================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 20-F
                                 Amendment No. 4
                             SEC File No. 001-31799
(Mark One)

          Registration  statement  pursuant  to  Section  12(b)  or  (g) of  the
------    Securities Exchange Act of 1934 or

  X       Annual  report  pursuant  to  Section  13 or 15(d) of  the  Securities
-----     Exchange Act of 1934

          For the fiscal year ended January 31, 2006  or

          Transition report pursuant to Section 13 or 15(d)  of  the  Securities
------    Exchange Act of 1934

          For the transition period from ___________ to _________________



                             GEMSTAR RESOURCES LTD.
        ----------------------------------------------------------------
             (Exact name of registrant as specified in this charter)

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


     220 Decourcy Drive, Gabriola Island, British Columbia, Canada, V0R 1X0
 -------------------------------------------------------------------------------
                    (Address of principal executive offices)

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


             None                                      None
---------------------------------           --------------------------
       (Title of each class)                  (Name of each exchange
                                                on which registered)

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

                         Common Shares Without Par Value
               --------------------------------------------------
                                (Title of Class)

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

                                      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.

<page>

                             5,651,714 Common Shares
               --------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                           Yes     X      No
                               ----------    ---------

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




<page>


<table>
<caption>
                                                  TABLE OF CONTENTS

                                                                                               PAGE
                                                       PART I

              <c>                                                                            <c>
ITEM 1.  Identity of Directors, Senior Management and Advisors....................................1
                  1.1 Directors and Senior Management.............................................2
                  1.2 Advisors....................................................................2
                  1.3 Auditors....................................................................2

ITEM 2.  Offer Statistics and Expected Timetable..................................................2

ITEM 3.  Key Information..........................................................................2
                  3.1 Selected Financial Data.....................................................2
                  3.2 Capitalization and Indebtedness.............................................5
                  3.3 Reasons for the Offer and Use of Proceeds...................................5
                  3.4 Risk Factors................................................................5

ITEM 4.  Information on the Company...............................................................9
                  4.1 History and Development....................................................10
                  4.2 Dotted Lake Property.......................................................11
                  4.3 Competition................................................................13
                  4.4 Management & Employees.....................................................14
                  4.5 Environmental Regulations..................................................14

ITEM 5.  Operating and Financial Review and Prospects............................................15
                  5.1 Results of Operations......................................................15
                  5.2 Liquidity..................................................................17

ITEM 6.  Directors, Senior Management and Employees..............................................18
                  6.1 Directors and Senior Management............................................18
                  6.2 Compensation of Directors..................................................19
                  6.3 Board Practices............................................................20
                  6.4 Employees..................................................................21
                  6.5 Share Ownership of Directors and Officers..................................21

ITEM 7.  Major Shareholders and Related Party Transactions.......................................21
                  7.1 Beneficial Ownership.......................................................21
                  7.2 Related Party Transactions.................................................22
                  7.3 Interests of Experts and Counsel...........................................23

ITEM 8.  Financial Information...................................................................23
                  8.1 Legal Proceedings..........................................................23
                  8.2 Significant Changes........................................................23

ITEM 9. The Offer and Listing....................................................................23
                  9.1 Offering and Listing Details...............................................23

ITEM 10. Additional Information..................................................................24
                  10.1 Share Capital.............................................................24
</table>

<page>
<table>
<caption>


              <c>                                                                            <c>
                  10.2 Memorandum and Articles of Association....................................24
                  10.3 Material Contracts........................................................25
                  10.4 Exchange Controls and other Limitations Affecting Security Holders........26
                  10.5 Canadian Federal Income Tax Consequences to
                       United States Investors...................................................26

                  10.6 United States Federal Income Tax Consequences to U.S. Investors...........27
                  10.7 Statements by Experts.....................................................31
                  10.8 Documents on Display......................................................31

ITEM 11. Quantitative and Qualitative Disclosures About Market Risk..............................31

ITEM 12. Descriptions of Securities Other than Equity Securities.................................31
                  12.1 Warrants..................................................................31
                  12.2 Stock Options.............................................................31

