 
| | Balance at May 31, 2008             | 8,115,134  |   | 1.83                 
| | Granted                             | 1,370,000  |   | 0.85                 
| | Exercised                           | (81,480    | ) | 0.50                 
| | Expired                             | (909,676   | ) | 2.17                 
| | Forfeited                           | (58,125    | ) | 2.32                 
| | Balance at May 31, 2009             | 8,435,853  |   | 1.64                 
| |                                    
| | Number of stock options exercisable | 7,592,103  |   | 1.72                 





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 109





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





17.

STOCK OPTIONS (continued)

As at May 31, 2009, the following stock options were outstanding as follows:



| |                  |                |                  
| | ---------------- | -------------- | -----------------
| | Number of Shares | Exercise Price |                  
| | Outstanding      | (CAD$)         | Expiry Date      
| | 30,000           | 0.26           | April 25, 2010   
| | 193,800          | 0.26           | July 11, 2010    
| | 919,200          | 0.54           | February 1, 2011 
| | 96,000           | 0.89           | April 27, 2011   
| | 4,826,853        | 2.01           | January 15, 2012 
| | 200,000          | 2.22           | June 12, 2012    
| | 500,000          | 2.25           | June 20, 2012    
| | 50,000           | 2.49           | July 12, 2012    
| | 50,000           | 2.54           | July 23, 2012    
| | 100,000          | 2.80           | February 11, 2013
| | 400.000          | 1.96           | May 5, 2013      
| | 60,000           | 1.25           | September 1, 2013
| | 410,000          | 0.56           | November 18, 2013
| | 300,000          | 0.52           | December 1, 2013 
| | 200,000          | 0.39           | January 5, 2014  
| | 100,000          | 0.39           | March 1, 2014    
| |                 
| | 8,435,853        |                |                  



Subsequent to year end, 3,245,080 stock options were cancelled (see note 27).



Totalstock options granted during the twelve months ended May 31, 2009 were 1,370,000 (one month ended May 31, 2008  130,000, twelve months ended April 30, 2008  1,245,000, three months ended April 30, 2007  150,000 and twelve months ended January 31, 2007  9,719,543), of which nil (one month ended May 31, 2008  nil, twelve months ended April 30, 2008  nil, three months ended April 30, 2007  nil and twelve months ended January 31, 2007  400,000) were expired and nil (one month ended May 31, 2008  nil, twelve months ended April 30, 2008  nil, three months ended April 30, 2007  nil and twelve months ended January 31, 2007  155,200) were forfeited during the period.  Stock options granted that are not vested have been excluded from the calculation of stock-based compensation.  Total stock-based compensation recognized for the fair value of stock options granted, vested and approved by the shareholders during the twelve months ended May 31, 2009 was $898,454 (one month ended May 31, 2008 - $77,890, twelve months ended April 30, 2008 - $5,561,247, three months ended April 30, 2007 - $2,915,884 and twelve months ended January 31, 2007 - $14,962,731). Stock-based compensation charged to exploration costs amounted to $(28,564) for the twelve months ended May 31, 2009 (one month ended May 31, 2008 -$12,113, twelve months ended April 30, 2008 - $581,068, three months ended April 30, 2007 - $nil and twelve months ended January 31, 2007 - $103,832).

The weighted average fair value of stock options granted is estimated to be approximately CAD$ 0.22, CAD$ 1.18, CAD$ 1.65, CAD$ 0.32 and CAD$ 1.21 for the twelve months ended May 31, 2009, the one month ended May 31, 2008, the twelve months ended April 30, 2008, the three months ended April 30, 2007 and the twelve months ended January 31, 2007 respectively, by using the Black-Scholes options pricing model with the following weighted average assumptions:



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 110





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





17.

STOCK OPTIONS (continued)



| |                                 |                     |                     |                    
| | ------------------------------- | ------------------- | ------------------- | -------------------
| |                                 |                     |                     |                    
| |                                 | Twelve Months Ended | One Month Ended May | Twelve Months Ended
| |                                 | May 31, 2009        | 31, 2008            | April 30, 2008     
| |                                
| | Risk-free interest              | 2.45%               | 3.05%               | 4.44%              
| | Expected dividend yield         | -                   | -                   | -                  
| | Expected stock price volatility | 64%                 | 74%                 | 87%                
| | Expected option life in years   | 4.90                | 5.00                | 5.00               



| |                                 |                    |                    
| | ------------------------------- | ------------------ | -------------------
| |                                 |                    |                    
| |                                 | Three Months Ended | Twelve Months Ended
| |                                 | April 30, 2007     | January 31, 2007   
| |                                
| | Risk-free interest              | 4.16%              | 4.04%              
| | Expected dividend yield         | -                  | -                  
| | Expected stock price volatility | 39%                | 106%               
| | Expected option life in years   | 1.00               | 5.00               

18.

SHARE PURCHASE WARRANTS

Share purchase warrant transactions are summarized as follows:

| |                           |            |  |             
| | ------------------------- | ---------- |  | ------------
| |                           |            |  | Weighted    
| |                           |            |  | Average     
| |                           | Number     |  | Exercise    
| |                           | of Shares  |  | Price (CAD$)
| |                          
| | Balance at April 30, 2007 | 9,798,000  |  | 1.54        
| | Issued                    | 15,210,110 |  | 3.50        
| | Exercised                 | (373,395)  |  | 1.54        
| | Balance at April 30, 2008 | 24,634,715 |  | 1.94        
| | Issued                    | 12,812,280 |  | 2.30        
| | Balance at May 31, 2008   | 24,634,715 |  | 2.13        
| | Issued                    | 11,024,520 |  | 0.65        
| | Expired                   | (705,955)  |  | 3.50        
| | Balance at May 31, 2009   | 34,953,280 |  | 1.03        



On May 10, 2007, the Company closed a non-brokered private placement comprising 1,387,879 units at CAD$ 2.00 per unit, and 24,033 units at CAD$ 2.02 per unit for gross proceeds of $2,552,698.  Each unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable into a common share at a price of CAD$ 3.50 per share for a period of two years following the close of the private placement (See Note 14).  The fair value of the warrants issued on this private placement was $263,263.

In October 2007, the Company closed a non-brokered private placement comprising 2,093,500 units at CAD$ 3.00 per unit for gross proceeds of $6,611,749.  Each unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable into a common share at a price of  CAD$ 3.50 per share for a period of two years following the close of the private placement.  The Company paid $234,104 and agreed to issue 74,125 share purchase warrants as finders fees in connection with part of the private placement. The fair value of the warrants issued on this tranche of the private placement was $758,116.  The fair value of the finders warrants was $55,357.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 111





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





18.

SHARE PURCHASE WARRANTS(continued)



In December 2007, the Company closed the second tranche of the non-brokered private placement announced in October 2007 comprising 339,000 units at CAD$ 3.00 per unit for gross proceeds of $1,018,732.  Each unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable into a common share at a price of CAD$ 3.50 per share for a period of two years following the close of the private placement.  The Company paid $43,574 and agreed to issue 12,500 share purchase warrants as finders fees in connection with part of the private placement. The fair value of the warrants issued on this tranche of the private placement was $103,725. The fair value of the finders warrants was $8,318.



In January 2008, the Company closed the third tranche of the non-brokered private placement announced in October 2007 comprising 708,000 units at CAD$ 3.00 per unit for gross proceeds of $2,106,098.  Each unit consisted of one common share and one-half of one common share purchase warrant, with each whole warrant exercisable into a common share at a price of CAD$ 3.50 per share for a period of two years following the close of the private placement. The Company paid $104,115 and agreed to issue 35,000 share purchase warrants as finders fees in connection with part of the private placement. The fair value of the warrants issued on this tranche of the private placement was $210,713. The fair value of the finders warrants was $22,764.



In May 2008, the Company closed the first tranche of its senior secured notes financing issuing 32,250 units for gross proceeds of $32,250,000.  Each unit of $1,000 consisted of one Note and a warrant to purchase 382 Common shares. Each warrant entitled the holder to purchase one common share at CAD$ 2.30 for a period of five years from the date of purchase. The Notes mature at 120% of the principal amount and carry 15% interest of which the first years interest was prepaid at the date the funds were received. The Company paid $1,635,230 and agreed to issue 492,780 share purchase warrants as finders fees in connection with this tranche of the private placement. The fair value of the finders warrants was $638,354.

In June 2008, the Company closed the second tranche of its senior secured notes financing issuing 10,000 units for gross proceeds of $10,000,000. Each unit of $1,000 consisted of one Note and a warrant to purchase 382 common shares. Each warrant entitled the holder to purchase one common share at CAD$ 2.30 for a period of five years from the date of purchase.  The Notes mature at 120% of the principal amount and carry 15% interest of which the first years interest was prepaid at the date the funds were received. The Company agreed to issue 152,800 share purchase warrants as finders fees in connection with this tranche of the private placement.  The fair value of the finders warrants was $104,196.

In July 2008, the Company closed the third tranche of its senior secured notes financing issuing 17,750 units for gross proceeds of $17,750,000. Each unit of $1,000 consisted of one Note and a warrant to purchase 382 common shares.  Each warrant entitled the holder to purchase one common share at CAD$ 2.30 for a period of five years from the date of purchase.  The Notes mature at 120% of the principal amount and carry 15% interest of which the first years interest was prepaid at the date the funds were received. The Company agreed to issue 271,220 share purchase warrants as finders fees in connection with this tranche of the private placement.  The fair value of the finders warrants was $110,734.



On April 17, 2009 the Company repriced the warrants issued with the Notes to entitle the holder to purchase one common share at CAD$ 0.65 for the remainder of the warrant period.  Under the revised terms of the warrants, if the common shares of the Company trade at a weighted average trading price of CAD$ 1.00 or more per share for 30 consecutive trading days, the holders of the warrants must exercise the warrants within 30 days.  The repricing of the warrants resulted in an increase in the value of the warrants by $1,781,500 and a decrease in contributed surplus by the same amount.

The weighted average fair value of the finders warrants issued is estimated to be approximately CAD$ 0.54, CAD$ 1.28, CAD$ 0.69, $nil, and CAD$ 2.06 for the twelve months ended May 31, 2009, the one month ended May 31, 2008, the twelve months ended April 30, 2008, the three months ended April 30, 2007 and the twelve months ended January 31, 2007 respectively, by using the Black-Scholes options pricing model with the following assumptions:



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 112





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





18.

SHARE PURCHASE WARRANTS(continued)



| |                                 |               |           |                 |             |                  
| | ------------------------------- | ------------- | --------- | --------------- | ----------- | -----------------
| |                                 |               |           |                 |             |                  
| |                                 |               |           |                 | Three       |                  
| |                                 | Twelve Months | One Month | Twelve Months   | Months      | Twelve Months    
| |                                 | Ended May 31, | Ended May | Ended April 30, | Ended April | Ended January 31,
| |                                 | 2009          | 31, 2008  | 2008            | 30, 2007    | 2007             
| |                                
| | Risk-free interest              | 3.29%         | 3.18%     | 4.00%           | -           | 4.04%            
| | Expected dividend yield         | -             | -         | -               | -           | -                
| | Expected stock price volatility | 43%           | 74%       | 47%             | -           | 108%             
| | Expected warrant life in years  | 5.00          | 5.00      | 2.00            | -           | 5.00             





As at May 31, 2009, the following warrants were outstanding as follows:

| |             |  |              |  |                  
| | ----------- |  | ------------ |  | -----------------
| | Number of   |  |              |  |                  
| | Warrants    |  | Exercise     |  |                  
| | Outstanding |  | Price (CAD$) |  | Expiry Date      
| | 1,120,875   |  | $3.50        |  | October 31, 2009 
| | 182,000     |  | $3.50        |  | December 20, 2009
| | 389,000     |  | $3.50        |  | May 9, 2010      
| | 9,424,605   |  | $1.54        |  | October 17, 2011 
| | 12,812,280  |  | $0.65        |  | May 21, 2013     
| | 3,972,800   |  | $0.65        |  | June 4, 2013     
| | 7,051,720   |  | $0.65        |  | July 8, 2013     
| | 34,953,280  |  |              |  |                  



19.

RELATED PARTY TRANSACTIONS



During the twelve months ended May 31, 2009:

a)

The Company paid consulting fees of $4,234 (one month ended May 31, 2008 - $1,890, twelve months ended April 30, 2008 - $103,965, three months ended April 30, 2007 - $13,421 and twelve months ended January 31, 2007 - $361,985) to related companies controlled by a director and a former officer.

b)

The Company paid consulting fees and wages of $252,334 (one month ended May 31, 2008 - $9,051, twelve months ended April 30, 2008 - $140,535, three months ended April 30, 2007 - $nil and twelve months ended January 31, 2007 - $nil) to companies controlled by directors and an officer.

c)

The Company paid legal fees of $269,526 (one month ended May 31, 2008  $nil, twelve months ended April 30, 2008 - $107,329, three months ended April 30, 2007 - $38,438 and twelve months ended January 31, 2007 - $202,536), share issue costs of $nil (one month ended May 31, 2008  $nil, twelve months ended April 30, 2008 - $162,523, three months ended April 30, 2007 - $nil and twelve months ended January 31, 2007 - $99,566) and financing costs of $104,272 (one month ended May 31, 2008 - $95,257, twelve months ended April 30, 2008  $nil, three months ended April 30, 2007 - $nil and twelve months ended January 31, 2007 - $nil) to a law firm controlled by an officer. The Company paid for goods and services of $155,805 (one month ended May 31, 2008  $nil, twelve months ended April 30, 2008 - $127,326, three months ended April 30, 2007 - $23,110 and twelve months ended January 31, 2007 - $94,514) to a company controlled by an officer.

d)

The Company sold dore bars containing 256 ounces to a director and officer for net proceeds of $220,060 (thirteen months ended May 31, 2008  $nil).  The sale was completed using the London Gold Market PM fix price.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 113





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





19.

RELATED PARTY TRANSACTIONS(continued)

e)

At May 31, 2009, $25,925 was owed to an officer of the Company.





20.

INCOME TAXES



A reconciliation of income taxes at statutory rates with the reported taxes is as follows:

| |                                                       |   |               |   |   |               |   |   |                |   |   |                |   |   |                   |  
| | ----------------------------------------------------- | - | ------------- | - | - | ------------- | - | - | -------------- | - | - | -------------- | - | - | ----------------- | -
| |                                                       |   | Twelve months |   |   | One month     |   |   | Twelve months  |   |   | Three months   |   |   | Twelve months     |  
| |                                                       |   | ended May 31, |   |   | ended May 31, |   |   | ended          |   |   | ended          |   |   | ended January 31, |  
| |                                                       |   | 2009          |   |   | 2008          |   |   | April 30, 2008 |   |   | April 30, 2007 |   |   | 2007              |  
| |                                                      
| | Statutory tax rate                                    |   | 30.38         | % |   | 30.67         | % |   | 33.08          | % |   | 34.12          | % |   | 34.12             | %
| | (Loss) for the period                                 | $ | (21,099,866   | ) | $ | (5,544,998    | ) | $ | (16,111,008    | ) | $ | (8,492,637     | ) | $ | (30,712,592       | )
| | Income tax recovery                                   |   | (6,409,084    | ) |   | (1,700,651    | ) |   | (5,329,521     | ) |   | (2,897,688     | ) |   | (10,479,136       | )
| | Permanent differences                                 |   | (4,746,965    | ) |   | (145,691      | ) |   | 508,419        |   |   | 807,187        |   |   | 4,956,888         |  
| | Income tax rate change and differential               |   | 5,551,802     |   |   | 630,937       |   |   | 4,933,488      |   |   | 1,548,509      |   |   | 4,413,448         |  
| | Foreign exchange                                      |   | (1,131,760    | ) |   | -             |   |   | -              |   |   | -              |   |   | -                 |  
| | Cost of previously unrecognized tax pools             |   | 1,480,781     |   |   | -             |   |   | -              |   |   | -              |   |   | -                 |  
| | Change in functional currency foreign exchange impact |   | 4,010,847     |   |   | -             |   |   | -              |   |   | -              |   |   | -                 |  
| | Change in valuation allowance                         |   | 1,244,379     |   |   | 1,215,405     |   |   | (112,386       | ) |   | 541,992        |   |   | 1,108,800         |  
| |                                                      
| | Income tax recovery                                   |   | -             |   |   | -             |   |   | -              |   |   | -              |   |   | -                 |  

The significant components of the Companys future income tax assets (liabilities) are as follows:

| |                                           |   |              |   |   |              |  
| | ----------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                           |   |              |   |   | May 31, 2008 |  
| |                                           |   | May 31, 2009 |   |   | (Note 2)     |  
| |                                          
| | Future income tax assets (liabilities)    |   |              |   |   |              |  
| | Non-capital and other loss carry-forwards | $ | 4,573,299    |   | $ | 3,268,748    |  
| | Equipment and exploration properties      |   | 48,335       |   |   | 55,198       |  
| | Deferred financing costs                  |   | 2,261,949    |   |   | 1,633,312    |  
| | Future income tax on investment           |   | -            |   |   | (290,579     | )
| | Foreign exchange gain on notes            |   | (556,181     | ) |   | -            |  
| | Senior secured notes                      |   | (442,636     | ) |   |              |  
| | Other                                     |   | 12,285       |   |   | 13,136       |  
| | Total future income tax assets            | $ | 5,897,051    |   | $ | 4,679,815    |  
| | Valuation allowance                       |   | (5,897,051   | ) |   | (4,679,815   | )
| | Net future income tax assets              |   | -            |   |   | -            |  





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 114





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





20.

INCOME TAXES(continued)



The Company has non-capital losses of $18,293,198 available for deduction against future years taxable income in Canada. These losses, if unutilized, will expire beginning in 2010 as follows:



| |      |   |           
| | ---- | - | ----------
| | 2010 | $ | 121,909   
| | 2014 |   | 384,966   
| | 2015 |   | 807,972   
| | 2026 |   | 1,770,096 
| | 2027 |   | 4,738,720 
| | 2028 |   | 3,188,007 
| | 2029 |   | 7,281,528 
| |      | $ | 18,293,198



The Company will not be subject to any income taxes in Panama until all of the debts incurred by all of the affiliated / subsidiary companies have been repaid in full, the timing of which cannot be estimated due to the uncertainty inherent in the future price of gold. At that time the Company will be able to claim accelerated write-offs for all Panamanian subsidiaries.



21.

SEGMENT INFORMATION



The Company has one operating segment which is the exploration of resource properties.  Details of geographic information are as follows:



| |                        |   |         |   |            |   |           
| | ---------------------- | - | ------- | - | ---------- | - | ----------
| | May 31, 2009           |   | Canada  |   | Panama     |   | Total     
| | Interest income        | $ | 120,735 | $ | 48,631     | $ | 169,366   
| | Property and equipment |   | -       | $ | 12,879,658 | $ | 12,879,658
| | Mineral properties     |   | -       | $ | 60,843,501 | $ | 60,843,501
| | May 31, 2008           |   |         |   |            |   |           
| | Interest income        | $ | 2,825   | $ | 75,833     | $ | 78,658    
| | Property and equipment |   | -       | $ | 16,779,149 | $ | 16,779,149
| | Mineral properties     |   | -       | $ | 37,739,133 | $ | 37,739,133
| | April 30, 2008         |   |         |   |            |   |           
| | Interest income        | $ | 39,627  | $ | 12,299     | $ | 51,926    
| | Property and equipment |   | -       | $ | 16,862,789 | $ | 16,862,789
| | Mineral properties     |   | -       | $ | 35,394,279 | $ | 35,394,279
| | April 30, 2007         |   |         |   |            |   |           
| | Interest income        | $ | 41,115  | $ | 7,965      | $ | 49,080    
| | Property and equipment | $ | 57,183  | $ | 4,770,816  | $ | 4,827,999 
| | Mineral properties     |   |         | $ | 12,748,966 | $ | 12,748,966
| | January 31, 2007       |   |         |   |            |   |           
| | Interest income        | $ | 232,599 | $ | 27,794     | $ | 260,393   
| | Property and equipment | $ | 73,157  | $ | 4,362,739  | $ | 4,435,896 
| | Mineral properties     |   |         | $ | 7,034,686  | $ | 7,034,686 





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 115





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





22.

COMMITMENTS



| |                                  |   |             |   |            |   |         |           |   |          
| | -------------------------------- | - | ----------- | - | ---------- | - | ------- | --------- | - | ---------
| |                                  |   |             |   |            |   |         |           |   |          
| |                                  |   | Less than 1 |   |            |   |         |           |   | More than
| |                                  |   | Year        |   | 2 Years    |   | 3 Years | 4-5 Years |   | 5 Years  
| | Office lease                     | $ | 60,676      | $ | 60,676     | $ | 15,168  | Nil       |   | Nil      
| | Capital expenditure commitment   | $ | 950,013     |   | Nil        |   | Nil     | Nil       |   | Nil      
| | Equipment lease                  | $ | 5,741,567   | $ | 4,164,972  | $ | 461,907 | Nil       |   | Nil      
| | Senior secured notes             | $ | 18,811,500  | $ | 16,800,010 |   | Nil     | Nil       |   | Nil      
| | Convertible senior secured notes |   | Nil         | $ | 49,616,537 |   | Nil     | Nil       |   | Nil      
| | Long-term debt                   | $ | 178,760     |   | Nil        |   | Nil     | Nil       |   | Nil      
| | Asset retirement obligation      |   | Nil         |   | Nil        |   | Nil     | Nil       | $ | 6,701,000





23.

FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT



The Company thoroughly examines the various financial instrument risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, currency risk, and interest rate risk. Where material, these risks are reviewed and monitored by the Board of Directors.



(a) Fair Values



The Company's financial instruments consist of cash and cash equivalents, receivables, restricted cash, accounts payable and long-term debt.  The fair value of these financial instruments approximates their carrying values due to the immediate or short-term maturity of these financial instruments.



The Companys senior secured notes and convertible senior secured notes are measured on initial recognition using the residual method (see Notes 14 and 15). Subsequent fair value measurement is based on a discounted cash flow model using a discount rate of 20.58% and a maturity date of two years from date of issue based on the ability of the Note holders to demand repayment after two years and the expectation that Note holders will make this demand.



(b) Financial Instrument Risk Exposure



Credit risk



Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, restricted cash, and accounts receivable. The Company has reduced its credit risk by investing its cash and cash equivalents and restricted cash in term deposits with financial institutions that operate globally. Also, as the majority of its receivables are with the governments of Canada in the form of sales tax the credit risk is minimal. Therefore, the Company is not exposed to significant credit risk and overall the Companys credit risk has not changed significantly from the prior year.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 116





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





23.

FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT(continued)



Liquidity risk

Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The Company has in place a planning and budgeting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. The Company has historically relied on issuance of shares, senior secured debt, convertible senior secured debt and leasing arrangements to develop the Molejon gold project and may require doing so again in the future. On an annual basis the Company may be required to pay 35% of its distributable cash as defined in its senior secured notes and convertible senior secured notes indenture (Notes 14and 15).



Market risk



(i)

Currency risk



Financial instruments that impact the Companys net earnings or other comprehensive income due to currency fluctuations include: Canadian dollar denominated cash and cash equivalents, restricted cash, accounts receivable and accounts payable. The sensitivity of the Companys net earnings and other comprehensive income to changes in the exchange rate between the Canadian dollar and the United States dollar is summarized in the table below:



| |                                                          |   |                     |   |                     |  
| | -------------------------------------------------------- | - | ------------------- | - | ------------------- | -
| |                                                          |   | As at May 31, 2009  |  
| |                                                          |   | 10% Increase in the |   | 10% decrease in the |  
| |                                                          |   | Canadian Dollar     |   | Canadian Dollar     |  
| | (Decrease) increase in net earnings                      | $ | 61,184              | $ | (61,184             | )
| | (Decrease) increase in other comprehensive (loss) income |   | -                   |   | -                   |  
| | Comprehensive (loss) income                              | $ | 61,184              | $ | (61,184             | )





(ii)

Interest rate risk



Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Cash and cash equivalents and restricted cash bear interest at fixed rates.



Other current financial assets and liabilities are not exposed to interest rate risk because they are non-interest bearing.



The operating credit line facility, leases, and long-term debt bear interest at a fixed rate and are also not exposed to interest rate risk.



(c) Capital Management



The Companys objectives of capital management are intended to safeguard the entity's ability to support the Companys normal operating requirements on an ongoing basis, continue the development and exploration of its mineral properties and support any expansionary plans.



The capital structure of the Company consists of long-term debt (Note 11), leases (Note 13), senior secured notes (Note 14), convertible senior secured notes (Note 15) and equity attributable to common shareholders, comprised of issued capital, contributed surplus and deficit. The Company manages the capital structure and makes adjustments in light of changes in economic conditions and the risk characteristics of the Companys assets.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 117





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





23.

FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT(continued)

To effectively manage the entitys capital requirements, the Company has in place a planning and budgeting process to help determine the funds required to ensure the Company has the appropriate liquidity to meet its operating and growth objectives. The Company has historically relied on issuance of shares, senior secured debt, convertible senior secured debt and leasing arrangements to develop the project and may require doing so again in the future.



The Company is monitoring market conditions to secure funding at the lowest cost of capital. The Company is exposed to various funding and market risks which could curtail its access to funds.





24.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

| |                                                                                                    |   |               |   |   |                 |   |   |                 |   |   |                 |   |                  |  
| | -------------------------------------------------------------------------------------------------- | - | ------------- | - | - | --------------- | - | - | --------------- | - | - | --------------- | - | ---------------- | -
| |                                                                                                    |   |               |   |   |                 |   |   |                 |   |   |                 |   |                  |  
| |                                                                                                    |   | Twelve Months |   |   |                 |   |   | Twelve months   |   |   | Three months    |   | Twelve           |  
| |                                                                                                    |   | ended May 31, |   |   | One month ended |   |   | ended April 30, |   |   | ended April 30, |   | months ended     |  
| |                                                                                                    |   | 2009          |   |   | May 31, 2008    |   |   | 2008            |   |   | 2007            |   | January 31, 2007 |  
| | Non-cash investing and financing activities                                                        |   |               |   |   |                 |   |   |                 |   |   |                 |   |                  |  
| | Finders fees                                                                                      | $ | -             |   | $ | 638,354         |   | $ | 86,439          |   | $ | -               | $ | 721,018          |  
| | Share issue costs                                                                                  |   | -             |   |   | (638,354        | ) |   | (86,439         | ) |   |                 |   | (721,018         | )
| | Debt issuance costs                                                                                |   | 112,686       |   |   |                 |   |   |                 |   |   |                 |   |                  |  
| | Warrants                                                                                           |   | (112,686      | ) |   |                 |   |   |                 |   |   |                 |   |                  |  
| | Settlement of advances for deferred services                                                       |   | -             |   |   | -               |   |   | (4,404,000      | ) |   | -               |   | -                |  
| | Settlement of advances for property andequipment and mineral properties                            |   | -             |   |   |                 |   |   | (3,394,847      | ) |   | -               |   | -                |  
| | Shares issued for legal settlement                                                                 |   | -             |   |   | -               |   |   | 264,438         |   |   | -               |   | -                |  
| | Property and equipment acquired through creditline facility and capital leases                     |   | 2,058,197     |   |   | -               |   |   | 10,541,877      |   |   | -               |   | -                |  
| |                                                                                                   
| | Mineral properties incurred through payables                                                       |   | 5,147,462     |   |   | 1,441,668       |   |   | 2,539,496       |   |   | 3,304,493       |   | 450,353          |  
| | Property and equipment incurred throughpayables                                                    |   | 1,071,255     |   |   | -               |   |   | -               |   |   | 162,637         |   | -                |  
| | Deferred services and materials financed by areduction in amounts payable to PetaquillaCopper Ltd. |   | 156,597       |   |   | 11,271          |   |   | 135,252         |   |   | -               |   | -                |  
| | Asset retirement obligation capitalized tomineral properties                                       |   | -             |   |   | -               |   |   | -               |   |   | 4,000,000       |   | -                |  
| |                                                                                                   
| | Interest paid in cash                                                                              | $ | 14,224,440    |   | $ | 5,751,180       |   | $ | 68,618          |   | $ | 58,990          | $ | -                |  
| | Income taxes paid in cash                                                                          |   | -             |   |   | -               |   |   | -               |   |   | -               |   | -                |  





| |                                       |   |              |   |             
| | ------------------------------------- | - | ------------ | - | ------------
| |                                       |   | May 31, 2009 |   | May 31, 2008
| | Cash and cash equivalents consist of: |   |              |   |             
| | Cash                                  | $ | 3,440,168    | $ | 6,394,962   
| | Term deposits                         |   | 135,000      |   | 6,455,175   
| |                                       | $ | 3,575,168    | $ | 12,850,137  
| |                                       |   |              |   |             





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 118





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





25.

ASSET RETIREMENT OBLIGATION



The Companys asset retirement obligation relates to site restoration and cleanup costs for its Molejon gold project located in Panama.



A reconciliation of the provision for asset retirement obligation is as follows (Note 2):



| |                                         |   |           |  
| | --------------------------------------- | - | --------- | -
| | Balance at April 30, 2008               | $ | 4,306,000 |  
| | Accretion                               |   | 52,098    |  
| | Foreign exchange translation difference |   | (24,882   | )
| | Balance at May 31, 2008                 | $ | 4,333,216 |  
| | Accretion                               |   | 331,504   |  
| | Balance at May 31, 2009                 | $ | 4,664,720 |  



The provision for asset retirement obligation is based upon the following assumptions:

a)

The total undiscounted cash flow required to settle the obligation is approximately $6,701,000;

b)

Asset retirement obligation payments are expected to occur during fiscal years 2014 and 2015;

c)

A credit adjusted risk-free rate of 7.65% has been used to discount cash flows.

26.

CONTINGENCIES



1)

On November 13, 2008 the Autoridad Nacional del Ambiente (ANAM), the environmental agency of the Government of the Republic of Panama, issued a Resolution purporting to fine the Company and its present and former affiliates US$ 1,000,000 for alleged violations of environmental laws that took place on the main Petaquilla Copper Concession in 2005 and an additional US$ 934,695 for damages. On November 26, 2008, ANAM, by Resolution, approved the Companys Environmental Impact Study (EIS) Category III submitted in July 2007 for the Molejon Gold Project. The Resolution sets out a number of conditions to be satisfied before the Company can attain full commercial production.   Based on the approval of the EIS, the Company filed for reconsideration by ANAM to have the fines reduced to nil.  In January 2009, the Company was advised that ANAM had not accepted the Companys request for reconsideration that the amount of the financial sanctions purportedly levied against the Company and its present and former affiliates be reduced to nil.  On March 10, 2009, the Supreme Court of the Republic of Panama suspended the imposition of ANAMs fine until the matter of the Companys appeal is resolved.  Consequently, the amount, if any, that may ultimately be payable by the Company cannot be determined.



2)

The Company is engaged in certain other legal actions in the ordinary course of business and believes that the ultimate outcome of these actions will not have a material adverse effect on our operating results, liquidity or financial position.



27.

SUBSEQUENT EVENTS



Subsequent to May 31, 2009 the following events took place:



1)

The Companys wholly-owned subsidiary Panama Central Electrica, S.A. (PCE) entered into a Memorandum of Understanding (MOU) with Generadora Hidroelectrica Santa María, S.A. ( ̈Santa Maria ̈) for the development of a 25MW hydroelectric plant (the  ̈Hydro Project ̈) in the Province of Veraguas, Panama.



2)

The Company granted 150,000 stock options, 60,000 options expired and 3,245,080 options were cancelled. The Company is currently reviewing the accounting impact of the option cancellations.



3)

The Company is currently conducting an internal investigation, under the oversight of its Audit Committee and with the assistance of independent counsel, of certain of its international operations, focusing on the material weakness identified during the Companys assessment of internal controls as at May 31, 2009.



4)

The Companys management conducted an assessment of the Molejon Gold Mine resulting in the identification of several deficiencies in the plant construction and operation. These deficiencies have led to several areas of the plant not operating to design specifications resulting in additional future costs to mitigate construction deficiencies. A process for estimating costs of mitigation is in the identification stage thus no amounts can be quantified at this time.



5)

The Company entered into a forward sale agreement for 7,000 ounces of gold to be delivered in October and November 2009. Disruption of plant operations from any cause may result in delivery default and result in additional cost being incurred.



6)

In September 2009, the Company made a principal, premium and interest payment of $6,208,844 on its senior secured notes pursuant to the provisions of the debt agreement (Note 12).



7)

As a result of operational issues, the Company has been unable to meet its current production targets and requires additional funding in order to continue operations.  Management is currently in substantive negotiations with lenders to secure additional financing; however, there is no guarantee that management will be successful in its efforts.



8)

On November 5, 2009, Gaston Araya, Robert Baxter, John Cook and John Resing resigned from the Companys board of directors, Christopher Davie resigned as President and Chief Executive Officer and Graham H. Scott resigned as Corporate Secretary.



9)

On November 6, 2009, Raul Ferrer, David Kaplan, David Levy and Daniel Small joined the Companys board of directors.  In addition, Richard Fifer was appointed Non-Executive Chairman of the board of directors and Joao Manuel was appointed President and Chief Executive Officer.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 119





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





28.

RESTATEMENT OF JANUARY 31, 2007 INTERIM FINANCIAL STATEMENTS AND MAY 31, 2008 BALANCE SHEET



During the fourth quarter of fiscal 2009, the Company concluded that:



·

The accounting for the spin-out of Petaquilla Copper Ltd. was not properly recorded in the financial statements for the period ended January 31, 2007.

·

Stock-based compensation relating to the options issued prior to the Plan of Arrangement was not properly recorded in the financial statements for the period ended January 31, 2007.

·

Certain capital assets were recorded as mineral properties in the financial statements as at January 31, 2007.

·

Dilution gains and equity losses for the equity investment in Petaquilla Copper Ltd. which were applicable to the twelve months ended January 31, 2007 were not recorded in that period.

·

The carrying value of the Investment in Petaquilla Copper Ltd. was not correctly recorded during the period ended May 31, 2008.



The Plan of Arrangement, whereby each holder of the common shares of the Company on October 17, 2006 was entitled to receive one common share of Copper for each common share of the Company held, was accounted for, in the twelve months ended January 31, 2007, based on a tentative plan.  According to the terms of the initial plan, Copper was to receive $4,833,040 (CAD$ 5,500,000).  The plan was later revised and this amount was no longer required to be transferred to Copper.  The effect of this change to the January 31, 2007 financial statements was to decrease the amount payable to a related company by $2,426,701, increase the amount receivable from a related company by $1,821,387, decrease other comprehensive income by $584,952 and decrease the amount distributed to Petaquilla Copper Ltd. by $4,833,040.

Incorrect accounting was applied to options issued prior to the Plan of Arrangement.  The effect of the adjustment to the January 31, 2007 financial statements was to increase stock-based compensation by $6,141,087, increase contributed surplus by $3,723,515, increase share capital by $2,497,743 and increase mineral properties by $103,832.



Certain capital assets acquired during the twelve months ending January 31, 2007 were incorrectly recorded as mineral properties.  As a result, equipment was understated by $3,411,215, accumulated amortization on production equipment was understated by $408,182 and mineral properties were overstated by $3,003,033. The effect of the adjustment to the January 31, 2007 financial statements is an increase in property and equipment of $3,003,033 and a decrease in mineral properties of $3,003,033.



The Company was required to record the investment in Copper using the equity method commencing October 18, 2006, the date of the Plan of Arrangement.  Dilution gains resulting from the issue of additional shares by Copper as well as the Companys proportionate share of losses incurred by Copper were required to be recorded by the Company in the period in which these transactions occurred.   Due to the inability of Copper to provide information on a timely basis, the dilution gain and equity loss for the twelve months ended January 31, 2007 were not recorded until the period ending April 30, 2007.  The result of the adjustment required to the January 31, 2007 financial statements was to increase the investment in Petaquilla Copper Ltd. by $2,187, 611, increase the gain on dilution of equity investment by $1,989,882 and increase the loss from equity investment by $169,866.   In the current year the Company has adopted a change in accounting policy which affects the measurement of dilution gains and equity losses on a retroactive basis and therefore this error has been corrected as part of this change.



The proceeds used in the calculation of dilution gains did not include transaction costs and the gain on sale of Petaquilla Copper Ltd. shares did not exclude the gain attributable to Petaquilla Minerals Ltd.s equity interest in Petaquilla Copper Ltd.  As a result, the investment in Petaquilla Copper Ltd. was overstated at May 31, 2008 by $1,207,000. The impact of this adjustment is reflected in the 12 month period ended April 30, 2008 which was previously presented as part of the 13 month period ended May 31, 2008.  In the current year the Company has adopted a change in accounting policy which affects the measurement of





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 120





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





28.

RESTATEMENT OF JANUARY 31, 2007 INTERIM FINANCIAL STATEMENTS AND MAY 31, 2008 BALANCE SHEET (continued)



dilution gains and equity losses on a retroactive basis and therefore this error has been corrected as part of this change.





29.

DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES



These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP). Material variations in the accounting principles, practices and methods used in preparing these financial statements from United States Generally Accepted Accounting Principles (U.S. GAAP) are described and quantified below.

Loss for the periods

| |                                                                                                              |   |                     |   |   |                 |   |   |                     |  
| | ------------------------------------------------------------------------------------------------------------ | - | ------------------- | - | - | --------------- | - | - | ------------------- | -
| |                                                                                                              |   | Twelve months ended |   |   | One month ended |   |   | Twelve months ended |  
| |                                                                                                              |   | May 31, 2009        |   |   | May 31,         |   |   | April 30,           |  
| |                                                                                                              |   |                     |   |   | 2008            |   |   | 2008                |  
| |                                                                                                              |   |                     |   |   | (Note 2)        |   |   | (Note 2)            |  
| | (Loss) for the period  Canadian GAAP                                                                        | $ | (21,099,866         | ) | $ | (5,544,998      | ) | $ | (16,111,007         | )
| | Gain on dilution of equity investment (b)                                                                    |   | (2,238,492          | ) |   | -               |   |   | (12,582,085         | )
| | Mineral properties expensed under U.S. GAAP (c)                                                              |   | (17,562,548         | ) |   | (1,884,160      | ) |   | (22,680,970         | )
| | Revenue recognized (k)                                                                                       |   | 653,941             |   |   | -               |   |   | -                   |  
| | Cost of goods sold (k)                                                                                       |   | (1,260,127          | ) |   | -               |   |   | -                   |  
| | Amortization (k)                                                                                             |   | (640,425            | ) |   | -               |   |   | -                   |  
| | Write down of inventory in finished goods and work in progress                                               |   | (2,404,695          | ) |   | -               |   |   | -                   |  
| | Change in fair value of warrants denominated in Canadian dollars under U.S. GAAP (l)                         |   | 22,871,582          |   |   | -               |   |   | -                   |  
| | Foreign exchange on difference in mineral properties expensed under U.S. GAAP                                |   | (9,639,262          | ) |   | -               |   |   | 1,622,000           |  
| | Foreign exchange on difference in senior secured notes under U.S. GAAP                                       |   | 3,180,313           |   |   | -               |   |   | -                   |  
| | Additional loss relating to redemption and modification of senior secured note agreement under U.S. GAAP (h) |   | (18,712,488         | ) |   | 3,831,931       |   |   | -                   |  
| | Net loss  U.S. GAAP                                                                                         | $ | (46,852,067         | ) | $ | (3,597,227      | ) | $ | (49,752,062         | )
| | Other comprehensive (loss) gain                                                                              |   |                     |   |   |                 |   |   |                     |  
| | Unrealized (loss) gain on translating financial statements to U.S. reporting currency                        |   | (4,648,716          | ) |   | 487,574         |   |   | 716,555             |  
| | Foreign exchange on difference in mineral properties expensed under U.S. GAAP                                |   | 9,639,262           |   |   | -               |   |   | (1,622,000          | )
| | Foreign exchange on difference in senior secured notes under U.S. GAAP                                       |   | (3,180,313          | ) |   | -               |   |   | -                   |  
| | Comprehensive loss for the year                                                                              | $ | (45,041,834         | ) | $ | (3,106,653      | ) | $ | (50,657,507         | )
| | Basic and diluted loss per share  U.S. GAAP                                                                 | $ | (0.49               | ) | $ | (0.04           | ) | $ | (0.53               | )







| |                                                                                       |   |                              |   |   |                             |  
| | ------------------------------------------------------------------------------------- | - | ---------------------------- | - | - | --------------------------- | -
| |                                                                                       |   | Three months ended April 30, |   |   | Twelve months ended January |  
| |                                                                                       |   | 2007                         |   |   | 31, 2007                    |  
| |                                                                                      
| |                                                                                       |   | (Note 2)                     |   |   | (Note 2)                    |  
| |                                                                                      
| | (Loss) for the period  Canadian GAAP                                                 | $ | (8,492,639                   | ) | $ | (30,712,592                 | )
| | Gain on dilution of equity investment (b)                                             |   | (632,396                     | ) |   | (1,701,589                  | )
| | Mineral properties expensed under U.S. GAAP (c)                                       |   | (5,510,801                   | ) |   | (3,540,104                  | )
| | Foreign exchange on difference in mineral properties under U.S. GAAP                  |   | -                            |   |   | 272,000                     |  
| | Net loss  U.S. GAAP                                                                  | $ | (14,635,836                  | ) | $ | (35,682,285                 | )
| | Other comprehensive (loss) gain                                                       |   |                              |   |   |                             |  
| | Unrealized (loss) gain on translating financial statements to U.S. reporting currency |   | 923,990                      |   |   | (598,731                    | )
| | Foreign exchange on difference in mineral properties expensed under U.S. GAAP         |   | -                            |   |   | (272,000                    | )
| | Comprehensive loss for the year                                                       | $ | (13,711,846                  | ) | $ | (36,553,016                 | )
| | Basic and diluted loss per share  U.S. GAAP                                          | $ | (0.16                        | ) | $ | (0.46                       | )





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 121





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





29.

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



| |                                                                                                                              |   |             |   |   |              |  
| | ---------------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ------------ | -
| | Balance Sheets                                                                                                               |   | May 31 2009 |   |   | May 31, 2008 |  
| |                                                                                                                              |   |             |   |   | (Note 2)     |  
| | Total assets  Canadian GAAP                                                                                                 | $ | 81,543,823  |   | $ | 71,208,177   |  
| | Mineral properties expensed or charged to cost of sales and revenue under U.S. GAAP (c)(k)                                   |   | (55,001,369 | ) |   | (33,788,515  | )
| | Total assets  U.S. GAAP                                                                                                     | $ | 26,542,454  |   | $ | 37,419,662   |  
| | Liabilities  Canadian GAAP                                                                                                  | $ | 90,464,111  |   | $ | 56,602,043   |  
| | Allocation of fair value of senior notes under U.S. GAAP (h)                                                                 |   | -           |   |   | (13,636,333  | )
| | Derivative liability  warrants (l)                                                                                          |   | 6,292,830   |   |   | -            |  
| | Equity component of convertible debt treated as a liability under U.S. GAAP (i)                                              |   | 495,121     |   |   | -            |  
| | Liabilities  U.S. GAAP                                                                                                      | $ | 97,252,062  |   | $ | 42,965,710   |  
| |                                                                                                                             
| | Shareholder s equity (deficit) - Canadian GAAP                                                                              | $ | (8,920,288  | ) | $ | 14,606,134   |  
| |                                                                                                                              |   |             |   |   |              |  
| | Mineral properties expensed or charged to cost of sales and revenue under U.S. GAAP (c)(k)                                   |   | (55,001,369 | ) |   | (33,788,515  | )
| | (Decrease) increase in retained earnings due to translation of prior year mineral property expenses and senior secured notes |   | (4,564,949  | ) |   | 1,622,000    |  
| | Difference in accumulated other comprehensive income                                                                         |   | 4,564,949   |   |   | (1,622,000   | )
| | Increase in net income due to the change in fair value of warrants denominated in Canadian dollars under U.S. GAAP (l)       |   | 22,871,582  |   |   | -            |  
| | Decrease in warrants due to fair value of warrants denominated in Canadian dollars under U.S. GAAP (l)                       |   | (29,164,412 | ) |   | -            |  
| | Additional loss relating to redemption and modification of senior secured note agreement under U.S. GAAP (h)                 |   | (14,903,816 | ) |   | 3,831,931    |  
| | Allocation of fair value of senior secured notes under U.S. GAAP (h)                                                         |   | 14,903,816  |   |   | 9,804,402    |  
| | Equity component of convertible debenture treated as a liability under U.S. GAAP (i)                                         |   | (495,121    | ) |   | -            |  
| | Shareholders equity (deficit)  U.S. GAAP                                                                                   | $ | (70,709,608 | ) | $ | (5,546,048   | )





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 122





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





29.

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



| |                                                                           |   |              |   |   |                      |  
| | ------------------------------------------------------------------------- | - | ------------ | - | - | -------------------- | -
| | Mineral Properties                                                        |   | May 31, 2009 |   |   | May 31 , 2008        |  
| |                                                                          
| |                                                                           |   |              |   |   | (Notes 2 and 28 (a)) |  
| |                                                                           |   |              |   |   |                      |  
| | Mineral properties  Canadian GAAP                                        | $ | 60,843,501   |   | $ | 37,739,133           |  
| | Amortization (k)                                                          |   | (640,425     | ) |   | -                    |  
| | Revenue recognized under U.S. GAAP (k)                                    |   | 653,941      |   |   | -                    |  
| | Cost of goods sold (k)                                                    |   | (1,260,127   | ) |   | -                    |  
| | Inventory write-down (k)                                                  |   | (2,404,695   | ) |   | -                    |  
| | Reclassification of work-in-progress and finished goods to current assets |   | (2,868,999   | ) |   | -                    |  
| | Mineral properties expensed under U.S. GAAP (c)                           |   | (51,350,063  | ) |   | (33,788,515          | )
| | Mineral properties  U.S. GAAP                                            | $ | 2,973,133    |   | $ | 3,950,618            |  
| |                                                                           |   |              |   |   |                      |  



| |                                                                |   |                    |   |   |                 |   |   |                      |  
| | -------------------------------------------------------------- | - | ------------------ | - | - | --------------- | - | - | -------------------- | -
| |                                                                |   |                    |   |   |                 |   |   |                      |  
| | Statement of Cash Flows                                        |   |                    |   |   |                 |   |   |                      |  
| |                                                                |   | Twelve months      |   |   | One month ended |   |   | Twelve months ended  |  
| |                                                                |   | ended May 31, 2009 |   |   | May 31, 2008    |   |   | April 30, 2008       |  
| |                                                                |   |                    |   |   | (Note 2)        |   |   | (Notes 2 and 28 (a)) |  
| |                                                                |   |                    |   |   |                 |   |   |                      |  
| | Cash (used in) provided by operating activities Canadian GAAP | $ | (16,010,085        | ) | $ | (10,134,316     | ) | $ | (6,667,860           | )
| | Expenditures on mineral properties                             |   | (27,201,810        | ) |   | (1,884,160      | ) |   | (21,058,970          | )
| | Cash used in operating activities  U.S. GAAP                  | $ | (43,211,895        | ) | $ | (12,018,476     | ) | $ | (27,726,830          | )
| | Cash from (used in) financing activities  Canadian            | $ | (1,260,198         | ) | $ | 23,380,108      |   | $ | 30,654,125           |  
| | Cash from (used in) financing activities  U.S. GAAP           | $ | (1,260,198         | ) | $ | 23,380,108      |   | $ | 30,654,125           |  
| | Cash from (used in) investing activities  Canadian GAAP       | $ | 8,164,377          |   | $ | (1,289,902      | ) | $ | (19,977,584          | )
| |                                                               
| | Expenditures on mineral properties                             |   | 27,201,810         |   |   | 1,884,160       |   |   | 21,058,970           |  
| | Cash from investing activities  U.S. GAAP                     | $ | 35,366,187         |   | $ | 594,258         |   | $ | 1,081,386            |  
| | Cash and cash equivalents, end of period  Canadian GAAP       | $ | 3,575,168          |   | $ | 12,850,137      |   | $ | 1,766,256            |  
| | Cash and cash equivalents, end of period  U.S. GAAP           | $ | 3,575,168          |   | $ | 12,850,137      |   | $ | 1,766,256            |  



| |                                                                 |   |                    |   |   |                     |  
| | --------------------------------------------------------------- | - | ------------------ | - | - | ------------------- | -
| |                                                                 |   |                    |   |   |                     |  
| | Statement of Cash Flows                                         |   | Three months ended |   |   | Twelve months ended |  
| |                                                                 |   | April 30, 2007     |   |   | January 31, 2007    |  
| |                                                                
| |                                                                
| | Cash (used in) provided by operating activities  Canadian GAAP | $ | (3,681,090         | ) | $ | (14,506,875         | )
| | Expenditures on mineral properties                              |   | (5,510,801         |   |   | (3,268,104          | )
| | Cash used in operating activities  U.S. GAAP                   | $ | (9,191,891         | ) | $ | (18,046,979         | )
| | Cash from (used in) financing activities  Canadian GAAP        | $ | (855,509           | ) | $ | 25,349,210          |  
| | Cash from (used in) financing activities  U.S. GAAP            | $ | (855,509           | ) | $ | 25,349,210          |  
| | Cash from (used in) investing activities  Canadian GAAP        | $ | 224,494            |   | $ | (12,395,955         | )
| | Expenditures on mineral properties                              |   | 5,510,801          |   |   | 3,268,104           |  
| | Cash from investing activities  U.S. GAAP                      | $ | 5,735,295          |   | $ | (9,127,851          | )
| |                                                                
| | Cash and cash equivalents, end of period  Canadian GAAP        | $ | 1,606,693          |   | $ | 5,887,701           |  
| | Cash and cash equivalents, end of period  U.S. GAAP            | $ | 1,606,693          |   | $ | 5,887,701           |  



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 123





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





29.

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



a)

Restatement



Certain capital assets purchased in the twelve months ended January 31, 2007 were included in mineral properties and were incorrectly expensed for accounting purposes under U.S. GAAP.  The effect of the restatement is to decrease mineral properties expensed by $3,950,618, increase total assets by $3,950,618 and increase shareholders equity by $3,950,618 at May 31, 2008 and decrease mineral properties expensed by $3,525,581, increase total assets by $3,525,581 and increase shareholders equity by $3,525,581 at April 30, 2007.



As a result of a review of the accounting for the investment in Petaquilla Copper Ltd. under U.S. GAAP, the presentation of the investment balance and the dilution gains and equity losses have been adjusted.  The effect of these adjustments is to increase the investment in Petaquilla Copper Ltd. at May 31, 2008 by $2,432,220, and increase shareholders equity by $2,432,220. In the current year the Company has adopted a change in accounting policy which affects the measurement of dilution gains and equity losses and is applied on a retroactive basis.  This change in accounting policy harmonizes the U.S. and Canadian GAAP treatment of the dilution gains and equity losses.   This error has therefore been eliminated as part of this change.



Debt issuance costs of $3,831,931 were written off during the month ending May 31, 2008 rather than being capitalized. The effect of this restatement is to decrease the senior secured notes under U.S. GAAP by $3,831,931, decrease debt issuance costs expensed under U.S. GAAP by $3,831,931 and increase shareholders' equity under U.S. GAAP by $3,831,931.



b)

Equity investment in Petaquilla Copper Ltd.

Under U.S. GAAP, changes in the parent companys proportionate share of equity resulting from the additional equity raised by an entity subject to significant influence in the development stage are accounted for as an equity transaction on consolidation. Under Canadian GAAP, these gains have been credited to income.

c)

Mineral properties and deferred costs

Mineral property costs and related exploration expenditures are accounted for in accordance with Canadian GAAP as disclosed in Note 2. For U.S. GAAP purposes, the Company expenses, as incurred, the exploration costs relating to unproven mineral properties which includes plant and  camp costs as these assets have no alternative use and cannot be transferred to another mine site. The ball mills, which could be moved to another site in the event that the Companys property is not economically feasible, are the only mineral properties that have been capitalized.  When proven and probable reserves are determined for a property and a feasibility study is prepared, then subsequent development costs of the property would be capitalized.

d)

Marketable securities

Under Canadian GAAP, the marketable securities held by the Company were recorded at the lower of cost and net realizable value. Under U.S. GAAP, these investments are classified as available-for-sale securities and recorded at market value. The accumulated difference between cost and market value is recorded as part of comprehensive income. Effective May 1, 2007 Canadian and U.S. GAAP relating to accounting for investments has converged and no differences exist for the period ended May 31, 2008 and May 31, 2009.

e)

Development stage company

Pursuant to U.S. GAAP, the Company would be subject to the disclosure requirements applicable to a development stage enterprise as the Company is devoting its efforts to establishing commercially viable mineral properties. However, the identification of the Company as such for accounting purposes does not impact the measurement principles applied to these consolidated financial statements.





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 124





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





29.

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

f)

Income taxes

Under Canadian GAAP, future tax assets and liabilities are recorded at substantively enacted tax rates. Under U.S. GAAP, deferred tax assets and liabilities are recorded at enacted rates. There were no significant differences between enacted and substantively enacted rates for the periods presented.

g)

Accounting for uncertainty in income taxes

In July 2006, the Financial Accounting Standards Board issued FIN 48, Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109 ("FIN 48"). This interpretation provides guidance on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 prescribes a recognition threshold and measurement of a tax position taken or expected to be taken in a tax return. This interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

Effective May 1, 2007 the Company adopted FIN 48. The adoption did not result in any adjustment to opening retained earnings under U.S. GAAP. As a result of the implementation of FIN 48, the Company did not recognize any liabilities for unrecognized tax benefits. In the event that the Company recognizes accrued interest related to unrecognized tax benefits, it will be recorded in interest expense. Any penalties will be recorded in general and administrative expenses.

The Company is subject to taxation in Canada and various other foreign jurisdictions. The Company is currently open to audit under the statute of limitations by the Canada Revenue Agency for years ended January 31, 2005 through May 31, 2009.

h)

Senior secured notes

Under Canadian GAAP, compound financial instruments can be accounted for using the residual method when allocating between the liability and the equity component of the instrument. Under U.S. GAAP, compound financial instruments are accounted for using the fair value method when allocating between the liability and the equity component. On the modification of the senior secured note agreement on March 25, 2009, the senior secured notes were required to be marked to market and the Company recognized additional losses relating to redemption and inception losses in the amount of $14,903,816. This resulted in harmonizing both Canadian GAAP and U.S. GAAP with no differences going forward.

i)

Convertible senior secured notes



Under U.S. GAAP, convertible debt instruments are classified as debt until converted to equity, whereas under Canadian GAAP, the proceeds of the convertible debt instrument are allocated to both debt and equity components, with the debt component being accreted over time to its face value and accretion charged to earnings.  Under U.S. GAAP, a value is assigned to the conversion feature only if the effective conversion rate is less than the market price of the common stock at the commitment date. No value would be assigned under U.S. GAAP to the conversion feature and thus, the entire value of the convertible notes is classified as debt. This difference resulted in liabilities being increased by $495,121 and shareholders equity being decreased by $495,121.



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 125





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





29.

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

j)

Deferred financing costs

Accounting Principles Board Opinion No. 21, Interest on Receivables and Payables requires that debt issue costs be reported in the balance sheet as deferred charges and amortized over the term of the debt. Upon issuance, the Company reduced the carrying value of the senior secured notes by debt issuance costs. On modification of the senior secured note agreement as stated above in (h), an inception loss wrote off all deferred financing costs. No differences exist for the period ended May 31, 2009.

k)

Commencement of mill commissioning

The Company is in the pre-operating phase and therefore in accordance with EIC 27, Revenues and Expenses during the pre-operating period, pre-operating expenditures are deferred and all revenues are recognized as a reduction of deferred expenditures. Under U.S. GAAP, in accordance with SOP 98-5, Reporting on the Costs of Start-Up Activites,all start up costs are expensed as incurred and revenues are recognized in the statement of operations with their corresponding costs of production.



For U.S. GAAP purposes, the impact of this difference for the year ended May 31, 2009 was to increase revenues by $653,941, increase cost of sales by $1,260,127, increase amortization by $640,425, increase inventory write-down by $2,404,695 and decrease mineral properties expensed by $3,651,306.

l)

Inventory Write Down



The $2,404,695 write-down of inventory arose from the excess of unit cost per ounce over net realizable value. Costs totaled $1,793.13 per ounce for the year ended May 31, 2009. Amounts greater than the net realizable value of $975.50 were applied to inventory on hand to calculate the total inventory write-down.

m)

Warrants

Warrants that are issued with an exercise price denominated in a currency other than the Companys functional currency are required to be classified and accounted for as financial liabilities and re-measured under the Black-Scholes model at each period end. For the year ended May 31, 2009, under U.S. GAAP, other income was increased by $22,871,582 arising from a decrease in fair value of the warrants granted in which the exercise price denominated currency is different from the Companys functional currency. As of May 31, 2009, the liability relating to warrants granted for which the exercise price denominated currency is different from the Companys functional currency was $6,292,830 and the warrant account was reduced by $29,164,412 as a result of the reclassification of the warrants to liabilities pursuant to U.S. GAAP.



n)

Adoption of new accounting policies



Statement of Financial Accounting Standards No. 157 (SFAS 157), Fair Value Measurements, defines fair value, establishes a framework for measuring value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and applies under other accounting pronouncements that require or permit fair value measurements. Accordingly, SFAS 157 does not require any new fair value measurements. The adoption of SFAS 157 is not expected to have an impact on the Companys consolidated financial statements. SFAS 157-2 defers the Statements effective date for certain nonfinancial assets and liabilities to fiscal years beginning after November 15, 2008, and interim periods within those years. The adoption of SFAS 157-2 is not expected to have an impact on the Companys consolidated financial statements.





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 126





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





29.

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



Statement of Financial Accounting Standards No. 159 (SFAS 159), The Fair Value Option for Financial Assets and Liabilities, provides companies with an option to report selected assets and liabilities (principally financial assets and liabilities) at fair value. The objective of SFAS 159 is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 is effective as of the beginning of an entitys first fiscal year that begins after November 15, 2007. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 requires entities to display the fair value of those assets and liabilities for which the Company has chosen to use fair value on the face of the balance sheet. SFAS 159 does not eliminate disclosure requirements included in other accounting standards.



o)

Recent Account Pronouncements



SFAS-160, Non-controlling Interests in Consolidated Financial Statements

In December 2007, FASB issued SFAS-160, Non-controlling Interests in Consolidated Financial Statements (SFAS-160), which specifies that non-controlling interests are to be treated as a separate component of equity, not as a liability or other item outside of equity. Because non-controlling interests are an element of equity, increases and decreases in the parents ownership interest that leave control intact are accounted for as capital transactions. The Statement is effective for business combinations entered into on or after December 15, 2008, and is to be applied prospectively to all non-controlling interests, including any that arose before the effective date. The Company is evaluating the impact of this new standard on the Companys consolidated financial statements.



SFAS 141R, Business Combinations

In December 2007, the FASB issued a revised standard on accounting for business combinations, SFAS-141R. The Statement is effective for periods beginning on or after December 15, 2008. SFAS-141R requires fair value measurement for all business acquisitions including pre-acquisition contingencies. The standard also expands the existing definition of a business and removes certain acquisition related costs from the purchase price consideration. The Company is evaluating the impact of this new standard on the Companys consolidated financial statements.



FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion

In May 2008, FASB issued FASB Staff Position Accounting Principles Board 14-1 (APB 14-1), which revises the accounting treatment for convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement. APB 14-1 requires the issuer to separately account for the liability and equity components of convertible debt instruments. The value assigned to the liability component would be the estimated fair value, as of the date of issuance, of similar debt without the conversion option, but including any other embedded features. The difference between the proceeds of the debt and the value allocated to the liability component would be recorded in equity. The standard is effective for periods beginning on or after December 15, 2008, and is to be applied retrospectively. The Company is evaluating the impact of APB 14-1 on the Companys consolidated financial statements.



EITF 07-5, Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entitys Own Stock

In June 2008, FASB Task Force reached a consensus on EITF Issue No. 07-5, Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entitys Own Stock (EITF 07-5). The standard provides that an equity-linked financial instrument (or embedded feature) would not be considered indexed to the entitys own stock if the strike price is denominated in a currency other than the issuers functional currency. EITF 07-5 is effective for periods beginning on or after December 15, 2008. The Company is evaluating the impact of EITF 07-5 on the Companys consolidated financial statements.





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 127





---

PETAQUILLA MINERALS LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(in United States Dollars)

Twelve Months Ended May 31, 2009, One Month Ended May 31, 2008, Twelve Months Ended April 30, 2008, Three Months Ended April 30, 2007 and Twelve Months Ended January 31, 2007





29.

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



EITF 08-4, Transition Guidance for Conforming Changes to EITF Issue No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios

In June 2008, FASB Task Force provided transition guidance for conforming changes made to EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustment Conversion Ratios that resulted from Issue 00-27 and Statement 150. EITF 08-4 is effective for fiscal years ending after December 15, 2008. The Company is evaluating the impact of EITF 08-4 on the Companys consolidated financial statements.



EITF 08-6, Equity Method Investment Accounting Considerations

In November 2008, FASB Task Force clarified the accounting for certain transactions and impairment considerations involving equity method investments. Topics related to equity method investments include the initial carrying value of an equity method investment, impairment assessment of an investees intangibles and an equity investees issuance of shares.  EITF 08-6 is effective for fiscal years beginning on or after December 15, 2008. The Company is evaluating the impact of EITF 08-6 on the Companys consolidated financial statements.





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 128





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ITEM 18.  FINANCIAL STATEMENTS

Please refer to Item 17  Financial Statements.

ITEM 19.  EXHIBITS

(a)  Financial Statements

|                                                                                                                                                                                                                             
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Description of Document                                                                                                                                                                                                      
|                                                                                                                                                                                                                             
|Cover Sheet                                                                                                                                                                                                                  
|Management Report on Internal Controls over Financial Reporting                                                                                                                                                              
|Independent Auditors Report on Financial Statements dated September 1, 2009                                                                                                                                                 
|Independent Auditors Report on Internal Controls dated September 1, 2009                                                                                                                                                    
|Balance Sheets as at May 31, 2009 and May 31 2008                                                                                                                                                                            
|Consolidated Statements of Operations and Deficit for 12 Months Ended May 31, 2009, One Month Ended May 31, 2008, 12 Months Ended April 30, 2008, Three Months Ended April 30, 2007, and Twelve Months Ended January 31, 2007
|Consolidated Statements of Shareholders Equity for 12 Months Ended May 31, 2009, One Month Ended May 31, 2008, 12 Months Ended April 30, 2008, Three Months Ended April 30, 2007, and Twelve Months Ended January 31, 2007  
|Consolidated Statements of Cash Flows for 12 Months Ended May 31, 2009, One Month Ended May 31, 2008, 12 Months Ended April 30, 2008, Three Months Ended April 30, 2007, and Twelve Months Ended January 31, 2007            
|Notes to the Consolidated Financial Statements                                                                                                                                                                               

(b)  Exhibits

|ExhibitNumber | Description of Document                                                                                                                                                                             
|------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*1.A.         | Memorandum of Incorporation and Articles of Petaquilla Minerals Ltd.                                                                                                                                
|*2.A.         | Shareholder Rights Plan                                                                                                                                                                             
|2.B.          | Amended and Restated Senior Secured Notes Indenture between Petaquilla Minerals Ltd. and Computershare Trust Company of Canada made as of March 25, 2009                                            
|*3.B.         | Special Resolution dated June 8, 1995, increasing the authorized share capital of Petaquilla Minerals Ltd.                                                                                          
|*4.F.         | Option Agreement dated August 10, 1993, between Petaquilla Minerals, S.A., Madison Enterprises Corp. and Madison Enterprises (Latin America), S.A. with respect to the Belencillo Property.         
|*4.G.         | Association Agreement dated September 23, 1994, as amended, between Petaquilla Minerals, S.A. and Madison Enterprises (Latin America), S.A., with respect to the Belencillo Property                
|*4.I.         | Option Agreement dated February 17, 1994, between Petaquilla Minerals, S.A. and Arlo Resources Ltd. with respect to the Oro del Norte Property                                                      
|*4.J.         | Option Agreement dated February 17, 1994, between Petaquilla Minerals, S.A. and Arlo Resources Ltd. with respect to the Santa Lucia Property                                                        
|*4.K.         | Option Agreement dated January 27, 1994, between Petaquilla Minerals, S.A. and Silverstone Resources Ltd. with respect to the La Esperanza Property                                                 
|*4.L.         | Option Agreement dated November 7, 1994, between Petaquilla Minerals, S.A., Arlo Resources Ltd. and Arlo Resources (Panama), S.A. with respect to the Iglesias Property                             
|*4.O.         | Petaquilla Shareholders Agreement dated February 21, 1997, between Petaquilla Minerals Ltd., Teck Corporation, Inmet Mining Corporation, Georecursos Internacional, S.A. and Minera Petaquilla, S.A.
|*4.S.         | Assignment dated May 23, 2000, between Adrian Resources (Colorado) Ltd. And Hyperion Resources (Colorado) Ltd. respecting the Baca Ranch Property                                                   
|*4.T.         | Molejon Gold Project Agreement dated June 2, 2005, among Petaquilla Minerals Ltd., Teck Cominco Limited, Inmet Mining Corporation and Minera Petaquilla, S.A.                                       
|*4.U.         | Employment agreement dated February 11, 2008, between Petaquilla Minerals Ltd. and Bassam Moubarak                                                                                                  
|*4.V.         | Law No. 9, dated February 26, 1997, of the Legislative Assembly of Panama(original Spanish version)                                                                                                 
|4.W.          | Law No. 9, dated February 26, 1997, of the Legislative Assembly of Panama (English translation of original Spanish version)                                                                         
|*8.           | Subsidiaries of Petaquilla Minerals Ltd.                                                                                                                                                            
|*11.A         | Code of Business Ethics and Conduct dated May 31, 2008                                                                                                                                              
|*11.B         | Whistle-Blower Policy dated May 31, 2008                                                                                                                                                            



|                                                          |         
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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 129





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|ExhibitNumber | Description of Document                                                                                                                                   
|------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|12.A          | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act 2002                                                           
|12.B          | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act 2002                                                           
|13.A          | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                    
|13.B          | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                    
|*             | These exhibits were previously filed with Petaquilla Minerals Ltd.'s Registration Statement or a previous Annual Report on Form 20-F (file no. 000-26296).



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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 130





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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on amended Form 20-F and has duly caused this annual report to be signed on its behalf by the undersigned, hereunto duly authorized.

Dated at Vancouver, British Columbia, this 6th day of November, 2009.

PETAQUILLA MINERALS LTD.



|    |                                                                                   |  |     |                                                                                     
|--- | --------------------------------------------------------------------------------- |  | --- | ------------------------------------------------------------------------------------
|By: | /s/ Joao Manuel                                                                   |  | By: | /s/ Bassam Moubarak                                                                 
|    | Joao Manuel , President and Chief Executive Officer (principal executive officer) |  |     | Bassam Moubarak, Chief Financial Officer(principal financial and accounting officer)





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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 131





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Exhibit 2.B



EXECUTION COPY











AMENDED AND RESTATED SENIOR SECURED NOTE INDENTURE





between





PETAQUILLA MINERALS LTD.





and





COMPUTERSHARE TRUST COMPANY OF CANADA

















PROVIDING FOR THE ISSUE OF

Senior SecuredNotes

of Petaquilla Minerals Ltd.





















Made as of March 25, 2009







|                                                          |         
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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 132





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TABLE OF CONTENTS

|   |                                  |                                                          |     
|-- | -------------------------------- | -------------------------------------------------------- | ----
|   |                                  |                                                          | Page
|  
|1. | DEFINITIONS                      | 2                                                       
|   |                                  |                                                         
|   | 1.1                              | Definitions and Interpretation                           | 2   
|   | 1.2                              | Meaning of "outstanding" for Certain Purposes            | 9   
|  
|2. | THE NOTES                        | 10                                                      
|  
|   | 2.1                              | Designation, Terms and Form of Notes                     | 10  
|   | 2.2                              | Payment of Principal                                     | 11  
|   | 2.3                              | Interest                                                 | 11  
|   | 2.4                              | Prescription                                             | 11  
|   | 2.5                              | Issue of Notes                                           | 12  
|   | 2.6                              | Trustees Reliance                                       | 12  
|   | 2.7                              | Execution of Notes                                       | 12  
|   | 2.8                              | Certification by the Trustee                             | 13  
|   | 2.9                              | Registration of Notes                                    | 13  
|   | 2.10                             | Person Entitled to Payment                               | 14  
|   | 2.11                             | Replacement of Notes                                     | 15  
|   | 2.12                             | Exchange of Notes                                        | 15  
|   | 2.13                             | Payment of Interest and Principal                        | 16  
|   | 2.14                             | Rank                                                     | 16  
|   | 2.15                             | Taxes                                                    | 16  
|   | 2.16                             | Redemption and Prepayment                                | 17  
|   | 2.17                             | Cash Flow Payment                                        | 18  
|   | 2.18                             | Transfer                                                 | 19  
|   | 2.19                             | Weighted Average Market Gold Price Semi-Annual Repayment | 21  
|  
|3. | PUT RIGHTS AND CONVERSION RIGHTS | 23                                                      
|  
|   | 3.1                              | Put Rights                                               | 23  
|   | 3.2                              | Notes Due on Put Closing Date                            | 23  
|   | 3.3                              | Delivery of Put Purchase Price                           | 23  
|   | 3.4                              | Surrender of Notes for Cancellation                      | 23  
|   | 3.5                              | Cancellation of Notes                                    | 24  
|   | 3.6                              | Conversion Rights                                        | 24  
|  
|4. | SECURITY                         | 24                                                      
|  
|   | 4.1                              | Security                                                 | 24  
|   | 4.2                              | Title to Charged Premises                                | 24  
|   | 4.3                              | Further Assurances                                       | 24  
|   | 4.4                              | Registration                                             | 25  
|   | 4.5                              | Security Valid Irrespective of Advance                   | 26  
|   | 4.6                              | Final Discharge                                          | 26  
|   | 4.7                              | Attachment                                               | 27  



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(ii)

|    |                                               |                                                |   
|--- | --------------------------------------------- | ---------------------------------------------- | --
|5.  | SENIORITY                                     | 27                                            
|   
|    | 5.1                                           | Seniority                                      | 27
|   
|6.  | COVENANTS OF PTQ                              | 27                                            
|   
|    | 6.1                                           | General Covenants                              | 27
|    | 6.2                                           | Trustees Remuneration and Expenses            | 30
|    | 6.3                                           | Trustee to Give Notice of Default              | 30
|    | 6.4                                           | Performance of Covenants by Trustee            | 30
|   
|7.  | DEFAULT AND ENFORCEMENT                       | 30                                            
|   
|    | 7.1                                           | Events of Default                              | 30
|    | 7.2                                           | Acceleration on Default                        | 31
|    | 7.3                                           | Waiver of Default or Breach                    | 32
|    | 7.4                                           | Proceedings by the Trustee                     | 32
|    | 7.5                                           | Suits by Noteholders                           | 33
|    | 7.6                                           | Application of Moneys Received by Trustee      | 33
|    | 7.7                                           | Distribution of Proceeds                       | 34
|    | 7.8                                           | Trustee Appointed Attorney                     | 34
|    | 7.9                                           | Remedies Cumulative                            | 34
|    | 7.10                                          | Judgment Against PTQ                           | 34
|   
|8.  | SATISFACTION AND DISCHARGE                    | 35                                            
|   
|    | 8.1                                           | Cancellation and Destruction                   | 35
|    | 8.2                                           | Non-Presentation of Notes                      | 35
|    | 8.3                                           | Repayment of Unclaimed Moneys to PTQ           | 35
|    | 8.4                                           | Release from Covenants                         | 35
|   
|9.  | CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER | 36                                            
|   
|    | 9.1                                           | Certain Requirements in Respect of Merger, etc | 36
|    | 9.2                                           | Vesting of Powers in Successor                 | 36
|    | 9.3                                           | Execution of Supplemental Indenture            | 37
|   
|10. | MEETINGS OF NOTEHOLDERS                       | 37                                            
|   
|    | 10.1                                          | Right to Convene Meeting                       | 37
|    | 10.2                                          | Notice of Meeting of Noteholders               | 38
|    | 10.3                                          | Quorum                                         | 38
|    | 10.4                                          | Chairman                                       | 38
|    | 10.5                                          | Power to Adjourn                               | 38
|    | 10.6                                          | Show of Hands                                  | 39
|    | 10.7                                          | Poll                                           | 39
|    | 10.8                                          | Voting                                         | 39
|    | 10.9                                          | Record Dates                                   | 39
|    | 10.10                                         | Proxies                                        | 39
|    | 10.11                                         | Resolution in Lieu of Meeting                  | 40
|    | 10.12                                         | PTQ and Trustee may be Represented             | 40
|    | 10.13                                         | Powers Exercisable by Special Resolution       | 40



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(iii)

|             |                         |                                                            |   
|------------ | ----------------------- | ---------------------------------------------------------- | --
|             | 10.14                   | Meaning of "Special Resolution"                            | 42
|             | 10.15                   | Minutes                                                    | 42
|             | 10.16                   | Effect of Resolutions                                      | 42
|            
|11.          | SUPPLEMENTAL INDENTURES | 43                                                        
|            
|             | 11.1                    | Provision for Supplemental Indentures for Certain Purposes | 43
|             | 11.2                    | Binding Effect of Modifications                            | 43
|            
|12.          | CONCERNING THE TRUSTEE  | 44                                                        
|            
|             | 12.1                    | Conditions Precedent to Trustees Obligation to Act        | 44
|             | 12.2                    | Requirement for Funds and Indemnity                        | 44
|             | 12.3                    | Evidence                                                   | 44
|             | 12.4                    | Experts and Advisers                                       | 45
|             | 12.5                    | Documents, Moneys, etc. Held by Trustee                    | 45
|             | 12.6                    | Action by Trustee to Protect Interests                     | 45
|             | 12.7                    | Trustee not Required to give Security                      | 46
|             | 12.8                    | Protection of Trustee                                      | 46
|             | 12.9                    | Replacement of Trustee                                     | 48
|             | 12.10                   | Trustee Not Bound to Act                                   | 49
|             | 12.11                   | Conflict of Interest                                       | 49
|             | 12.12                   | Delegation of Powers                                       | 49
|             | 12.13                   | Acceptance of Trust                                        | 50
|             | 12.14                   | Privacy Issues                                             | 50
|             | 12.15                   | Third Party Interests                                      | 50
|             | 12.16                   | Environmental Indemnity                                    | 50
|            
|13.          | GUARANTEE               | 51                                                        
|            
|             | 13.1                    | Guarantee                                                  | 51
|             | 13.2                    | Subordination of Claims and Postponement of Subordination  | 54
|            
|14.          | MISCELLANEOUS           | 55                                                        
|            
|             | 14.1                    | Manner of Giving Notice                                    | 55
|             | 14.2                    | Day not a Business Day                                     | 56
|             | 14.3                    | Execution and Effect of Restated Indenture                 | 56
|             | 14.4                    | Consolidations                                             | 56
|             | 14.5                    | Counterparts                                               | 56
|             | 14.6                    | Severability                                               | 57
|             | 14.7                    | Headings for Reference Only and Preamble                   | 57
|             | 14.8                    | Successors and Assigns                                     | 57
|             | 14.9                    | Time of the Essence                                        | 57
|             | 14.10                   | Governing Law                                              | 57
|             | 14.11                   | Force Majeure                                              | 57
|             | 14.12                   | Entire Agreement                                           | 58
|            
|APPENDIX I | 1                      



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(iv)

|   |                   |                                                 |  
|-- | ----------------- | ----------------------------------------------- | -
|1. | CONVERSION RIGHTS | 1                                              
|   |                  
|   | 1.1               | Conversion Privilege of the Series D Noteholder | 1
|   | 1.2               | Manner of Exercise of Right to Convert          | 1
|   | 1.3               | Adjustment of Conversion Price                  | 2
|   | 1.4               | No Requirement to Issue Fractional Shares       | 5
|   | 1.5               | Corporation to Reserve Common Shares            | 6
|   | 1.6               | Taxes and Charges on Conversion                 | 6
|   | 1.7               | Cancellation of Converted Series D Notes        | 6
|   | 1.8               | Certificate as to Adjustment                    | 6
|   | 1.9               | Notice of Special Matters                       | 7
|   | 1.10              | Obligations of PTQ Regarding Calculations       | 7
|   | 1.11              | Protection of Trustee                           | 7

Schedule "A"  Form of Notes (other than Series D Notes) 
Schedule "B"  Form of Series D Notes



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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 136





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PETAQUILLA MINERALS LTD.



Senior Secured Note Indenture



THIS INDENTUREis  made  as  of  the  25th  day  of  March,  2009,





|               |                                                                                                                                                                                                                                                                                                                       
|-------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|BETWEEN:       | PETAQUILLA MINERALS LTD. ("PTQ") ;                                                                                                                                                                                                                                                                                    
|AND:





AND: | ADRIAN RESOURCES (BVI) LTD., PETAQUILLA MINERALS, S.A., PETAQUILLA GOLD, S.A., COMPANIA MINERA BELENCILLO, S.A., PETAQUILLA INFRAESTRUCTURA, S.A. AND AQUA AZURE, S.A.(collectively, the "GUARANTORS");


COMPUTERSHARE TRUST COMPANY OF CANADA,a trust corporation existing under the laws of Canada (the "Trustee").



WITNESSETH THAT:



WHEREASPTQ is authorized to create and issue the Notes as herein provided to be issued in one or more series as herein provided;



AND WHEREASall necessary resolutions of the directors of PTQ have been duly passed and other proceedings taken and conditions complied with to make the creation and issuance of the Notes and this Indenture and the execution thereof and hereof legal, valid and effective;



AND WHEREASthe Trustee has full power and authority to execute this Indenture and to accept and execute the rights, powers, duties, obligations and responsibilities and any trusts herein imposed upon it;



AND WHEREASall necessary resolutions of the directors of the Guarantors have been duly passed and other proceedings taken and conditions complied with to make the creation and issuance of this Indenture and the execution thereof and hereof legal, valid and effective.



NOW THEREFORE THIS SECURED NOTE INDENTURE WITNESSETH FOR GOOD AND VALUABLE CONSIDERATION GIVEN AND ACKNOWLEDGED THATthe parties hereto hereby agree and declare as follows:









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 137





---

-2-





1.

DEFINITIONS



1.1

Definitions and Interpretation



In this Indenture, words in the singular number include the plural and words in the plural number include the singular, and the masculine includes the feminine and neuter. In this Indenture, except where the context otherwise requires:



"Affiliate"of any specified Person means any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. For the purposes of this definition, control (including, with correlative meanings, the terms controlling, controlled by, and under common control with), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise;



"Bankruptcy Act"has the meaning ascribed thereto in subsection 7.1(e);



"Business Day"means any day other than a Saturday, Sunday or a day on which the principal chartered banks located at Vancouver, British Columbia are not open for business during normal banking hours;



Change of Controlmeans the occurrence of any of the following:



(1)

the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of PTQ and its Subsidiaries, taken as a whole, to any person; or



(2)

the adoption of a plan relating to the liquidation or dissolution of PTQ; or



(3)

any person or group, becomes the owner, directly or indirectly, of 50% or more of the voting power of voting securities of PTQ; or



(4)

PTQ amalgamates or consolidates with, or merges with or into, any person, or any person consolidates with, or merges with or into PTQ, in any such event pursuant to a transaction in which any of the outstanding voting securities of PTQ or such other person is converted into or exchanged for cash, securities or other property, other than any such transaction where the voting securities of PTQ outstanding immediately prior to such transaction is converted into or exchanged for voting securities (other than Disqualified Capital Stock) of the surviving or transferee person constituting a majority of the outstanding shares of such voting securities of such surviving or transferee person (immediately after giving effect to such issuance).



Common Shares means the common shares in the capital of PTQ; provided that in the event of a subdivision, redivision, reduction, combination or consolidation thereof, or such subdivisions, redivisions, reductions, combinations or consolidations, then, subject to adjustments, if any, having been made in accordance with the provisions of Appendix I below, "Common Share"shall thereafter mean the shares resulting from such subdivision, redivision, reduction, combination or consolidation;









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 138





---

-3-







"Conversion Price"means CDN$2.25 per Common Share as adjusted as provided herein, in each case issuable from time to time upon the conversion of the Notes in accordance with the provisions of Appendix I;



"Counsel"means the firm of legal counsel retained by the Trustee or retained by PTQ and acceptable to the Trustee;



Determination Datehas the meaning assigned thereto in Section 2.19.



"Dollar"and "$"unless otherwise specified, mean lawful money of the United States;



Disqualified Capital Stockmeans any capital shares of PTQ or a Subsidiary thereof which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the maturity date of the Notes, for cash or securities constituting Indebtedness. Without limitation of the foregoing, Disqualified Capital Stock shall be deemed to include (i) any preferred shares of a Subsidiary of PTQ and (ii) any preferred shares of PTQ, with respect to either of which, under the terms of such preferred shares, by agreement or otherwise, such Subsidiary or PTQ is obligated to pay current dividends or distributions in cash during the period prior to the maturity date of the Notes.



Distributable Cashmeans all of the PTQs available cash, after:



(a)

satisfaction of its debt obligations (principal and interest) as contemplated by or permitted under this Indenture;



(b)

satisfaction of its general and administration expenses, capital expenditures and other expense obligations, subject to the terms and conditions set forth in this Indenture;



(c)

deduction for income tax obligations; and



(d)

retaining reasonable working capital or other reserves, as contemplated by or permitted under this Indenture;



all as calculated without duplication.