                                     PART II

ITEM 13. Defaults, Dividend Arrearages and Delinquencies.........................................32

ITEM 14. Material Modifications to the Rights of Security Holders and Use of Proceeds............32

                                    PART III

ITEM 17. Financial Statements

ITEM 18. Financial Statements

ITEM 19. Exhibits

SIGNATURE
</table>

















<page>


                           FORWARD-LOOKING STATEMENTS
                           --------------------------

We caution you that certain  important  factors  (including  without  limitation
those set forth in this Form 20-F) may affect our actual results and could cause
such results to differ materially from any  forward-looking  statements that may
be  deemed  to have been  made in this  Form  20-F  annual  report,  or that are
otherwise made by or on our behalf. For this purpose,  any statements  contained
in this annual report that are not  statements of historical  fact may be deemed
to be  forward-looking  statements.  Without  limiting  the  generality  of  the
foregoing,  words such as "may," "except,"  "believe,"  "anticipate,"  "intend,"
"could,"  estimate,"  or  "continue,"  or the  negative or other  variations  of
comparable terminology, are intended to identify forward-looking statements.

                                     PART I
                                     ------

Item 1.   Identity of Directors, Senior Management and Advisors

     1.1 Directors and Senior Management:

         Not applicable.


Item 2.  Offer Statistics and Expected Timetable

         Not applicable


Item 3.  Key Information

     3.1 Selected Financial Data

The  following  tables set forth the data of the  Company  for the fiscal  years
ended January 31, 2006,  2005,  2004, 2003 and 2002. We derived all figures from
our financial  statements,  which were audited by our independent auditor.  This
information should be read in conjunction with our financial statements includes
in this annual  report.  Our audited  financial  statements for the fiscal years
ended January 31, 2004, 2003 and 2002 are not included in this annual report.

Our  financial  statements  included  in this  annual  report  and the table set
forth   below  gave  been  prepared  in  accordance  with accounting  principles
generally  accepted in Canada.  A  reconciliation  to  United  States  generally
accepted  accounting  principles is included in Note 14 to our audited financial
statements.  All  amounts are  expressed  in Canadian  dollars.  The first table
presents this financial data in accordance with United States generally accepted
accounting principles.  The second table  presents  the data in  accordance with
Canadian generally accepted accounting principles.


                                                                               1

<page>

U.S. Generally Accepted Accounting Principles
<table>
<caption>
===============================================================================================================================
                              Fiscal Year           Fiscal Year          Fiscal Year        Fiscal Year         Fiscal Year
                                 ended                 ended                ended              ended                ended
                            January 31, 2006     January 31, 2005       Jan. 31, 2004       Jan. 31, 2003       Jan. 31, 2002
                              (in Cdn$)             (in Cdn$)            (in Cdn$)            (in Cdn$)           (in Cdn$)
-------------------------------------------------------------------------------------------------------------------------------

                         <c>                  <c>                    <c>               <c>                   <c>
Net Operating Revenue            Nil                   Nil                  Nil                  Nil                 Nil
-------------------------------------------------------------------------------------------------------------------------------
Loss from operations         ($204,612)             ($92,349)            ($79,684)           ($421,332)           ($269,158)
-------------------------------------------------------------------------------------------------------------------------------
Loss per common share          ($0.04)              ($0.02)               ($0.01)             ($0.07)             ($0.05)
-------------------------------------------------------------------------------------------------------------------------------
Total assets                   $34,856              $170,236              $4,202               $3,644             $160,781
-------------------------------------------------------------------------------------------------------------------------------
Net assets                   ($1,025,710)          ($821,098)            ($877,455)          ($819,541)          ($598,209)

-------------------------------------------------------------------------------------------------------------------------------
Long term debt                 $39,676                 Nil                   Nil                 Nil              $608,250
-------------------------------------------------------------------------------------------------------------------------------
Cash dividends per share         Nil                   Nil                   Nil                 Nil                 Nil
-------------------------------------------------------------------------------------------------------------------------------
Deficit                      ($2,150,757)         ($1,946,145)         ($1,999,922)         $ (1,933,012)       ($1,718,055)
-------------------------------------------------------------------------------------------------------------------------------
Capital stock                 $1,113,471           $1,113,471           $ 1,113,471          $ 1,113,471          $1,113,471
-------------------------------------------------------------------------------------------------------------------------------
Weighted average number        5,651,714            5,651,714            5,651,714            5,651,714           5,651,714
of common shares
===============================================================================================================================
</table>