"Event of Default"has the meaning ascribed thereto in section 7.1;



Excluded Taxesmeans taxes, levies, imposts, deductions, charges or withholdings, including interest, penalties or additions thereto, and all related liabilities, imposed on or measured by net income or net profits of the relevant Holder, capital taxes or franchise taxes imposed pursuant to the Laws of Canada, the United States or by the jurisdiction under the laws of which the Holder is organized, in which such person is resident for tax purposes or in which the principal office or applicable lending office of such Holder is located or in which it is otherwise deemed to be engaged in a trade or business for Tax purposes or any subdivision thereof or therein, and any branch profits taxes imposed by the United States or any similar tax imposed by any jurisdiction on the Holder;









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 139





---

-4-







"GAAP"means generally accepted accounting principles in effect from time to time in Canada;



Guarantormeans (i) Adrian Resources (BVI) Ltd. a corporation incorporated in the British Virgin Islands, (ii) Petaquilla Minerals, S.A. a corporation incorporated in the Republic of Panama (iii) Petaquilla Gold, S.A. a corporation incorporated in the Republic of Panama, (iv) Compania Minera Belencillo, S.A. a corporation incorporated in the Republic of Panama, (v) Petaquilla Infraestructura, S.A. a corporation incorporated in the Republic of Panama (vi) Aqua Azure, S.A. a corporation incorporated in the Republic of Panama and (iv) each Subsidiary of PTQ that hereafter becomes a Guarantor pursuant to Section 6.1(j) and Guarantorsmeans such entities, collectively;



"Indebtedness"means any liability of PTQ and its Affiliates and Subsidiaries;



Indemnified Taxesmeans Taxes (including Other Taxes) other than Excluded Taxes;



"Indenture", "herein", "hereby", "hereof"and similar expressions mean or refer to this Secured Note Indenture and any indenture, deed or instrument supplemental or ancillary hereto; and the expressions "Article", "section", "subsection", "paragraph"and "clause"followed by numbers or letters mean and refer to the specified Article, section, subsection, paragraph or clause of this Indenture; the whole as same may be amended, supplemented, restated or replaced from time to time;



"Interest Payment Date"means initially the date of issuance of the Notes and after the First Anniversary (as defined below), the 15th day of the months of May and November of each year, provided that, if any Interest Payment Date would otherwise fall on a day which is not a Business Day, it shall be postponed to the next following Business Day ;



Investmentsmeans, directly or indirectly, any advance, account receivable (other than an account receivable arising in the ordinary course of business), loan or capital contribution to (by means of transfers of property to others, payments for property or services for the account or use of others or otherwise), the purchase of any stock, bonds, notes, debentures, partnership or joint venture interests or other securities of, the acquisition, by purchase or otherwise, of all or substantially all of the business or assets or stock or other evidence of beneficial ownership of, any Person or the making of any investment in any Person. Investments shall exclude (i) extensions of trade credit on commercially reasonable terms in accordance with normal trade practices and (ii) the repurchase of securities of any Person by such Person;









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 140





---

-5-







"Lien"shall mean any hypothec, mortgage, charge, pledge, lien (statutory or otherwise), security interest or other encumbrance of any nature however arising, or any other security agreement or arrangement creating in favour of any creditor a right in respect of any asset that is prior to the right of any other creditor in respect of such asset;



"Maturity Date"means the date on which the Notes are to mature pursuant to subsection 2.1(d);



"Noteholder(s)"or "Holder(s)"means the registered holder(s) of Notes;



"Noteholders Request"means an instrument, signed in one or more counterparts by the Holders of at least 25% in the aggregate principal amount of Notes then outstanding, requesting the Trustee to take some action or proceeding specified therein;



"Notes"means collectively the 15% senior secured notes of PTQ authorized to be issued hereunder each in principal amount denominations of US$1,000 and any integral multiple thereof;



"PTQ"means Petaquilla Minerals Ltd., a corporation under the laws of the British Columbia;



"PTQ Charged Property"shall have the meaning ascribed thereto in section 4.1;



"PTQ GSA"means the general security agreement, as applicable, granted by PTQ in favour of the Trustee, for and on behalf of the Noteholders, on the PTQ Charged Property, in a form and content acceptable to PTQ and the Trustee, to secure the Secured Obligations, the whole as described in section 4.1, the whole as same may be amended, supplemented, restated or replaced from time to time;



"PTQ Security Interests"means, collectively, all of the Liens on the property of PTQ created or granted under the PTQ GSA or any other security document delivered from time to time under section 4.3;



"Officers Certificate"means a certificate signed in the name of PTQ by any of the Chairman, the President, an Executive Vice-President, Senior Vice-President, Vice-President or any other officer of PTQ;



Other Taxesmeans any present or future transfer, mortgage, stamp or documentary taxes or any other excise or property taxes, charges, financial institutions duties, debits taxes or similar levies imposed by Canada, or any province or territory thereof, the United States or any other jurisdiction that arise from any payment under this Agreement or under the Notes or from the execution, delivery, enforcement or registration of, or otherwise with respect to, this Agreement or the Notes;



Permitted Investmentsmeans, for any Person, investments made on or after the date of this Indenture consisting of:



(i)

Investments by PTQ, or by a Subsidiary thereof, in PTQ or a Subsidiary of PTQ;









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 141





---

-6-





(ii)

Temporary Cash Investments;



(iii)

any Investment by PTQ, or by a Subsidiary thereof to (a) acquire control (as defined below) of a Person by way of an offer to acquire outstanding shares of the Person; (b) purchase of all or substantially all of the Persons assets, or all or substantially all of, any interest in, the assets of the Person, or of any right to all or substantially all of the revenues or income of the Person, by way of a negotiated purchase, lease, license, exchange transaction or other means; (c) effect any merger, amalgamation, plan of arrangement, consolidation, reorganization or other business combination pursuant to which the assets and business of the Person are combined with the assets of PTQ or a Subsidiary thereof; (d) effect the issuance by PTQ or a subsidiary thereof to one or more Persons of shares of PTQ or a Subsidiary thereof in numbers sufficient to constitute an acquisition of control (as defined below) of the Person; and (e) effect any acquisition of control (as defined below) of the Person, directly or indirectly, otherwise than as contemplated by any of the foregoing paragraphs (a) to (d) inclusive, if as a result of such (a) (e) Investments: (I) such Person becomes a Subsidiary of PTQ; (II) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, PTQ or a Subsidiary thereof; or (II) such business or assets are owned by PTQ or a Subsidiary. For the purposes of this sub-section (iii). For the purposes of this definition, acquisition of control shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise;



(iv)

reasonable and customary loans made to employees not to exceed US$500,000 in the aggregate at any one time outstanding; and



(v)

accounts receivable of PTQ and its Subsidiaries generated in the ordinary course of business;



"Permitted Liens"means, at any time, the following Liens:



(vi)

Liens for taxes, assessments or governmental levies not yet due or which are being contested if adequate reserves with respect thereto are maintained in accordance with generally accepted accounting principles, so long as the same do not involve any imminent danger of the sale, forfeiture or loss of any of the material property of PTQ or any interest therein;



(vii)

undetermined or inchoate Liens arising in the ordinary course of business, a claim for which has not been filed or registered pursuant to law or of which notice shall not have been given or become known to PTQ or the Trustee;



(viii)

carriers, warehousemens, mechanics, materialmens, repairmens or other similar Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested;









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(ix)

servitudes, rights-of-way, restrictions and other similar encumbrances which, in the aggregate, do not materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of PTQ;



(x)

statutory Liens incurred or deposits made in the ordinary course of business of PTQ in connection with workers compensation, employment insurance and other social security legislation;



(xi)

the reservations and exceptions contained in, or implied by statute in, original dispositions of property from the Crown and grants made by the Crown of interests so reserved or excepted;



(xii)

Liens given to a public utility or similar operating authority when ordinarily required as part of the normal operating practices of such utility or operating authority but only to the extent that the same provide security to such utility or operating authority for payments required to be made by PTQ in the ordinary course of business for services provided to PTQ by such utility or operating authority in the normal course of its business;



(xiii)

Purchase Money Obligations not exceeding in the aggregate CDN$500,000;



"person"means and includes individuals, corporations, limited partnerships, general partnerships, joint stock companies, unlimited liability companies, limited liability corporations, joint ventures, associations, companies, trusts, banks, trust companies, pension funds, business trusts or other organizations, whether or not legal entities and governments and agencies and political subdivisions thereof;



"Prevailing Exchange Rate"means the noon (New York City time) buying rate on the Business Day immediately prior to the Date of Conversion for Canadian dollars for cable transfers quoted in New York City as certified for customs purposes by HSBC Bank USA; such Holder shall confirm in writing to PTQ and the Trustee the Prevailing Exchange Rate to use for the conversion;



"Purchase Money Obligations"means:



(a)

any Lien created, issued or assumed after the date of this Indenture to secure Indebtedness not in excess of the value of the underlying property assumed as a part of, or issued or incurred to provide funds to pay, the purchase price of any movable property; and



(b)

any renewal, refunding or extension of any such Lien securing Indebtedness in a principal amount not in excess of the unpaid principal amount of the indebtedness secured thereby immediately prior to such renewal, refunding or extension;



Redemption Datewhen used with respect to any Note to be redeemed means the date fixed for such redemption by or pursuant to this Indenture;









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"Regulation S"means Regulation S promulgated by the SEC under the U.S. Securities Act;



Restricted Paymentmeans any of the following: (i) the declaration or payment of any dividend or any other distribution or payment on capital of PTQ or any Subsidiary of PTQ or any payment made to the direct or indirect holders (in their capacities as such) of capital of PTQ or any Subsidiary of PTQ (other than (x) dividends or distributions payable solely in capital shares (other than Disqualified Capital Stock) or in options, warrants or other rights to purchase capital shares (other than Disqualified Capital Stock), and (y) in the case of Subsidiaries of PTQ, dividends or distributions payable to PTQ or to a Wholly-Owned Subsidiary of PTQ), (ii) the purchase, redemption or other acquisition or retirement for value of any capital shares of PTQ or any of its Subsidiaries (other than capital shares owned by PTQ or a Wholly-Owned Subsidiary of PTQ, excluding Disqualified Capital Stock), (iii) the making of any principal payment on, or the purchase, defeasance, repurchase, redemption or other acquisition or retirement for value, prior to any scheduled maturity, scheduled repayment or scheduled sinking fund payment, of any Indebtedness other than Indebtedness acquired in anticipation of satisfying final maturity of the Notes, in each case due within one year of the date of acquisition), (iv) the making of any Investment or guarantee of any Investment in any Person other than a Permitted Investment and (v) forgiveness of any Indebtedness of an Affiliate of PTQ to PTQ or a Subsidiary. For purposes of determining the amount expended for Restricted Payments, cash distributed or invested shall be valued at the face amount thereof and property other than cash shall be valued at its fair market value;



"SEC"means the United States Securities and Exchange Commission;



"Special Resolution"has the meaning ascribed thereto at section 10.14;



Subsidiaryof any specified Person means any corporation, partnership, joint venture, association or other business entity, whether now existing or hereafter organized or acquired, (i) in the case of a corporation, of which more than 50% of the total voting power of the capital shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors, officers or trustees thereof is held by such first-named Person or any of its Subsidiaries; or (ii) in the case of a partnership, joint venture, association or other business entity, with respect to which such first named Person or any of its Subsidiaries has the power to direct or cause the direction of the management and policies of such entity by contract or otherwise or if in accordance with generally accepted accounting principles such entity is consolidated with the first-named Person for financial statement purposes;



"Successor"has the meaning ascribed thereto in section 9.1;



Taxesmeans all taxes, levies, imposts, deductions, charges or withholdings and all related liabilities;









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Temporary Cash Investmentsmeans (i) Investments in marketable, direct obligations issued or guaranteed by the federal government of Canada or any provincial government of Canada or the United States, or of any governmental agency or political subdivision thereof, maturing within 365 days of the date of purchase; (ii) Investments in certificates of deposit issued by a Canadian chartered bank or bank organized under the laws of the United States or any state thereof or the District of Columbia, in each case having capital, surplus and undivided profits at the time of investment totaling more than US$1,000,000,000 and rated at the time of investment at least A by S&P and A-2 by Moodys, maturing within 365 days of purchase; or (iii) Investments not exceeding 365 days in duration in money market funds that invest substantially all of such funds assets in the Investments described in the preceding clauses (i) and (ii);



"Trustee"means Computershare Trust Company of Canada and its successors hereunder;



"United States"means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;



U.S. Personmeans a U.S. person as defined in Regulation S;



"U.S. Securities Act"means the United States Securities Act of 1933, as amended;



Weighted Average Market Gold Pricemeans the average closing price of an ounce of gold in US dollars as reported on Bloomberg under the symbol GOLDS Comdty for the six month period immediately prior to a Determination Date.



Wholly-Owned Subsidiarymeans any Subsidiary, all of the outstanding voting, securities (other than directors qualifying shares) of which are owned, directly or indirectly, by PTQ; and



"Written Order"or "Written Request"means a written order or request, respectively, signed in the name of PTQ or any of the Chairman, the President, an Executive Vice-President, Senior Vice-President, Vice-President or any other officer of PTQ.



1.2

Meaning of "outstanding" for Certain Purposes



Every Note shall be deemed to be outstanding until it shall be cancelled or delivered to the Trustee for cancellation, or until moneys for the payment thereof shall be set aside under Article 8, or until it shall have become void pursuant to section 2.4. Where a new Note has been issued in substitution for a Note which has been lost, stolen or destroyed, only one of such Notes shall be counted for all purposes, including, without limitation, the purpose of determining the aggregate principal amount of Notes outstanding. Notes owned, directly or indirectly, legally or beneficially by PTQ or any Affiliate of PTQ shall be disregarded for the purpose of any provision of this Indenture entitling Holders of outstanding Notes to vote, constitute a quorum for the purpose of voting, sign consents, requisitions or other instruments or take any other action under this Indenture, except that (a) for the purpose of determining whether the Trustee shall be protected in relying on any vote, constitution of a quorum, consent, requisition or other action, only those Notes which the Trustee knows are so owned shall be disregarded and (b) Notes so owned which have been pledged in good faith other than to PTQ or any Affiliate of PTQ shall not be so disregarded if the pledgee shall establish to the

satisfaction of the Trustee the pledgees right to vote such Notes in his discretion, free from the control of PTQ or any Affiliate of PTQ.









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2.

THE NOTES



2.1

Designation, Terms and Form of Notes



The aggregate principal amount of Notes authorized to be issued under this Indenture and outstanding at any one time shall consist of and be limited to US$67,000,000. For clarity, PTQ may issue further Notes up to the aforementioned limited amount for any principal amount of Notes redeemed in part or in whole. Each Note authorized to be issued under this Indenture shall:



(a)

consist of and be limited to an aggregate principal amount denominations of US$1,000 and any integral multiple thereof;



(b)

with respect to Notes issued on May 21, 2008, be designated Senior Secured Notes  Series 1, with respect to Notes issued on March 25, 2009, be designated Convertible Senior Secured Notes  Series D (each a Series D Note)limited to an aggregate principal amount of US $40,000,000 and, if any future series are issued in accordance with section 2.5, such other series designation as directed by PTQ in writing;



(c)

with respect to Senior Secured Notes  Series 1 dated May 21, 2008, with respect to Senior Secured Notes  Series D dated March 25, 2009 and, if any future series are issued in accordance with section 2.5, such later issue date as directed by PTQ in writing (such issue date, a Future Series Issue Date);



(d)

with respect to Senior Secured Notes  Series 1 mature on May 21, 2013, with respect to Senior Secured Notes  Series D mature on March 25, 2011 and, if any future series are issued in accordance with section 2.5, five years after such later Future Series Issue Date;



(e)

bear interest at 15% per annum (after as well as before maturity, default and judgment, with interest on overdue interest at such rate), the first twelve months worth of which shall be prepaid in full upon issuance of the Notes and thereafter which shall be paid on each Interest Payment Date;



(f)

be substantially in the form set out in Schedule "A" hereto (provided however that Series D shall be substantially in the form set out in Schedule "B" hereto) with such appropriate insertions, deletions, substitutions and variations as may be required or permitted by the terms of this Indenture, as may be required to comply with any law or the rules of any securities exchange or as may be not inconsistent with the terms hereof and as the officers of PTQ executing any Notes may deem necessary or desirable, in their sole discretion; and



(g)

bear such distinguishing letters and numbers as the Trustee may approve.









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2.2

Payment of Principal



An amount equal to 120% of the principal of each Note (other than the Series D Note) will be payable on the Maturity Date of such Note in lawful money of the United States against the surrender of such Note by the registered Holder thereof at any of the places at which a register (including any branch register) is maintained pursuant to section 2.9. An amount equal to 110% of the principal of each Series D Note will be payable on the Maturity Date of such Note in lawful money of the United States against the surrender of such Series D Note by the registered Holder thereof at any of the places at which a register (including any branch register) is maintained pursuant to section 2.9. PTQ will deposit with the Trustee or any paying agent to the order of the Trustee, on or before 11:00 a.m. Vancouver time on the Business Day immediately prior to the Maturity Date, such sums sufficient to pay an amount equal to 120% of the principal amount of Notes, or 110% of the principal amount of a Series D Note, as applicable, plus accrued interest owing thereon.



2.3

Interest



Each Note issued hereunder, whether issued originally or in exchange for another Note, shall bear interest at a rate equal to 15% per annum from and including the date of issuance thereof to the Maturity Date, the first twelve months worth of which shall be prepaid in full upon issuance of the Notes and thereafter which shall be paid on each Interest Payment Date. After the first twelve months of the issuance of the Notes (the Twelve Month Anniversary),interest shall be calculated semi-annually and payable on each Interest Payment Date, from and including the Twelve Month Anniversary or from and including the last Interest Payment Date on which interest shall have been paid or made available for payment with respect to the outstanding Notes up to and including the day preceding the Interest Payment Date or Maturity Date, as the case may be. Interest will be computed on the basis of a 360-day year of twelve 30-day months.



Wherever in this Indenture the payment of interest is referred to, such reference shall be deemed to include the payment of interest on amounts in default to the extent that, in such context, such interest is, was or would be payable, and express mention of interest on amounts in default in any provisions hereof shall not be construed as excluding such interest in those provisions hereof where such express mention is not made.



2.4

Prescription



Provided that the Trustee receives all monies due and owing under the Notes (principal, interest, etc.), the right of a Noteholder to exercise his rights under this Indenture with respect to a Note shall become void unless the Note is presented for payment within a period of three (3) years from the Maturity Date thereof, after which payment with respect to such Note shall be governed by the provisions of Article 8. PTQ shall have satisfied its obligations under each Note upon remittance to the Trustee for the account of the Holder of such Note upon redemption or at the Maturity Date thereof of any and all considerations due hereunder in cash with respect to such Note, subject to and in accordance with the provisions of this Indenture. Such remittance shall for all purposes be deemed a payment to the Noteholder, and to such extent such Note shall thereafter not be considered as outstanding and the Noteholder shall

have no right with respect to such Note, except to receive payment out of the moneys so paid and deposited upon surrender of the Note.









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2.5

Issue of Notes



Notes may be issued in one or more series (which shall be identical in all respects hereunder save and except for the issue date and Maturity Date which shall confirm to the requirements of sections 2.1(b) and (c)) in the aggregate principal amount in denominations of US$1,000 (or any integral multiple thereof) shall be executed by PTQ and, immediately after such execution, shall be delivered to the Trustee and shall be certified by the Trustee and delivered by the Trustee to or to the order of PTQ upon receipt by the Trustee of the following:



(a)

a Written Order for the certification and delivery of such Notes;



(b)

an opinion of Counsel in favour of the Trustee substantially in form satisfactory to the Trustee;



(c)

an Officers Certificate certifying that, so far as is known to the persons signing the same, PTQ is not in default in the performance of any of its covenants contained herein and in all documents relating hereto and that PTQ has complied with the requirements of this Indenture in connection with the issue of the Notes; and



(d)

such Officers Certificate, as confirmed by Counsel, if any, as may be required by any provision of applicable indenture legislation in connection with the issue, certification and delivery of the Notes.



2.6

Trustees Reliance



The Trustee, prior to the certification of the Notes, shall not be bound to make any enquiry or investigation as to the correctness of the matters set forth in any of the opinions, certificates or other documents required by the provisions hereof. The Trustee may rely and shall be protected in acting upon any such opinions, certificates or other documents, but may in its discretion require additional evidence before acting or relying thereon. The Trustee shall have no duty or responsibility with respect to the use or application of any of the Notes so certified and delivered or of the proceeds thereof.



2.7

Execution of Notes



Notes shall be signed by at least one officer of PTQ holding office at the time of signing. The signatures of officers of PTQ required on Notes may be printed or otherwise mechanically reproduced thereon and Notes so signed are as valid as if they had been signed manually. If a Note contains a printed or mechanically reproduced signature of a person, then PTQ may issue the Note even though the person has ceased to be an officer of PTQ and such Note is as valid as if the person were an officer of PTQ at the date of its issue.









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2.8

Certification by the Trustee



No Note shall be issued or, if issued, shall be obligatory or entitle the Holder to the benefit hereof, until it has been certified by or on behalf of the Trustee substantially in the form of the certificate set out in Schedule "A" hereto or in the case of a Series D Note, in the form of the certificate set out in Schedule B hereto, or in some other form approved by the Trustee. Such certification by the Trustee upon any Note shall be conclusive evidence that the Note has been duly issued hereunder, is a valid obligation of PTQ and that the Holder is entitled to the benefit hereof.



The certificate of the Trustee on Notes issued hereunder shall not be construed as a representation or warranty by the Trustee as to the validity of this Indenture or of the Notes (except the due certification thereof) and the Trustee shall in no respect be liable or answerable for the use made of the Notes or any of them or of the proceeds thereof.



2.9

Registration of Notes



PTQ shall cause to be kept by and at the principal corporate trust office of the Trustee in the City of Vancouver and Toronto, a central Notes register, and by and at the principal corporate trust office of the Trustee (or by such other registrar or registrars, if any, as PTQ with the approval of the Trustee may designate) and in such other place or places as PTQ with the approval of the Trustee may designate, branch registers in which shall be entered the names and latest known addresses of the Holders of Notes and the other particulars, prescribed by law, of the Notes held by them respectively and of all transfers of Notes. Such name registration shall be noted on the Notes by the Trustee or other registrar. No transfer of a Note shall be effective as against PTQ unless made on one of the appropriate registers and made by the registered Holder or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and execution satisfactory to the Trustee, upon compliance with such requirements as the Trustee or other registrar may prescribe, and unless such transfer shall have been duly noted on such Note by the Trustee or other registrar.



The registers referred to in this section shall at all reasonable times during regular business hours be open for inspection by PTQ, by the Trustee and by any Noteholder.



The Holder of a Note may at any time and from time to time have such Note transferred at any of the places at which a register is kept pursuant to the provisions of this section and in accordance with such reasonable regulations as the Trustee may prescribe.



The Holder of a Note may at any time and from time to time have the registration of such Note transferred from the register in which the registration thereof appears to another register maintained in another place authorized for that purpose under the provisions of this Indenture upon payment of a reasonable fee to be fixed by the Trustee.



None of the Trustee or any registrar for any of the Notes or PTQ shall be charged with notice of or be bound to see to the execution of any trust, whether express, implied or constructive, in respect of any Note and may transfer any Note on the direction of the Holder thereof, whether named as trustee or otherwise, as though that person were the beneficial owner thereof.









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Except in the case of the central register required to be kept at the City of Vancouver, PTQ shall have the power at any time to close, with the prior approval of the Trustee, any branch register upon which the registration of any Notes appears and in that event it shall transfer the records thereof to another existing register or to a new register and thereafter such Notes shall be deemed to be registered on such existing or new register, as the case may be. In the event that the register in any place is closed and the records transferred to a register kept in another place, notice of such change shall be given, in the manner provided in section 14.1, to the Holders of the Notes registered in the register so closed and in addition the particulars of such change shall be recorded in the central register required to be kept in the City of Vancouver and Toronto.



Every registrar shall, when requested to do so by PTQ or the Trustee, furnish PTQ or the Trustee, as the case may be, with a list of the names and addresses of the Holders of Notes showing the principal amounts and serial numbers of such Notes held by each Holder.



2.10

Person Entitled to Payment



The person in whose name any Notes shall be registered shall be deemed the owner thereof for all purposes of this Indenture and payment of or on account of the principal and accrued interest on such Notes shall be made only to or upon the order in writing of such Holder thereof and such payment shall be a good and sufficient discharge to the Trustee and any registrar and to PTQ and any paying agent for the amount so paid.



As the interest on the Notes becomes payable, PTQ, at least three (3) days before such interest payment date, shall forward or cause to be forwarded by prepaid post (or in the event of mail service interruption by such other means as the Trustee and PTQ shall determine to be appropriate), to the Holder for the time being of each such Note, at his address appearing on the appropriate register hereinbefore mentioned, or in the case of joint Holders, to the one whose name appears first on such register, a cheque for such interest (and any additional amounts payable under section 2.15) payable to the order of such Holder or Holders and negotiable at par at each of the places at which interest upon such Notes is payable. The forwarding of such cheque shall satisfy and discharge the liability for the interest on the Notes to the extent of the sums represented thereby, unless such cheque be not paid on presentation; provided that, in the event of the non-receipt of such cheque by the Holder, or the loss or destruction thereof, PTQ, on being furnished with reasonable evidence of such non-receipt, loss or destruction and indemnity reasonably satisfactory to it shall issue to such Holder a replacement cheque for the amount of such cheque.



Unless PTQ has caused the cheques for the interest payments due on any Interest Payment Date to be sent by the Trustee to the Holders pursuant to this section 2.10, PTQ will send to the Trustee in the manner provided in section 14.1 within seven (7) Business Days of such Interest Payment Date a Certificate of PTQ confirming the making of such interest payments by PTQ together with particulars of such interest payments, including the names of the Persons to whom such interest payments were made and the amount of such interest payments.









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The registered Holder for the time being of any Note shall be entitled to the principal and interest, if any, evidenced by such Note, free from all equities or rights of set-off, compensation or counterclaim between PTQ and the original or any intermediate Holder thereof and all persons may act accordingly, and a transferee of a Note shall, after the appropriate form of transfer is lodged with the Trustee or other registrar and upon compliance with all other conditions in such respect required by this Indenture or by any conditions contained in such Note or by law, be entitled to be entered on the appropriate register or on any one of the appropriate registers as the owner of such Note, free from all equities or rights of set-off, compensation or counterclaim between PTQ and his transferor or any previous Holder thereof, save in respect of equities of which PTQ is required to take notice by statute or by order of a court of competent jurisdiction.



Where Notes are registered in more than one name, the principal and interest, if any, from time to time payable in respect thereof in accordance with this section 2.10 may be paid by cheque payable to the order of all such Holders, failing written instructions from them to the contrary, and such payment shall be a valid discharge to the Trustee and any registrar and to PTQ and any paying agent for the amount so paid.



2.11

Replacement of Notes



If any of the Notes shall become mutilated or defaced, or be lost, stolen or destroyed and in the absence of notice that such Notes have been acquired by a bona fide purchaser for value, PTQ shall issue and thereupon the Trustee shall certify and deliver a new Note of like date and tenor as the one mutilated, defaced, lost, stolen or destroyed in exchange for, in place of and upon cancellation of such mutilated or defaced Note or in lieu of and in substitution for such lost, stolen or destroyed Note and the new Note shall be in a form approved by the Trustee. The new Note shall be entitled to the benefit hereof and shall rank equally in accordance with its terms with all other Notes issued hereunder.



The applicant for the issue of a new Note shall bear the cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to PTQ and the Trustee such evidence of ownership and of the loss, destruction or theft of the Note so lost, destroyed or stolen as shall be satisfactory to PTQ and the Trustee in their respective discretion and such applicant will also be required to furnish indemnity and surety bond in amount and form satisfactory to PTQ and the Trustee in their respective discretion, and shall pay the reasonable charges of PTQ and the Trustee in connection therewith.



2.12

Exchange of Notes



Notes in any denomination may be exchanged at any time for Notes of the same aggregate principal amount in any other authorized denomination. Notes may be so exchanged at any of the places at which a register (including any branch register) is maintained pursuant to section 2.9.



PTQ shall execute and the Trustee shall certify all Notes necessary to carry out exchanges pursuant to this section 2.12. All Notes surrendered for exchange shall be cancelled.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 151





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The party requesting any exchange pursuant to this section 2.12 shall, as a condition precedent to such exchange, reimburse the Trustee for any stamp or other security transfer tax or governmental charge required to be paid in respect of such exchange or the related issue of Notes and in addition a reasonable charge for its services for each Note exchanged or transferred and a reasonable charge for every Note issued upon such exchange or transfer, and payment of the said charges shall be made by the party requesting such exchange or transfer as a condition precedent thereto.



2.13

Payment of Interest and Principal



Except as herein otherwise provided, all sums which may at any time become payable, whether at maturity or otherwise, on account of any Note or any interest thereon, if any, shall be payable at the option of the Holder at any of the places at which the principal and interest, if any, of such Note are payable.



Whenever any payment of principal or interest to be made hereunder shall be stated to be due on a day which is not a business day in the place in which a Note is presented for payment, then the Noteholder shall not be entitled to payment of the amount due in such place until the next succeeding business day in that place and will not be entitled to interest or other payment in respect of such delay.



2.14

Rank



The Notes certified and issued under this Indenture rank prior to any other Indebtedness. The Notes certified and issued under this Indenture rank pari passu with one another, in accordance to their tenor without discrimination, preference or priority.



2.15

Taxes



All payments to a Holder (or any successor or assignee thereof) by PTQ under this Agreement or under the Notes shall be made free and clear of and without deduction or withholding for any and all Indemnified Taxes unless required by law. If PTQ shall be required by law or the interpretation thereof by the relevant governmental authority to deduct or withhold any such Indemnified Taxes from or in respect of any sum payable under this Agreement or under the Notes: (i) the amount payable shall be increased by such additional amount as may be necessary so that after making all required deductions or withholdings (including, without limitation, deductions or withholdings applicable to additional amounts paid under this section 2.15), the Holder receives a net amount equal to the full amount it would have received if no deduction or withholding had been made; (ii) PTQ shall make such required deductions or withholdings; (iii) PTQ shall immediately pay the full amount deducted or withheld to the relevant governmental authority in accordance with applicable law; and (iv) PTQ shall deliver to the Holder as soon as practicable after it has made such payment to the applicable governmental authority (x) a copy of any receipt issued by such governmental authority evidencing the payment of all amounts required to be deducted or withheld from the sum payable hereunder or (y) if such a receipt is not available from such governmental authority, notice of the payment of such amount deducted or withheld. In addition, PTQ shall immediately pay any and all Other Taxes.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 152





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PTQ shall indemnify and hold harmless each Holder of Notes for the full amount of Indemnified Taxes imposed on or paid by such Holder and any liability (including penalties, interest and expenses payable or incurred in connection therewith) arising from or with respect to such Indemnified Taxes, whether or not they were correctly or legally asserted. In addition, PTQ shall indemnify the Holder for any Taxes based on or measured by the overall net income of the Holder imposed by any jurisdiction on or with respect to any additional amount payable by PTQ under this section 2.15. Payment under this indemnification shall be made within 30 days from the date the Holder makes written demand for it. A certificate of the Holder containing reasonable detail as to the amounts required to be indemnified under this section 2.15(b) submitted to PTQ shall be conclusive evidence, absent manifest error, of the amount due from PTQ to the Holder.



Without prejudice to the survival of any other agreement contained herein, the agreements and obligations contained in this section 2.15 shall survive the termination of this Agreement and the payment in full of principal, interest, fees and any other amounts payable under this Agreement and under the Notes.



Trustee shall have no duty or responsibility to determine any applicable taxes and shall rely on written confirmation by PTQ.



2.16

Redemption and Prepayment



The Notes may be prepaid prior to maturity at PTQ's option, in whole at any time, on not more than sixty (60) and not less than thirty (30) days' prior written notice, for an amount equal to the sum of the following (i) 120% of the principal amount of the Note or 110% of the principal amount of the Series D Notes, as applicable and (ii) accrued and unpaid interest to the Redemption Date (the sum of (i) and (ii), the Redemption Amount,it being understood that any and all prepaid interest on such Notes shall be forfeited by PTQ to the respective Noteholders as a make whole premium). The election of PTQ to redeem any Notes shall be evidenced by a resolution of the board of directors of PTQ.



All notices of redemption shall be sent to each Noteholder to be redeemed not less than thirty (30) days prior to the Redemption Date and shall state:



(a)

the Redemption Date and the Redemption Amount, and



(b)

the place where such Notes are to be surrendered for payment of the Redemption Amount thereof.



Notice of redemption of Notes to be redeemed at the election of PTQ shall be given by PTQ to the Noteholders and the Trustee or, at PTQ's written request, by the Trustee to the Noteholders in the name of and at the expense of PTQ.



Except as may otherwise be provided in any supplemental indenture, upon Notes being called for redemption, PTQ will deposit with the Trustee or any paying agent to the order of the Trustee, on or before 11:00 a.m. Vancouver time on the Business Day immediately prior to the Redemption Date specified in such notice, such sums of money as may be sufficient to pay the Redemption Amount of all the Notes. At the request of the Trustee, PTQ shall also deposit with the Trustee a sum of money sufficient to pay any charges or expenses which may be reasonably incurred by the Trustee in connection with such redemption. Every such deposit shall be irrevocable. From the sums so deposited, the Trustee shall pay or cause to be paid, or issue or cause to be issued, to the holders of such Notes so called for redemption, upon surrender of such Notes, the Redemption Amount to which they are respectively entitled on redemption.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 153





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Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Amount thereof and on and after such date such Notes shall only bear interest if PTQ shall default in the payment of the principal amount. Upon surrender of any such Note for redemption in accordance with such notice, such Note shall be paid by PTQ.



If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid, bear interest from the Redemption Date at a rate equal to 20% per annum.



2.17

Cash Flow Payment



On an annual basis from October 1st up to and including November 1st in any given year (each such date a Noteholders Notice Expiry Date),any Noteholder may, upon written request to PTQ (each notice a Notice of Cash Flow Prepayment)together with surrender of the Note Certificate, all delivered to the Trustee, require PTQ to make a principal payment under such Holders Notes in an amount equal to the product of (i) 35% of the Distributable Cash multiplied by (ii) the quotient of (A) the principal amount of such Holders Notes divided by (B) the then total aggregate principal amount of outstanding Notes hereunder (such product of (i) and (ii), the Pro Rata Cash Flow Payment).The Pro Rata Cash Flow Payment shall be applied to reduce the outstanding principal amount owing from time to time and due under such Holders Notes and shall be made and applied by PTQ in the manner contemplated by section 2.10. PTQ shall pay the Pro Rata Cash Flow Payments to the Noteholders on November 15 of such year (such date Cash Flow Payment Date)and shall deposit sufficient funds to the Trustee before the Cash Flow Payment Date. Subject to sufficient funds received by the Trustee, payments will be sent as contemplated in section 2.10. The Cash Flow Payment shall not be subject to any prepayment penalty (including, without limitation, the prepayment penalty outlined in section 2.16 hereof); provided however that all prepaid interest on such Notes shall be forfeited by PTQ to the respective Noteholders as a make whole premium irrespective of any reduction of the outstanding principal amount by any Pro Rata Cash Flow Payment. Trustee shall advise PTQ of all Notices of Cash Flow Prepayment received by the Noteholders Notice Expiry Date. If PTQ has no Distributable Cash, the Noteholders shall not be entitled to any Pro Rata Cash Flow Payment.



The Pro Rata Cash Flow Payment shall be calculated based upon the annual consolidated financial statements of PTQ for such fiscal year just ended, provided that any such Pro Rata Cash Flow Payment does not result in a default under or breach of any term or condition of this Indenture, as confirmed in writing in an Officers Certificate by PTQ. The Trustee shall have no duty or responsibility to calculate or verify the Pro Rata Cash Flow Payment and is to rely on an Officers Certificate to be provided by PTQ confirming the calculated Pro Rata Cash Flow Payment without further investigation.







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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 154





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2.18

Transfer



The Notes may only be transferred on the register kept at the office of the Trustee in accordance with applicable laws (including, without limitation, the fact that in Canada the Notes are subject to a hold period of four (4) months and one day from the date of issuance, such period the Hold Period)and upon compliance with the conditions hereof by the Noteholder or his legal representatives or his attorney duly appointed by an instrument in writing in form and substance satisfactory to the Trustee and upon due execution by the Noteholder and its transferee of the transfer and acknowledgement in the form set forth in the Note and delivery of the same to the Trustee and compliance with such other reasonable requirements as PTQ and the Trustee may prescribe, such transfer shall be duly noted on the register by the Trustee. The reasonable transfer charges of the Trustee with respect to the transfer of Notes shall be payable by the applicable Noteholders.



Neither PTQ nor the Trustee shall be required to transfer or exchange any Notes during the ten (10) Business Days preceding an Interest Payment Date or Redemption Date.



The Trustee understands and acknowledges that the Series D Notes are not transferable in the United States or to U.S. Persons unless an exemption from registration is available under the U.S. Securities Act and any applicable state securities laws, and the Corporation and the Trustee receive an opinion of counsel of recognized standing or other evidence to such effect in form and substance reasonably satisfactory to the Corporation and the Trustee.



The Trustee also understands and acknowledges that the Notes, the Series D Notes, the Common Shares issuable upon conversion of the Series D Notes and any other securities issuable related to the Series D Notes have not been and will not be registered under the U.S. Securities Act or applicable state securities laws. Therefore, each Note, Series D Note, Common Share issuable upon conversion of a Series D Note or any other securities issuable related to the Series D Note delivered to a person in the United States or a U.S. Person, and all certificates issued in exchange therefor or in substitution thereof, shall bear the following legend, other than for the Series D Notes, the Common Shares issuable upon conversion of a Series D Note and any other securities issuable related to the Series D Notes, which shall bear the U.S. legend in substantially the form set out in Schedule B hereto, until such time as it is no longer required under the requirements of applicable United States federal and state securities laws:



UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE <INSERT DATE THAT IS FOUR (4) MONTHS AND ONE (1) DAY AFTER CLOSING DATE>.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 155





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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE 1933 ACT, OR ANY STATE SECURITIES LAWS OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES INACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN ACCORDANCE WITH THE EXEMPTIONS FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULES 144 OR 144A THEREUNDER, IF APPLICABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) WITH THE PRIOR WRITTEN CONSENT OF THE CORPORATION (WHICH WILL BE DELIVERED PROMPTLY AND WILL NOT BE UNREASONABLY WITHHELD, BUT WHICH MAY BE CONDITIONAL ON DELIVERY OF A LEGAL OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION AND THE TRUSTEE), PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS.



DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. PROVIDED THAT THE CORPORATION IS A "FOREIGN ISSUER" WITHIN THE MEANING OF REGULATION S UNDER THE 1933 ACT AT THE TIME OF SALE, A NEW CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM THE CORPORATION'S REGISTRAR AND TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE REGISTRAR AND TRANSFER AGENT AND THE CORPORATION, TO THE EFFECT THAT SUCH SALE IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT.



provided, that if any of the Notes, the Series D Notes, the Common Shares issuable upon conversion of the Series D Notes or any other securities issuable related to the Series D Notes are being sold under clause (B) in the legend above or the legend set out in Schedule B hereto, as applicable, at a time when PTQ and each of the Guarantors, as applicable, are each a foreign issuer as defined in Rule 902 under Regulation S, such legend may be removed by providing a declaration to PTQ and its transfer agent in the form PTQ may from time to time prescribe, together with any other evidence, which may, without limitation, include an opinion of counsel of recognized standing reasonably satisfactory to PTQ and the Trustee, required by the Trustee to be delivered; and provided further, that if any such securities are being sold pursuant to Rule 144 of the U.S. Securities Act, such legend may be removed by delivery to the Trustee of an opinion of counsel of recognized standing in form and substance satisfactory to PTQ and the Trustee to the effect that the legend is no longer required under applicable requirements of the U.S. Securities Act or state securities laws.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 156





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If a certificate representing Notes, Series D Notes, Common Shares issuable upon conversion of Series D Notes or any other securities issuable related to Series D Notes is tendered for transfer and bears the legend set forth in above or in Schedule B hereto, as applicable, and the holder has not obtained the prior written consent of PTQ, the Trustee shall not register such transfer unless the transferor has provided the certificate representing such securities, and the transfer is being made (i) to PTQ, (ii) outside the United States in compliance with the requirements of Rule 904 of Regulation S, if available, and in compliance with applicable local laws and regulations of the jurisdiction(s) where such sale is made, (iii) pursuant to the exemption from the registration requirements under the U.S. Securities Act provided by Rule 144 or Rule 144A thereunder, if available, and in accordance with applicable state securities laws, or (iv) with the prior written consent of PTQ (which will be delivered promptly and will not be unreasonably withheld, but which may be conditional on delivery of a legal opinion of counsel of recognized standing or other evidence in form and substance satisfactory to PTQ and the Trustee), pursuant to another exemption from registration under the U.S. Securities Act and applicable state securities laws.



The Trustee will process all transfers in good faith upon the presumption that such transfer is permissible pursuant to all applicable legislation and the terms of this Indenture. The transferor and transferee are solely responsible for ensuring compliance with any applicable securities laws, and the Trustee will have no obligations to ensure compliance with any laws applicable to the issue, transfer of the Notes.



The Trustee shall be entitled to rely on the registered address of the Noteholder as the residency of such Noteholder.



2.19

Weighted Average Market Gold Price Semi-Annual Repayment



Subject to section 14.11, on a semi-annual basis beginning September 1, 2009 (and continuing each March 1 and September 1 thereafter) (each a Determination Date,PTQ shall provide an Officers Certificate to the Trustee and the Holders of the Notes calculating the then applicable Weighted Average Market Gold Price (each such Officers Certificate, the Notification Certificate).To the extent the Weighted Average Market Gold Price exceeds or meets the relevant thresholds as set out in the table below, PTQ shall make (if applicable) (I) a principal payment under each Holders Notes (other than the Series D Notes of such Holder, who will not be able to participate in the Pro Rata Amortization Payment until September ______, 2010) in an amount equal to the product of (i) the applicable Aggregate Pro Rata Principal Payment identified in the column below by (ii) the quotient of (A) the principal amount of a Holders Notes (other than the Series D Notes of such Holder, which will only be able to participate in the Pro Rata Amortization Payment from September 15, 2010 forward) divided by (B) the then total aggregate principal amount of outstanding Notes (other than the Series D Notes for any calculation done prior to September 15, 2010) hereunder (such product of (i) and (ii), the Pro Rata Amortization Payment)and (II) an additional payment of accrued and unpaid interest on the principal balance of a Holders Note being repaid for the period from the last Interest Payment Date to the relevant Amortization Payment Date (such amount the Additional Interest Payment).The Aggregate Pro Rata Principal Payment shall be determined in the amounts set forth below:









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 157





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|                                   |                                     
|---------------------------------- | ------------------------------------
|Weighted Average Market Gold Price | Aggregate Pro Rata Principal Payment
|Over U.S. $1000                    | U.S. $8,000,000                     
|U.S. $900 - $1000                  | U.S. $6,000,000                     
|U.S. $800 - $900                   | U.S. $4,000,000                     
|Less than U.S. $800                | $0 (no principal payment required)  



The Pro Rata Amortization Payment shall be applied to reduce the outstanding principal amount owing from time to time and due under such Holders Notes and shall be made and applied by PTQ in the manner contemplated by section 2.10. PTQ shall pay the Pro Rata Amortization Payments to the Noteholders semi-annually on September 15 and March 15 of each year (such date Amortization Payment Date)and shall deposit sufficient funds to the Trustee three (3) Business Days before the Amortization Payment Date. To the extent that PTQ shall be required to make a Pro Rata Amortization Payment under each Note, PTQ shall provide notice in the Notification Certificate to each Holder (other than a Holder of only the Series D Notes; provided however that from the September 1, 2010 Determination Date a Holder of only the Series D Notes shall receive such Notification Certificate) to surrender their Notes (other than the Series D Notes; provided however from the September 1, 2010 Determination Date a Holder of Series D Notes shall surrender their Series D Notes) to the Trustee so that PTQ can cause the Trustee to issue a new Note reflecting the updated balance after the Pro Rata Amortization Payment has been made.



For clarity, where we assume the Pro Rata Amortization Payment is equal to US$200, the Amortization Payment Date is September [15], 2009 and the last Interest Payment Date was May 15, 2009, then US$200 would be applied to reduce the outstanding principal amount owing from time to time and due under such Holders Notes. Therefore the new balance of the US$1,000 Series 1 Note would be US$1,000 multiplied by 120% = US$1200 minus US$200 = US$1,000 divided by 1.2 = US$833.33. For clarity, the Additional Interest Amount shall be equal to US$166.67 multiplied by 15% divided by 360 days multiplied by 30 days multiplied by 4 (number of months of 30 days between May 15, 2009 and September 15, 2009) which shall equal US$8.33.



Subject to sufficient funds received by the Trustee, payments will be sent as contemplated in section 2.10. The Pro Rata Amortization Payment shall not be subject to any prepayment penalty (including, without limitation, the prepayment penalty outlined in section 2.16 hereof); provided however that all prepaid interest on such Notes shall be forfeited by PTQ to the respective Noteholders as a make whole premium irrespective of any reduction of the outstanding principal amount by any Pro Rata Amortization Payment.



The Weighted Average Market Gold Price shall be confirmed in writing in an Officers Certificate by PTQ together with a schedule of the Holders Pro Rata Amortization Payment and Additional Interest Payment amounts, delivered to the Trustee within three (3) Business Days after the Determination Date. The Trustee shall have no duty or responsibility to calculate or verify the Weighted Average Market Gold Price, Pro Rata Amortization Payment or the Additional Interest Payment amounts and is to rely on an Officers Certificate to be provided by PTQ confirming the Weighted Average Market Gold Price, Pro Rata Amortization Payment and Additional Interest Payment amounts without further investigation.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 158





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3.

PUT RIGHTS AND CONVERSION RIGHTS



3.1

Put Rights



At any such time that any of the Notes remain outstanding, but in any event no earlier than eighteen (18) months following the initial issuance of a Note or a Future Series Issue Date, the Holder of such Note shall have the right to cause PTQ to purchase all of its Notes (with the exception of the Series D Notes) then outstanding by delivering to PTQ written notice (the "Put Notice")of such demand in the manner provided in section 14.1. The Noteholder shall specify in such Put Notice a date for the purchase of the outstanding Notes (the "Put Closing Date"),such Put Closing Date not to be less than six (6) months from the date of delivery of the Put Notice. Notes specified in the Put Notice shall be purchased at a price equal to 120% of the principal amount of such Notes to be purchased, together with accrued and unpaid interest on the principal amount of the Notes, or part thereof, to be purchased, to but not including the Put Closing Date (such price at which the Notes may be purchased is referred to herein as the "Put Purchase Price"). The closing of the transaction contemplated by the Put Notice shall occur at 10:00 a.m. (British Columbia time) on the Put Closing Date at the office of counsel to the PTQ. For greater certainty, a Holder shall not be permitted to exercise its rights under the Section 3.1 with respect to its Series D Notes.



3.2

Notes Due on Put Closing Date



Upon the Put Notice having been delivered as provided in section 3.1, all of the Notes referenced therein shall thereupon be and become due and payable on the Put Closing Date, in the same manner and with the same effect as if it were the Maturity Date, anything therein or herein to the contrary notwithstanding, and from and after such Put Closing Date, if the Put Purchase Price necessary to purchase such Notes shall have been delivered to the Noteholders as provided for herein, such Notes shall not be considered as outstanding hereunder and interest upon such Notes shall cease to accrue after such Put Closing Date.



3.3

Delivery of Put Purchase Price



Upon the Notes having been called for purchase as provided in this Article 3, PTQ shall pay or cause to be paid to the Noteholders on the Put Closing Date such sums as shall be sufficient in immediately available funds to pay the Put Purchase Price of the Notes.



3.4

Surrender of Notes for Cancellation



Holders of any such Notes required to be purchased as provided for in this Article 3 shall, on the Put Closing Date, surrender for cancellation the Notes to PTQ upon receipt of the Put Purchase Price.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 159





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3.5

Cancellation of Notes



All Notes purchased by PTQ under this Article 3 shall forthwith be cancelled by PTQ and no Notes shall be issued in substitution therefor.



3.6

Conversion Rights



The Holder of each Series D Note shall have the right, at its option, to convert the whole or any part of such Series D Note into fully paid and non-assessable Common Shares as more specifically described in Appendix I.





4.

SECURITY



4.1

Security



As general and continuing security for the due and punctual payment of all of the principal of and interest on the Notes, all other amounts from time to time payable to the Trustee and the Noteholders under or in respect of this Indenture and the performance of PTQs obligations contained in the Notes and this Indenture, (the Secured Obligations)forthwith after the execution hereof, PTQ shall execute and deliver the PTQ GSA in favour of the Trustee for and on behalf of the Noteholders and, pursuant to such PTQ GSA, PTQ shall grant a security interest, lien, mortgage and hypothec on the universality of all of the property of PTQ, movable and immovable (personal and real), present and future, corporeal and incorporeal (tangible and intangible) (the "PTQ Charged Property"),which security interest, lien, mortgage and hypothec shall be in priority to all Liens created or to be created to secure the repayment of any other Indebtedness.



4.2

Title to Charged Premises



PTQ represents, warrants and covenants with the Trustee and the Noteholders that (a) PTQ has authority to grant the PTQ Security Interests on the PTQ Charged Property; and (b) such PTQ Charged Property is and will be and remain free and clear of any Liens thereon other than the PTQ Security Interests and other than Permitted Liens.



4.3

Further Assurances



Each of PTQ and the Guarantors acknowledges to and covenants with the Trustee that:



(a)

it shall from time to time execute and deliver all such agreements, documents and other instruments, and do all such things and give all such assurances as, in the opinion of Counsel, are necessary or of advantage for validly granting to the Trustee the PTQ Security Interests intended to be created by the PTQ GSA upon the PTQ Charged Property or the security interests granted by the Guarantors as further described in Section 13, as applicable, whether now owned or hereafter acquired by PTQ or by the Guarantors, as applicable, subject to Permitted Liens;









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 160





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(b)

it shall from time to time, after the PTQ Security Interests or the security interests granted by the Guarantors as further described in Section 13, as applicable, shall have become enforceable and the Trustee shall have been directed by the Noteholders to enforce the same after the occurrence and during the continuance of an event of default thereunder, execute and deliver all such agreements, documents and other instruments, and do all such things and give all such assurances as the Trustee may reasonably require for facilitating the enforcement of the PTQ Security Interests and the realization of the PTQ Charged Property or the security interests granted by the Guarantors as further described in Section 13, as applicable, and for exercising all of the powers, authorities and discretions conferred upon the Trustee by the PTQ GSA or the security interests granted by the Guarantors as further described in Section 13, as applicable, and for transferring to any purchaser of any such property, whether sold by the Trustee under the PTQ GSA or the security interests granted by the Guarantors as further described in Section 13, as applicable, or by judicial proceedings, the title to the assets so sold and PTQ or the Guarantors, as applicable, shall give all such notices and which the Trustee may consider expedient; and



(c)

it will, and shall upon request from the Trustee from time to time, deliver to the Trustee such additional security documents and amend or supplement the PTQ GSA or the security interests granted by the Guarantors as further described in Section 13, as applicable:



(i)

to reflect any changes in laws, whether arising as a result of statutory amendments, court decisions or otherwise; or



(ii)

to facilitate the registration of appropriate forms of security documents against all property subject to, or intended to be subject to, the PTQ Security Interests created or intended to be created by the PTQ GSA or the security interests granted by the Guarantors as further described in Section 13, as applicable; or



(iii)

to facilitate the registration of the PTQ Security Interests or the security interests granted by the Guarantors as further described in Section 13, as applicable in all applicable jurisdictions; or



(iv)

if PTQ or a Guarantors, as applicable, merges with or enters into a reorganization with any person;



(v)

in each case in order to confer upon the Trustee such PTQ Security Interests with such priority as is intended to be created by the PTQ GSA or the security interests granted by the Guarantors as further described in Section 13, as applicable.



4.4

Registration



PTQ covenants with the Trustee that immediately after the execution of the PTQ GSA, PTQ shall register, file or record the PTQ GSA in all registry offices in all registration divisions where, in the opinion of the Trustee, Counsel or Noteholders representing a majority in principal amount of the Notes, such registration, filing or recording is necessary or of advantage to the PTQ Security Interests. PTQ shall deliver to the Trustee certificates establishing each such registration, filing or recording, and shall do, observe and perform all matters and things including renewals of such registrations, filings or recordings necessary or expedient to be done, observed and performed for the purpose of creating, perfecting, setting up, rendering opposable, protecting and maintaining the PTQ Security Interests as valid and effective Liens with the priority intended to be created and maintained by the PTQ GSA. PTQ will pay or indemnify the Trustee and the Noteholders against any and all stamp duties, registration fees and similar taxes or charges which may be payable or determined to be payable in connection with the execution, delivery, performance, registration or enforcement of any of the PTQ GSA or any of the transactions contemplated by the PTQ GSA.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 161





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Each Guarantor covenants with the Trustee that immediately after the execution of the chattel mortgage or pledge of assets as further described in Section 13, as applicable, each Guarantor shall register, file or record such documents in all registry offices in all registration divisions where, in the opinion of the Trustee, Counsel or Noteholders representing a majority in principal amount of the Notes, such registration, filing or recording is necessary or of advantage to the security interests created by such documents. Each Guarantor shall deliver to the Trustee certificates establishing each such registration, filing or recording, and shall do, observe and perform all matters and things including renewals of such registrations, filings or recordings necessary or expedient to be done, observed and performed for the purpose of creating, perfecting, setting up, rendering opposable, protecting and maintaining such security interests as valid and effective Liens with the priority intended to be created and maintained by the chattel mortgage or pledge of assets. Each Guarantor will pay or indemnify the Trustee and the Noteholders against any and all stamp duties, registration fees and similar taxes or charges which may be payable or determined to be payable in connection with the execution, delivery, performance, registration or enforcement of any of the chattel mortgage or pledge of assets or any of the transactions contemplated by the chattel mortgage or pledge of assets.



4.5

Security Valid Irrespective of Advance



The PTQ Security Interests shall be effective whether the consideration in respect of which the Notes are issued or any part of such consideration shall be made or given before or after or at the same time as the execution and delivery of this Indenture or the issue of any of the Notes. The PTQ Security Interests shall be effective notwithstanding that from time to time no Notes may be outstanding and the obligations of PTQ shall not be deemed extinguished until PTQ shall have been released from its covenants under this Indenture, the Notes and the PTQ GSA in accordance with section 8.4.



4.6

Final Discharge



Upon proof being given to the satisfaction of the Trustee that:



(a)

all of the principal of and interest on, if any, the Notes have been paid and satisfied in full; and



(b)

all other amounts owing under this Indenture and the PTQ GSA have been paid and satisfied in full.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 162





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the Trustee shall, at the request and at the expense of PTQ, execute and deliver to PTQ such deeds or other instruments as shall be requisite to evidence the satisfaction and discharge of the PTQ Security Interests and to release or reconvey to PTQ all PTQ Charged Property freed and discharged from the PTQ Security Interests.



4.7

Attachment



PTQ shall promptly inform the Trustee in writing of the acquisition by PTQ of any immovable or real property which is not described in the PTQ GSA, and PTQ agrees to execute and deliver at its own expense from time to time amendments or supplements to this Indenture, the PTQ GSA or such other instruments as may be required in the opinion of Counsel in order that the PTQ Security Interests shall attach to such after-acquired immovable or real property, together with all present and future works, constructions and appurtenances related thereto or in order to perfect, set up, render opposable or protect the PTQ Security Interests with respect to such property.



5.

SECURITY



5.1

Security



Except for Permitted Liens, PTQ owns each item of the PTQ Charged Property free and clear of any and all Liens or claims of others. No security agreement, financing statement or other public notice with respect to all or any part of the PTQ Charged Property that evidences a Lien securing any material Indebtedness is on file or of record in any public office, except such as have been filed in favor of Trustee for the ratable benefit of the Noteholders pursuant to this Indenture. PTQ shall maintain each of the PTQ Security Interests as a perfected, set up, opposable and protected Lien having at least the priority described in this section 5.1 and shall defend such security interest against the claims and demands of all Persons whomsoever. All Notes issued pursuant to the provisions of this Indenture shall rank pari passu and be secured equally and ratably without discrimination or preference, whatever may be the actual date thereof or of the certification thereof respectively.





6.

COVENANTS OF PTQ



6.1

General Covenants



PTQ covenants with the Trustee that so long as any of the Notes remain outstanding:



(a)

it will well, duly and punctually pay or cause to be paid to every Noteholder, or to the Trustee on behalf of every Noteholder, all principal thereof and accrued interest, if any, on the Notes, at the dates and places, in the currency and in the manner mentioned herein and in the Notes;









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 163





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(b)

it will carry on and conduct, and will cause to be carried on and conducted, its business in a proper and efficient manner and do or cause to be done all things necessary to preserve and keep in full force and effect its existence and all consents, rights, franchises, licences, approvals, permits and qualifications necessary to own their respective properties and assets and perform their respective obligations under this Indenture; but PTQ may not cease to operate or dispose of all or substantially all of its undertaking or assets, except in accordance with Article 9, and it will keep or cause to be kept proper books of account, and will if and whenever required in writing by the Trustee on request by the Noteholders, forthwith file with the Trustee copies of all annual and periodic reports of PTQ furnished to its shareholders after the date hereof, and at all reasonable times it will furnish or cause to be furnished to the Trustee or its duly authorized agent or attorney such information relating to its business as the Trustee on request by the Noteholders, may reasonably require. No obligation shall rest with the Trustee to analyze such statements, or evaluate the performance of the Company as indicated therein in any manner whatsoever;



(c)

it will, immediately upon obtaining knowledge thereof, provide, or cause to be provided, prompt notice in writing to the Trustee of any Event of Default;



(d)

it shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (a) all taxes, assessments and governmental charges levied or imposed upon its or its Subsidiaries income, profits or property and (b) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien upon its property; provided that PTQ shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate negotiations or proceedings and for which disputed amounts any reserves required in accordance with GAAP have been made;



(e)

it shall, and shall cause each of its Subsidiaries to, at all times cause all properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order (reasonable wear and tear excepted) and supplied with all necessary equipment, and shall cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereto;



(f)

it shall, and shall cause each of its Subsidiaries to, maintain insurance in such amounts and covering such risks as are usually and customarily carried with respect to similar facilities according to their respective locations;



(g)

it shall not make, and shall not permit any of its Subsidiaries to, directly or indirectly, make, any Restricted Payment;



(h)

it shall not, and shall not permit any of its Subsidiaries to, make any Investment other than a Permitted Investment;



(i)

it shall, and shall cause each of its Subsidiaries to, in the event of any equity offering (other than any equity offering undertaken in respect of (A) a transaction that is a Permitted Investment as defined in (iii) of the definition of Permitted Investment or (B) a Permitted Investment as defined in (i) of the definition of Permitted Investment in Petaquilla Infraestructura, S.A.) of PTQ or the Guarantors, to apply 50% of the gross proceeds of such equity offering to the redemption of the Notes pursuant to section 2.16;









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 164





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(j)

it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or suffer to exist any transaction or series of related transactions (including, without limitation, the sale, purchase, exchange or lease of assets, property or services) with any Affiliate (including entities in which PTQ or any of its Subsidiaries own a minority interest) or holder of 10% or more of PTQs capital shares (an Affiliate Transaction)or extend, renew, waive or otherwise modify the terms of any Affiliate Transaction entered into prior the date hereof unless (i) such Affiliate Transaction is between or among PTQ and its Wholly-Owned Subsidiaries; such Affiliate Transaction is solely between or among Wholly-Owned Subsidiaries of PTQ; or (ii) the terms of such Affiliate Transaction are fair and reasonable to PTQ or such Subsidiary, as the case may be, and the terms of such Affiliate Transaction are at least as favorable as the terms which could be obtained by PTQ or such Subsidiary, as the case may be, in a comparable transaction made on an arms-length basis between unaffiliated parties. In any Affiliate Transaction involving an amount or having a value in excess of CDN$3 million which is not permitted under clause (i) above, PTQ must obtain a resolution of the Board of Directors certifying that such Affiliate Transaction complies with clause (ii) above. In transactions with a value in excess of CDN$5 million which are not permitted under clause (i) above, PTQ must obtain a written opinion as to the fairness of such a transaction from an independent investment banking firm of national standing in the United States or Canada;



(k)

it shall not create or acquire, nor permit any of its Subsidiaries to create or acquire, any Subsidiary other than (i) a Subsidiary existing as of the date of the Indenture, or (ii) a Subsidiary conducting a business similar or reasonably related to the business of PTQ and its Subsidiaries on the date hereof; provided, however, that each Subsidiary acquired or created pursuant to clause (ii), which Subsidiary has total assets in excess of CDN$2,500,000, shall have become a Guarantor hereunder and evidenced its guarantee with such documentation satisfactory in form and substance as determined by Counsel shall be required, including, without limitation, a supplement or amendment to the Indenture and opinions of counsel as to the enforceability of such guarantee pursuant to which such Subsidiary shall become a Guarantor and shall have executed appropriate documentation. Neither PTQ nor any of the Guarantors will transfer any assets to a Subsidiary which is not a Guarantor unless such Subsidiary simultaneously with such transfer executes a guarantee satisfactory in form and substance to Counsel (together with the documentation referred to in the preceding sentence) pursuant to which such Subsidiary shall become a Guarantor;



(l)

it will annually, within 140 days of the end of each fiscal year of PTQ, deliver to the Trustee (i) an Officers Certificate confirming that it has complied with all requirements contained in this Indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an Event of Default, or, if there has been any failure to comply, giving particulars thereof and (ii) audited consolidated financial statements for the previous fiscal year;



(m)

each of PTQ and the Guarantors will use or cause to be used the proceeds of the Notes exclusively at the Molejon gold deposit project in the Republic of Panama; and









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 165





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(n)

generally, it will well, duly and punctually perform and carry out all of the acts or things to be done by it as provided in this Indenture.



6.2

Trustees Remuneration and Expenses



PTQ will pay to the Trustee from time to time such reasonable remuneration for its services hereunder as shall be negotiated by PTQ and the Trustee, and PTQ will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in the execution of its rights, powers, duties and obligations hereunder and in the administration or execution of the trusts hereby created (including the reasonable compensation and the disbursements of its Counsel and all other advisers and assistants not regularly in its employ), both before any default hereunder and thereafter until all duties of the Trustee hereunder shall be finally and fully performed, except any such expense, disbursement or advance as may arise from the gross negligence or fraud of the Trustee. Any amount due under this section and unpaid 30 days after a request for such payment shall bear interest at the then current rate charged by the Trustee. After default, all amounts so payable and the interest thereon shall be payable out of any funds coming into the possession of the Trustee in priority to the principal of and interest on, if any, the Notes.



6.3

Trustee to Give Notice of Default



The Trustee shall give to the Noteholders in the manner provided in section 14.1 promptly after the Trustee receives written notice of any Event of Default from PTQ per section 6.1(c). The Trustee shall assume no Event of Default until written notice is received.



6.4

Performance of Covenants by Trustee



If PTQ shall fail to perform any of its covenants contained in this Indenture, the Trustee may itself perform any of such covenants capable of being performed by it, but shall be under no obligation to do so. All sums so expended or advanced by the Trustee shall be repayable as provided in section 6.2. No such performance or advance by the Trustee shall be deemed to relieve PTQ of a default hereunder.



7.

DEFAULT AND ENFORCEMENT



7.1

Events of Default



Each of the following events is herein referred to as an "Event of Default":



(a)

if default is made in the payment of any principal due on any of the Notes when the same becomes due under any provision hereof or of the Notes as required hereunder; or



(b)

if default is made in the payment of any interest due on any of the Notes; or



(c)

if default is made in the performance or breach by PTQ or any Guarantor of any other covenant or agreement under the provisions of the Notes, this Indenture or any document relating hereto or thereto, including the PTQ GSA, and continues for a period

of 10 days after written notice specifying such default and requiring such default to be remedied has been given to PTQ or any Guarantor, as the case may be, by the Trustee; or









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 166





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(d)

if there occurs with respect to any Indebtedness of PTQ or any Guarantor having an outstanding principal amount of $500,000 or more an event of default that has caused the holder thereof to declare such Indebtedness to be due and payable prior to its maturity and such Indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled within 30 days of such acceleration; or



(e)

if a proceeding or case shall be commenced against PTQ or any Guarantor, except in the course of carrying out, or pursuant to, a transaction which is permitted by Article 9, in any court of competent jurisdiction, seeking (i) its reorganization, liquidation, termination or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a receiver, custodian, liquidator or the like of PTQ or any Guarantor or all or any substantial part of its respective property, or (iii) similar relief in respect of PTQ or any Guarantor under any law relating to bankruptcy, insolvency, reorganization, winding-up or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days, or an order for relief against PTQ or any Guarantor shall be entered in an involuntary case under the Bankruptcy and Insolvency Act(Canada) (as amended, the "Bankruptcy Act");or



(f)

if PTQ or any Guarantor shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, examiner, liquidator or the like of itself or of all or any substantial part of its property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Act or any other similar foreign statute, (iv) institute any proceeding or file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, liquidation, termination, winding-up or composition or readjustment of debts, (v) fail to contest in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Act or any other similar foreign statute, or (vi) take any action for the purpose of effecting any of the foregoing; or



(g)

the occurrence of the public announcement of a Change of Control.



7.2

Acceleration on Default



In case of any Event of Default that has occurred and is continuing, the Trustee may in its discretion and shall, if so directed by a Special Resolution, subject to the provisions of section 7.3, declare an amount equal to 120% of the principal of all Notes (other than the Series D Notes) and 110% of the Series D Notes then outstanding and all other moneys payable hereunder to be due and payable and the same shall forthwith become immediately due and payable to the Trustee on written demand, anything therein or herein to the contrary notwithstanding. PTQ shall in either case forthwith pay to the Trustee for the benefit of the Noteholders the principal of such Notes and all other moneys payable hereunder, together with subsequent interest thereon at the rate of 17% per annum from the date of such declaration (subject to the proviso below) until the date payment is received by the Trustee, such subsequent interest to be payable at the times and places and according to the tenor of the Notes. Such payment when made shall be deemed to have been made in discharge of PTQs obligations hereunder and any moneys so received by the Trustee shall be applied in the manner provided in section 7.6. Provided that, for greater certainty, in the event of an acceleration of payment, if PTQ has prepaid interest on the principal amount of the Notes through to the Maturity Date, the interest on such principal amount outstanding shall only accrue and be payable after the Maturity Date.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 167





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7.3

Waiver of Default or Breach



In case any Event of Default hereunder has occurred, the Holders of not less than 66 2/3% in principal amount of the Notes then outstanding shall have the power (in addition to and subject to the powers exercisable by Special Resolution) by instrument in writing to instruct the Trustee to waive the default and/or to annul any declaration and/or demand made by the Trustee pursuant to section 7.2 and the Trustee shall thereupon waive the default and/or annul such declaration and/or demand upon such terms and conditions as such Noteholders may prescribe; however, that no act or omission of the Trustee or the Noteholders shall extend to or be taken in any manner whatsoever to affect any subsequent default or the rights resulting therefrom.



7.4

Proceedings by the Trustee



Whenever any Event of Default hereunder has occurred and is continuing, but subject to section 7.3 and to the provisions of any Special Resolution:



(a)

the Trustee, in the exercise of its discretion and without further notice, may proceed to enforce the rights of the Trustee and the Noteholders by any action, suit, remedy, including, but not limited to, appointing a receiver, or proceeding authorized or permitted by law or by equity and may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Holders lodged in any bankruptcy, termination or other proceedings relative to PTQ; and



(b)

if so directed by a Special Resolution and, upon being indemnified and funded to its satisfaction as provided in section 12.2, the Trustee shall exercise or take such one or more of such remedies as the Special Resolution may direct or, if such Special Resolution contains no direction, as the Trustee may deem expedient.



Notwithstanding any other provision of this Indenture, neither the Trustee nor any Person related to the Trustee shall be appointed a receiver or receiver and manager or liquidator of any part of the property or assets of PTQ or the Guarantors.



No delay or omission of the Trustee or of the Noteholders to exercise any remedy referred to in this paragraph shall impair any such remedy or shall be construed to be a waiver of any default hereunder or acquiescence therein.



PTQ shall be liable to the Trustee for all costs incurred by the Trustee in connection with the enforcement of rights under this Indenture.









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No such remedy for the enforcement of the rights of the Trustee or of the Noteholders shall be exclusive of or dependent on any other such remedy but any one or more of such remedies may from time to time be exercised independently or in combination.



Upon the exercise or taking by the Trustee of any such remedies, whether or not a declaration and demand have been made pursuant to section 7.2, the principal and interest on, if any, all Notes and other moneys payable under section 7.2 shall forthwith become due and payable to the Trustee as though such a declaration and a demand therefor had actually been made.



All rights of action hereunder may be enforced by the Trustee, without the possession of any of the Notes or the production thereof on the trial or other proceedings relative thereto.



7.5

Suits by Noteholders



No Holder of any Note shall have the right to institute any action or proceedings or to exercise any other remedy authorized by this Indenture for the purpose of enforcing any right hereunder or under any Note or for the execution of any trust or power hereunder or for the appointment of a liquidator or receiver or for a receiving order under any bankruptcy legislation or to have PTQ terminated or to file or prove a claim in any liquidation or bankruptcy proceedings, unless a Special Resolution and indemnity referred to in section 12.2 have been tendered to the Trustee and the Trustee shall have failed to act within a reasonable time thereafter. In such case, but not otherwise, any Noteholder acting on behalf of himself and all other Noteholders shall be entitled to take proceedings in any court of competent jurisdiction such as the Trustee might have taken under section 7.4. No one or more Noteholders shall have any right in any manner whatsoever to affect, disturb or prejudice the rights hereby created by his or their action, or to enforce any right hereunder or under any Note, except subject to the conditions and in the manner herein provided, and all powers and trusts hereunder shall be exercised and all proceedings at law shall be instituted, had and maintained by the Trustee, except only as herein provided, and in any event for the equal benefit of all Noteholders.



7.6

Application of Moneys Received by Trustee



Except as otherwise herein provided, the moneys arising from any enforcement hereof shall be held in trust by the Trustee and by it applied, together with any other moneys then or thereafter in the hands of the Trustee available for the purpose, as follows:



(a)

first, in payment or reimbursement to the Trustee of the reasonable remuneration, expenses, disbursements and advances of the Trustee earned, incurred or made in the execution of its obligations and responsibilities hereunder and in the administration or execution of any trusts hereunder or otherwise in relation to this Indenture with interest thereon as herein provided;



(b)

thereafter, in or towards payment rateably and proportionately firstly of the principal of the Notes, secondly of the accrued and unpaid interest on the Notes and thirdly of the other moneys payable hereunder, unless the order or priority of payment shall be otherwise directed by Special Resolution and, in that case, in such order or priority as between such principal and interest as may be directed by such Special Resolution; and









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 169





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(c)

lastly, the surplus (if any) of such moneys shall be paid to PTQ or its assigns, unless otherwise required by law.



7.7

Distribution of Proceeds



Payments to Holders pursuant to section 7.6 shall be made as follows:



(a)

at least 10 days notice of every such payment shall be given in the manner provided in section 14.1 specifying the time when and the place or places where the Notes are to be presented and the amount of the payment and the application thereof as between principal, interest and any other moneys payable hereunder;



(b)

payment of any Note shall be made upon presentation thereof at any one of the places specified in such notice, any such Note thereby paid in full shall be surrendered and otherwise such payment shall be recorded by endorsement thereon;



(c)

from and after the date of payment specified in the notice, interest shall accrue only on the amount owing on each Note after giving credit for the amount of the payment specified in such notice, unless such Note be duly presented on or after the date so specified and payment of such amount be not made; and



(d)

the Trustee shall not be required to make any interim payment to Noteholders, unless the moneys in its hands, after reserving therefrom such amount as the Trustee may think necessary to provide for the payments mentioned in subsections 7.6(a), exceed 5% of the principal amount of the Notes.



7.8

Trustee Appointed Attorney



PTQ hereby irrevocably appoints the Trustee to be the attorney of PTQ for and in the name and on behalf of PTQ to execute any instrument and do any acts and things which PTQ ought to sign, execute and do hereunder and generally to use the name of PTQ in the exercise of all or any of the powers hereby conferred on the Trustee, with full powers of substitution and revocation.



7.9

Remedies Cumulative



Each and every remedy herein conferred upon or reserved to the Trustee, or upon or to the Noteholders, shall, to the extent permitted by law, be cumulative and shall be in addition to every other remedy given hereunder or now existing or hereafter to exist by law or by statute.



7.10

Judgment Against PTQ



PTQ covenants and agrees with the Trustee that, in case of any proceedings to obtain judgment for the principal of or interest on, if any, the Notes, judgment may be rendered against it in favour of the Noteholders hereunder, or in favour of the Trustee, as fondé de pouvoir(holder of the power of attorney) for all the Noteholders, for any amount which may remain due in respect of the Notes and interest thereon and any other moneys payable by PTQ hereunder and under all documents relating hereto.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 170





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8.

SATISFACTION AND DISCHARGE



8.1

Cancellation and Destruction



All Notes shall forthwith after full payment thereof be delivered to the Trustee or to a person appointed by it or by PTQ with the approval of the Trustee and cancelled. The Trustee shall prepare and retain a certificate of such cancellation and deliver a duplicate thereof to PTQ.



8.2

Non-Presentation of Notes



In case the Holder of any Note should fail to present the same for payment on the date on which the principal thereof and the interest thereon or represented thereby becomes payable at maturity or otherwise or should fail to accept payment on account thereof or give such receipt therefor, as may be required by the Trustee:



(a)

PTQ shall be entitled to pay to the Trustee and direct it to set aside; or



(b)

in respect of moneys in the hands of the Trustee which may or should be applied to the payment of the Notes, PTQ shall be entitled to direct the Trustee to set aside,



the principal and such interest in trust to be paid without interest to the Holder of such Note, upon due presentation or surrender thereof in accordance with the provisions of this Indenture; and thereupon the principal and interest payable on or represented by each Note in respect whereof such moneys have been set aside shall be deemed to have been paid and the Holder thereof shall thereafter have no right in respect thereof, except that of receiving payment of the moneys so set aside by the Trustee upon due presentation and surrender thereof, subject always to the provisions of section 8.3.



8.3

Repayment of Unclaimed Moneys to PTQ



Any moneys in the hands of the Trustee and set aside under section 8.2 and not claimed by and paid or delivered as provided in section 8.2 to Holders of Notes within three (3) years after the date of such setting aside shall be repaid to PTQ by the Trustee on demand or otherwise as required by the provisions of applicable laws of public order, and thereupon the Trustee shall be released from all further liability with respect to such moneys and thereafter the Holders of the Notes in respect of which such moneys were so repaid or delivered to PTQ shall have no rights in respect thereof, except to obtain payment of the moneys due thereon from PTQ up to the fifth anniversary of the date hereof.



8.4

Release from Covenants



Upon Written Request and proof being given to the reasonable satisfaction of the Trustee that the principal of all the Notes and interest thereon, if any, and other moneys payable hereunder have been paid or satisfied, or that all the outstanding Notes having matured, such payments have been duly and effectually provided for by payment to the Trustee or otherwise and upon payment of all costs, charges and expenses properly incurred by the Trustee in relation to these presents and all documents relating hereto, and all interest thereon, and the remuneration of the Trustee, or upon provision satisfactory to the Trustee being made therefor, the Trustee shall, at the request and at the expense of PTQ, execute and deliver to PTQ such deeds or other instruments as shall be requisite to release PTQ from the terms of the Indenture, the Notes and the PTQ GSA, except those terms of the Indenture relating to the indemnification of the Trustee.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 171





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9.

CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER



9.1

Certain Requirements in Respect of Merger, etc.



PTQ shall not enter into any transaction (whether by way of merger, consolidation, reorganization, lease, sale, conveyance, transfer, or otherwise) whereby all or substantially all of its undertaking or assets would become the property of any other person as long as any Notes are outstanding, unless:



(a)

such other person (herein called the "Successor")is a trust, partnership or corporation constituted under the laws of a province of Canada or the laws of Canada;



(b)

the Successor executes, prior to the consummation of such transaction, such indenture supplemental hereto and other instruments (if any) as are satisfactory to the Trustee and in the opinion of Counsel necessary or advisable to evidence the assumption by the Successor of the liability for the due and punctual payment of all the Notes and the interest thereon, if any, and all other moneys payable hereunder and the covenant of such Successor to pay the same and its agreement to observe and perform all the covenants and obligations of PTQ under this Indenture, the Notes and the PTQ GSA;



(c)

such transaction is to the satisfaction of the Trustee and in the opinion of Counsel upon such terms as substantially to preserve and not to impair any of the rights and powers of the Trustee and of the Noteholders hereunder;



(d)

at the time of or immediately after the consummation of such transaction, no condition or event shall exist which constitutes or which would, after the lapse of time or giving of notice or both, constitute an Event of Default hereunder; and



(e)

an Officers Certificate is delivered to the Trustee together with an Opinion of Counsel to the Trustee confirming satisfaction of all foregoing conditions and legal requirements.



9.2

Vesting of Powers in Successor



Upon satisfaction of the conditions of section 9.1, the Successor shall succeed to and be substituted for PTQ with the same effect as if the Successor had been named herein and the Successor shall possess and from time to time may exercise each and every right and power of PTQ under this Indenture in the name of PTQ or otherwise and any act or proceeding by any provisions of this Indenture required to be done or performed by any trustees or officers of PTQ may be done and performed with like force and effect by the like trustees (if any), directors (if any) or officers of such Successor.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 172





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9.3

Execution of Supplemental Indenture



Upon being satisfied that the conditions of section 9.1 have been duly observed and performed, the Trustee shall execute any supplemental indenture required, as provided in Article 11.





10.

MEETINGS OF NOTEHOLDERS



10.1

Right to Convene Meeting



The Trustee shall have power at any time to call meetings of the Noteholders at such time and place as the Trustee may determine. Noteholders may, by Noteholders Request or Written Request, respectively, requisition the Trustee to call a meeting of the Noteholders for the purposes stated in the requisition. The requisition shall state in reasonable detail the business to be transacted at the meeting and shall be sent to the Trustee. Upon receiving the requisition and upon receiving sufficient evidence that it is being indemnified to its reasonable satisfaction by the Noteholders or PTQ, the Trustee shall call a meeting of Noteholders to transact the business referred to in the requisition, unless:



(a)

a record date for a meeting of the Noteholders has been fixed;



(b)

the Trustee has called a meeting of the Noteholders and has given notice thereof pursuant to section 10.2; or



(c)

in connection with the business as stated in the requisition:



(i)

the requisition is not submitted to the Trustee at least ninety (90) days before the date of the next scheduled meeting, if any, of the Noteholders;



(ii)

it clearly appears that the matter covered by the requisition is submitted by the Noteholders primarily for the purpose of enforcing a personal claim or redressing a personal grievance against PTQ, the Trustee or the officers of PTQ, or primarily for the purpose of promoting general economic, political, religious, social or similar causes;



(iii)

the Trustee, at one or more Noteholders Request, included a matter covered by a requisition on an order of business relating to a meeting of Noteholders held within two years preceding the receipt of such request and such Noteholders failed to present the matter, in person or by proxy, at the meeting;



(iv)

substantially the same matter covered by the requisition was submitted to Noteholders at a meeting of Noteholders held within two years preceding the receipt of the Noteholders Request and the matter covered by the requisition was defeated; or



(v)

the rights conferred by this section 10.1 are being abused to secure publicity.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 173





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If the Trustee does not within 21 days after receiving the requisition call a meeting, any Noteholders who signed the requisition may call the meeting in accordance with the provisions of sections 10.2 and 10.9, mutatis mutandis.If there shall be no Trustee, PTQ shall promptly appoint a successor Trustee in the manner provided in section 12.9.



10.2

Notice of Meeting of Noteholders



Notice of all meetings of the Noteholders shall be mailed or delivered to each Noteholder with a copy to the Trustee and PTQ in the manner provided in section 14.1 and to the auditors of PTQ not less than 21 nor more than 50 days (or within such other delays as required by law) before the meeting but may be waived in writing by any Noteholders either before or after such meeting. The attendance of a Noteholder at a meeting shall constitute a waiver of notice of such meeting except where a Noteholder attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened. Notice of any meeting of the Noteholders shall state the purposes of the meeting.



10.3

Quorum



A quorum for any meeting of Noteholders shall be individuals present not being less than two in number and being Noteholders or representing by proxy Noteholders who hold in the aggregate not less than 25% in principal amount of the Notes then outstanding.



If a quorum of the Noteholders shall not be present within 30 minutes from the time fixed for holding any meeting, the meeting, if convened by the Noteholders on a Noteholders Request, shall be dissolved; but in any other case the meeting shall be adjourned to the same day in the next week (unless such day is not a business day in the place where the meeting is to be held, in which case it shall be adjourned to the next following business day in such place) at the same time and place. At the adjourned meeting, the Noteholders present in person or represented by proxy shall form a quorum and may transact the business for which the meeting was originally convened, notwithstanding that they may not represent 25% of the principal amount of the Notes then outstanding.



10.4

Chairman



An individual, who need not be a Noteholder, nominated in writing by the Trustee shall be chairman of the meeting and if no individual is so nominated, or if the individual so nominated is not present within 15 minutes from the time fixed for the holding of the meeting, the Noteholders present in person or by proxy shall choose an individual present to be chairman.



10.5

Power to Adjourn



The chairman of any meeting at which a quorum of the Noteholders is present may with the consent of the Holders of a majority in principal amount of Notes represented thereat and voting thereon adjourn any such meeting and no notice of such adjournment need be given, except such notice (if any) as the meeting may prescribe.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 174





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10.6

Show of Hands



Every question submitted to a meeting shall be decided in the first place by a majority of the votes given on a show of hands, except that a vote on any Special Resolution shall be given in the manner hereinafter provided. At any such meeting, unless a poll is required or duly demanded as herein provided, a declaration by the chairman that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.



10.7

Poll



On every Special Resolution, and on any other question submitted to a meeting when demanded, after a vote by a show of hands, by the chairman or by one or more of the Noteholders acting in person or by proxy and holding at least 5% of the principal amount of the Notes then outstanding, a poll shall be taken in such manner as the chairman shall direct. Questions other than Special Resolutions shall be decided by the votes of the Holders of a majority of the principal amount of the Notes represented at the meeting who voted on the poll.



10.8

Voting



Holders of Notes may attend and vote at all meetings of the Noteholders either in person or by proxy. On a show of hands every individual who is present and entitled to vote, whether as a Noteholder or as proxy for one or more absent Noteholders, or both, shall have one vote. On a poll, each Noteholder present in person or represented by proxy shall be entitled to one vote in respect of each US$1,000 principal amount of Notes of which he shall be a Holder. The chairman of any such meeting shall not have a second or casting vote.



10.9

Record Dates



For the purpose of determining the Noteholders who are entitled to receive notice of and vote at any meeting or any adjournment thereof, or for the purpose of any other action, the Trustee may from time to time, without notice to Noteholders, close the transfer books for such period, not exceeding 30 days, as the Trustee may determine; or with or without closing the transfer books the Trustee may fix a date not more than 60 days prior to the date of any meeting of the Noteholders or other action as a record date for the determination of Noteholders entitled to receive notice of and to vote at such meeting or any adjournment thereof or to be treated as Noteholders of record for purposes of such other action, as the case may be, and any Noteholder who was a Noteholder at the time so fixed shall be entitled to receive notice of and vote at such meeting or any adjournment thereof, even though he has since that date disposed of his Notes, and no person who becomes a Noteholder after that date shall be entitled to receive notice of and vote at such meeting or any adjournment thereof or to be treated as a Noteholder of record for purposes of such other action.



10.10

Proxies



Whenever the vote or consent of Noteholders is required or permitted under this Indenture, such vote or consent may be given either directly by the Noteholder or by a proxy in such form as is acceptable to the Trustee acting reasonably. A Noteholder may appoint a maximum of five proxyholders to act singly, jointly, unanimously, in succession or in the alternative. A proxyholder need not be a Noteholder. The Trustee may solicit such proxies from the Noteholders or any of them in any matter requiring or permitting the Noteholders vote, approval or consent in such manner as may be required by applicable law.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 175





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The Trustee may adopt, amend or repeal such rules relating to the appointment of proxyholders and the solicitation, execution, validity, revocation and deposit of proxies, as it in its discretion from time to time determines.