Canadian Generally Accepted Accounting Principles
<table>
<caption>
===============================================================================================================================
                              Fiscal Year        Fiscal Year         Fiscal Year      Fiscal Year      Fiscal Year
                                 ended              ended              ended            ended             ended
                              January 31,         January 31,        January 31,      January 31,      January 31,
                                 2006                2005               2004             2003             2002
                              (in Cdn$)            (in Cdn$)          (in Cdn$)        (in Cdn$)       (in Cdn$)
-------------------------------------------------------------------------------------------------------------------------------

                         <c>                  <c>               <c>               <c>              <c>
Net Operating Revenue            Nil                 Nil                Nil              Nil              Nil
-------------------------------------------------------------------------------------------------------------------------------
Loss from operations          ($138,379)          ($92,349)          ($79,684)      $ (262,432)      $ (69,158)
-------------------------------------------------------------------------------------------------------------------------------
Loss per common share          ($0.02)             ($0.02)            ($0.01)          ($0.05)          ($0.01)
-------------------------------------------------------------------------------------------------------------------------------
Total assets                   $101,089           $170,236            $167,662         $162,544         $360,781

-------------------------------------------------------------------------------------------------------------------------------
Net assets                    ($959,477)          ($821,098)         ($713.995)       ($660,641)       ($398,209)

-------------------------------------------------------------------------------------------------------------------------------
Long term debt                 $39,676               Nil                Nil               Nil           $608,250
-------------------------------------------------------------------------------------------------------------------------------
Cash dividends per share         Nil                 Nil                Nil               Nil             Nil
-------------------------------------------------------------------------------------------------------------------------------
Deficit                      ($2,084,524)       ($1,946,145)       ($1,853,796)      ($1,774,112)     ($1,518,055)
-------------------------------------------------------------------------------------------------------------------------------
Capital stock                 $1,113,471         $1,113,471         $1,113,471        $1,113,471       $1,113,471
-------------------------------------------------------------------------------------------------------------------------------
Weighted average number        5,651,714          5,651,714          5,651,714         5,651,714       5,652,000
of common shares
===============================================================================================================================
</table>

Since June 1, 1970, the  government of Canada has permitted a floating  exchange
rate to  determine  the value of the  Canadian  dollar as compared to the United
States  dollar.  On November 22, 2006,  the exchange rate in effect for Canadian
dollars  exchanged  for United  States  dollars,  expressed in terms of Canadian
dollars was $1.1414. This exchange rate is based on the noon buying rates in New
York City,  for cable  transfers in Canadian  dollars,  as certified for customs
purposes  by the Federal  Reserve  Bank of New York.  For the past fiscal  years
ended January 31 and for the six-month  period  between May 31, 2006 and October
31, 2006,  the  following  exchange  rates were in effect for  Canadian  dollars
exchanged for United States dollars, calculated in the same manner as above:


                                                                               2

<page>

  Time Period                           Average Exchange Rate for Period
  -----------                           --------------------------------
  Year ended Jan 31, 2006                            $1.2006
  Year ended Jan 31, 2005                            $1.2912
  Year ended Jan 31, 2004                            $1.3422
  Year ended Jan 31, 2003                            $1.5650
  Year ended Jan 31, 2002                            $1.5596

  Time Period                                      Low - High
  -----------                                      -----------
   Month ended May 31, 2006                    $1.0987 - $1.1232
   Month ended June 30, 2006                   $1.0991 - $1.1241
   Month ended July 31, 2006                   $1.1112 - $1.1415
   Month ended August 31, 2006                 $1.1066 - $1.1312
   Month ended September 30, 2006              $1.1052 - $1.1272
   Month ended October 31, 2006                $1.1154 - $1.1384