10.11

Resolution in Lieu of Meeting



A resolution signed in writing by Noteholders holding a proportion of the principal amount of the aggregate principal amount of all outstanding Notes equal to the proportion of the principal amount of Notes required to vote in favour thereof at a meeting of Noteholders to approve that resolution, being not less than 66 2/3% of the principal amount of Notes outstanding, is as valid as if it had been passed at a duly called meeting of Noteholders.



10.12

PTQ and Trustee may be Represented



The officers of PTQ and the Trustee, by their respective representatives, and with their respective advisers, may attend any meeting of the Noteholders but shall have no vote as such.



10.13

Powers Exercisable by Special Resolution



In addition to all other powers stated in this Indenture to be exercisable by Special Resolution and all other powers conferred by law, a meeting of the Noteholders shall have the following powers exercisable from time to time by Special Resolution:



(a)

power to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Noteholders or the Trustee (subject to the approval of the Trustee) against PTQ, whether such rights arise under this Indenture, the Notes, the PTQ GSA or otherwise and to authorize the Trustee to concur in and to execute any deed or instrument supplemental hereto or thereto embodying any such modification, abrogation, alteration, compromise or arrangement, provided that any such modification, abrogation, alteration, compromise or arrangement shall have been agreed to by PTQ;



(b)

power to direct or authorize the Trustee to exercise any power, right, remedy or authority given to it by this Indenture, the Notes, the PTQ GSA or otherwise in any manner specified in such Special Resolution or to refrain from exercising any such power, right, remedy or authority;



(c)

power to waive and direct the Trustee to waive any default on the part of PTQ in complying with any provision of this Indenture, the Notes, the PTQ GSA or any other document relating hereto or thereto, or to annul and to direct the Trustee to annul any declaration in respect of such default made by the Trustee pursuant to section (f) either unconditionally or upon any conditions specified in such Special Resolution;









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 176





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(d)

power, with the approval of PTQ, to sanction the exchange of Notes for any other securities or obligations of PTQ or any other person;



(e)

power to restrain any Noteholder from taking or instituting any suit, action or proceeding for the purpose of enforcing payment by PTQ of principal or interest or for the execution of any trust or power under this Indenture, the Notes, the PTQ GSA or any other document relating hereto or thereto or for the appointment of a liquidator or a receiver or a trustee in bankruptcy or for any other remedy hereunder or thereunder;



(f)

power to direct any Noteholder who, as such, has brought any suit, action or proceeding, to stay or discontinue or otherwise deal with the same upon payment, if the taking of such suit, action or proceeding shall have been permitted by section 7.5, of the costs, charges and expenses reasonably and properly incurred by such Noteholder in connection therewith;



(g)

power to sanction any scheme for the reconstruction or reorganization of PTQ or for the consolidation or merger of PTQ with any other person or for the sale, leasing, transfer or other disposition of the undertaking, property and assets of PTQ or any part thereof, provided that no such sanction shall be necessary in respect of any such transaction if the provisions of section 9.1 shall have been complied with;



(h)

power to assent to any compromise or arrangement with any creditor or creditors or any class or classes of creditors, whether secured or otherwise, and with holders of any PTQ Units or other securities of PTQ;



(i)

power to amend, alter or repeal any Special Resolution previously passed or sanctioned by the Noteholders;



(j)

power to appoint and remove a committee to consult with the Trustee and to delegate to such committee (subject to such limitations, if any, as may be prescribed in such Special Resolution) all or any of the powers which the Noteholders could exercise by Special Resolution under this section 10.13. The Special Resolution making such appointment may provide for payment of the expenses and disbursements of and compensation to such committee. Such committee shall consist of such number of persons as shall be prescribed in the Special Resolution appointing it, and the members need not be themselves Noteholders. Subject to the Special Resolution appointing it, every such committee may elect its chairman and may make regulations respecting its quorum, the calling of its meetings, the filling of vacancies occurring in its number, the manner in which it may act and its procedure generally and such regulations may provide that the committee may act at a meeting at which a quorum is present or may act by minutes signed by a majority of the members thereof or the number of members thereof necessary to constitute a quorum, whichever is the greater. All acts of any such committee within the authority delegated to it shall be binding upon all Noteholders. Neither such committee nor any member thereof shall be liable for any loss arising from or in connection with any action taken or omitted to be taken in good faith;



(k)

power to remove the Trustee and appoint a new Trustee; and









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 177





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(l)

power to authorize the Trustee to grant extensions of time for payment of any principal or interest on the Notes, whether or not the principal or interest, the payment of which is extended, is at the time due or overdue.



Notwithstanding paragraphs (a) to (l) above, no resolution shall modify, abrogate, alter, compromise, arrange or otherwise affect the rights of the Trustee hereunder without the Trustees written consent, such consent not to be unreasonably withheld.



10.14

Meaning of "Special Resolution"



The expression "Special Resolution"when used in this Indenture means, subject to section 10.11 provided, a resolution proposed at a meeting of Noteholders duly convened for the purpose of passing a Special Resolution and held in accordance with the provisions in this Article 10 at which, subject as hereinafter provided, the Holders of at least 51% of the principal amount of the Notes then outstanding are present in person or represented by proxy and passed by the favourable votes of the Holders of not less than 66 2/3% of the principal amount of Notes represented at the meeting and voted on a poll upon such resolution.



10.15

Minutes



Minutes of all resolutions and proceedings at every such meeting as aforesaid shall be made and duly entered in books to be from time to time provided for that purpose by the Trustee at the expense of PTQ, and any such minutes as aforesaid, if signed by the chairman of the meeting at which such resolutions were passed or proceedings had, shall constitute prima facieevidence of the matters therein stated and, until the contrary is proved, every such meeting, in respect of the proceedings of which minutes shall have been made and signed as aforesaid, shall be deemed to have been duly held and convened and all resolutions passed or proceedings had thereat to have been duly passed and had.



10.16

Effect of Resolutions



Every resolution and every Special Resolution passed in accordance with the provisions of this Article 10 at a meeting of Noteholders shall be binding upon all the Noteholders, whether present at or absent from such meeting, and every instrument in writing signed by the Noteholders in accordance with section 10.11 shall be binding upon all the Noteholders, whether signatories thereto or not, and each and every Noteholder and the Trustee (subject to any provisions for its indemnity herein contained) shall be bound to give effect accordingly to every such resolution, Special Resolution and instrument in writing. Notwithstanding anything contained herein to the contrary, no Special Resolution may: (i) reduce in any manner the amount of, or delay the timing of the distributions required to be made on a Note without the consent of 100% of the Noteholders; (iii) adversely affect in any material respect the interests of the Noteholders without the consent of 100% of the Noteholders based on the opinion of counsel; and (iv) modify the provisions of this Section 10.16 without the consent of 100% of the Noteholders. Unless the Trustee agrees otherwise, notice of the passing of every resolution and every Special Resolution shall be given to the Noteholders in the manner provided in section 14.1.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 178





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11.

SUPPLEMENTAL INDENTURES



11.1

Provision for Supplemental Indentures for Certain Purposes



From time to time PTQ and the Trustee may, without any further approval or consent of the Noteholders (subject to the provisions of this Indenture), and they shall, when so directed by the provisions hereof, execute and deliver indentures or instruments supplemental hereto, which thereafter shall form part hereof, for any one or more or all of the following purposes:



(a)

evidencing the succession of Successors and the covenants of and obligations assumed by such Successors in accordance with the provisions of Article 9;



(b)

giving effect to any Special Resolution passed as provided in Article 10;



(c)

adding to the provisions hereof such additional covenants, enforcement provisions, release provisions and other provisions as, in the opinion of Counsel, are necessary or advisable, provided that, in the opinion of the Trustee, the same are not prejudicial to the legal rights of the Noteholders;



(d)

making any modification of any of the provisions of this Indenture or the Notes which is of a formal, minor or technical nature;



(e)

making any additions to, deletions from or alterations of the provisions of this Indenture (including any of the terms and conditions of the Notes) which in the opinion of the Trustee based on the opinion of Counsel are not prejudicial to the interests of the Noteholders and which are necessary or advisable in order to incorporate, reflect or comply with any legislation the provisions of which apply to this Indenture;



(f)

adding to or altering the provisions hereof in respect of the transfer of Notes, including provision for the exchange of Notes of different denominations and making any modification in the form of the Notes which does not affect the substance thereof and which, in the opinion of the Trustee, based on the opinion of Counsel, is not prejudicial to the interests of the Noteholders;



(g)

correcting or rectifying any ambiguities, defective provisions, errors or omissions herein, provided that, in the opinion of the Trustee, based on the opinion of Counsel, the rights of the Trustee and the Noteholders are not materially prejudiced thereby; and



(h)

any other purpose not inconsistent with the terms of this Indenture provided that, in the opinion of the Trustee, based on the opinion of Counsel, the rights of the Trustee and of the Noteholders are not materially prejudiced thereby.



11.2

Binding Effect of Modifications



Every modification, addition, deletion, alteration, correction or rectification to, from or of the provisions hereof shall bind the Noteholders and notice thereof shall be given as soon as practicable in accordance with section 14.1, unless the Trustee agrees otherwise.











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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 179





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12.

CONCERNING THE TRUSTEE



12.1

Conditions Precedent to Trustees Obligation to Act



The Trustee shall not be bound to give any notice or do or take any act, action or proceeding in virtue of the powers conferred on it hereby unless and until it shall have been required so to do under the terms hereof. Nor, subject to any default which may come to the attention of the Trustee by virtue of PTQs compliance with subsection 6.1(c), shall the Trustee be required to take notice of any default hereunder, unless and until notified in writing of such default, which notice shall distinctly specify the default desired to be brought to the attention of the Trustee, and in the absence of any such notice the Trustee may for all purposes of this Indenture conclusively assume that PTQ is not in default hereunder and that no default has been made with respect to the payment of principal or interest on the Notes or in the observance or performance of any of the covenants, agreements or conditions contained herein.

Any such notice or requisition shall in no way limit any discretion herein given to the Trustee to determine whether or not the Trustee shall take action with respect to any default or take action without any such requisition.



12.2

Requirement for Funds and Indemnity



The obligation of the Trustee to commence or continue any act, action or proceeding for the purpose of enforcing any right of the Trustee or the Noteholders hereunder shall be conditional upon the Noteholders furnishing, when required by notice in writing by the Trustee, sufficient funds to commence or continue such act, action or proceeding and an indemnity reasonably satisfactory to the Trustee to protect and hold harmless the Trustee and its officers directors and employees against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof. None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers.



The Trustee may, before commencing or at any time during the continuance of any such act, action or proceeding, require the Noteholders at whose instance it is acting to deposit with the Trustee the Notes held by them, for which Notes the Trustee shall issue receipts.



12.3

Evidence



Whenever it is provided in this Indenture, with reference to any application to the Trustee for the certification and delivery of Notes or other action hereunder, that PTQ shall deposit with the Trustee resolutions, certificates, opinions, requests, orders or other documents,

it is intended that the truth, accuracy and good faith at the time of the granting of such application (or on the effective date of any such certificate or report, as the case may be) of the facts and opinions stated in all documents so deposited shall, in each and every such case, be conditions precedent to the right of PTQ to have such application granted. The Trustee may rely and shall be protected in acting upon any such documents deposited with it in purported compliance with any such provision or of any other purpose hereof, but may in its discretion require further evidence before acting or relying thereon.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 180





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The Trustee may rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, letter, or other paper or document believed by it to be genuine without the need for independent investigation and to have been signed, sent or presented by or on behalf of the proper party or parties.



12.4

Experts and Advisers



The Trustee may employ or retain such Counsel, accountants, appraisers or other experts or advisers as it may reasonably require for the purpose of discharging its duties hereunder and may pay reasonable remuneration for all services so performed by any of them, and shall not be responsible for any misconduct on the part of any of them.



The cost of such services shall be added to and be part of the Trustees expenses hereunder.



The Trustee may act, or not act, and shall incur no liability and shall be protected in acting, or not acting, in good faith on the opinion or advice of or information obtained from any counsel, accountant, appraiser or other expert or adviser, whether retained or employed by PTQ or by the Trustee, in relation to any matter arising in the administration of the trusts hereunder and the fulfilment of its obligations and the exercise of its rights hereunder.



12.5

Documents, Moneys, etc. Held by Trustee



Any securities, documents of title or other instruments that may at any time be held by the Trustee subject to the trusts hereof may be placed in the deposit vaults of the Trustee or of any Canadian chartered bank or deposited for safe-keeping in the Province of British Columbia with any such bank. Unless herein otherwise expressly provided, any moneys so held, pending the application or withdrawal thereof under any provisions of this Indenture, may be deposited in the name of the Trustee in any Canadian chartered bank at the rate of interest (if any) then current on similar deposits or, with the consent of PTQ, may be (a) deposited in the deposit department of the Trustee or any other loan or trust corporation authorized to accept deposits under the laws of Canada or a province thereof, or (b) invested in securities issued or guaranteed by the government of Canada or of any province thereof, maturing not more than 90 days from the date of investment. All interest or other income received by the Trustee in respect of such deposits and investments shall belong to PTQ and be remitted to PTQ or in accordance with the provisions of applicable laws of public order, unless an Event of Default shall have occurred and be continuing, in which case all such interest and income shall be held by the Trustee and applied in accordance with section 7.6.



12.6

Action by Trustee to Protect Interests



The Trustee shall have power to institute and to maintain such actions and proceedings as it may consider necessary or expedient to preserve, protect and enforce its interests and the interests of the Noteholders.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 181





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12.7

Trustee not Required to give Security



The Trustee shall not be required to give any bond or security in respect of the execution of the trusts and powers of this Indenture or otherwise in respect of this Indenture.



12.8

Protection of Trustee



By way of supplement to the provisions of any law for the time being relating to trustees:



(a)

the Trustee shall not be liable for or by reason of any statements of fact or recitals in this Indenture, in the Notes, in the PTQ GSA or in any other document relating hereto or thereto (except the representation contained in section 12.11 and in the certificate of the Trustee on the Notes) or required to verify the same, but any such statements or recitals are and shall be deemed to be made by PTQ;



(b)

nothing herein contained shall impose any obligation on the Trustee to see to or require evidence of the registration or filing (or renewal thereof) of this Indenture or the PTQ GSA or any instrument ancillary, including but not limited to security documents relating to the Guarantors, or supplemental hereto or thereto;



(c)

the Trustee is not a party to, nor is bound by, any provisions which may be evidenced by, or arise out of, any agreement other than as therein set forth under the express provisions of this Agreement;



(d)

the Trustee shall not be answerable for the default or misconduct of any adviser, agent or legal counsel employed or appointed, at its discretion, by it if such adviser, agent or legal counsel shall have been selected with reasonable care;



(e)

the Trustee shall not be liable for any error of judgement, or for any act done or omitted by it in good faith, or for any mistake of fact or law, or for anything which it may do or  omit from doing in connection herewith, except its own fraud and gross negligence;



(f)

the Trustee shall not be bound to give to any person notice of the execution hereof;



(g)

the Trustee shall not incur any liability or responsibility whatever or be in any way responsible for the consequence of any breach on the part of PTQ of any of the covenants contained in this Indenture, in the PTQ GSA or in any other document relating hereto or thereto or of any acts of the agents or servants of PTQ;



(h)

PTQ and every party to this Agreement hereby agrees to jointly and severally indemnify and save harmless the Trustee and its officers, directors, employees and agents from and against any and all liabilities, losses, costs, claims, actions or demands whatsoever which may be brought against the Trustee or which it may suffer or incur as a result or arising out of the performance of its duties and obligations hereunder (including without limitation the fees and disbursements of any advisers and legal counsel it may retain), save only in the event of gross negligence or fraud of the Trustee or any of its officers, directors, employees or agents. This indemnification shall survive the termination of this Indenture or the resignation or removal of the Trustee;









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 182





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(i)

every party to this Agreement agrees that its liability hereunder shall be absolute and unconditional regardless of the correctness of any representations of any third parties and regardless of any liability of third parties to the Indemnified Parties, and shall accrue and become enforceable without prior demand or any other precedent action or proceeding. The Trustee shall not be under any obligation to prosecute or to defend any action or suit in respect of the relationship which, in the opinion of its counsel, may involve it in expense or liability, unless the parties hereto shall, so often as required, furnish the Trustee with satisfactory indemnity and funding against such expense or liability;



(j)

the forwarding of a cheque by the Trustee will satisfy and discharge the liability for any amounts due to the extent of the sum or sums represented thereby (plus the amount of any tax deducted or withheld as required by law) unless such cheque is not honoured on presentation; provided that in the event of the non-receipt of such cheque by the payee, or the loss or destruction thereof, the Trustee, upon being furnished with reasonable evidence of such non-receipt, loss or destruction and indemnity reasonably satisfactory to it, will issue to such payee a replacement cheque for the amount of such cheque;



(k)

the Trustee shall exercise that degree of care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances;



(l)

the Trustee will disburse monies according to this Agreement only to the extent that monies have been deposited with it;



(m)

the Trustee shall not be bound by any notice, claim or demand with respect to, or any waiver, modification, amendment, termination or rescission of this Agreement, unless received by it in writing, and signed by the parties hereto and if its duties herein are affected, unless it shall have given its prior written consent thereto;



(n)

the Trustee shall have no duties except those which are expressly set forth herein, and the Trustee shall not be liable except for the performance of such duties and obligations as shall specifically be set forth in this Agreement and no implied covenants or obligations shall be read into this Agreement against the Trustee;



(o)

the Trustee shall not be responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of any security deposited with it;



(p)

the Trustee shall not be responsible for assessing the validity or advisability of any directions or instructions received by it. The Trustee shall under no circumstances be deemed to provide legal, investment, tax or trading advice or counselling;



(q)

the Trustee shall incur no liability with respect to the delivery or non-delivery of any certificate or certificates whether delivered by hand, mail or any other means;









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 183





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(r)

nothing herein shall be deemed to hold the Trustee responsible for failure by PTQ or the Guarantors to maintain insurance coverage or for any loss arising out of any want, defect or insufficiency in any insurance policy, or because of failure of any insurer to pay the full amount of any loss or damage insured against. The Trustee shall be entitled to request and rely absolutely upon an Officers' Certificate of PTQ stating that each of PTQ and the Guarantors are in compliance with their covenant to maintain adequate insurance coverage. No duty with respect to effecting or maintaining insurance coverage shall rest with the Trustee;



(s)

given that the Guarantors have created certain security documents to secure all obligations created under this Indenture which are joint and several with as amongst PTQ and the other Guarantors and given that such security documents state that the rights, duties and obligations of the Trustee under such documents shall be governed by and construed in accordance with laws other than those of British Columbia and Canada, PTQ agrees to indemnify and hold harmless the Trustee for any duties, obligations or standards imposed on the Trustee under any laws which are not Canadian which are more stringent, than the duties, obligations and standards to which the Trustee would be held as the Trustee under such security agreements by the laws of British Columbia and Canada; and



(t)

the Trustee shall not be liable for or by reason of:



a.

any failure or defect of title to, or encumbrance upon, the PTQ Charged Property or any security pledged hereunder;



b.

any failure of or defect in the registration, filing or recording of this Indenture or any other deed or writing delivered hereunder by way of mortgage or charge upon the PTQ Charged Property or any security pledged hereunder or any part thereof, or any notice, caveat or financing statement with respect to the foregoing; or



c.

any failure to do any act necessary to constitute, perfect and maintain the priority of the security hereby created.



12.9

Replacement of Trustee



The Trustee may resign and be discharged from all further duties and liabilities hereunder by giving to PTQ not less than 60 days notice in writing or such shorter notice as PTQ may accept as sufficient. The Noteholders, by Special Resolution, shall have power at any time to remove the Trustee and to appoint a new trustee. In the event of the Trustee resigning or being removed as aforesaid or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, PTQ shall forthwith appoint a new trustee unless a new trustee has already been appointed by the Noteholders; failing such appointment by PTQ, the retiring Trustee or any Noteholder may apply to the Court, on such notice as the Court may direct, for the appointment of a new trustee; but any new trustee so appointed by PTQ or by the Court shall be subject to removal as aforesaid by the Noteholders. Any new trustee appointed under these provisions must be a corporation authorized to carry on the business of a trust company in the Province of British Columbia. On any new appointment, the new trustee shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Trustee without any further assurance, conveyance, act or deed, but there shall be immediately executed, at the expense of PTQ, all such conveyances or other instruments as may, in the opinion of Counsel, be necessary or advisable for the purpose of assuring the same to the new trustee. At the request of PTQ or the new trustee, the retiring Trustee, upon payment of the amounts, if any, due to it pursuant to section 6.2, shall duly assign, transfer and deliver to the new trustee all property and money held and all records kept by the retiring Trustee hereunder or in connection herewith.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 184





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Any corporation into which the Trustee may be merged or with which it may be consolidated or amalgamated or any corporation resulting from any merger, consolidation or amalgamation to which the Trustee shall be a party, shall be the successor trustee under this Indenture without the execution of any instrument or any further act.



12.10

Trustee Not Bound to Act



The Trustee shall retain the right not to act and shall not be liable for refusing to act if, due to a lack of information or for any other reason whatsoever, the Trustee, in its sole judgment, determines that such act might cause it to be in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline. Further, should the Trustee, in its sole judgment, determine at any time that its acting under this Agreement has resulted in its being in non-compliance with any applicable anti-money laundering or anti-terrorist legislation, regulation or guideline, then it shall have the right to resign on 10 Business Days written notice to PTQ, or any shorter period of time as agreed to by the parties, notwithstanding the provisions of Section 11.9 of this Indenture, provided that (i) the Trustees written notice shall describe the circumstances of such non-compliance; and (ii) if such circumstances are rectified to the Trustees satisfaction within such notification period, then such resignation shall not be effective.



12.11

Conflict of Interest



The Trustee represents to PTQ that at the time of the execution and delivery hereof no material conflict of interest exists in the Trustees role as a fiduciary hereunder and agrees that in the event of a material conflict of interest arising hereafter it will, within 90 days after ascertaining that it has such material conflict of interest, either eliminate same or resign its trust hereunder.



Subject to the preceding paragraph, the Trustee, in its personal or any other capacity, may buy, lend upon and deal in securities of PTQ and generally may contract and enter into business transactions with PTQ or any of its Affiliates without being liable to account for any profit made thereby.



12.12

Delegation of Powers



The Trustee may delegate to any person the performance of any of the trusts and powers vested in it by this Indenture and any such delegation may be made upon such terms and conditions and subject to such regulations as the Trustee may think to be in the interests of the Noteholders.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 185





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12.13

Acceptance of Trust



The Trustee hereby accepts any and all trusts created or constituted for the purposes of such sections, agrees to perform the same upon the terms and conditions herein set forth and in acting as Trustee hereunder shall not be subject to any personal liability for any debts, liabilities, obligations, claims, demands, judgments, costs, charges or expenses against or with respect to this Indenture and the trusts established hereunder.



12.14

Privacy Issues



The parties acknowledge that the Trustee may, in the course of providing services hereunder, collect or receive financial and other personal information about such parties and/or their representatives, as individuals, or about other individuals related to the subject matter hereof, and use such information for the following purposes:



(a)

to provide the services required under this agreement and other services that may be requested from time to time;



(b)

to help the Trustee manage its servicing relationships with such individuals



(c)

to meet the Trustees legal and regulatory requirements; and



(d)

if Social Insurance Numbers or Social Security Numbers are collected by the Trustee, to perform tax reporting and to assist in verification of an individuals identity for security purposes.



Each party acknowledges and agrees that the Trustee may receive, collect, use and disclose personal information provided to it or acquired by it in the course of this Indenture for the purposes described above and, generally, in the manner and on the terms described in its privacy code, which the Trustee shall make available on its website or upon request, including revisions thereto. Further, each party agrees that it shall not provide or cause to be provided to the Trustee any personal information relating to an individual who is not a party to this Indenture unless that party has assured itself that such individual understands and has consented to the aforementioned uses and disclosures.



12.15

Third Party Interests



PTQ hereby represents to the Trustee that any account to be opened by, or interest to be held by, the Trustee in connection with this Indenture, for or to the credit of the PTQ, is not intended to be used by or on behalf of any third party.









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|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 186





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12.16

Environmental Indemnity



PTQ and the Guarantors jointly and severally shall indemnify the Trustee, its directors, officers, employees, and agents, and all of their successors and assigns (collectively the Indemnified Parties) against any loss (other than a loss of profit), expense, claim, liability or asserted liability (including strict liability) and including costs and expenses of abatement and remediation of spills or releases of contaminants and including liabilities of the Indemnified Parties to third parties (including governmental agencies) in respect of bodily injuries, property damage, damage to or impairment of the environment or any other injury or damage and including liabilities of the Indemnified Parties to third parties for the third parties' foreseeable and unforeseeable consequential damages incurred as a result of: (a) the administration of the trust created hereby; (b) the exercise by the Trustee of any rights hereunder; which result from or relate, directly or indirectly, to: (i) the presence or release of any contaminants, by any means or for any reason, on the PTQ Charged Property and property charged by the Guarantors hereunder, whether or not release or presence of the contaminants was under control, care or management of PTQ or the Guarantors or of a previous owner, or of a tenant; (ii) any contaminant present on or released from any contiguous property to the PTQ Charged Property and property charged by the Guarantors hereunder; or (iii) the breach or alleged breach of any environmental laws by PTQ or the Guarantors. For the purposes of this Section 12.16, liability shall include (i) liability of an Indemnified Party for costs and expenses of abatement and remediation of spills and releases of contaminants, (ii) liability of an Indemnified Party to a third party to reimburse the third party for bodily injuries, property damages and other injuries or damages which the third party suffers, including (to the extent, if any, that the Indemnified Party is liable therefor) foreseeable and unforeseeable consequential damages suffered by the third party and (iii) liability of the Indemnified Party for damage to or impairment of the environment; (iv) liability of an Indemnified Party for damage to or impairment of the environment and (v) liability of an Indemnified Party for court costs, expenses of alternative dispute resolution proceedings, and fees and disbursements of expert consultants and legal counsel on a solicitor and client basis.





13.

GUARANTEE



13.1

Guarantee



Each Guarantor hereby solidarily (jointly and severally), waiving any and all rights of guarantors under Sections 809, 810, 811 and 812 of the Panamanian Code of Commerce, absolutely, unconditionally and irrevocably guarantees (the Guarantee) to each Noteholder and to the Trustee and their respective successors, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of PTQ or any other Guarantors to the Noteholders or the Trustee hereunder or thereunder, that: (a) the principal of, interest on, and any additional amounts, if any, with respect to the Notes will be duly and punctually paid in full when due, whether at maturity, by acceleration or otherwise, and interest on the overdue principal and (to the extent permitted by law) interest on, or additional amounts, if any, with respect to the Notes, and (b) all other obligations of PTQ or the Guarantors to the Noteholders or the Trustee hereunder or under the Notes (including amounts due the Trustee) and all other obligations of PTQ to the Noteholders or the Trustee hereunder or under the Notes, the PTQ GSA or any other document relating hereto or thereto (including fees, expenses or other), will be promptly paid in full or performed, all in accordance with the terms hereof and thereof. Failing payment when due of any amount so guaranteed, or failing performance of any other obligation of PTQ to the Noteholders, for whatever reason, each Guarantor will be obligated to pay, or to perform or cause the performance of, the same immediately. This Guarantee is valid as of the date hereof without the need of the Noteholders or the Trustee expressly giving notice of their acceptance thereto.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 187





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An Event of Default shall constitute an event of default under this Guarantee, and shall entitle the Noteholders or the Trustee to accelerate the obligations of the Guarantors hereunder in the same manner and to the same extent as the obligations of PTQ. Each Guarantor further agrees that, as between it, on the one hand, and the Noteholders and the Trustee, on the other hand, (a) subject to this Article 12, the maturity of the obligations guaranteed hereby may be accelerated as provided herein for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (b) in the event of any acceleration of such guaranteed obligations as provided herein, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Guarantee.



As general and continuing security for the due and punctual payment and performance of each Guarantor's obligations under this Indenture or this Guarantee, each Guarantor shall, forthwith after the execution hereof or its accession hereto, as applicable, execute and deliver a chattel mortgage and pledge of assets, as applicable as advised by Counsel, in favour of the Trustee for and on behalf of the Noteholders, in a form and content acceptable to such Guarantor and the Trustee as advised by Counsel, and pursuant to such chattel mortgage and pledge of assets, as applicable as advised by Counsel, each such Guarantor shall grant a security interest, lien, mortgage and hypothec on the universality of all of its property, movable and immovable (personal and real), present and future, corporeal and incorporeal (tangible and intangible), which security interest, lien, mortgage and hypothec shall be in priority to all Liens created or to be created to secure the repayment of any other Indebtedness.



If there is any conflict between the terms of any security document entered into by a Guarantor and this Indenture, the terms of this Indenture shall govern.



Each of the Guarantors hereby agrees that its obligations hereunder shall be unconditional, irrespective of the loss or diminution of capacity of PTQ or any other Guarantor, any change in the name of PTQ, the acquisition of the business of PTQ by another person, any change whatsoever in the objects, capital structure or constitution of PTQ, the amalgamation of PTQ or its business with any other person or with the business of any such other person, the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, any release of any other Guarantor, the recovery of any judgment against PTQ, any action to enforce the same, whether or not a guarantee is affixed to any particular Note, or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each of the Guarantors hereby waives the benefit of diligence, presentment, demand for payment, filing of claims with a court in the event of insolvency or bankruptcy of PTQ, any right to require a proceeding first against PTQ, protest, notice and all demands whatsoever. This Guarantee is a guarantee of payment and not of collection. No settlement or discharge of the obligations guaranteed pursuant to this Guarantee shall be effective if any payment by PTQ or any Guarantor in respect of such guaranteed obligations is avoided, affected or reduced including by virtue of any provisions or enactments relating to bankruptcy, insolvency, liquidation or similar or other laws of general application from time to time, and if such payment is so avoided, affected or reduced, the Trustee and the Noteholders shall be entitled to recover the amount of such payment as if such settlement or discharge had not occurred and this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 188





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The Trustee and the Noteholders, without thereby releasing any Guarantor, in whole or in part, under this Guarantee, may, in accordance with this Indenture, grant extensions of time, renewals, postponements and releases; they may also (i) take and give up Liens or guarantees or abandon same, in whole or in part, (ii) abstain from taking, perfecting, registering, publishing, renewing or enforcing any Lien or guarantee, (iii) accept arrangements or otherwise deal with the Company and others including any other guarantor, (iv) dispose of any Lien or guarantee and (v) amend, terminate, waive or otherwise modify any provision of this Indenture, the Notes or this Guarantee or any security granted hereunder.



The obligations of each Guarantor hereunder will constitute and be continuing obligations and will apply to and secure any ultimate balance due or remaining due in respect of the obligations guaranteed pursuant to this Guarantee and will not be considered as wholly or partially satisfied by the payment or liquidation at any time of any sum of money for the time being due or remaining unpaid. The only circumstance where a Guarantor will be automatically released from its obligations hereunder is the case where such Guarantor is no longer required by the terms of the Indenture to maintain its Guarantee hereunder.



This Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against PTQ for liquidation or reorganization, should PTQ become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of PTQs assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment or performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes, whether as a voidable preference, fraudulent transfer or otherwise, all as though such payment or performance had not been made. In the event that any such payment, or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.



All payments due to the Trustee or the Noteholders pursuant to the terms of this Guarantee or all other provisions, conditions, covenants and agreements to be observed and executed by the Guarantor shall be made, observed and executed by the Guarantor without any reduction whatsoever including all reductions resulting from any means of defence, right of action, right of set-off or compensation or from a reconventional demand of whatever nature, which the Guarantor has at any time against the Trustee or the Noteholders, in connection with this Guarantee, the Indenture, the Notes or otherwise.



Each Guarantor hereby binds itself with each and all of PTQ and the other Guarantors as solidary (joint and several) codebtor for the payment and performance of the obligations guaranteed pursuant to this Guarantee. The Trustee and the Noteholders shall not be bound to exhaust their recourse against PTQ or any Guarantor or under any other Lien or guarantee before being entitled to payment from any Guarantor under this Guarantee. Each Guarantor hereby irrevocably renounces to the benefits of discussion and division. Subject to the foregoing, the Guarantors shall have the right to seek contribution from any non-payingGuarantor so long as the exercise of such right does not impair the rights of the Trustee or the Noteholders under this Guarantee.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 189





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Notwithstanding anything contained herein to the contrary, each Guarantor shall, under this Guarantee, only be liable, directly or indirectly, for the maximum amount that can be guaranteed by such Guarantor without contravening the provisions of applicable law.



No shareholder, officer, director, employee or incorporator, past, present or future, of any Guarantor, as such, shall have any personal liability under this Guarantee by reason of his, her or its status as such shareholder, officer, director, employee or incorporator.



Each Guarantor agrees, at its expense, to do all such things and to execute and deliver to the Trustee and the Noteholders, from time to time, any such additional instruments or documents considered necessary to cause the Guarantee of such Guarantor to be, become or remain valid and effective in accordance with the terms of this Article 13.1, or to otherwise give full force and effect to the terms of this Article 13.1.



13.2

Subordination of Claims and Postponement of Subordination



Each Guarantor hereby subordinates all its claims, whether present or future, against PTQ to the obligations guaranteed pursuant to this Guarantee, so as to enable the Trustee and the Noteholders, in all circumstances, to be fully paid such guaranteed obligations in priority over such claims of each Guarantor.



Each Guarantor hereby absolutely, unconditionally and irrevocably agrees to refrain, until the obligations guaranteed pursuant to this Guarantee shall have been fully and indefeasibly paid and performed and until the Trustee and the Noteholders shall have received the entire amount of their claims in connection with such guaranteed obligations, from exercising any right which it may now or hereafter acquire against PTQ that arises from the existence, payment, performance or enforcement of such Guarantors obligations under this Guarantee and this Indenture, including, without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any Holder of Notes against PTQ, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from PTQ, directly or indirectly, in cash or other property or by set-off or compensation or in any other manner, payment or Lien on account of such claim or other rights.



If any amount shall be paid to any Guarantor in violation of any of the preceding subparagraphs of this section 13.2 and the obligations guaranteed pursuant to this Guarantee shall not have been fully and indefeasibly paid and performed, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and shall be held in trust for the benefit of, the Noteholders, and shall forthwith be paid to the Trustee for the benefit of such Noteholders, to be credited and applied upon such guaranteed obligations, whether matured or unmatured, in accordance with the terms of this Indenture.



Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the subordination and postponement set forth in this section 13.2 are knowingly made in contemplation of such benefits.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 190





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14.

MISCELLANEOUS



14.1

Manner of Giving Notice



Any notice required or permitted by the provisions of this Indenture to be given to a Noteholder, the Trustee or PTQ shall be deemed conclusively to have been made if given either by hand delivery or by prepaid first class mail addressed:



(a)

in the case of the Noteholders, at their addresses shown on the register kept by the Trustee pursuant to section 2.9;



(b)

in the case of the Trustee, as follows:



COMPUTERSHARE TRUST COMPANY OF CANADA

510 Burrard Street, 3rd Floor

Vancouver, British Columbia V6C 3B9



Attention:

Manager, Corporate Trust



Telecopier:

(604) 661-9403



(c)

in the case of PTQ, as follows:



PETAQUILLA MINERALS LTD.

475 West Georgia Street, Suite 410

Vancouver, British Columbia V6B 4M9



Attention:

President and Chief Executive Officer



Telecopier:

(604) 694-0063







With a copy to:



VECTOR CORPORATE FINANCE LAWYERS

1040-999 West Hastings Street

Vancouver, B.C., V6C 2W2



Attention:

Mr. Graham H. Scott





Telecopier :

(604) 683-2643









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 191





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provided that if there is a general discontinuance of postal service due to strike, lockout or otherwise, such notice may be given by publication twice in the Report on Business section of the National Edition of The Globe and Mail or a similar section of any other newspaper having national circulation in Canada; provided further that if there is no such newspaper having national circulation, then by publishing twice in the business section or a newspaper in the city where the registers referred to in section 2.9 are maintained. Any notice so given shall be deemed to have been given on the day of hand delivery or on the day of courier or the day following that on which the notice was mailed or on the day that it was sent by facsimile if delivered prior to 5:00 p.m. (Van time) on a Business Day and otherwise on the next Business Day, in the case of notice being given by publication, after publishing such notice twice in the designated newspaper or newspapers. In proving notice was mailed, it shall be sufficient to prove that such notice was properly addressed, stamped and mailed. Notice to any one of several joint Holders of Notes shall be deemed effective notice to the other joint Holders. Any notice sent by mail to or left at the address of a Noteholder pursuant to this section shall, notwithstanding the death or bankruptcy of such Noteholder, and whether or not the Trustee has notice of such death or bankruptcy, be deemed to have been fully given and shall be deemed sufficient notice to all persons having an interest in the Notes concerned.



14.2

Day not a Business Day



In the event that any day on which any action is required to be taken hereunder is not a Business Day, then such action shall be required to be taken at or before the requisite time on the next succeeding day that is a Business Day.



14.3

Execution and Effect of Restated Indenture



Subject to Article 11, a restated Indenture, setting forth the terms of this Indenture, as amended to the time of execution, may be executed at any time or from time to time by the Trustee and such restated Indenture as so executed shall thereafter be effective and may thereafter be referred to in lieu of the original Indenture as so amended; provided, however, that no such execution of a restated Indenture shall be deemed to constitute a termination of this Indenture or the trusts constituted hereunder.



14.4

Consolidations



The Trustee may prepare consolidated copies of this Indenture as it may from time to time be amended or amended and restated and may certify the same to be a true consolidated copy of this Indenture, as amended or amended and restated.



14.5

Counterparts



This Indenture may be executed in several counterparts, each of which when so executed shall be deemed to be an original and such counterparts together shall constitute one and the same instrument, which shall be sufficiently evidenced by any such original counterpart and notwithstanding their date of execution shall be deemed to be dated the date of this Indenture.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 192





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14.6

Severability



The provisions of this Indenture are severable and if any provisions are in conflict with any applicable law, the conflicting provisions shall be deemed never to have constituted a part of this Indenture and shall not affect or impair any of the remaining provisions thereof. If any provision of this Indenture shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such provision in such jurisdiction and shall not in any manner affect or render invalid or unenforceable such provision in any other jurisdiction or any other provision of this Indenture in any jurisdiction.



14.7

Headings for Reference Only and Preamble



The headings preceding the Articles and sections hereof have been inserted for convenience and reference only and shall not be construed to affect the meaning, construction or effect of this Indenture. The preamble and recitals hereto (and all definitions therein contained) shall form an integral part of this Indenture.



14.8

Successors and Assigns



The provisions of this Indenture shall enure to the benefit of, and be binding upon, the parties and their respective successors and assigns.



14.9

Time of the Essence



Time shall be of the essence of this Indenture.



14.10

Governing Law



This Indenture and the Notes shall be interpreted and governed by, take effect and be construed exclusively in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein.



14.11

Force Majeure



To the extent that a Force Majeure Event occurs and is continuing for a period of 45 days or more such that PTQ cannot make the distribution contemplated by Section 2.19, PTQ shall be immediately notify the holders of the Notes in writing and no Event of Default shall arise under this Indenture by reason of any failure by PTQ to make such distribution to the extent that such failure to perform is caused by the occurrence of a Force Majeure Event; provided however if such Force Majeure Event continues for a maximum of 180 days, such failure to make distribution contemplated by Section 2.19 shall become an Event of Default. For purposes of this Indenture, Force Majeure Eventmeans any event beyond the reasonable control of PTQ, whether or not foreseeable, including, without limitation fire, explosion, lightning, storm, tempest, hurricane, tornado, flood, earthquake, riot or civil commotion provided that, in each case, such event does not arise, directly or indirectly, as a result of any act or negligence on the part of PTQ or its Affiliates and such event, directly or indirectly, causes PTQ to be unable to comply with its obligations under section 2.19. Where PTQ is (or claims to be) affected by a Force Majeure Event, it shall take all commercially reasonable steps to mitigate the consequences of such an event upon the performance of its obligations under section 2.19.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 193





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14.12

Entire Agreement



This Indenture and all documents contemplated by or delivered under or in connection with this Indenture, constitute the entire agreement between the parties with respect to the subject matter and supersede all prior agreements, negotiations, discussions, undertakings, representations, warranties and undertakings, whether written or verbal.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 194





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IN WITNESS WHEREOF each of the parties has caused these presents to be executed as of the date indicated on the first page of this Indenture.





PETAQUILLA MINERALS LTD.



Per: /s/ Bassam Moubarak

Name:  Bassam Moubarak

Title:

CFO



ADRIAN RESOURCES (BVI) LTD.





Per:/s/ Bassam Moubarak

Name:  Bassam Moubarak

Title:



PETAQUILLA MINERALS, S.A.





Per:/s/ Richard Fifer

Name:  Richard Fifer

Title:



PETAQUILLA GOLD, S.A.





Per:/s/ Richard Fifer

Name:  Richard Fifer

Title:



COMPANIA MINERA BELENCILLO, S.A.





Per:/s/ Richard Fifer

Name:  Richard Fifer

Title:















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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 195





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PETAQUILLA INFRAESTRUCTURA, S.A.





Per:/s/ Richard Fifer

Name:  Richard Fifer

Title:



AQUA AZURE, S.A.





Per:/s/ Richard Fifer

Name:  Richard Fifer

Title:





COMPUTERSHARE TRUST COMPANY OF CANADA





Per:/s/ Alice Kollen

Name:  Alice Kollen

Title:

Professional, Corporate Trust





COMPUTERSHARE TRUST COMPANY OF CANADA





Per:/s/ Garbriel Ducharme

Name:  Gabriel Ducharme

Title:

Professional, Corporate Trust











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|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 196





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APPENDIX "I"



1.

CONVERSION RIGHTS



1.1

Conversion Privilege of the Series D Noteholder



Upon and subject to the provisions and conditions hereof, the Holder of each Series D Note shall have the right, at its option, at any time prior to 5:00 p.m. (Eastern Standard Time) on the earlier of: (i) the Maturity Date and (ii) if such Series D Note has been previously called for redemption pursuant to section 2.16, the Business Day immediately preceding the Redemption Date (such time and date in this Article 3 being referred to as the "Time of Expiry"), to convert the whole or any part of the amount due on the Maturity Date of such Series D Note (for greater certainty being 110% of the principal amount of the Series D Note for conversion) into fully paid and non-assessable Common Shares of PTQ at the Conversion Price; provided however that the amount of such Series D Note to be converted shall be converted into Canadian currency using the Prevailing Exchange Rate. For clarity, the calculation for US$1000 principal amount to convert is: US$1000 multiplied by 110% = US$1100 and assuming a Prevailing Exchange Rate of CDN$1.10 = CDN $1210.00 divided by Conversion Price (CDN $2.25) = 538 Common Shares (after adjustment pursuant to section 1.4). Such right of conversion shall extend only to the maximum number of whole Common Shares into which the aggregate principal amount of the Series D Note or Series D Notes surrendered for conversion at any one time by the Holder thereof may be converted in accordance with the foregoing provisions of this section 1.1.  Fractional interests in Common Shares shall be adjusted for in the manner provided in section 1.4.



In addition, PTQ shall make an additional cash payment to any Holder who exercises their right to convert as described above in an amount equal to any and all accrued and unpaid interest on that portion of the note being converted to the Date of Conversion, it being understood that any and all prepaid interest in such Series D Notes shall be deemed fully paid and unrecoverable by PTQ to the respective Series D Noteholder as a make whole premium.  PTQ shall pay such interest payment to the Noteholders exercising their right to convert on the Conversion Date and shall deposit sufficient funds to the Trustee before the Conversion Date.  Subject to sufficient funds received by the Trustee, payments will be sent as contemplated in section 2.10.



1.2

Manner of Exercise of Right to Convert



The Holder of a Series D Note desiring to convert such Series D Note in whole or in part into Common Shares in accordance with section 1.1 shall surrender such Series D Note to the Trustee at the Corporate Trust office together with the Conversion Form on the back of such Series D Note or any other written notice, acceptable to the Company and Trustee, in either case duly executed by the Holder or its executors or administrators or other legal representatives or its or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Trustee and PTQ, and together with Holders written notice of the Prevailing Exchange Rate for such conversion, in each case acting reasonably, exercising its right to convert such Series D Note in accordance with the provisions of this Article 1.









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 197





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Thereupon such Series D Noteholder and/or its nominee(s) or assignee(s) shall be entitled to be entered in the books of PTQ as at the Date of Conversion (as defined below) as the Holder of the number of Common Shares into which such Series D Note is convertible in accordance with the provisions of this Article 1 and, as soon as practicable thereafter and in any event within five (5) Business Days, PTQ shall deliver or cause to be delivered to such Series D Noteholder and/or, subject as aforesaid, its nominee(s) or assignee(s) a certificate or certificates for such Common Shares registered in the name of the Series D Noteholder or as otherwise directed by the Series D Noteholder.



If a Series D Note contains the U.S. restrictive legend set forth in Schedule B to the Indenture, the certificate representing the Common Shares underlying such Series D Note issuable upon conversion thereof shall also contain substantially the same form of U.S. restrictive legend set forth in Schedule B to the Indenture.



The deemed date of conversion (the "Date of Conversion") of a Series D Note shall be the date on which it is surrendered in accordance with this section 1.2. In the case of a Series D Note surrendered by post or other means of transmission, the Date of Conversion shall be the date on which it is received by the Trustee.



Any part, being US$1,000 or an integral multiple thereof, of a Series D Note may be converted as provided in this Article 1 and all references in this Indenture to conversion of Series D Notes shall be deemed to include conversion of such parts.



The Holder of any Series D Note of which part only is converted shall, upon the exercise of its right of conversion, surrender the said Series D Note to the Trustee, and the Trustee shall cancel the same and shall without charge forthwith deliver to the Holder a new Series D Note or Series D Notes in an aggregate principal amount equal to the unconverted part of the principal amount of the Series D Note so surrendered.



1.3

Adjustment of Conversion Price



The Conversion Price in effect at any date shall be subject to adjustment from time to time as follows:



(a)

intentionally deleted;



(b)

if and whenever at any time prior to the Time of Expiry PTQ shall: (i) subdivide or redivide the outstanding Common Shares into a greater number of Common Shares; (ii) reduce, combine or consolidate the outstanding Common Shares into a smaller number of Common Shares; or (iii) issue Common Shares to the Holders of all or substantially all of the outstanding Common Shares by way of a stock dividend (other than the issue of Common Shares pursuant to the exercise of options to receive dividends in the form of Common Shares in lieu of dividends paid in the ordinary course), the Conversion Price in effect on the effective date of such subdivision, redivision, reduction, combination or consolidation or on the record date for such issuance of Common Shares by way of a stock dividend, as the case may be, shall, in the case of the events referred to in clauses (i) and (iii) above, be decreased in proportion to the number of outstanding Common Shares resulting from such subdivision, redivision or dividend, or shall, in the case of the events referred to in clause (ii) above, be increased in proportion to the number of outstanding Common Shares resulting from such reduction, combination or consolidation. Such adjustment shall be made successively whenever any event referred to in this section 1.3(b) shall occur; any such issuance of Common Shares by way of a stock dividend shall be deemed to have been made on the record date for the stock dividend for the purpose of calculating the number of outstanding Common Shares under sections 1.3(c) and (d);









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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 198





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(c)

if and whenever at any time prior to the Time of Expiry PTQ shall fix a record date for the issuance of rights or warrants to all or substantially all the Holders of its outstanding Common Shares entitling them, to subscribe for or purchase Common Shares (or securities convertible into Common Shares) at a price per Common Share (or having a conversion or exchange price per Common Share) less than 95% of the Current Market Price of a Common Share on such record date, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Conversion Price in effect on such record date by a fraction, the numerator of which shall be the total number of Common Shares outstanding on such record date plus a number of Common Shares equal to the number arrived at by dividing the aggregate price of the total number of additional Common Shares offered for subscription or purchase (or the aggregate conversion or exchange price of the convertible securities so offered) by such Current Market Price per Common Share, and the denominator of which shall be the total number of Common Shares outstanding on such record date plus the total number of additional Common Shares offered for subscription or purchase (or into which the convertible securities so offered are convertible); any Common Shares owned by or held for the account of PTQ shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that any such rights or warrants are not so issued or any such rights or warrants are not exercised prior to the expiration thereof, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which would then be in effect based upon the number of Common Shares (or securities convertible into Common Shares) actually issued upon the exercise of such rights or warrants, as the case may be;



(d)

if and whenever at any time prior to the Time of Expiry PTQ shall fix a record date for the making of a distribution to all or substantially all the holders of its outstanding Common Shares of: (i) shares of any class other than Common Shares; (ii) rights, options, warrants or securities convertible into or exchangeable for Common Shares (excluding those referred to in section 3.3(c)); (iii) evidence of its indebtedness; or (iv) assets (including cash, but excluding dividends paid in the ordinary course) then, in each such case, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Conversion Price in effect on such record date by a fraction, the numerator of which shall be the total number of Common Shares outstanding on such record date multiplied by the Current Market Price per Common Share on such record date, less the fair market value (as determined by the Board of Directors with the approval of the Series D Noteholders, and if the Common Shares are then listed on the Toronto Stock Exchange, the approval of the Toronto Stock Exchange, which determination shall be conclusive) of such shares or rights, options, warrants or securities convertible into or exchangeable for Common Shares or evidence of indebtedness or assets so distributed, and the denominator of which shall be the total number of Common Shares outstanding on such record date multiplied by such Current Market Price per Common Share; any Common Shares owned by or held for the account of PTQ shall be deemed not to be outstanding for the purpose of any such computation; such adjustment shall be made successively whenever such a record date is fixed; to the extent that such distribution is not so made, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which would then be in effect based upon such shares, rights, options, warrants or securities convertible into or exchangeable for Common Shares or evidence of indebtedness or assets actually distributed, as the case may be;









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 199





---

-4-







(e)

for the purpose of any computation under section 3.3(c) or (d), the "Current Market Price"per Common Share at any date shall be the weighted average price of the Common Shares for the 30 consecutive trading days ending three (3) trading days prior to such date on the Toronto Stock Exchange or, if the Common Shares are not listed on the Toronto Stock Exchange, on such national stock exchange on which the Common Shares are listed as may be selected for such purpose by the Board of Directors, or, if the Common Shares are not listed on a national stock exchange, then on the over-the-counter market (provided that an "active trading market" for the Common Shares exists on such over-the-counter market). An "active trading market" shall not be deemed to exist when the spread between the bid and ask prices per Common Shares exceeds 10%. If there is no active trading market, the "Current Market Price" shall be determined in the good faith and reasonable judgment of a nationally-recognized investment banking firm selected by PTQ and the Holders of a majority in principal amount of the outstanding Series D Notes;



(f)

if and whenever at any time after the date hereof and prior to the Time of Expiry, there is a consolidation, amalgamation or merger of PTQ with or into any other corporation or other entity (other than a vertical short-form amalgamation with one or more of its Subsidiaries), or a transfer of the undertaking or assets of PTQ as an entirety or substantially as an entirety to another corporation or other entity in which the holders of Common Shares are entitled to receive shares, other securities or other property (any of such events being called a "Capital Reorganization"),the holder upon conversion of the Series D Notes after the effective date of such Capital Reorganization will be entitled to receive upon conversion of the Series D Notes, and will accept for the same aggregate consideration in lieu of the number of Common Shares to which the holder was previously entitled upon such conversion, the aggregate number of shares, other securities or other property, including cash, which the holder would have been entitled to receive as a result of such Capital Reorganization if, on the effective date thereof, the holder had been the registered holder of the number of Common Shares to which the holder would have been entitled upon conversion of the Series D Notes;



(g)

in the case of any reclassification of, or other change in, the outstanding Common Shares of  PTQ other than a subdivision, redivision, reduction, combination or consolidation, the Conversion Price shall be adjusted in such manner, if any, and at such time, as, the Board of Directors, in their sole discretion, may determine to be equitable in the circumstances and if the Common Shares are then listed on the Toronto Stock Exchange, with the approval of the Toronto Stock Exchange. Failure of the Board of Directors to provide for an adjustment on or prior to the effective date of any such reclassification of, or change in, the outstanding Common Shares of PTQ shall be conclusive evidence that the Board of Directors have determined that it is equitable to make no adjustment in the circumstances;











|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 200





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-5-







(h)

subject to the prior written consent of the Toronto Stock Exchange, in any case in which this section 1.3 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, PTQ may defer, until the occurrence of such event, issuing to the Holder of any Series D Note converted after such record date and before the occurrence of such event the additional Common Shares issuable upon such conversion by reason of the adjustment required by such event before giving effect to such adjustment; provided, however, that PTQ shall deliver to such Holder an appropriate instrument evidencing such holder's right to receive such additional Common Shares upon the occurrence of the event requiring such adjustment and the right to receive any distributions made on such additional Common Shares declared in favour of holders of record of Common Shares on and after the Date of Conversion or such later date as such holder would, but for the provisions of this section 1.3, have become the holder of record of such additional Common Shares;



(i)

the adjustments provided for in this section 1.3 are cumulative and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this section 1.3; provided that, notwithstanding any other provision of this section 1.3, no adjustment of the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion Price then in effect; provided, however, that any adjustments which by reason of this section 1.3(l) are not required to be made shall be carried forward and taken into account in any subsequent adjustment; and



(j)

in the event of any question arising with respect to the adjustments provided in this section 1.3, such question, subject to prior written consent of the Toronto Stock Exchange, shall be conclusively determined by a firm of chartered accountants appointed by PTQ and acceptable to the Series D Noteholders (who may be the auditors of PTQ); such accountants shall have access to all necessary records of PTQ and such determination shall be binding upon PTQ, the Series D Noteholders and the Trustee.



1.4

No Requirement to Issue Fractional Shares



PTQ shall not be required to issue fractional Common Shares upon the conversion of Series D Notes pursuant to this section 1. If more than one Series D Note shall be surrendered for conversion at one time by the same holder, the number of whole Common Shares issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of such Series D Notes to be converted. If any fractional interest in a Common Share would, except for the provisions of this section 1.4, be deliverable upon the conversion of any principal amount of Series D Notes, the number of Common Shares issuable shall be rounded up to the nearest whole number.









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 201





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1.5

Corporation to Reserve Common Shares



PTQ covenants with the Series D Noteholders that it will at all times reserve and keep available out of its authorized Common Shares, solely for the purpose of issue upon conversion of Series D Notes as in this Article 1 provided, and conditionally allot to Series D Noteholders who may exercise their conversion rights hereunder, such number of Common Shares as shall then be issuable upon the conversion of all outstanding Series D Notes. PTQ covenants with the Series D Noteholders that all Common Shares which shall be so issuable shall be duly and validly issued as fully paid and non-assessable Common Shares of PTQ. The Series D Noteholders hereby acknowledge and accept that in the event that the conversion of the Series D Notes into Common Shares requires the issuance of more than 24,000,000 Common Shares, PTQ, in order to comply with the policies of the Toronto Stock Exchange, will require the approval of the shareholders of PTQ. PTQ will be deemed to be in compliance with the provisions hereof for so long as it is diligently seeking to obtain such shareholder approval. PTQ shall confirm by Officers Certificate that any such shareholder approval has been obtained and the Trustee shall be entitled to rely on such Officers Certificate without further investigation.



1.6

Taxes and Charges on Conversion



The Trustee shall deliver Common Shares to the Holders of Series D Notes free and clear of all deductions and withholdings as confirmed applicable in a tax opinion to be provided by PTQ tax advisor. Trustee shall rely on such opinion and any written direction from PTQ and shall have no duty or responsibility to determine applicable withholding taxes. Common shares shall only be delivered to Holders upon payment of any applicable withholding taxes by the Holder required to be paid by the Trustee or PTQ. The Trustee shall be held harmless by the Holder entitled to the common shares for any damages caused due to the failure to release the shares including but not limited to price fluctuations of the common shares. Each Holder shall (severally, but not jointly and severally) indemnify and hold harmless the Trustee and PTQ for the full amount of Indemnified Taxes (including penalties, interest and expenses payable or incurred in connection therewith) imposed on or required to be paid by the Trustee or PTQ in connection with issuance and/or delivery to the Holder of Common Shares upon the exercise of the Holder's right of conversion pursuant to the terms of the Series D Notes and of this Indenture. Payment under this indemnification shall be made within 30 days from the date the Trustee or PTQ makes written demand for it to the Holder, provided that such demand is accompanied by an assessment, demand or similar document issued by a governmental authority having jurisdiction to tax.



1.7

Cancellation of Converted Series D Notes



All Series D Notes converted in whole or in part under the provisions of this Article 1 shall be forthwith delivered to and cancelled by the Trustee.











|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 202





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-7-





1.8

Certificate as to Adjustment



PTQ shall from time to time, immediately after the occurrence of any event which requires an adjustment or readjustment as provided in section 1.3, deliver an Officers' Certificate to the Series D Noteholders and the Trustee specifying the nature of the event requiring the same and the amount of the adjustment necessitated thereby and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based, which certificate and the amount of the adjustment specified therein shall, subject to the provisions of section 1.3(j), be conclusive and binding on all parties in interest. PTQ shall, except in respect of any subdivision, redivision, reduction, combination or consolidation of the Common Shares, forthwith give notice to the Series D Noteholders and the Trustee in the manner provided herein specifying the event requiring such adjustment or readjustment and the results thereof, including the resulting Conversion Price.



1.9

Notice of Special Matters



PTQ covenants with the Series D Noteholders and the Trustee, that, at any such time that any Series D Notes remain outstanding, it will give notice to the Series D Noteholders in the manner provided in section 14.1 of the Indenture, of its intention to fix a record date for any event referred to in section 1.3(b), (c) or (d) which may give rise to an adjustment in the Conversion Price, and, in each case, such notice shall specify the particulars of such event and the record date and the effective date for such event; provided that PTQ shall only be required to specify in such notice such particulars of such event as shall have been fixed and determined on the date on which such notice is given. Such notice shall be given not less than 15 Business Days in each case prior to such applicable record date or effective date, whichever is earlier.



1.10

Obligations of PTQ Regarding Calculations



PTQ shall provide Trustee with all calculations pursuant to section 1.5 hereunder, and PTQ acknowledges and agrees that Trustee shall be permitted to rely on such calculations without further investigation, and shall not be liable for any errors or omissions associated with such calculations.



1.11

Protection of Trustee



The Trustee shall:



(a)

not at any time be under any duty or responsibility to any Series D Noteholder to determine whether any facts exist which may require any adjustment in the Conversion Price, or with respect to the nature or extent of any such adjustment when made when made, or with respect to the method employed in making the same;



(b)

not be accountable with respect to the validity or value (or kind or amount) of any Common Shares or other securities or property which may at any time be issued or delivered upon the conversion of any Series D Notes;



(c)

not be responsible for any failure of PTQ to make any cash payment or to issue, transfer or deliver Common Shares or certificates for the same upon the surrender of any Series D Notes for the purpose of conversion or to comply with any of the covenants contained in Article 1;











|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 203





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-8-







(d)

be under no responsibility in respect of the validity of this Indenture or the execution and delivery hereof by or on behalf PTQ or in respect of the validity or the execution of any Series D Notes by PTQ and issued hereunder, nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of Common Shares or any securities to be issued upon conversion of Series D Notes provided for in this Indenture and/or in any Series D Note certificate or as to whether any securities will when issued be duly authorized or be validly issued and fully paid and non-assessable; and



(e)

be entitled to act and rely on any adjustment calculation provided by PTQ or PTQs auditors and on any certificates and other documents filed by PTQ pursuant to this Article 1 for all purposes of the adjustment









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 204





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SCHEDULE "A"



To the Secured Note Indenture between Petaquilla Minerals Ltd. and Computershare Trust Company of Canada providing for the issue of Senior Secured Notes of Petaquilla Minerals Ltd.



|
|
|

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE SEPTEMBER 21, 2008.



FOR SENIOR SECURED NOTES ISSUED IN THE UNITED STATES OR TO, OR FOR, THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, AS SUCH TERM IS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, PLEASE INSERT THE FOLLOWING LEGEND:



[THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND RESTRICTIONS, (C) IN ACCORDANCE WITH THE EXEMPTIONS FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULES 144 OR 144A THEREUNDER, IF APPLICABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) WITH THE PRIOR WRITTEN CONSENT OF THE CORPORATION (WHICH WILL BE DELIVERED PROMPTLY AND WILL NOT BE UNREASONABLY WITHHELD, BUT WHICH MAY BE CONDITIONAL ON DELIVERY OF A LEGAL OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION AND THE TRUSTEE), PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS.



DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. PROVIDED THAT THE CORPORATION IS A "FOREIGN ISSUER" WITHIN THE MEANING OF REGULATION S UNDER THE 1933 ACT AT THE TIME OF SALE, A NEW CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM THE CORPORATION'S REGISTRAR AND TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE REGISTRAR AND TRANSFER AGENT AND THE CORPORATION, TO THE EFFECT THAT SUCH SALE IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT.]









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 205





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-2-





FORM OF SENIOR SECURED NOTES



|     |     
|---- | ----
|NO.Å | US$Å



PETAQUILLA MINERALS LTD.

(A corporation incorporated under the laws of British Columbia)

SENIOR SECURED NOTE

DUE MAY 21, 2013



Petaquilla Minerals Ltd. ("PTQ")for value received hereby promises to pay to the order of ____________________________ on May 21, 2013 (the "Maturity Date")or on such earlier date as the principal amount hereof may become due in accordance with the provisions of the Indenture hereinafter  mentioned, the sum of 120% ofÅDOLLARS ($Å) in lawful money of the United States, on presentation and surrender of this Note at the principal office of the Trustee in the city of Vancouver and such other cities as the Trustee may keep branch registers for these Notes from time to time.



This Note is one of the Senior Secured Notes due May 21, 2013 in the aggregate principal amount denominations of $1,000 in lawful money of the United States issued under a Senior Secured Note Indenture (the "Indenture")made as of May 21, 2008 and made between PTQ and Computershare Trust Company of Canada, as trustee (the "Trustee").Reference is hereby made to the Indenture for a description of the rights of the holders of the said Notes, PTQ and the Trustee and of the terms and conditions upon which the Notes are issued and held, all to the same effect as if the provisions of the Indenture were herein set forth, to all of which provisions the holder of this Note, by acceptance hereof, assents. All capitalized terms used herein have the meaning ascribed thereto in the Indenture unless otherwise indicated.



The Notes are issuable as fully registered Notes in denominations of US$1,000 and integral multiples of US$1,000 and in other authorized denominations. The Notes of any authorized denomination may be exchanged, as provided in the Indenture, for Notes in an equal aggregate principal amount in some authorized denomination or denominations.



This Note and all other Notes certified and issued under the Indenture rank pari passuwith one another, in accordance to their tenor without discrimination, preference or priority. The Indenture does not restrict PTQ from incurring additional Indebtedness for borrowed money or from mortgaging, pledging or charging its properties to secure any Indebtedness.



Subject to regulatory requirements, Notes may be purchased by PTQ in the open market or by tender or private contract at any price. Notes purchased by PTQ shall be cancelled and shall not be reissued.



The Indenture contains provisions for the holding of meetings of Noteholders and rendering resolutions passed at such meetings and instruments in writing signed by the holders of 66 2/3% of the Notes outstanding binding upon all Noteholders, subject to the provisions of the Indenture.









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 206





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This Note may only be transferred upon compliance with the conditions precedent in the Indenture on one of the registers kept at the above-mentioned principal offices of the Trustee and at such other place or places, if any, and/or by such other registrar or registrars, if any, as PTQ with the approval of the Trustee may designate, and may be exchanged at any such place, by the registered holder hereof or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and execution satisfactory to the Trustee, and upon compliance with such reasonable requirements as the Trustee and/or registrar may prescribe, and such transfer shall be duly noted thereon by the Trustee or other registrar.



This Note shall not become obligatory for any purpose until it shall have been certified by the Trustee for the time being under the Indenture.



The holder of this Note, by receiving and holding same, hereby accepts and agrees to be bound by the terms, and to be entitled to the benefits of this Note and of the Indenture and confirms and ratifies the appointment of the Trustee as the fondé de pouvoir(holder of the power of attorney) of the holder of this Note to the extent necessary for the purposes hereof and of the Indenture, the whole in accordance with and subject to the respective provisions thereof.



IN WITNESS WHEREOFPTQ has caused this Note to be signed by its duly authorized signing authorities.



DATEDas of the 21st day of May, 2008.









| |                         |                     
| | ----------------------- | --------------------
| | PETAQUILLA MINERALS LTD
| | By:                     |                     
| |                         | (Authorized Officer)
| |                         |                     
| |                         |                     
| | By:                     |                     
| |                         | (Authorized Officer)
| |                         |                     











|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 207





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TRUSTEES CERTIFICATE



This Note is one of the Senior Secured Notes referred to in the Indenture within mentioned.



| |                                       | 
| | ------------------------------------- | 
| | COMPUTERSHARE TRUST COMPANY OF CANADA
| | By:                                   | 
| |                                       | 
| |                                       | 











|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 208





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-2-







FORM OF ASSIGNMENT



FOR VALUE RECEIVED,the undersigned hereby sells, assigns and transfers unto ____________________________________________, whose address and social insurance number, if applicable, are set forth below, this Note (or US$________________________ principal amount hereof) of Petaquilla Minerals Ltd. standing in the name(s) of the undersigned in the register maintained by or on behalf of Petaquilla Minerals Ltd. with respect to such Note and does hereby irrevocably authorize and direct _____________________ to transfer such Note in such register, with full power of substitution in the premises.



Dated:  _________________________



|                       |                                  |         
|---------------------- | -------------------------------- | --------
|Address of Transferee: |                                  |         
|                       | (Street                          | Address)
|                       |                                  |         
|                       | (City, Province and Postal Code) |         



|                                                      |  | 
|----------------------------------------------------- |  | 
|Social Insurance Number of Transferee, if applicable: |  | 





*

If less than the full principal amount of the within Note is to be transferred, indicate in the space provided the principal amount (which must be US$1,000 or an integral multiple thereof).



1.

The signature(s) to this assignment must correspond with the name(s) as written upon the face of this Note in every particular without alteration or any change whatsoever. The signature(s) must be guaranteed by an eligible guarantor institution with membership in an approved signature guarantee medallion program. Notarized or witnessed signatures are not acceptable as guaranteed signatures.



2.

The registered holder of this Note is responsible for the payment of any documentary, stamp or other transfer taxes that may be payable in respect of the transfer of this Note.





|                        |  |                                            
|----------------------- |  | -------------------------------------------
|Signature of Guarantor: |  |                                            
|                        |  |                                            
|                        |  |                                            
|Authorized Officer      |  | Signature of transferring registered holder
|                        |  |                                            
|                        |  |                                            
|Name of Institution     |  |                                            









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 209





---





SCHEDULE "B"



To the Indenture between Petaquilla Minerals Ltd. and Computershare Trust Company of Canada providing for the issue of Notes of Petaquilla Minerals Ltd.



|
|
|



UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE JULY 27, 2009.



[FOR NOTES ISSUED IN THE UNITED STATES OR TO, OR FOR, THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, AS SUCH TERM IS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, PLEASE INSERT THE FOLLOWING LEGEND:

[THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON CONVERSION THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY STATE SECURITIES LAWS OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND RESTRICTIONS, (C) IN ACCORDANCE WITH THE EXEMPTIONS FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULES 144 OR 144A THEREUNDER, IF APPLICABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (D) WITH THE PRIOR WRITTEN CONSENT OF THE CORPORATION (WHICH WILL BE DELIVERED PROMPTLY AND WILL NOT BE UNREASONABLY WITHHELD, BUT WHICH MAY BE CONDITIONAL ON DELIVERY OF A LEGAL OPINION OF COUNSEL OF RECOGNIZED STANDING OR OTHER EVIDENCE IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION AND THE TRUSTEE), PURSUANT TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS.



DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA. PROVIDED THAT THE CORPORATION IS A "FOREIGN ISSUER" WITHIN THE MEANING OF REGULATION S UNDER THE 1933 ACT AT THE TIME OF SALE, A NEW CERTIFICATE BEARING NO LEGEND MAY BE OBTAINED FROM THE CORPORATION'S REGISTRAR AND TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE REGISTRAR AND TRANSFER AGENT AND THE CORPORATION, TO THE EFFECT THAT SUCH SALE IS BEING MADE IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT.]









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 210





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- 2-





FORM OFSERIESD NOTES





|     |     
|---- | ----
|NO.Å | US$Å



PETAQUILLA MINERALS LTD.

(A corporation incorporated under the laws of British Columbia)

CONVERTIBLE SENIOR SECURED NOTE  SERIES D

DUE MARCH 25, 2011



Petaquilla Minerals Ltd. ("PTQ")for value received hereby promises to pay to the order of _____________________________ on March 25, 2011 (the "Maturity Date")or on such earlier date as the principal amount hereof may become due in accordance with the provisions of the Indenture hereinafter mentioned, the sum of 110%of ÅDOLLARS ($Å) in lawful money of the United States, on presentation and surrender of this Note at the principal office of the Trustee in the city of Vancouver and such other cities as the Trustee may keep branch registers for these Notes from time to time.



This Note is one of the Notes due March 25, 2011 in the aggregate principal amount denominations of $1,000 in lawful money of the United States issued under an Amended and Restated Note Indenture (the "Indenture")made as of March 25, 2009 and made between PTQ and Computershare Trust Company of Canada, as trustee (the "Trustee").Reference is hereby made to the Indenture for a description of the rights of the holders of the said Notes, PTQ and the Trustee and of the terms and conditions upon which the Notes are issued and held, all to the same effect as if the provisions of the Indenture were herein set forth, to all of which provisions the holder of this Note, by acceptance hereof, assents. All capitalized terms used herein have the meaning ascribed thereto in the Indenture unless otherwise indicated.



The Notes are issuable as fully registered Notes in denominations of US$1,000 and integral multiples of US$1,000 and in other authorized denominations. The Notes of any authorized denomination may be exchanged, as provided in the Indenture, for Notes in an equal aggregate principal amount in some authorized denomination or denominations.



This Note and all other Notes certified and issued under the Indenture rank pari passuwith one another, in accordance to their tenor without discrimination, preference or priority.



The Holder of a Note desiring to convert such Note in whole or in part into Common Shares in accordance with section 1.1 of Appendix I of the Indenture shall surrender such Note to the Trustee at the Corporate Trust office together with the Conversion Form on the back of such Note.









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 212





---

- 3-







Upon and subject to the provisions and conditions hereof, the Holder of each Note shall have the right, at its option, at any time prior to 5:00 p.m. (Eastern Standard Time) on the earlier of: (i) the Maturity Date and (ii) if such Note has been previously called for redemption pursuant to section 2.16, the Business Day immediately preceding the Redemption Date (such time and date in this Article 3 being referred to as the "Time of Expiry"), to convert the whole or any part of the amount due on the Maturity Date of such Note (for greater certainty being 110% of the principal amount of the Note for conversion), plus any and all accrued and unpaid interest to the Date of Conversion, into fully paid and non-assessable Common Shares of PTQ at the Conversion Price, it being understood that any and all prepaid interest in such Notes shall be forfeited by PTQ to the respective Noteholder as a make whole premium; provided however that the amount of such Note to be converted shall be converted into Canadian currency using a fixed exchange rate whereby each US$1.00 of such amount for conversion shall be converted into CDN$1.10.



Subject to regulatory requirements, Notes may be purchased by PTQ in the open market or by tender or private contract at any price. Notes purchased by PTQ shall be cancelled and shall not be reissued.



The Indenture contains provisions for the holding of meetings of Noteholders and rendering resolutions passed at such meetings and instruments in writing signed by the holders of 66 2/3% of the Notes outstanding binding upon all Noteholders, subject to the provisions of the Indenture.



This Note may only be transferred upon compliance with the conditions precedent in the Indenture on one of the registers kept at the above-mentioned principal offices of the Trustee and at such other place or places, if any, and/or by such other registrar or registrars, if any, as PTQ with the approval of the Trustee may designate, and may be exchanged at any such place, by the registered holder hereof or his executors or administrators or other legal representatives or his or their attorney duly appointed by an instrument in writing in form and execution satisfactory to the Trustee, and upon compliance with such reasonable requirements as the Trustee and/or registrar may prescribe, and such transfer shall be duly noted thereon by the Trustee or other registrar.



This Note is not transferable in the United States or to U.S. persons, as such term is defined in  Regulation S under the United States Securities Act of 1933, as amended (the U.S. Securities Act), unless an exemption from registration is available under the U.S. Securities Act and any applicable state securities laws, and the Corporation and the Trustee have received an opinion of counsel of recognized standing or other evidence to such effect in form and substance reasonably satisfactory to the Corporation and the Trustee.



If this Note contains a legend restricting transfer under applicable United States federal and state securities laws, the Common Shares issuable upon conversion thereof shall also bear the same legend.



This Note shall not become obligatory for any purpose until it shall have been certified by the Trustee for the time being under the Indenture.



The holder of this Note, by receiving and holding same, hereby accepts and agrees to be bound by the terms, and to be entitled to the benefits of this Note and of the Indenture, the whole in accordance with and subject to the respective provisions thereof.









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 213





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- 4-







IN WITNESS WHEREOFPTQ has caused this Note to be signed by its duly authorized signing authorities.



DATEDas of the 25th day of March, 2009.



| |                         |                     
| | ----------------------- | --------------------
| | PETAQUILLA MINERALS LTD
| | By:                     |                     
| |                         | (Authorized Officer)
| |                         |                     
| |                         |                     
| | By:                     |                     
| |                         | (Authorized Officer)
| |                         |                     















|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 214





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TRUSTEES CERTIFICATE



This Note is one of the Notes referred to in the Indenture within mentioned.



| |                                       | 
| | ------------------------------------- | 
| | COMPUTERSHARE TRUST COMPANY OF CANADA
| | By:                                   | 
| |                                       | 
| |                                       | 









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 215





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FORM OF ASSIGNMENT



FOR VALUE RECEIVED,the undersigned hereby sells, assigns and transfers unto ____________________________________________, whose address and social insurance number, if applicable, are set forth below, this Note (or US$________________________ principal amount hereof) of Petaquilla Minerals Ltd. standing in the name(s) of the undersigned in the register maintained by or on behalf of Petaquilla Minerals Ltd. with respect to such Note and does hereby irrevocably authorize and direct _____________________ to transfer such Note in such register, with full power of substitution in the premises.



Dated:  _________________________



|                       |                                  |         
|---------------------- | -------------------------------- | --------
|Address of Transferee: |                                  |         
|                       | (Street                          | Address)
|                       |                                  |         
|                       | (City, Province and Postal Code) |         



|                                                      |  | 
|----------------------------------------------------- |  | 
|Social Insurance Number of Transferee, if applicable: |  | 





*

If less than the full principal amount of the within Note is to be transferred, indicate in the space provided the principal amount (which must be US$1,000 or an integral multiple thereof).



3.

The signature(s) to this assignment must correspond with the name(s) as written upon the face of this Note in every particular without alteration or any change whatsoever. The signature(s) must be guaranteed by an eligible guarantor institution with membership in an approved signature guarantee medallion program. Notarized or witnessed signatures are not acceptable as guaranteed signatures.



4.

The registered holder of this Note is responsible for the payment of any documentary, stamp or other transfer taxes that may be payable in respect of the transfer of this Note.



|                        |  |                                            
|----------------------- |  | -------------------------------------------
|Signature of Guarantor: |  |                                            
|                        |  |                                            
|                        |  |                                            
|Authorized Officer      |  | Signature of transferring registered holder
|                        |  |                                            
|                        |  |                                            
|Name of Institution     |  |                                            











|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 216





---

-3-









Representations of Transferee



The transferee represents, warrants and certifies as follows (only one of the following must be checked):



A.

£

The Transferee (a) is not in the United States and is not a U.S. person (a U.S. Person), as such term is defined in Regulation S under the United States Securities Act of 1933, as amended (the U.S. Securities Act), (b) is not acquiring this Note on behalf of a person in the United States or a U.S. Person, and (c) did not execute or deliver this Form of Assignment in the United States; or



B.

£

The Transferee has delivered to the Company and the Trustee a written opinion of counsel of recognized standing or such other evidence in form and substance reasonably satisfactory to the Company and the Trustee to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available for the transfer of the Note to such Transferee.



The undersigned understands that if Box B above is checked, the certificate representing this Note will bear a legend restricting transfer without registration under the U.S. Securities Act and applicable state securities laws unless an exemption from registration is available.



If Box B is checked, any opinion or other evidence tendered must be in form and substance reasonably satisfactory to the Company and the Trustee. Holders planning to deliver an opinion of counsel or other evidence in connection with the transfer of Notes should contact the Company and the Trustee in advance to determine whether any opinions or other evidence to be tendered will be acceptable to the Company and the Trustee.



Dated: ____________________________



| |                          
| | -------------------------
| |                          
| | (SIGNATURE OF TRANSFEREE)
| |                          



|             | 
|------------ | 
|Print  Name: | 













|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 217





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CONVERSION FORM











TO:

PETAQUILLA MINERALS LTD.



The undersigned registered holder of the within Note hereby irrevocably elects to convert US$              principal amount thereof into Common Shares of Petaquilla Minerals Ltd. in accordance with the terms of the Indenture referred to in such Note and directs that the Common Shares issuable and deliverable upon the conversion be issued and delivered to the Person indicated below.



* If less than the full principal amount of the within Note is to be converted, the principal amount indicated must be US$1,000 or integral multiples thereof to be converted.





Dated



Print name in which Common Shares issued on

conversion are to be issued, delivered and registered







Name







(ADDRESS)

(CITY AND PROVINCE)







| |                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | SIGNATURE OF REGISTERED HOLDER                                                                                                                                                                             
| | If shares are to be issued in the name of a Person other than the holder, the signature must be guaranteed by an eligible guarantor institution with membership in an approved medallion guarantee program.







|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 218





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Exhibit 4.W



|                                                                                               
|-----------------------------------------------------------------------------------------------
|OFFICIAL GAZETTE
STATE AGENCY                                                                  
|YEAR XCIII     PANAMA, REPUBLIC OF PANAMA     FRIDAY, FEBRUARY 28, 1997              No. 23,235



CONTENT

LEGISLATIVE ASSEMBLY

LAW NO. 9

(of February 26, 1997)



                     BY WHICH THE AGREEMENT SUBSCRIBED BETWEEN THE STATE AND THE CORPORATION MINERA PETAQUILLA, S.A., IS APPROVED...................... Page 1



NOTICES AND EDICTS



|                    
|--------------------
|LEGISLATIVE ASSEMBLY

LAW NO. 9

(Of February 26, 1997)

By which the Agreement subscribed between the State

and the Corporation Minera Petaquilla, S.A. is approved.



THE LEGISLATIVE ASSEMBLY



DECREES



Article 1.  The Agreement subscribed between THE STATE and the Corporation named MINERA PETAQUILLA, S.A., is approved, and reads as follows:



Between the undersigned, to wit, on the one part NITZIA RODRIGUEZ DE VILLAREAL, female Panamanian, of legal age, with personal identification card Item 8-207-2450 in her capacity as Minister of Commerce and Industries, on behalf of THE STATE, duly authorized by the Cabinet Council meeting held on February 13, 1996, by the authority conferred by Article 195, numeral three, of the Political Constitution of the Republic of Panama, hereinafter called THE STATE, and on the other, Richard Fifer, Engineer., male, Panamanian, of legal age, holder of personal Identification card Item 8-433-163 in his capacity as President and Legal Representative of MINERA PETAQUILLA, S.A. a corporation organized, and existing according to the laws of the Republic of Panama, and duly registered in the Microfilm Mercantile Section of the Public Registry, Microjacket 303869, Roll 46505, Frame 0096, duly authorized for this act by a Resolution of the Board of Director of said corporation, dated December 1, 1995, who hereinafter shall be called THE COMPANY, subscribe this mineral concession Agreement.  Also present at this act and subscribing the present Agreement were the following persons for the following purposes: (a)  GEORECURSOS INTERNACIONAL, S.A., corporation constituted and existing pursuant to the laws of the Republic of Panama, duly registered in the Microfilm Section Mercantile of the Public Registry at Microjacket 239116, Roll 30512, Frame 181, represented in this act by Engineer Richard Fifer, whose particulars have been previously presented, in his capacity as President and Legal Representative, duly authorized for this act by Resolution of the Board of Directors dated December 1, 1995, who hereinafter shall be called GEORECURSOS, with the purpose of terminating and substituting the existent concession in conformity with Agreement No. 27-A of August 7, 1991, as stipulated in Clause Twenty Eight of this Agreement and (b) ADRIAN RESOURCES, S.A., corporation constituted and existing pursuant to the laws of the Republic of Panama, duly registered in the microfilm Section Mercantile of the Public Registry at Microjacket 259118, Roll 35173, Frame 002, duly represented in this act by Engineer Richard Fifer, whose particulars have been previously presented, in his capacity as President and Legal Representative, duly authorized to enter into this act by means of a Resolution of the Board of Directors, dated December 1, 1995, who hereinafter shall be called ADRIAN with  the purpose of recognizing certain reciprocal rights and obligations jointly with THE COMPANY in relation to certain mining concessions adjacent to the CONCESSION AREAS, according to Annex IV of this Agreement.





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 219





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- 2 -







THEREFORE, the parties have agreed to enter into this Agreement subject to the following Clauses:

CLAUSE ONE

Purpose

The main purpose of this Agreement is to grant THE COMPANY, as in fact it is granted with the subscription and approval of this Agreement, the concession of the rights hereinafter stipulated over the gold, copper and other mining deposits, located in the area known as Cerro Petaquilla, described in Annex 1 of this Agreement as the Concession Area, with the purposes of exploring, extracting, exploiting, benefiting, processing, refining, transporting, selling and marketing all the minerals, base or precious, located in the Concession Area and, for such purposes THE COMPANY may design, construct and operate all sorts of infrastructure work, including housing units, health, education and recreation centers, all types of air and land installations, electric power generation facilities to satisfy the needs of this Concession as well as for other uses expressly allowed, by this Agreement, water treatment plants, storage and use of natural waters, and in general design, construct and operate all those installations and provide all those other services which are necessary or pertinent for the development of this Concession, all of which hereinafter shall be called THE PROJECT.



THE STATE recognizes that the development of THE PROJECT protected by the present Agreement represents a great benefit to stimulate the mining industry in the Republic of Panama, and therefore, THE STATE will consider it a priority and shall provide its assistance to THE COMPANY in order to achieve compliance and fulfillment of the objects and purposes of this Agreement.



CLAUSE TWO



Definitions



For the purposes of this Agreement, the following terms shall have the meaning indicated hereinafter.