3.2   Capitalization and Indebtedness

The following table sets forth our capitalization and indebtedness as at October
31, 2006

================================================================================
                                                        As at October 31, 2006
--------------------------------------------------------------------------------
Short term debt
(unsecured and not guaranteed)                                 $66,499
--------------------------------------------------------------------------------
Long term debt                                                 $39,676
--------------------------------------------------------------------------------
Total debt                                                   $1,157,189
--------------------------------------------------------------------------------

Shareholder's Equity
--------------------------------------------------------------------------------
Common shares                                               $1,125,047
--------------------------------------------------------------------------------
Retained earnings (accumulated deficit)                    ($2,181,733)
--------------------------------------------------------------------------------
Total shareholders' deficit                                 $1,056,686
================================================================================

     3.3          Reasons for the Offer and Use of Proceeds

Not Applicable

     3.4          Risk Factors

Any  investment in our common shares  involves a high degree of risk. You should
consider carefully the following information before you decide to buy our common
shares.  If any of the events  discussed in the following risk factors  actually
occurs, our business,  financial condition or results of operations would likely
suffer.  In this case, the market price of our common shares could decline,  and
you could lose all or part of your  investment  in our shares The following is a
list of all known  material  risks relating to our business and an investment in
our common shares:


                                                                               3

<page>

WE HAVE A HISTORY  OF  LOSSES.  OUR  INABILITY  TO  ACHIEVE  PROFITABILITY  WILL
NEGATIVELY IMPACT ANY INVESTMENT IN OUR SHARES.

We have  incurred  losses in our business  operations  since  inception,  and we
expect that we will continue to lose money for the foreseeable future. Since our
incorporation  on March 31, 1998 to January 31, 2006,  we have  incurred  losses
totalling $2,084,524 (US GAAP - $2,150,757).  Very few junior resource companies
ever  become  profitable.  Failure to achieve  and  maintain  profitability  may
adversely affect the market price of our common stock.

WE HAVE LIMITED FINANCIAL RESOURCES AND NO SOURCE OF CASH FLOW. IF WE ARE UNABLE
TO GENERATE GENERATE REVENUE, OUR BUSINESS WILL FAIL.

We have limited  financial  resources,  no source of operating  cash flow and no
commitments  for additional  funding for further  exploration of the Dotted Lake
property.  Failure to obtain such additional  financing could result in delay or
indefinite postponement of further exploration and ultimately the failure of our
business.

VERY FEW MINERAL PROPERTIES ARE ULTIMATELY DEVELOPED INTO PRODUCING MINES. IF WE
ARE UNABLE TO PROVE THAT A MINERAL  RESERVE  EXISTS ON OUR DOTTED LAKE PROPERTY,
OUR BUSINESS MAY FAIL.

The business of  exploration  for minerals and mining  involves a high degree of
risk. Few properties  that are explored are ultimately  developed into producing
mines. At present,  our mineral properties have no known body of commercial ore.
Most  exploration  projects  do not  result  in the  discovery  of  commercially
mineable deposits of ore.

Substantial  expenditures  are required for us to establish ore reserves through
drilling, to develop metallurgical  processes, to extract the metal from the ore
and,  in the case of new  properties,  to  develop  the  mining  and  processing
facilities and infrastructure at any site chosen for mining.

It is unknown  whether we will  discover  minerals in  sufficient  quantities to
justify  commercial  operations  or that we can  obtain the funds  required  for
development  on a  timely  basis.  The  probability  of  an  individual  mineral
exploration  prospect such as the Dotted Lake Property ever containing  reserves
is extremely remote. It is unlikely that the property contains reserves,  so any
funds expended on the property will most likely be lost.

IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.

As at January 31,  2006,  we had cash in the amount of  $16,945.  Our ability to
continue  as a going  concern is  dependent  upon the ability of  management  to
obtain  sufficient   financing.   Management  is  actively  seeking   additional
financing,  but has no specific commitments for investment.  These matters raise
doubt  about  the  company's  ability  to  continue  as a going  concern.  These
financial  statements do not include  adjustments that would be necessary should
the company be unable to continue as a going concern.