AFFILIATE

For the purposes of this Agreement, AFFILIATE shall mean in regards to any natural person or body corporate, the natural person or body corporate that directly or indirectly, controls, is controlled by or is under the common control with said other natural person or body corporate through the holding of fifty percent (50%) or more of the issued and outstanding shares with the ordinary right to vote for the election of the directors of said other natural person or body corporate, or by means of any other method or manner that represents control of said natural person or body corporate. For the purposes of this Agreement it is also understood that TECK CORPORATION, INMET MINING CORPORATION and ADRIAN RESOURCES LTD.; and their affiliates or subsidiaries, shall be considered as Affiliates of THE COMPANY while they are its shareholders.



PROJECT AREA

Is the area that THE COMPANY appoints in the Concession Area to develop the exploitation of minerals and comprises all the installations, facilities and structures that are established on said area by THE COMPANY, its Affiliates, contractors or sub-contractors.



CERRO PETAQUILLA

Is the concession protected under the Agreement subscribed by and between the Ministry of Commerce and Industries and Geo-Recursos Internacional, S.A., identified as Agreement Item 27-A, August 7, 1991, with its renewals and extensions, and described in Annex 1 of the present  Agreement.





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 220





---

- 3 -







CONCESSION

The ensemble of rights granted by THE STATE due to this Agreement, which includes, among others, the right to explore, exploit, and usufruct the ore deposits located in the Cerro Petaquilla area described in Annex 1 of this Agreement, which is called the Concession Area.



ADJACENT CONCESSION

Refers to the concessions or requests for concessions, as the case may be, in favor of ADRIAN identified as:  Agreement No. 41 of July 12, 1994, Agreement NO. 39-A of July 7, 1994, Agreement No. 39-B of July 7, 1994, Agreement No. 59 of December 29, 1994, all subscribed by and between the Ministry of Commerce and Industries and ADRIAN, and the requests for concessions  Nos. 93-92, 93-93 and 94-39 according to the registries filed at the General Direction of Mineral Resources of the Ministry of Commerce and Industries of the Republic of Panama.



CONTRACTOR

Shall be those natural persons or body corporate that THE COMPANY, its Affiliates or Assignees appoint as Contractors for the effects of this Agreement, and it shall suffice that THE COMPANY notifies the Ministry of Commerce and Industries on such appointments for the same to have effect.



COMPANY

Refers to, through the contents of the present Agreement, to MINERA PETAQUILLA, S.A., as well as to its Affiliates and the cessionary entities of the Affiliates and Minera Petaquilla, S.A.



FEASIBILITY STUDY

Shall have the meaning given in Annex II of the present Agreement, which forms an integral part thereof.



FACILITY

Is any excavation, pit, hole, shaft, trench, channel, outlet, equipment, railroad, streets, highways, roads, shelters or rooms for the workers, piping, electric transmission lines, installations and equipment for the generation of any type of energy, accumulation or storage of materials and raw materials, slag heap or accumulation of waste or residues of any type, piers, docks, floaters or floating pads, waste ponds, sedimentation or settling ponds, and other improvements to the property, fixed accessories, mills, crushers, elution or floating installations, installation for the improvement or claiming of waters, trucking or transportation routes, in addition to any other improvements, accessories, installations or constructions that are, according to THE COMPANY,  necessary or advisable for the exploration, development, extraction, benefit or transportation of minerals or products related to the Concession Area, which shall be executed in compliance with the pertinent environmental regulations.



NEGOTIABLE GROSS PRODUCTION

For the purposes of the present Agreement:

a)

when the ore or its derived concentrate are sold as ore or as concentrate, the gross amount received from the buyer as a result of the sale after deductions, if there were any, all foundry costs, fines and other deductions, and after the deduction of all transportation costs and the insurance of the ore or the concentrate, incurred in their transfer from the mine to the smelter or factory or other place where the final delivery to the buyer is carried out, or

b)

when the ore or the concentrate are processed in a smelter, and the metals recovered in said process are sold and delivered by THE COMPANY, the gross amount received from the buyer as a result of the sale of the metals so delivered, after the deduction of all the costs of smelting, fines and other deductions and after deducting all the costs of transportation and insurance of the ore or the concentrate incurred in their transportation from the mine to the smelter, and all costs of transportation and insurance of the metals, incurred in their transportation from the smelter to the place where its definite delivery to the buyer is carried out, or

c)

when the ore or the concentrate are processed in a smelter property of THE COMPANY or under the control





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 221





---

- 4 -





thereof, the gross amount that is considered earned regarding the sale of the ore or the concentrate, shall not be less than the amount that may have been obtained from a smelter that was not property of, nor controlled by THE COMPANY in regards to the processing of ore or of concentrate of the same quality and amount.



COMMERCIAL PRODUCTON

Refers to the extraction and processing of the mineral with the purpose of selling a final product.  The extraction and processing of mineral to perform tests and determine the metallurgical process to be employed shall not be considered Commercial Production.  When seventy per cent (70%) of the designed production capability is achieved, as defined in the Feasibility Study, and this is maintained during ninety consecutive days, it shall be considered that Commercial Production has been attained.



SUBCONTRACTOR

Shall be those natural persons or body corporate that THE COMPANY, its Affiliates or assignees, appoint as Subcontractors for the effects of the present Agreement and it shall suffice that THE COMPANY notifies the Ministry of Commerce and Industries on such appointment for of the same to have effect.



INITIAL TERM

Is the twenty (20) year term following the date of the enactment of the law approving the present Agreement.



CLAUSE THREE



Rights and Obligations



A. RIGHTS OF THE COMPANY



During the life of this Agreement, THE STATE grants THE COMPANY, which it extends, for the effects of the development of THE PROJECT, to its Affiliates, to the contractors and subcontractors that it appoints, the following powers and rights:

1.

In the Concession Area, as described in Annex 1, to perform geological researches related to minerals found in said Concession Area before and during their extraction.

2.

Perform all types of mineral operations, including but not limited to exploration, extraction, exploitation, processing, refining, transportation, benefits, sale and commercialization, within the Concession Area, and carry out all the other necessary and adequate operations and activities for said mining operations inside and outside the Concession Area, always in compliance with the pertinent environmental regulations.

3.

Carry out the activities necessary to benefit the minerals extracted in the Areas of the Project in compliance with the stipulations of the present Agreement.

4.

Transport the extracted ore, concentrate and minerals, as well as any item, supply, materials or goods that THE COMPANY deems convenient for its operation, using any transportation means and security method acknowledged in the mining industry.

5.

Store inside and outside the Concession Area and export and commercialize the ore, concentrate and the minerals extracted in the Concession Area, in accordance with the legal and regulatory provisions in force.

6.

The right of way, when THE COMPANY considers it necessary for the development of THE PROJECT, through the surface and subsoil of all lands and waters property of THE STATE on the date on which the Agreement comes into force, subject to the stipulations of Annex IV of this Agreement, to the point where they do not violate the rights acquired by third parties to this Agreement, and the rights to build, install, maintain and use in the surface or the subsoil of such lands and waters those facilities and installations that THE COMPANY deems convenient for the development of THE PROJECT.  In the event of using the right of way by the subsoil, THE COMPANY shall coordinate with the corresponding state entity, everything pertaining to the protection of the underground water in the fresh water reserves that might exist in the site of said right of way.  The COMPANY shall enjoy this right of way and can use it without being subject to payment for any concept.  When the lands property of THE STATE are transferred  to private third parties after the enforcement of this Agreement,  the rights of way of THE COMPANY shall prevail without detriment to the compensation corresponding to physical damages to crops or permanent improvements built there.





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 222





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- 5 -







In relation to the stipulations of Annex IV of this Agreement, THE COMPANY and ADRIAN declare that any conflict or controversy arising between them in the execution or compliance with what has been agreed in Annex IV shall not in any manner affect the respective obligations and commitments which bind THE COMPANY pursuant to this Agreement and ADRIAN with respect to the Adjacent Concessions with THE STATE, unless the respective conflict or controversy is motivated or caused by any act or omission by THE STATE.

7.

The right to make use of and deviate the waters coming form natural sources, when the activities of THE PROJECT so requires, without any charges, it being understood that if these uses damage or interfere with the rights or the properties of persons or private or state entities using such waters on the date that this Agreement comes into effect, these persons or entities shall receive from THE COMPANY fair compensation for the damaged caused pursuant to the standards in force.  Likewise, THE COMPANY shall guarantee sufficient drinking water supply for the subsistence of those natural persons lawfully occupying the affected area at the time that this Agreement comes into force.

8.

The right to design and build access bridges, pipelines, canals, railroads, and other access facilities or transportation means, and any other installations and facilities that  may be useful or necessary for the realization of THE PROJECT and use said installations or facilities without having to pay any liens, canons, royalties, taxes, nor any other type of charges to THE STATE, excepting the payment of surface canons, royalties and municipal taxes stipulated in this Agreement. It is understood that THE COMPANY is empowered to extract and use any minerals or materials needed to carry out infrastructure works, including but not limited to rock, sand and gravel, and shall have the right to exploit quarries for the same purpose subject to the stipulations of this Agreement and the legislation in force that rules or regulates the exploitation of non-metallic minerals used as construction materials.

9.

Generate electricity for the use of THE PROJECT and sell or commercialize any electricity surplus generated according to the legislation in force, as well as to establish, build and operate any communication installations that THE COMPANY deems necessary for THE PROJECT and the operations related thereto.

10.

The right to obtain without delay licenses, permits, approvals and other authorizations generally required from THE STATE or any of its departments or autonomous or semi-autonomous institutions, and that are necessary for the development of THE PROJECT.  Subject to the other provisions of this Agreement, it is understood that all these licenses, approvals or authorizations shall be granted at the usual general application rate.

11.

To process, operate and structure, exempted from the payment of any type of duty, tax or fees from THE STATE, vehicles, helicopters, airplanes, barges, heavy equipment for the use on land or water or amphibian, towboats, ships of great draft, ships for the transportation of workers, and any other machinery or equipment necessary for the effective development of THE PROJECT, and provide air, maritime and land services, on the Panamanian territory as these services are required for the development of THE PROJECT.

12.

THE COMPANY shall have the right to acquire, lease or use, those STATE lands inside or outside the Concession Area that are necessary or useful for the development of THE PROJECT.  The COMPANY may acquire these lands in property, lease or use through the Ministry of Finance and Treasury that shall give due course to such requests and will approve their direct concession, to THE COMPANY without the need of submitting such concession to the mechanisms of public biding, tendering or price requests established in the Fiscal Code, provided that said lands are available and inasmuch as the rights acquired by third parties to this Agreement are not violated due to other mining concessions, subject to the provisions of Annex IV of this Agreement.  When related to lands acquired in use or in leasing, the amounts to be paid by THE COMPANY shall not be higher than the surface canons by hectare provided for in this Clause.  When it pertains to lands that THE COMPANY wishes to acquire in property, the price to be paid for such lands will be determined by the procedures stipulated by the legislation in force.





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 223





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- 6 -







In the event that THE COMPANY needs lands inside or outside the Concession Area that are private property, anything pertaining to its use, possession or acquisition, with the exception of the stipulations of Clause Seven (7) Sub-clause A herein, shall be transacted according to the provisions of the Mineral Resources Code and this Agreement

13.

The COMPANY will have the right to design, build and operate, directly or through third parties, and always under its own management, piers, docks, and other port installations and landing places that THE COMPANY requires in the Port Area as determined in the Feasibility Study, regarding activities anticipated in this Agreement, and it will be understood that such piers, docks and other port installations and landing places will be for the priority use of THE COMPANY.  Port duties or fees which may be established for the use of said installations shall not be applied to THE COMPANY and its ships, nor to the ships belonging to or under the control of third parties rendering services for the purpose of the Agreement.  As soon as this Agreement concludes its life term pursuant to Clause Five, the previously mentioned port installations shall become property of THE STATE, which is to assume the responsibility of its operation.

Notwithstanding the provisions of the foregoing paragraph, THE STATE reserves the right to allow the use of such port installations to other ships for purposes different to those considered under this Agreement.  In this event, THE COMPANY will reserve the right to collect from such ships the dockage rights it deems convenient and it can object the use of port installations by these ships if such use damages or interferes in any manner with the activities developed by THE COMPANY, its Affiliates, contactors or subcontractors.  In any event THE COMPANY may also collect rights or reasonable rates, for the use of cranes, pipelines, storage deposits and other services, installations and facilities that THE COMPANY provides or supplies or puts at the disposition of said ships.

14.

To organize, establish and provide piloting, towing, and repair services, mobilization in boats and in general, services that assist navigation.  It is understood that this capacity does not imply the obligation to do so, and therefore, its exercises is a discretionary liberty of THE COMPANY.  These services shall be rendered by capable personnel selected by THE COMPANY, protected by the licenses that to that effect are granted by THE STATE to said personnel.  The cost of these services shall be financed by the duties and tariffs that to the effect are established by THE STATE.  No duties or tariffs in favor of THE STATE shall be applied when the ships are the property of THE COMPANY or ships rendering services to THE COMPANY, or ships providing services related to activities provided for in this Agreement.  When THE COMPANY does not wish to continue providing any of the services referred to in this clause, it shall notify THE STATE, at least six (6) months in advance.  In this event, THE STATE shall provide the service charging the general applicable rates established, and the same shall be applied to THE COMPANY as well as to those who render services to THE COMPANY in relation to the activities pertaining to this Agreement, in this Agreement always giving priority to THE COMPANY for the provision of such services and activities.  Notwithstanding the foregoing, it is understood that THE STATE shall offer THE COMPANY the most favorable tariff which at the time is offered or may be offered to other users.

15.

To design, establish, build, maintain, renew and extend works, installations, annexes, works and auxiliary services that have to do with maritime, air or land activities and also to design, build maintain, renew and expand breakwaters, ports, helicopters, landing strips, communication towers, roads, bridges, highways, boulevards, dredges, canals and docks related to the activities taken into consideration in this Agreement or with the development of said activities and make use of similar installations without any costs, provided that this use complies with the stipulations of the law and the regulations related to construction, health, security, occupational hygiene and environment protection, that are in force and are of general application.

16.

It is understood that irremovable installations and transportation equipment in the Concession Area are included and are an integral part of THE PROJECT, and that THE COMPANY uses in relation to the activities established in the present Agreement,  as well as pipelines, aqueducts, ducts, rails, terminals and other installations destined for the transportation of ore or minerals, cargo and goods in general, or activities pertaining to the operation of THE COMPANY, when they have been built or are to be built with the objective of exercising the right of way pertaining to THE COMPANY.





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|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 224





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- 7 -







17.

To manage and operate THE PROJECT and assign totally of partially the pertinent rights regarding a portion or stage or phase of the Project or its totality, according to the stipulations of Clause Nine of this Agreement.

18.

In addition to the aforementioned rights and authorizations, THE COMPANY shall have the right and the faculty to perform those acts or activities which it considers incidental or leading to the attainment of the objectives described in Clause One of this Agreement and to exercise the rights and powers provided by this Clause.



B.  OBLIGATIONS OF THE COMPANY



1.    The Preliminary Environmental Evaluation, Environment Examination and Environment Feasibility and its annexes, jointly named Environmental Report, required by the Environment Regulations of the Mining Sector, in force on the date of the enforcement of this Agreement, shall be an integral part of this Agreement and shall be of mandatory compliance to THE COMPANY. The General Direction of Mineral Resources shall evaluate the studies that form part of the Environmental Report in consultation with INRENARE.

2.

Before beginning the extraction period, THE COMPANY shall submit an Environment Feasibility Study specific to the Project Area in which the respective extradition will take place.  Said study shall be elaborated or revised by experts on the subject, previously approved by the General Direction of Mineral Resources of the Ministry of Commerce and Industries.  Said study shall be evaluated and its approval, modification or rejection shall be defined within a term of 45 days counted as of the date of its presentation to the General Direction of Mineral Resources. After the end of this term, if there is no statement from the General Direction of Mining Resources, the Environment Feasibility Study shall be considered approved so that THE COMPANY may proceed with the development of its activities according to the contents of said Study.

3.

At the beginning of each year, THE COMPANY shall submit a Work Plan comprising the projections and approximate costs for the respective year to the General Direction of Mineral Resources of the Ministry of Commerce and Industries.

4.

The COMPANY shall pay to THE STATE in cash, subject to the deductions established by Clause Thirteen of this Agreement, the following yearly surface canons per hectare on the Concession Area not defined as Area ï of the Project according to Clause Four of this Agreement.

Years

US$ per Hectare

1 to 2

0.50

3 to 4

1.00

5 and thereafter

1.50



5.

The COMPANY shall pay THE STATE in cash, subject to the deductions established by Clause Thirteen of this Agreement, surface canons per each hectare covering the zones identified as Areas(s) of the Project according to Clause Four of this Agreement, and annual royalties for extracted minerals according to the following table:



|        |          |            |               |        
|------- | -------- | ---------- | ------------- | -------
|Type of | First 5  | From the   | 11th year and | Royalty
|Mineral | years    | 6th to the | thereafter    |        
|        |          | 10th year  |               |        
|I       | B/. 0.75 | B/. 1.25   | B/. 2.00      | 2%     
|II      | 1.00     | 2.00       | 3.00          | 2%     
|III     | 1.00     | 2.00       | 3.00          | 4%     
|IV      | 1.00     | 2.50       | 3.50          | 2%     
|V       | 0.50     | 1.00       | 1.00          | 2%     
|VI      | 1.50     | 3.00       | 4.00          | 2%     







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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 225





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It is understood that the foregoing types of minerals shall have the following meanings:

Class

I:

Non-metallic minerals, excluding construction materials.

Class

II:

Metallic minerals except precious minerals.

Class

III:

Precious alluvial minerals

Class

IV:

Precious non-alluvial minerals

Class

V:

Energetic minerals, except hydrocarbons.

Class

VI:

Reserve minerals.



Surface canon payments shall be made in advanced annual payments and royalties at outstanding quarters in a sixty (60) day period started as of the outstanding date.  Surface canons shall be estimated based on the total surface held at the beginning of each year.

In this Clause, the royalty to be paid by THE COMPANY is expressed as a percentage of the Negotiable Net Production as defined in Clause Two of this Agreement.

6.

The COMPANY undertakes to annually present to the Ministry of Commerce and Industries the following detailed reports, and said Ministry shall be in charge of informing other governmental institutions and, as deemed convenient, to provide information on the case:

a)

The Operation Report, shall be part of the annual report, unless, through a previous sixty (60) day prior notice to THE COMPANY, the Ministry of Commerce and Industries requests that it be provided otherwise.  Said report shall include information regarding minerals extracted, transported and benefit rates applicable, the number and type of mining operations conducted during the period covered by the report, and the success of these operations, the procedures that have been applied to mining operations in accordance with good standards of operation, records of surveys, sampling, and topographical, geological and mineralogical data obtained, locations of drilling and study sites, maps, plans and geological sections and all other technical information obtained in the operation process, and data that has not been previously submitted, indicating whether minerals have been obtained in commercial quantities, and if this is the case, an estimate of the date of commencement of extraction and magnitude of planned operations.

b)

Report on employment and training, which will form part of the annual report, unless THE STATE requires it be delivered in another form.  This report shall consist of a statement covering the previous fiscal year regarding the employment of Panamanians and foreigners and the development of training programs.

Each report shall include an affidavit of THE COMPANY or of the person authorized to act on its behalf.

7.

THE COMPANY shall allow THE STATE to examine the technical reports related to THE PROJECT and to perform routine inspections of all Project Installations during working days and hours, it being understood that THE STATE assumes all expenses and risks that might be caused by the abovementioned inspections.

8.

THE COMPANY shall allow THE STATE to have access and use of port installations and the complementary installations that THE COMPANY sets up subject to the provisions of Clause Three, Point A, Items 13 and 14 of the Agreement.

9.

Before the beginning of extraction activities, THE COMPANY shall create and participate in the administration of a scholarship fund for the total amount of TWO HUNDRED AND FIFTY THOUSAND US DOLLARS (US$250,000.00) which will be used to finance studies and training courses or professional training for the inhabitants of the communities neighboring THE PROJECT, located in the Provinces of Cocle and Colon. Said inhabitants will be selected by a committee integrated by the communities and THE COMPANY.

10.

THE COMPANY undertakes to provide due maintenance to all the mining and infrastructure works and services of THE PROJECT, always complying with the standards and regulations of general application in force that pertain to occupational safety, health and construction.  Likewise, THE COMPANY may abandon THE PROJECT, partially or totally, when it deems it necessary provided that it complies with all the obligations stipulated in this Agreement.





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CLAUSE FOUR



Areas of the Project and Initial Investment



1.

Under the terms of this Agreement, THE COMPANY, its Affiliates, contractors and subcontractors may at any time perform works and evaluation studies, feasibility and mining exploration in all or in part of the Concession Area, seeking the commercial exploitation of THE PROJECT or any Area of the PROJECT.

2.

THE COMPANY and its Affiliates shall have the option to return to THE STATE any part, section or portion of the Concession Area, adjusting if necessary to the stipulations of Clause Seven of this Agreement on the protection of the environment. Furthermore THE COMPANY performs a mineralization evaluation of the Concession Area, and defines one or more Areas of the Project. Once the Area of the Project has been defined, THE COMPANY shall initiate a feasibility study (Feasibility Study) said Project Area, which shall be submitted to the Ministry of Commerce and Industries.  THE COMPANY may divide the Concession Area into a plural Item of development zones as it deems convenient and may designate one or more of these zones as Project Area, it being understood that they may have any form or configuration.  Anyhow, THE COMPANY must submit to the Ministry of Commerce and Industries a feasibility study regarding any of the Areas of the Concession defined as Project Area, no later than 18 months following the date of enactment of the Law by which this Agreement is approved, and said study shall comply with the requirements established in Annex II which is an integral part of this Agreement.

3.

Within a period of no more than sixty (60) months after the enforcement of this Agreement, THE COMPANY shall invest in exploration, infrastructure, roads and a feasibility study no less than TEN MILLION US (US$10,000,000.00)



CLAUSE FIVE



Life of the Agreement



This Agreement shall have a twenty (20) year life term as of the date of the enforcement of the law of approval.  If THE COMPANY has substantially and reasonably complied with the obligations undertaken in this Agreement, and if its termination by mutual agreement has not occurred before such term has elapsed, THE COMPANY can request and obtain up to two (2) consecutive renewals of the Agreement, it being understood that each one of  these renewals shall have a term of twenty (20) years. Taking into consideration the request submitted to the Ministry of Commerce and Industries within one hundred and twenty (120) days prior to the subsequent twenty (20) days at the end of each twenty (20) years term, the Ministry of Commerce and Industries shall grant each one of the respective renewals related to this Clause, it being understood that these renewals are granted if the Ministry of Commerce and Industries does not make a statement on them within a period or sixty (60) days after the mentioned request has been presented to the Ministry of Commerce and Industries.

At the end of this Agreement, including its renewals, THE COMPANY may leave at its properties or freely remove from them, but with the due adherence to this Agreement and of the legal provisions and regulations of the Republic of Panama that are enforceable on the subject of demolitions, development and sanitation, all articles of its property, installations, improvements, accessories, annexes, equipment and all other property of whichever nature, be it private property or totally or partially connected to the real estate of THE COMPANY, without THE COMPANY having  to make any payment whatsoever to THE STATE due to such withdrawal or removal. Nevertheless, in the event of such occurrence, all docks, landfills, maritime and land works and installations built by THE COMPANY on lands or other assets property of THE STATE, shall become property of THE STATE at no cost.



CLAUSE SIX



Development and Investment Commitment





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In order for THE COMPANY to maintain the fiscal benefits that THE STATE grants through this Agreement and as a consideration of THE COMPANY towards THE STATE so that the latter will subscribe this Agreement, THE COMPANY undertakes the following:

1.

THE COMPANY, its AFFILIATES, Contractors or Subcontractors shall carry out a FEASIBILITY STUDY for the development of the copper mine in the CONCESSION AREA and for the processing of ore into concentrate. The cost of said FEASIBILITY STUDY shall not be less than SEVEN MILLION US DOLLARS (US$7,000,000.00), including the amounts that have been invested in said study before the date of this Agreement.  The preparation of said FEASIBILITY STUDY must adjust to the guidelines provided in Annex II of this Agreement. THE COMPANY undertakes to deliver a copy of the FEASIBILITY STUDY to the Ministry of Commerce and Industries in 18 months following the date of enactment of the law approving the present Agreement.   Likewise, THE COMPANY shall provide said Ministry with an Affidavit detailing the amounts invested in the preparation of said FEASIBILITY STUDY.

2.

In the three years following the date of delivery of the FEASIBILITY STUDY related to the foregoing numeral, to the Ministry of Commerce and Industries, THE COMPANY shall start the development of the copper mine and the construction of the necessary infrastructure for the operation of said mine pursuant to the program provided in Annex II of this Agreement. Notwithstanding the foregoing, THE COMPANY may delay the beginning of the development of the mine and of the construction of the corresponding infrastructure and, therefore, the period of time equivalent to the months elapsed since the delivery date of the aforementioned FEASIBILITY STUDY during which the average price of the pound of refined copper, according to quotes from London Metal Exchange is less than the amount resulting from the addition of (a) the price of copper used in the cited Feasibility Study showing a rate of return  that will permit obtaining the necessary financing in the international capital markets plus (b) five (5%) percent of this.

PARAGRAPH:

The delay due to the low prices mentioned in numeral 2 of this Clause may not be extended for more than five (5) years as of the date of the expiration of the original three (3) year term stipulated in this clause, without THE COMPANY notifying THE STATE of its decision to proceed with the corresponding investment for the development and construction of the aforementioned infrastructure and the initiation of said works.  If the delay was to take more than five (5) years, this Agreement shall be annulled and the Concession expired.  During the delay period, THE COMPANY can formulate proposals for the development of THE PROJECT in terms and conditions others than those agreed upon under this Agreement, and THE STATE agrees to consider in good faith said proposals.  Nevertheless, for the two (2) years following the expiration of the abovementioned five (5) year term, THE COMPANY shall enjoy the first option for the development of THE PROJECT in the event  that THE STATE receives from any third party (the Third Bidder) an offer (the Offer) for that purpose. If THE STATE receives an Offer that it considers accepting, it must inform and notify THE COMPANY in written, and the later will have ninety (90) days as of the date of the delivery of said communication to make us of its first option to perform the development of THE PROJET, in terms at least as advantageous for THE STATE as those proposed in said Offer.  If THE COMPANY communicates to THE STATE its decision not to exercise said first option or ceases to exercise the same after the ninety (90) days of the aforementioned communication and notification in writing, THE STATE may negotiate the agreement or agreements of the concession with the respective Third Bidder, provided that it (they) do not reflect a set of rights and obligations that are more  advantageous for the Third Bidder than those contained in the respective offer.  This first option procedure shall apply to any Offer presented by a Third Bidder during the aforementioned two year period, in which THE COMPANY has not waived or ceased to exercise its first option.

3.

Before the beginning of the commercial production of copper, THE COMPANY jointly with its Affiliates, contractors and sub-contractors shall comply with the following commitments:

(a)

Invest no less than FOUR HUNDRED MILLION US DOLLARS (USS$400,000,000.00) in the development and construction of the mine and infrastructure in agreement with the provisions of the Feasibility Study mentioned above in Item 1 of this Clause on in any other Feasibility Study which is prepared later on or its modifications, approved by THE COMPANY, provided that copies of said study or modifications have been delivered to the Ministry of Commerce and Industries.





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(b)

Hire no less than 700 Panamanian workers for the development and the construction of the mine, preferably using labor from the Municipality or Municipalities where the Concession Area is located.

4.

Once a sustained production of copper concentrate in the Concession Area at the rates forecasted in the Feasibility Study is obtained, THE COMPANY, its Affiliates, contractors and subcontractors shall hire for the operation of THE PROJECT no less than 300 permanent Panamanian workers, it being understood that the total Item of said workers may fluctuate as a result of the changes in the market conditions and technological innovations.

5.

For the effects of what is provided in Item 2 of this Clause, the average adjusted price of refined copper in the London Metal Exchange for a determined month shall be equal to the average of the closing prices for one pound of refined copper on each day of said month during which the Exchange is open for the performance of mercantile activities, derived from the quotes published by said Exchange.

6.

In addition to any delays occurring in the development of the mine, permitted by Clause Twenty of this Agreement, THE COMPANY, in consultation with the Ministry of Commerce and Industries, may delay the beginning of said development or the termination thereof during proven economic instability periods in the country or at the international level causing unforeseen increase in the cost of materials, supplies or labor greater than those foreseen in the Feasibility Study referred to  in numeral one of this Clause, or when said proven instability periods does not permit obtaining of financing for THE PROJECT in the international financial markets under normal terms and conditions.  THE COMPANY shall immediately notify the Ministry of Commerce and Industries in the event that any of these events occurs and shall consult with said Ministry while the respective instability period lasts, with the purpose of determining if conditions have changed or if a modification to the Feasibility Study is necessary with the purpose of being able to start the development or the continuation of said development.



CLAUSE SEVEN



Environment Protection



The COMPANY undertakes to carry out its activities maintaining at all times an adequate protection of the environment in the Concession Area, complying with the legal dispositions and regulations of general application in force in the Republic of Panama.

The COMPANY shall be accountable for the damages caused to the environment due to its fault, fraud or negligence in the performance of its operations, and to that end THE COMPANY shall constitute a bond in favor of THE STATE in the amount of THREE MILLION US DOLLARS (US$3,000,000.00), in cash, cashiers check, insurance company policy, promissory note issued by a financial institution, letter of credit issued by a local bank, bank guaranties, or by any other means permitted by the laws in force.  Said bond shall be constituted at the beginning of the construction of the mine, and its totality or the portion not claimed by THE STATE shall be canceled or returned to THE COMPANY, as the case may be, no later than one year after the end of this Agreement.  The bond shall be issued to the order of the Ministry of Commerce and Industries and the Office of the General Comptroller of the Republic of Panama.  The amount of this bond does not purport to establish a limit to the liability of THE COMPANY.

In addition to the restoration obligations provided for in the Mineral Resources Code, THE COMPANY undertakes to finance a Reforestation Program for those areas of the concession in which THE COMPANY has caused any kind of deforestation, subject to the degree of deterioration caused to nature.  The program shall be carried out using species of trees native to the zone neighboring the Concession Area in consultation with the respective authorities, and with the possibility





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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 229





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- 12 -





of planting species of a greater advantage for the population and the environment.



CLAUSE EIGHT



Hiring of Experts



THE COMPANY, its Affiliates, contractors and sub-contractors shall give preference to hiring national labor.  However, foreign personnel may be hired provided that the total Item of hired foreigners does not surpass twenty-five per cent (25%) of the total labor force of THE PROJECT.

Notwithstanding the foregoing, as from the enforcement of this Agreement and during the first five (5) years as of the beginning of the construction works referred to in this Agreement, a higher percentage of foreign specialists or technicians or workers with experience in the mining sector shall be allowed taking into consideration the requirements of THE COMPANY, its Affiliates, contractors and subcontractors, to whom THE STATE shall issue the working permits, licenses and visas required to that effect.

The COMPANY undertakes to comply with the transference of technology to Panamanian personnel in the event of hiring foreigners.

For the effects of the application of the aforementioned percentages, the totality of the labor force of THE PROJECT shall be taken into account, which will consist of the workers hired by THE COMPANY, its Affiliates, contractors and sub-contractors.



CLAUSE NINE



Contract Assignment



THE COMPANY can totally or partially assign or transfer this Agreement without any alteration of its terms or conditions, as well as the totality or part of its Concession Area, provided that the assignee counts with the technical and financial capability, which could be a Panamanian corporation or a foreign corporation duly registered and empowered to perform business in the Republic of Panama.  Such assignment shall grant the assignee all the rights and obligations that THE COMPANY undertakes with this Agreement.

When the assignment or transfer mentioned in this Clause is on behalf of an Affiliate of THE COMPANY, the only requirement which THE COMPANY shall have to comply with to effect such assignment or transfer shall be to communicate it in written to the Ministry of Commerce and industries fifteen (15) days in advance. Once said notice has been provided the assignment or transfer shall be effective and the Ministry of Commerce and Industries shall issue an official recognition certifying such assignment or transfer within the next thirty (30) days.

When the assignment or transfer is to be made on behalf of third parties that are not Affiliates of THE COMPANY, prior authorization from the Ministry of Commerce and Industries is required, except in the cases referred to in the last paragraph of this Clause.  In the event of assignments or transfers to third parties, THE COMPANY must notify the the Ministry of Commerce and Industries which should make a statement within the thirty (30) days following the date of the respective notice.  If after the above mentioned thirty (30) days the Ministry of Commerce and Industries has not made a statement in relation to said assignment or transfer, it shall be considered that there is no objection to such assignment or transfer and that it has been approved, it being understood that the Ministry of Commerce and Industries shall certify said transfer or assignment.

In the event of total or partial assignment of the present Agreement, the assignee shall assume all the rights and obligations arising thereof, it being understood that THE COMPANY shall be free from any obligation resulting from facts or acts that take place after the date of the assignment with regards to the assigned, and in the case of partial assignment or transfer, the Assignee shall assume the corresponding proportion deriving from the contracting rights and obligations as stipulated in the respective assignment or transfer agreement.

The assignment or transfer, that it be it total or partial, shall not generate taxes, contributions, fees, nor liens of any nature, in favor of THE STATE.

It is understood that the mining concessions subject to this Contract may be totally or partially encumbered, with prior notification to the Ministry of Commerce and Industries, provided that the creditor is a financial institution of known and proved stability.  Additionally, notwithstanding the foregoing, the mortgagee may totally or partially assume the encumbered concession, and may in turn transfer or assign it to a third party, as long as any such third party is a Panamanian corporation or a foreign corporation duly registered in the Republic of Panama directly or through a subsidiary, with a renown technical and financial capability with a net consolidated shareholders equity which shall not be lower than at least THREE HUNDRED MILLION US DOLLARS (US$300,000,000.00), including its Affiliates.  Prior notification to the Ministry of Commerce and Industries will be satisfactory for the said transfer or assignment to become effective.





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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 230





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CLAUSE TEN



Energy



The COMPANY, directly or through third parties, may generate electric power for its own use and for that purpose it may build and operate hydroelectric installations and thermal plants, as well as other means of generating power both inside or outside the Concession Area, as THE COMPANY deems necessary, to develop the activities provided in this Agreement.  It is understood that THE COMPANY may sell and commercialize any surplus electric energy, as long as it complies with the rules and provisions in force.



CLAUSE ELEVEN



Obligations of the State



The STATE shall have the following obligations:

A.

To grant and procure THE COMPANY with the full, uninterrupted and pacific use of the Concession Area which is defined and described in Clause Two and in Annex 1 which are an integral part of the present Agreement.

B.

If THE COMPANY so requires, to have inside or outside the Concession Area, the services of firemen, police, customs, migration, health and any other public service that are not provided by THE STATE.  It is understood that the additional costs of these services as well as the necessary infrastructure to provide them shall be to the account of the THE COMPANY.  It is also understood that the necessary private property necessary to provide these services for which costs are on the account of THE COMPANY shall be the property of THE COMPANY.

C.

To provide THE COMPANY the licenses or permits, approvals and authorizations required by THE STATE or any of its departments, autonomous or semi-autonomous institutions and political subdivisions, in relation to the activities developed by THE COMPANY in compliance with this Agreement, it being understood that such licenses, authorization and approvals shall be granted at the general application tariffs in force prior compliance with the corresponding requirements as established by law.



CLAUSE TWELVE



Fiscal Exemptions



The STATE confers THE COMPANY and its Affiliates (and in the cases expressly mentioned, to its contractors and subcontractors), the following fiscal exemptions during the life of this Agreement:

A.

Exemption for THE COMPANY, its Affiliates, contractors and subcontractors, of any rights, or import tax, contribution, charges, consular rights, lien, duties or any other tax or contribution, or any denomination or class that are imposed on the introduction and import of equipment, machinery, materials, parts, diesel and Bunker C and other petroleum by-products, it is understood that they shall cause, nevertheless, when applicable, the protection tariff stipulated in Clause Twenty-two of Agreement No. 35f of September 15, 1992, approved through Law No. 31 of December 31, 1992, and regulated by Cabinet Decree No. 38 of September 9, 1992; raw material, lubricants, necessary work vehicles used for the efficient and economic development of the operations covered by this Agreement, ships, airships, appliances, spare parts and accessories exclusively destined  for the construction, development, operation, maintenance, infrastructure and activities of THE PROJECT.  It is understood by the parties that the exempted goods pursuant to this numeral shall only be used for the development of THE PROJECT.  Said goods shall not be sold or transferred to anybody without previous written authorization from THE STATE, but having elapsed at least two (2) years from the purchase date and always subject to the payment of the respective tax which shall be estimated based on their value at the time of the sale or transfer.  It is understood, however, that the goods may be transferred to any Affiliate of THE COMPANY, or any other natural person or body corporate benefiting from the introduction tax exemption that THE COMPANY has, complying with the legal provisions in force.





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In order to be covered by the exemptions of the Import Tax mentioned in Point  A of this Clause, THE COMPANY, it Affiliates, contractors and subcontractors shall notify the General Directorate of Mineral Resources of The Ministry of Commerce and Industries its intention of introducing the exonerated assets or product, and said Direction shall deliver, in a maximum period of thirty (30) days after receiving the notice, a document certifying the applicant is has the right to the respective exemption.  Said certification shall be accepted by the General Customs Direction of the Ministry of Finance and Treasury which shall give speed to the proceedings of the corresponding introduction of or duly exempted import

B.

Total transfer tax exemption for THE COMPANY, its affiliates, contractors and sub-contractors of movable goods on minerals, equipment, machinery, material, parts, accessories, raw material, cranes, work vehicle, ships, airships, appliances, diesel and lubricants and other petroleum derivatives, cargo and containers, destined for the operation, construction or maintenance of THE PROJECT, as well as those that are necessary for the development of the activities performed by THE COMPANY, or carried out for its benefit, in the Concession Area pursuant to what is established in this Agreement.

The exempted goods shall be used in activities related to THE PROJECT, and cannot  be sold nor transferred, until after two (2) years have elapsed as from the purchase date and always subject to the payment of the respective tax, which shall be estimated based at the value of the good at the moment of the sale or transfer.

It is understood that the goods may be transferred to an Affiliate of THE COMPANY, according to what is defined in this Agreement, or to any other natural person or body corporate that benefits from the introduction tax exemption that THE COMPANY has without any type of restrictions other than the previous notification of the transfer to the authorities of the Ministry of Commerce and Industries, and that these transfers shall not be subject to the payment of any type of tax or duties in favor of THE STATE.

C.

Tax exemption on income tax, applicable to remittances or transferences abroad, made to pay commissions, loans, royalties, returns, professional or administrative advice performed outside the national territory, discounts, payments referred to in Clause Sixteen of the Agreement, or for any other concept related to the activities of this Agreement.

D.

Exemption from the payment of duties pertaining to the cargo of mineral products and dockage of containers, stowage, break bulk, handling, sojourn operations, which may be applicable inside the port installations of THE COMPANY.

E.

Exemption from any tax, lien or contribution related to non-distributed profits of THE COMPANY and its Affiliates in any fiscal year.

F.

Exemption from the obligation to pay premiums and offers for exploitation rights of minerals in the Concession Area.



CLAUSE THIRTEEN



Fiscal Deductions



1.

The COMPANY and its Affiliates shall have the right to include as operation expenses those that are deductibles, pursuant to the Income Tax laws in force.  Besides surface canons, royalties, taxes and depreciation charges, the following items may be deducted as operation expenses:

a)

Annual deduction in concept of exhaustion for each one of the mineral deposits pursuant to the stipulations of Point b, numeral 6 of this Clause.





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b)

The cost of excavations of subsidence, prospecting and galleries, open-cut excavations, perforation of wells and other similar operations,  that have been performed without finding minerals in amounts that would merit a commercial exploitation.

c)

Expenses for services and supplies, as well as other expenses made in relation to preliminary geological investigations, mining explorations, pre-extraction operations,  as well as expenses made for subsidence, prospecting and gallery excavations, open-cut excavations, perforation of wells and other similar operations performed with the purpose of extracting minerals.

Expenses for items for which deductions are allowed because of depreciation or for capital amortization cannot be included as operation costs.

2.

To determine operation deficits during a fiscal term, THE COMPANY shall deduct from the gross income attributable to mining operations all deductible amounts authorized by the Mineral Resources Code, this Agreement and other applicable laws, with the exception of deficits that have been differed from a previous fiscal year.

3.

Taxes, rights, duties, charges and other contributions and amounts paid to THE STATE, shall be considered as general deductible expenses, as well as inherent expenses, incurred in relation with the education or training of Panamanian citizens according to this Agreement. Likewise, municipal taxes payable by THE COMPANY to the municipalities of THE STATE shall be considered as deductible general expenses, to the point in which they have not been credited against the income tax payable by THE COMPANY, as stipulated in Point  (L), numeral (I) of Clause Fourteen of this Agreement.

4.

THE COMPANY shall establish depreciation accounts for depreciated assets that it acquires during the life of this Agreement, which shall be segregated according to the following categories of assets:



CATEGORY A:  Building and other permanent improvements built on lands, parking areas, railroads, tunnels, dams, bridges and roads, waste deposits, port installations, airport installations and landing strips.



CATEGORY B:  Other fixed assets, including machinery and equipment located on any real estate for its better use and other real estate by destination (excluding mobile equipment, ships and barges), elevators, electrical and plumbing systems, fixed structures and installations for the generation and transmission of electric power.



CATEGORY C:  Mobile equipment, ships and barges and mining equipment of any type or nature, including, but without limitation, tractors, buses, railroad engines and wagons, airplanes, loading and unloading facilities, cargo transportation equipment, any other type of equipment and mobile machinery not included in Category D below, telephone and general communication systems.



CATEGORY D:  Laboratory equipment, drilling equipment, assets used for the test or sampling and other of technological nature, including computer equipment, accessories and programs.



CATEGORY E:  Other capital assets that are not included in any other previously mentioned category.

The cost of each depreciated asset that the Company acquires, for which the Company will use the benefit of the depreciation, shall be included in the account corresponding to the Category towhere it belongs and, for each fiscal year, when calculating the respective taxable income, to THE COMPANY may use the depreciation for amounts equal to the percentages Itemed hereinafter, applied to the accumulated of (a) the original cost of the assets already included in the respective Categories at the beginning of the corresponding fiscal year and (b) fifty per cent (50%) of the cost of the assets added to said Categories during the referred fiscal year.

Category A:

7%

Category B:

15%

Category C:

25%

Category D:

33%

Category E:

20%





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However, it is understood that in regards to any of said Categories, amounts greater than the surplus resulting from subtracting the accumulated from the original acquisition cost of the assets included in the respective Category, the total amount of the depreciation previously deducted on said acquisition cost may not be deducted in concept of depreciation.

In any fiscal year in which the maximum deduction amount for permissible deduction in relation to assets under any Category is not used for determining the net accruable income corresponding to said fiscal year, the unused balance may be indefinitely deferred for its total or partial deduction in any future fiscal year, jointly with any other amount deductible in said future fiscal year, it being understood however that deductions for depreciation in a given fiscal year, in relation to assets under any Category, shall not exceed fifty per cent (50%) of the accumulated of the acquisition cost of the assets included in the respective Category at the end of the respective fiscal year, and it shall also be limited as stipulated in the paragraph immediately preceding this Item 4.

5.

Losses suffered by THE COMPANY in operations according to income tax estimates of the year in course and of previous years may be differed to the following terms, as long as they have not been deducted, but they shall not be deferred for more than five (5) years, counted as of the fiscal year during which they were originated. Once these five (5) years have elapsed, those losses cannot be deductible nor shall they cause any refund from the National Treasury.

6.

Among other deductions allowed the Mineral Resources Code at the date of the enforcement of this Agreement, THE COMPANY may make following deductions:

a)

Expenses proved as duly incurred during a fiscal year in mining explorations related to the concession may be deducted from the surface canons payable to the Nation for that fiscal term to a maximum of seventy-five percent (75%)  of the total amount of said surface canons.  When these have been paid before the deduction authorization, THE COMPANY shall be allowed to credit the amounts already paid to the payment of surface canons payable in the following fiscal term.  There shall not be cash reimbursements for this concept.

b)

In the exploitation of mines, quarries and other non-renewable natural resource, THE COMPANY may include as operation expenses for calculation of taxable net income purposes of each fiscal year, deductions for depletion in function of the produced or extracted units. To that end, the probable content of such deposits as of the first day of the fiscal year              shall be calculated and added to units produced in the said year.  The relation of the previous amount and the units produced during the year, produce the rate of amortization for that year, and this rate shall be percentually applied to the value of the asset to obtain the deduction for depletion.  This same operation shall be made in the following years until the mineral deposit is totally depleted.

For the purpose of this point b), the preceding paragraph will  be applied according to the following formula (as per their initials in Spanish):

DA

= Deduction due to Depletion

TA

= Depletion Percentage

RMI

= Mineral Reserves at Beginning of the Period

UP

= Units Extracted or Produced during the Period

RA

= Additional Units or Reserves during the Period

RMf

= Mineral Reserves at the End of Year

VA

= Asset Value

Pf

= Mean Value of the quarterly royalty statements

PR

= Recovery Percentage

TM

= Metric Tons

LEY (GRADE) = Metal contents of a rock or ore.



FORMULA TO BE APPLIED

Step 1:

TA = RMI + UP + RA

UP

Step 2:

RMf = RMI  UP + RA

Step 3:

VA = (RMf x UPf x RA) X PR

Step 4:

DA = TA x VA





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The value of the probable content of the deposit and the new confirmed referred to in this Point shall be certified by the General Direction of Mineral Resources of The Ministry of Commerce and Industries.

The deduction for mining amortization may not exceed fifty percent (50%) of the net income of THE COMPANY, after deducting all operation expenses from the gross income for the extraction, with the exception of the permitted mining amortization, it being understood that, for the calculation of net income to which this paragraph bears relation to, such operation expenses do not include the interests payable by THE COMPANY, nor the asset depreciation corresponding to the respective fiscal period.  This limitation shall be applied separately to each place or deposit where minerals are extracted or jointly to all deposits which are exploited by THE COMPANY in the same mill or grinder, as THE COMPANY deems convenient, and the gross extraction income and operation expenses shall be assigned to each place or jointly, as the case may be, according to the accepted accounting standards.

c)

Deductions for mining amortization shall be estimated independently for each one of the places where the mineral is extracted and according to the type of mineral.



Together with the sworn income tax statement for each fiscal term THE COMPANY shall prepare and present a chart summarizing the calculations made for mining amortization for each one of the mentioned sites.



CLAUSE FOURTEEN



Contributions in favor of THE STATE



1.

Without detriment to the exemptions or privileges that THE STATE grants to THE COMPANY and its Affiliates pursuant to the stipulations of this Agreement, THE COMPANY and its Affiliates shall pay to THE STATE the following taxes, rights, duties, contributions, charges or impositions mentioned as follows:

A.

Income Tax derived from the profits obtained by THE COMPANY, subject to the provisions of this Agreement.

B.

The following taxes, rights and registration fees:

(1) fifty percent (50%) of taxes, rights or duties caused by the registration of property titles that THE COMPANY or its Affiliates may constitute on their assets or rights;

(2) fifty percent (50%) of taxes, rights or duties caused by the registration of encumbrances that THE COMPANY of its Affiliates may constitute on their assets or rights;

(3) fifty percent (50%) of taxes, rights or dutiescaused by the registration of financial leasing contracts that THE COMPANY or its Affiliates may subscribe;

(4) Other rights or registration fees caused at the Public Registry.

C.

Notary fees

D.

A five percent (5%) tax on the transference of movable goods applied to the import or transference of movable goods, according to the legislation in force at the date of the enforcement of this Agreement, when it does not pertain to those mentioned in in which this Contract become in force, when the same are not mentioned in (A) and (B) of Clause Twelve, which will always be  exempted from said tax.

E.

Fifty percent (50%) of stamp taxes caused according to the legislation in force.

F.

Rights and duties for the use of public services provided that THE STATE or any of its subdivisions or dependencies provide to THE COMPANY and which are not those which THE COMPANY receives exoneration according to the stipulations of this Agreement.  In any event, rights and duties shall be payable at the current rates of general application.

G.

Contributions and employer quotas to Social Security,  professional risks premiums and others employer contributions of a social nature based on the employee payroll of THE COMPANY, which shall be payable at the current rates or tariffs of general application.

H.

Property Tax according to the legislation and tariffs of general application in force.  Notwithstanding the foregoing, Property Tax shall be paid up to a maximum of ONE HUNDRED THOUSAND US DOLLARS (US$100,000.00) per year, provided that the assets acquired or built by THE COMPANY or its Affiliates are to be used for the development of THE PROJECT and are located in a province of the Republic where THE COMPANY or its Affiliates would have invested not less than TEN MILLION US DOLLARS (US$10,000,000.00) in mineral processing plants, ports or transport and cargo handling installations.





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I.

Industrial or commercial license tax up to maximum of TWENTY THOUSAND US DOLLARS (US$20,000.00) per year.

J.

Surface canons and royalties, subject to the stipulations of Clause Three, point B, what items 4 and 5 of this Agreement.

K.

Fifteen percent (15-%) of the benefits received by THE STATE in concept of surface canons and royalties which THE COMPANY has to pay hereunder shall correspond to the municipality(ies) within which the CONCESSION AREA is located, amount which shall be directly paid by THE COMPANY to the corresponding municipality or municipalities.  THE STATE, through its pertinent entity, shall verify compliance with said obligation.

L.

Municipal Taxes.  The total of Municipal Taxes that are paid to whichever municipalities shall not exceed the sum to ONE HUNDRED THOUSAND US DOLLARS (US$100,000.00) per year.  Any additional amount which THE COMPANY must pay in concept of Municipal Taxes, above the aforementioned sums, shall be deductible by THE COMPANY as a fiscal credit against its Income Tax payment for the current year.  The maximum amount of the payable sum in concept of Municipal Taxes shall be adjusted in proportion to the variations on the wholesale price index of the total manufactures of the Office of the Comptroller General of the Republic of Panama for two-year periods.  The first adjustment shall be applied upon the fifth year of life of this Agreement, taking into account the changes occurred in the aforementioned price index during the two immediately previous years.

Thereafter, the successive adjustments shall be made at the end of each two-year period.  In the event that said index was not available so that the adjustment provided in this Clause may not be made, THE STATE and THE COMPANY, by mutual agreement, shall apply another index or adjustment method.

M.

Any other taxes, rights, liens, duties, contributions, charges or impositions established or to be established in the future, and that are different to those for which THE COMPANY receives exemptions derived from this Agreement, and as long they are of general application, and that they are not contrary to nor exceed those established in the present Contract in this Agreement and in the legislation in force on the date on which this Agreement is enforced.  It is understood that taxes, rights, liens, duties, contributions, charges and impositions that are only applied to a specific industry or to a determined activity shall not be considered as of general application.

II.

Without detriment to what is previously provided for in this Clause and in other provisions of this Agreement and with the sole exception of the respective surface canons and royalties, as long as THE COMPANY has either not finished repaying the debt which THE COMPANY or its Affiliates acquire for the construction and development of the project, THE COMPANY, and its Affiliates shall be totally exempted from the payment of any type of tax, rights, duties, charges, liens, contribution or tariff that may be caused due to any reason related to the development of THE PROJECT, with the exception of municipal taxes.



CLAUSE FIFTEEN



Direct Investment and Infrastructure



The COMPANY, its Affiliates, contractors and sub-contractors shall have the right to the use of a fiscal credit which may be used to pay to THE STATE those taxes , duties, charges, contributions and rights established by the law in force and this Agreement.  Said fiscal credit shall be equal to the amounts invested by THE COMPANY its Affiliates, contractors and sub-contractors during the life of this Agreement in infrastructure pertaining to THE PROJECT of the following types or categories.

A.

Infrastructure and transportation equipment, including but without being limited to roads, railroads, bridges, energy generating plants, electric power transmission lines and telecommunication transmission lines.

B.

Facilities and installations for transportation, storage, treatment and removal of water, including, canals, dikes, aqueducts, sewage systems piping, tubing, dams, storage tanks and reservoir dams.





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C.

Maritime installations, ports, docks, piers, breakwaters, mobile and fixed installations for loading and unloading ships, facilities for loading of waste and cargo of barges.

D.

Housing or lodging for workers.

E.

Social type infrastructure, including hospitals and first aid stations, structures for social and recreational use of the community, streets, sidewalks, and ornamentation, built with prior authorization from THE STATE.

Paragraph 1:  The fiscal credit due to direct investment may be used in various fiscal years until covering 100% of the investment.

Paragraph 2:  In order to receive the benefit referred to in this Clause,, the corporation that has made an Investment shall present a request to the Ministry of Finance and Treasury, so that the later will to certify the investment in the corresponding fiscal year.

Adjoining this request should be, among others, the following documents::

1.

Copy of the work contracts, if any, regarding the pertinent investment.

2.

Payment vouchers of all costs and expenses performed.

3.

Copy of the plans of the work.

4.

Construction and occupation permits, and

5.

Certification issued by a Certified Public Accountant evidencing the amount of the investment.

Paragraph 3:  The General Directorate of Revenues of the Ministry of Finance and Treasury, previous analysis of the documents submitted by the corporation that executed the investment and inspection of the works built, shall issue, with due celerity, the corresponding fiscal credit.

Paragraph 4:  There is no possibility of receiving a credit in relation to cost of depreciable assets, in spite of the fact that they are part of the previously described infrastructure, if THE COMPANY or its AFFILIATES, contractors, or sub-contractors, according to the case, have decided to include the cost of said assets in the depreciation accounts established according to Clause Thirteen of this Agreement.

Paragraph 5:  In any fiscal year THE COMPANY, its AFFILIATES, contractors or sub-contractors may use the portion that it determines of the balance of the credits derived from investments in infrastructure not used in previous years, as a credit for the payment of those taxes that THE COMPANY selects, it being understood that said credit shall not be applied with the purpose of decreasing the amounts to be paid in concept of taxes or royalties in any year to less than half of what the Company would be otherwise obliged to pay.

Paragraph 6:  The General Direction of Revenues will maintain a registry of the amount of fiscal credits granted due to this Clause, as well as its use, assignment and favorable balances thereof.



CLAUSE SIXTEEN



Taxes on Moneylenders and Shareholders of THE COMPANY



Natural persons or body corporates and international agencies, that grant or guarantee financing in any manner or form acknowledged by THE COMPANY, or its Affiliates, contractors and subcontractors for the construction, operation and development of THE PROJECT, or any part thereof, shall be exempted from any type of taxes, rights, duties, charges, liens, contribution and imposition, including Income Tax, that might be caused by interest earned by said loans, discounts, commissions or other payable financial charges due to loans or guarantees, whatever the origin of the funds of those loans or guarantees, and whichever the development phase of THE PROJECT object of the respective credit or the manner in which as said taxes are charged or collected, it being understood that THE COMPANY shall not be obliged to perform retentions of any nature regarding aforementioned financing.  These credits shall not be subject to the provisions established in Article 2 of  Law 4, of 1935.



CLAUSE SEVENTEEN



Monetary Matters



The STATE shall allow THE COMPANY and its Affiliates to maintain amounts abroad in any currency and freely perform remittances of any nature including but without limited to remittances to repay advances and investments, to pay dividends, interests and profits coming from or related to THE PROJECT, exempted from any tax, and all retention impositions and obligations during the life of this Agreement.  Likewise THE COMPANY and its Affiliates may keep bank accounts outside the Republic of Panama.





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CLAUSE EIGHTEEN



Registry of Concessions, Rights and Privileges



The STATE has issued and shall issue in favor of THE COMPANY, the adequate documents evidencing the specific concessions, rights and privileges arising from this Agreement and their assignments or transfers, of the same, and at all times shall comply with the administrative and legal requirements, in order for THE COMPANY to develop its activities, exercise its rights and enjoy its privileges, without the outcome of any interference nor obstacles which would prevent its full enjoyment.  Only for advertising purposes, but without this being understood as a requirement or formality that affects the life or the effectiveness of the Concession, THE COMPANY may register free of charges the Concession under this Agreement in the Mining Registry of the General Direction of Mineral Resources.



CLAUSE NINETEEN



Notices



Notices and additional communications established by the provisions of this Agreement,   shall be done in writing and be delivered personally at the following indicated addresses, according to the case, or sent to the address that the pertinent party indicates to the other by means of a written notice, with acknowledge of receipt, unless the parties agree otherwise.

1)

Ministry of Commerce and Industries

Edificio de la Loteria, Piso No. 21

Calle entre Avenida Cuba y Avenida Peru

Telephone:

227-4177

Fax:

227-5604



2)

Minera Petaquilla, S. A.

Swiss Bank Tower, Piso 13

Urbanizacion Marbella

Telephone: 223-5341

Fax:

223-3032



3)

Geo-Recursos Internacional, S. A.

Banco General Tower, Piso 45

Urbanización Marbella

Telephone:   223-5488

Fax:

223-8425



4)

Adrian Resources, S. A.

Banco General Tower, Piso 25

Urbanización Marbella

Telephone: 223-5488

Fax:

223-8425



CLAUSE TWENTY



Acts of God or Force Majeure



For the purposes of this Agreement,  the following events or circumstances among others, shall be considered as Acts of God:  epidemics, earthquakes, landslides, storms or other adverse meteorological conditions, explosions, fires, lightning, as well as any other cause,  that they are or not of the nature described, that is unpredictable or that is beyond the control of the affected party, and that to the point  that it delays, restricts or prevents the timely action of the affected party.





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For the purposes of this Agreement,  the following events, acts or new circumstances, among others, shall be understood as force majeure, revolutions, insurrections, civil uprisings, blockages, commotions, embargoes, strikes and other labor conflicts which are not attributable to fault or negligence of the corresponding employer or of THE COMPANY or Affiliates or contractors or subcontractors,  orders or instructions of any Government in law or in fact, or entity or subdivision of the same, the price of minerals in the international market to a degree such that it renders the exploitation of THE PROJECT economically non-profitable, delay in the delivery of machinery, faults of the installations or machinery, wherever they happen, not attributable to the affected party, that adversely affects the operation of THE PROJECT and, in general, any event, occurrence or circumstance that is unpredictable or that out of the control of the affected party and to the point that it delays, restricts or prevents its timely action and is not attributable to its fault or negligence.

It is understood that, as long as they are not obligations consisting in money payments, if one of the parties ceases to comply with any of the obligations undertaken pursuant to this Agreement, ,such non-compliance shall not be considered a violation or non-compliance when the same is originated due to an act of God or force majeure.  If any activity, as long as it is not an activity pertaining to money payment, is delayed, restricted or precluded due to an Act of God or force majeure, both the established term to carry out the activity affected, as well as the terms of the present Agreement shall be extended for a term equal to the effective duration of the acts of God, force majeure or   their causes.  The investments that THE COMPANY undertakes to perform based on the Feasibility Study shall not be considered under any concept as obligations consisting in payment of money.

The party whose capacity to comply with its obligations is affected by an Act of God or force majeure shall notify, as soon as feasible, the other party in writing regarding the event, mentioning its causes and the parties will make all the reasonable possible efforts to overcome the event. Notwithstanding the foregoing, neither party shall be obliged to solve or end any conflict that it may have with third parties or with the labor force related to THE PROJECT, except in acceptable conditions or according to the decision of an arbitrator pronounced according to Clause Twenty three of this Agreement or an order from the competent judicial or administrative authority that has been duly executed or that in any other manner has a definite and coercive nature.



CLAUSE TWENTY ONE



Applicable Law



This Contract shall be the legal standard between the parties and shall be governed by the applicable laws that are currently in force in the Republic of Panama, except to the point that said laws or legal provisions that are contrary or inconsistent or incompatible with this Agreement are not of general application, it being understood that those laws that are only applicable to an industry or a determinate activity shall not be considered of general application. In the cases not foreseen in this Agreement, and as long as they are not inconsistent or incompatible with their provisions, the standards of the Mineral Resources Code shall apply to this Agreement in an auxiliary manner.

The COMPANY, its Affiliates, successors and assignees waiveany diplomatic claim in regards to the duties and rights deriving from this Agreement,  except in the case of denial of justice.  It is understood that it shall not be considered that denial of justice has occurred if THE COMPANY has not previously tried to make use of the arbitration right conferred by the present Agreement.



CLAUSE TWENTY TWO



Substantial Defaults



For the effects of the present Agreement, Substantial Default shall be understood as the default or delay in relation with the compliance with any of the obligations to which the parties are subject according to this Agreement when, if as a consequence of that default or delay, the value and the interests of the Agreement substantially decrease for the other party.  While the Substantial Default situation exists, the party affected by said default may deliver to the responsible party a written notice of its decision to, end the Agreement and in this event this Agreement shall terminate one hundred and eighty (180) calendar days after the receipt of said notice, unless the default or delay is not corrected before the end of said term.  In the event that said Substantial Default is of a nature that makes it necessary to have a term greater than one hundred and eighty (180) calendar days so it can be corrected, and the responsible party is diligently dedicated to correct the default or delay, there shall be no cause to end the Agreement at the end of the established term, unless later on further interruptions of those efforts, attributable to the party responsible for correcting the default or delay occur.  The parties agree that the right of the party affected to end the Agreement shall be suspended while the parties are in the process of solving any conflict related to the alleged Substantial Default as provided in Clause Twenty two or by means of any other method allowed by the laws in force and this Agreement and for a term of sixty (60) days after the date on which the existence of Substantial Default alleged by the party affected is determined.





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The termination of this Agreement according to the stipulations of this Clause, shall not affect the following rights:

a)

The right of the damaged party to receive from the other party a monetary compensation for damages caused by the default or delay, and

b)

The rights of any of the parties issuing from and accrued according to the provisions of this agreement,  until the date on which the termination comes into effect.



CLAUSE TWENTY THREE



Arbitration



The parties declare their firm purpose of examining in the most objective and friendly manner all discrepancies that may arise between them regarding the present Agreement, with the intent of solving said divergences. All conflicts that arise regarding the present Agreement, and that cannot be solved in the before mentioned manner, shall be finally resolved through arbitration, according to the Procedure Regulations of the Interamerican Commission on Commercial Arbitration, in force on the date this Agreement, unless at the time of submitting to arbitration, the parties expressly agree to be governed by the regulations that may than be in force.

Controversies arising between the parties regarding the objective, application, execution or interpretation or the present Agreement shall be susceptible to arbitration as established in this Clause, as well as those related with its validity, compliance or termination, except for those controversies referring to the respect of the integrity of the Constitution.

The Arbitration shall be limited to the subject matter subject of the controversy and pending on the resolution, shall not have the effect of suspending or delaying compliance with the obligations issuing from this Agreement, with the exception of the events of force majeure or acts of God described in Clause Twenty of this Agreement or that the stipulations of Clause Twenty Two be applied with DA = Deduction due to Depletion. TA comes before. The parties agree that the execution of the decisions of the arbitrators will be pronounced by the courts of justice of the Republic of Panama or, in the event that execution is needed abroad, by the courts of justice of any State that is a part to international treaties recognizing said arbitrage decisions of which Panama is also a party. To that effect said arbitration decisions shall be considered as if they had been pronounced by Panamanian arbitration courts pursuant to the legal provisions now in force.



CLAUSE TWENTY FOUR



Abandonment



In the event that THE COMPANY decides to partially or totally abandon THE PROJECT during the life of the Agreement, or due to its termination or expiration, whichever the cause may be, it undertakes to notify said decision to Ministry of Commerce and Industries two years in advance.  Jointly with such notice, a Restoration Plan for the affected area shall be submitted for the consideration and approval of the Ministry of Commerce and Industries.  Once said Plan is approved, it shall be of mandatory compliance for THE COMPANY.





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CLAUSE TWENTY FIVE



Severability



In any Clause of the Agreement is annulled totally or partially, the validity of the rest of the Agreement shall not be affected.



CLAUSE TWENTY SIX



Compliance Guarantee



With the purpose of guaranteeing compliance with the present Agreement, THE COMPANY shall consign a guarantee of THREE MILLION US DOLLARS (US$3,000,000.00) in favor of THE STATE by means of cash, certified check, insurance policy from an insurance company, promissory note from a financial institution, letter of credit issued by a local bank, banking guarantees or by any means allowed by the laws in force.  Said bond shall be consigned by THE COMPANY within the one hundred and eighty (180) days following the date on which the law approving this Agreement is published in the Official Gazette and for the term of the Agreement. The same shall be drawn in favor of the Ministry of Commerce and Industries and the Office of the Comptroller General of the Republic of Panama.  Said bond shall be canceled and returned to THE COMPANY at the termination of this Agreement.



CLAUSE TWENTY SEVEN



Stamps Taxes



This Agreement shall be in force as of the date enactment of the law approving its subscription, and shall cause the payment o the amount of B/.1,000.00 in concept of stamp taxes.



CLAUSE TWENTY EIGHT



Subrogation



This Agreement, including its Annexes I, II, III and IV, constitutes the sole agreement between the parties in relation to its object matter.  Effective as of the date of enactment of the law approving this Agreement, Agreement No. 27-A of August 7, 1991 subscribed by THE STATE and GEORECURSOS and whichever other contracts, amendment, agreement or understanding between THE STATE and GEORECURSOS in relation to the CONCESSION AREA, as well as whichever claim or proceeding which the parties may have pertaining to or with occasion of the subscription, compliance or termination of such previous contracts or agreements.

By the law approving this Agreement and its Annexes, it shall be understood that Cabinet Decree number 267, of August 21, 1969 is totally annulled.

This Agreement including its Annexes, requires the approval of the Legislative Assembly of the Republic of Panama.  The minister of Commerce and Industries will submit to the Legislative Assembly of the Republic of Panama the draft bill whereby the present Agreement and its Annexes is approved within the fifteen (15) days following its subscription.



IN WITNESS WHEREOF, the parties subscribe the present, Agreement in two (2) copies, of the same tenor and effect, in the City of Panama, on the sixteenth day February of nineteen hundred ninety-six (1996)



For THE STATE:

For THE COMPANY:

/sgd/

/sgd/

NITZIA R. DE VILLARRAL



RICHARD FIFER





For GEORECURSOS:

For ADRIAN:

/sgd/

/sgd/

RICHARD FIFER

RICHARD FIFER





Countersignature:



GUSTAVO PERZ

Comptroller General of the Republic











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ANNEX I



Description of the Concession Area



The Concession, as defined in this, Agreement has a total area of 13,600 Hs. and its description is as follows:



Zone No. 1:  Starting form Point No. 1, which geographical coordinates are 80°4159,02 of western length and 8°5125,11 of north latitude, a straight line is followed in eastern direction by a distance of 8,000 meters until finding Point No. 2, which geographical coordinates are 80°3738.15 of western length and 8°5125.11 north latitude; from there a straight line is followed in south direction by a distance of 5,000 meters until reaching Point No. 3, which geographical coordinates are 80°3738.15 of west length and 8°4842.07 of north latitude, from there a straight line is followed of west direction by a distance of 8,000 meters until reaching Point No. 4, which geographical coordinates are 80°4159.02 of west length and 8°4842.07of north latitude; from there a straight line is followed in north direction by a distance of 5,000 meters until finding the starting Point 1.



This zone has a total surface of four thousand (4,000) Hs. and it is located in the Jurisdiction of Northern Cocle and San Jose del General, Donoso District, Province of Colon.



Zone No. 2:  Starting from Point No. 1, which geographical coordinates are 80°4514.67 of west length and 8°5440.76 of north latitude, a straight line is followed in east direction by a distance of 6,000 meters until finding Point No. 2, which geographical coordinates are 80°4159.02 of west length an 8°5440.76 of north latitude, from there a straight line is followed in south direction by a distance of 11,000 meters until reaching Point No. 3, which geographical coordinates are 80°4159.02 of west length and 8°4842.07 of north latitude, from there a straight line is followed in western direction by a distance of 6,000 meters until reaching Point No. 4, which geographical coordinates are 80°4514.67 of western length and 8°4842.07 of north latitude, from where a straight line is followed in north direction until reaching Point 1 which is the starting point.  This zone has a total area of 6,000 Hs. It is located in the Jurisdiction of Northern Cocle, Donoso District, Province of Colon, and borders in the east with the Zone No. 1.



Zone No. 3:  Starting from Point N. 1, which geographical coordinates are 80°4053.8 of west length and 8°4842.07 of north latitude a straight line is followed in east direction by a distance of 6,000 meters until finding Point No. 2, which geographical coordinates are 80°3738.15 of west length and 8°4842.07 of north latitude, from there a straight lie is followed in south direction by a distance of 2,000 meters until reaching Point No. 3, which geographical coordinates are 8°4736.85 of north latitude, from there a straight line is followed in western direction by distance of 6,000 meters until reaching Point No. 4, which geographical coordinates are 80°4553.8 of western length and 8°4736.85 of northern latitude, from there a straight line is followed in northern direction until finding point 1, which is the starting point.  This zone has a total area of 1,200 Hs., and it is located in the Jurisdiction of San Jose del General, Donoso District, Province of Colon, and adjoins on the north with the Zone No. 1 granted to GEO-RECURSOS INTERNACIONAL, S.A, according to Agreement No. 27-A of August 7, 1991.

Zone No. 4:  Starting from Point No. 1., which geographical coordinates are 80°3738.15 of west length and 8°5052.55 of north latitude a straight line is followed in east direction by a distance of 3,000 meters until reaching Point No. 2, which geographical coordinates are 80°360.48 of west length and 8°5052.55 of north latitude; from there a straight line is followed in south direction at a distance of 6,000 meters until finding Point No. 3, which geographical coordinates are 80°360.48 of west length and 8°4736.85 of north latitude, from there a straight line is followed in west direction by a distance of 3,000 meters until finding Point No 3., which geographical coordinates are 80°3738.15 of west length and 8°4736.85 of north latitude, from where a straight line is followed in north direction by a distance of 6,000 meters until finding point 1, which is starting point.  This zone has a total area of 1,800 Hs.  It is located in the Jurisdiction of San Jose del General, Donoso District, Province of Colon, Republic of Panama and adjoins on the west with the Zone No. 1 granted to the company, GEO-RECURSOS INTERNACIONAL, S.A, according to Agreement No. 27-A of August 7, 1991 and to the Zone No. 3 requested by the Company of the same name.





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ANNEX II



DEFINITION OF THE FEASIBILITY STUDY  CERRO PETAQUILLA PROJECT BASE



The Feasibility Study, which shall include any necessary modifications at the time the economical aspects and financial costs are established, shall consist of a feasibility study that contains all information necessary to decide whether THE PROJECT shall be commercially exploited..

In the preparation of the Feasibility Study the following procedures shall be followed:

The tests in scale model have been completed in most parts and shall be supported by tests carried out in pilot plants, should the latter be necessary.  Specifications of the products shall be based on marketing research.  Several visits may be required to the place where the plant is installed.

Listings of equipment and designs shall be made, for their location backed by pipeline system drawings of pipelines of one sole strip and electric wiring.  Equipment specifications shall not be included and formal bids will not be required from suppliers however, written quotes should be obtained from at least  one supplier for each important item.  Installation costs of the machinery shall be determined, based on former experience, based on weight and percentage factors.  Installation costs of pipelines and electrical wiring may be based on approximations with regard to the extensions of electrical wiring and pipeline.  An estimate of the construction cost of the plant and camp shall be provided and estimates on designing costs may be more precise.  Income shall be estimated on the basis of estimates on plant performance and payment indicators coming from foundations and other buyers.



Data Required

It will be necessary to have available proper topographic and geotechnical data.  Written reports related to metallurgic works should be available.  Actual costs of labor available in the region shall be determined, and written quotations from basic material suppliers should be obtained, such as:  fuel, explosives, atomizers, reactives, etc., if deemed necessary.   Rates from companies providing public services should be obtained, such as water, light, gas, and telephone providing service to the region.  If necessary research should be made for obtaining permits and licenses from governmental agencies when required.  Regulations applicable to water and air pollution should be studied.



Training Required

The Feasibility Study shall be prepared under the supervision of a project engineer with knowledge of the mining industrial sector as referred to in this study.  Considering the existence of general design drawings, pipeline system drawings, electrical wiring and  placement of instrumentats, it will be possible to use the services of capable professional project specialists trained to make projections relating to electrical wiring, pipelines and instrumentation as well as experienced project specialists experience relating to the industry referred to in the study.



Use of Estimates

The overall factor of contingencies for the Feasibility Study shall be between 10% and 15%.  The percentages assigned to contingencies shall constitute estimating prices and should not be construed as an indication that estimates are necessarily precise within the margin of contingencies, nor as an implicit reference to any degree of precision.  In general, the Feasibility Study shall be adequate to determine the feasibility and assist the administration in the preparation of a budget for THE PROJECT.











|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 243





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- 26 -





ANNEX III



Preliminary Investment Program



ENGINEERING AND ACQUISITIONS US$24,000,000.00

Requests and Construction Permits Authorizations

Detailed Engineering

Acquisitions

Agreements

Field Studies



CONSTRUCTION/MINING US$67,000,000.00

Pre-production (Phase I)

Waste Deposit (Initial)

Access Route (Llano Grande to Petaquilla)



PROCESSING INSTALLATIONS US$102,000,000.00

Crushing

Excavation and Backfill/Concrete

Retaining Wall-Reinforced Soil

Installation of Crushing Machine

Steel for Construction of Building and Enclosure

Machinery, Piping, Electrical Wiring and Instrumentation

Transports

Ore Piling and Restoration

Concentrator

Excavation, Concrete and Slab

Building, Internal Steel and Enclosure

Installation of Mills

Machinery, Piping, Electrical Wiring and Instrumentation



SITE AND GENERAL US$118,000,000.00

Clearing, Weed-cutting, Preliminary Grading

Roads, Fencing, Entry /Booth, Parkings

Storage, Water Provision and Distribution

Sewage Collection and Discarding

Reservoir for Settlement of Mine Wastes

Electricity Provision and Transmission

Main Substation Wiring and Additions

Communications

Fuel Storage and Distribution



BUILDING FOR SERVICE TO THE PROJECT US$9,000,000.00

Administration and Engineering Building

Rolling Equipment Workshop/Warehouse/Dry Explosive Warehouse

Testing Laboratory



WASTE AND RESTORATION SYSTEM US$28,000,000.00



INFRASTRUCTURE AND INSTALLATION US$13,000,000.00

Construction Camp

Aeronautic Installations

New Airdrome/Landing Strip



PORT US$47,000,000.00

Conditioning of Site and Streets

Water System and Pipes

Generation of Electric Energy

Installations for Shipment of Concentrate and Supplies



Note:  The foregoing figures are subject to variation on the basis of final results of the Feasibility Study.







|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 244





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- 27 -





ANNEX IV



MINERA PETAQUILLA, S.A., duly represented by Eng. Richard Fifer, male, Panamanian, of legal age, engineer, bearer of personal identification card Item, 8-433-263, hereinafter  MINERA; and ADRIAN RESOURCES, S.A., duly represented by Juan Francisco Pardini, male, Panamanian, of legal age, bearer of personal identification card Item, 8-223-797, hereinafter ADRIAN, state that they agree to the following:

WHEREAS, MINERA together with THE STATE shall subscribe a Mining Concession Agreement (AGREEMENT) on the Concession Area as said term has been defined in the, Agreement and will receive determined specific rights according to same with respect to deposits located in the area of Cerro Petaquilla; and

WHEREAS, ADRIAN is holder of certain mining grants adjoining the aforementioned Concession Area identified as: Agreement No. 41 of July 12, 1994, Agreement No. 39-A of July 7, 1994, Agreement No. 39-B of July 7, 1994, Agreement No. 59 of December 29, 1994, all subscribed by and between the Ministry of Commerce and Industries and ADRIAN; and concession requests Nos. 93-92, 93-93 and 94-39, according to the records kept in the General Direction of Mineral Resources of the Ministry of Commerce and Industries of the Republic of Panama (hereinafter (ADJACENT CONCESSIONS); and

WHEREAS, MINERA and ADRIAN wish to acknowledge certain reciprocate rights and obligations regarding the use of easement rights and the use of the Area of the aforementioned  Concession and on areas corresponding to the Adjacent Concessions, as well as of construction and location and use of facilities and installations. In consideration of the foregoing , MINERA and ADRIAN state and agree as follows:



1.  THE COMPANY and its affiliates shall be entitled to the easement of use on the surface and subsoil of the Area identified as Adjacent Concessions and access to the area comprising the Adjacent Concessions for whatever reason or cause which, that according to THE COMPANY, is convenient for the proper exploration, construction, development or exploitation of THE PROJECT, including the right to, place, construct, build, operate, maintain and use in, or remove from, the Adjacent Concessions any type of facility or installation deemed convenient by THE COMPANY (hereinafter the Adjacent Installations).  It is understood that the rights of access and of easement of use referred to in this paragraph granted in favor of the Concession, shall go with, and be inseparable of, the lands comprising the Adjacent Concessions and that same shall outlive any sale, transfer, assignation or granting of any type of right or interest, including rights protected under any type of mining concession existing or which may exist on said adjacent estate.



2.   Without impairment to the above, before establishing or constructing any permanent or non movable installation or structure in the areas comprised by the Adjacent Concessions, THE COMPANY, or any affiliate or contractor or subcontractor of same, or any transferee or successor of part or the whole of the Concession, as defined in Annex 1 of the  Agreement should carry out all the geotechnical research, including drilling works for condemnation of specific areas and any other necessary to determine the environmental technical and economical viability of the site, in which it is proposed to construct or establish the permanent installations or structures and shall carry out an exploration of the area of the Adjacent Concession, to be covered by said installation or structure, to confirm that there does not exist actual or potential minerals sufficiently  near the surface of the proposed site so that its safe and economic extraction disabled or impaired by the presence of the permanent installation or structure it intends to establish, and shall provide the results of the mentioned research and exploitations to the holder of the Adjacent Concession(s) which may be affected.



Without impairment to provisions of item 1 of this Annex IV, THE COMPANY or the respective holder or beneficiary of the Concession, as the case may be, which has placed any movable structure or installation in the area known as the Adjacent Concessions, shall remove as soon as possible, at its own account and cost, said structure or installation or a portion of same if, according to the reasonable opinion of the holder of the affected Adjacent Concessions, its location is unfavorable for the mineral exploitation contemplated in said Adjacent Concession.





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|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 245





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- 28 -







Without impairment to provisions in item 1 of this Annex IV, THE COMPANY or the respective holder or beneficiary of the Concession, as the case may be, shall carry out its activities related to the construction, installation and operation of any structure or installation located in the area comprised by the Serving Concession carefully and according to the principles of good mining practices and the laws in effect in the Republic of Panama, and should indemnify the holder of the Adjacent Concession affected for any expense, action or demand against the later , resulting from the cited activities performed by THE COMPANY or the beneficiary holder of the Concession.



3.   If at any time any of the Adjacent Installations has a surplus capacity not necessary to carry out the existing or scheduled operations of THE COMPANY and it has not previously committed itself to third parties after having granted a first option to the holder of the respective Adjacent Concession, THE COMPANY shall make available to the holder of the Adjacent Concession where the respective installation is located, this surplus capacity, provided this holder is an Affiliate of THE COMPANY, in the understanding that it will be done in fair terms and always in conditions not more favorable to THE COMPANY than those applicable in the event of sale, license or other rights of use to third parties or affiliates of an installation similar to the Adjacent Installation.



4.   The parties state that any conflict or dispute arising between the same for reason of the execution or fulfillment of what has been covered in this agreement shall not affect in any way the respective obligations and commitments that entail MINERA, according to the Agreement and to ADRIAN with regard to the Adjacent Concessions in the face of THE STATE, unless the respective conflict or dispute be motivated or caused by any act or omission of THE STATE.



IN WITNESS WHEREOF, this document is entered into in two similar copies in Panama, December 5, 1995.



by ADRIAN RESOURCES, S.A.

by MINERA PETAQUILLA, S.A.

(signed)

(signed)

JUAN FRANCISCO PARDINI

RICHARD FIFER







|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 246





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- 29 -





Article 2.  This Law shall enter into effect as of its promulgation; it annuls Cabinet Decree 267 of 1969 and any provision contrary to same.



LET IT BE NOTIFIED AND EXECUTED.



Approved in third debate, in the Justo Arosemena Palace, Panama City, on January 30, nineteen hundred ninety seven (1997).



CESAR A PARDIC

VICTOR M. DE GRACIA  M.

President

Secretary General



NATIONAL EXECUTIVE BODY.  MINISTRY OF THE PRESIDENCY

PANAMA, REPUBLIC OF PANAMA, FEBRUARY 26, 1997



ERNESTO PEREZ BALLADARES

RAUL ARANGO GASTEAZORO

President of the Republic

Ministry of Commerce and Industries





|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 247





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EXHIBIT 12.A





CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT 2002



I, Joao Manuel , President and Chief Executive Officer of Petaquilla Minerals Ltd., certify that:



1.

I have reviewed this Amendment No. 1 to the annual report on Form 20-F of Petaquilla Minerals Ltd.;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;



4.

The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



(c)

Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d)

Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and



5.

The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.



Date:

November 6, 2009



|    |                                      
|--- | -------------------------------------
|By: | /s/ Joao Manuel                      
|    | Joao Manuel                          
|    | President and Chief Executive Officer
|    | (principal executive officer )       



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 248





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EXHIBIT 12.B



CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT 2002



I, Bassam Moubarak, Chief Financial Officer of Petaquilla Minerals Ltd., certify that:



1.

I have reviewed this Amendment No. 1 to the annual report on Form 20-F of Petaquilla Minerals Ltd.;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;



4.

The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



(c)

Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d)

Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and



5.

The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Companys auditors and the audit committee of the Companys board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.



Date:

November 6, 2009



|    |                              
|--- | -----------------------------
|By: | /s/ Bassam Moubarak          
|    | Bassam Moubarak              
|    | Chief Financial Officer      
|    | (principal financial officer)



|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 249





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EXHIBIT 13.A



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with Amendment No. 1 to the
Annual Report of Petaquilla Minerals Ltd. (the Company) on Form 20-F for the fiscal period ended May 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Joao Manuel , President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:



| |    |  |                                                                                                                                                      
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. |  | The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and    
| |    |  |                                                                                                                                                      
| | 2. |  | The information contained in the Report fairly presents, in all materials respects, the financial condition and results of operations of the Company.





|                               | 
|------------------------------ | 
|/s/ Joao Manuel                | 
|Joao Manuel                    | 
|(principal executive officer ) | 



Dated:  November 6, 2009





The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.









|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 250





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EXHIBIT 13.B





CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with Amendment No. 1 to the Annual Report of Petaquilla Minerals Ltd. (the Company) on Form 20-F for the fiscal period ended May 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Bassam Moubarak, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:



| |    |  |                                                                                                                                                      
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. |  | The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and    
| |    |  |                                                                                                                                                      
| | 2. |  | The information contained in the Report fairly presents, in all materials respects, the financial condition and results of operations of the Company.





|                              | 
|----------------------------- | 
|/s/ Bassam Moubarak           | 
|Bassam Moubarak              
|(principal financial officer)



Dated:  November 6
  , 2009





The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.











|                                                          |         
|--------------------------------------------------------- | --------
|Form 20-F/A_Amendment No. 1_Fiscal Year Ended 2009 May 31 | Page 251





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