                                                                               4

<page>

BECAUSE  MANAGEMENT  HAS ONLY LIMITED  EXPERIENCE IN RESOURCE  EXPLORATION,  THE
BUSINESS HAS A HIGHER RISK OF FAILURE.

Our management has only limited experience in resource exploration.  None of our
directors or officers has any  significant  technical  training or experience in
resource exploration for, starting and operating a mine. With no direct training
or experience in this sector,  our  management may not be fully aware of many of
the specific requirements related to working within the industry. Their business
decisions  may  not  take  into  account  standard   engineering  or  managerial
approaches that mineral exploration companies with qualified management commonly
use. As a result, our operations,  earnings and ultimate financial success could
suffer irreparable harm due to management's lack of experience in this industry.

MINERAL  EXPLORATION  INVOLVES A HIGH  DEGREE OF RISK  AGAINST  WHICH WE ARE NOT
CURRENTLY INSURED. ENVIRONMENTAL LIABILITY THAT WE INCURRED MAY IRREPARABLY HARM
OUR BUSINESS.

Unusual  or  unexpected  rock  formations,  formation  pressures,  fires,  power
outages, labour disruptions, flooding, cave-ins, landslides and the inability to
obtain suitable or adequate machinery, equipment or labour are risks involved in
the operation of mines and the conduct of exploration programs.

It is not always  possible to fully insure  against such risks and we may decide
not to take out  insurance  against  such risks as a result of high  premiums or
other reasons. Should such liabilities arise, they could reduce or eliminate any
future  profitability  and result in increasing costs and a decline in the value
of  our  common  stock.  We  do  not  currently   maintain   insurance   against
environmental risks relating to the Dotted Lake property.

IF TITLE TO THE DOTTED LAKE IS DISPUTED, WE MAY LOSE OUR SOLE BUSINESS ASSET AND
OUR BUSINESS MAY FAIL.

The Dotted Lake  property  may be subject to prior  unregistered  agreements  or
transfers or native land claims and title may be affected by undetected defects.
There is a risk  that the  property  boundaries  could  be  challenged.  In such
circumstances,  we will  incur  costs  defending  our title to the  Dotted  Lake
property and may lose our interest in the claims, causing our business to fail.

WE MAY REQUIRE PERMITS AND LICENSES THAT WE MAY NOT BE ABLE TO OBTAIN. IF WE ARE
UNABLE TO OBTAIN SUCH PERMITS AND LICENSES, OUR BUSINESS PLAN WILL FAIL.

Our  operations  may require  licenses  and permits  from  various  governmental
authorities.  If we are unable to obtain such licenses and permits,  we will not
be able to continue  exploration and development of the Dotted Lake property and
we may have to abandon our business plan.

We will be required to obtain work permits from the Ontario Ministry of Northern
Development  and Mines  for the Phase II  drilling  program  and any  subsequent
exploration  work that  results  in a  physical  disturbance  to the land if the
program  calls for the  disturbance  of more than  10,000  square  meters of the
property  surface,  or such areas that would total that amount when combined.  A
work permit is also  required for the erection of  structures  on the  property.
There is no charge to obtain a work permit under the Mining Act.


                                                                               5

<page>

METAL PRICES  FLUCTUATE  WIDELY.  A DECREASE IN METAL PRICES MAY PREVENT US FROM
RAISING THE CAPITAL  NECESSARY TO CONTINUE OUR BUSINESS  PLAN IN THE FUTURE.  AS
WELL,  LOW METAL  PRICES WILL REDUCE THE VALUE OF ANY RESERVE WE DISCOVER ON THE
DOTTED LAKE PROPERTY.

Factors  beyond our  control  may affect the  marketability  of any  minerals we
discover. Metal prices have fluctuated widely, particularly in recent years. Our
ability to raise capital for continuing  exploration of the Dotted Lake property
depends to a large degree on the market price for metals  generally,  as well as
for gold in particular. In addition, the value of any reserve we discover on the
Dotted Lake property will fluctuate depending on current metal prices. Low metal
prices may make it  uneconomical  to  commence  production  on the  Dotted  Lake
property if a reserve is established, of which there is no guarantee.

THE  RESOURCE  INDUSTRY  IS VERY  COMPETITIVE.  THE  COMPETITIVE  NATURE  OF THE
BUSINESS  MAY  INCREASE  OUR COST OF  OPERATIONS  AND PREVENT US FROM  OBTAINING
INTERESTS IN ADDITIONAL MINERAL PROPERTIES.

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

IN CONDUCTING  EXPLORATION  ON THE DOTTED LAKE  PROPERTY,  WE WILL BE SUBJECT TO
ENVIRONMENTAL REGULATIONS. IN ADDITION, OUR OPERATIONS MAY BE ADVERSELY AFFECTED
BY  CHANGES  IN  ENVIRONMENTAL   REGULATIONS.   A  SIGNIFICANT  CHANGE  IN  SUCH
REGULATIONS MAY PREVENT US FROM PROCEEDING WITH OUR BUSINESS PLAN.

Our  operations  are be  subject to  environmental  regulations  promulgated  by
government agencies from time to time.  Environmental  legislation  provides for
restrictions  and  prohibitions  on  spills,  release  or  emissions  of various
substances produced in association with certain mining industry operations, such
as seepage from tailings  disposal  areas,  which would result in  environmental
pollution.  A breach of such  legislation  may result in the imposition of fines
and penalties.  In addition,  certain types of operations require the submission
and approval of environmental impact assessments.  Environmental  legislation is
evolving  in a  manner  which  means  that  standards,  enforcement,  fines  and
penalties for  non-compliance are more stringent.  Environmental  assessments of
proposed  projects carry a heightened  degree of  responsibility  for us and our
directors,  officers and  consultants.  The cost of  compliance  with changes in
governmental  regulations  has a potential  to reduce the  profitability  of our
operations. We do not maintain environmental liability insurance.

When our  exploration  program  on the  Dotted  Lake  property  proceeds  to the
drilling  stage,  we may be  required  to post  small  bonds if the  rights of a
private land owner may be affected.  We may also be required to file  statements
of work with the  Ministry of Northern  Development  and Mines.  We will also be
required  to  undertake  remediation  work on any  exploration  that  results in
physical  disturbance  to the  land.  The cost of  remediation  work  will  vary
according to the degree of physical disturbance.



                                                                               6

<page>

IF A MARKET OUR COMMON  SHARES DOES NOT DEVELOP,  SHAREHOLDERS  MAY BE UNABLE TO
SELL THEIR SHARES.

Our common  shares do not trade on any  recognized  stock  exchange or quotation
system.  Unless a market develops, it will be difficult for shareholders to sell
their stock. As a result,  shareholders may find that they are unable to achieve
benefits from their investment.

WHEN  OUR  SECURITIES  BECOME  LISTED,  THEY  WILL BE  SUBJECT  TO  PENNY  STOCK
REGULATION,  WHICH MAY  IMPEDE AN  INVESTOR'S  ABILITY  TO  PURCHASE  OUR COMMON
SHARES.

If a market for our securities  develops,  the price of our common stock will be
below $5.00 per share and we will be subject to "penny stock" regulation. "Penny
stock" rules impose additional sales practice requirements on broker-dealers who
sell such securities to persons other than established  customers and accredited
investors  (generally those with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with a spouse). For transactions covered
by these rules, the broker-dealer must make a special suitability  determination
for the purchase of such  securities and have received the  purchaser's  written
consent  to  the  transaction  prior  to the  purchase.  Additionally,  for  any
transaction  involving  a penny  stock,  unless  exempt,  the rules  require the
delivery,  prior to the transaction,  of a disclosure schedule prescribed by the
Commission  relating  to the penny stock  market.  The  broker-dealer  also must
disclose the commissions  payable to both the  broker-dealer  and the registered
representative  and current  quotations  for the  securities.  Finally,  monthly
statements  must be sent  disclosing  recent  price  information  on the limited
market in penny stocks.  Consequently,  the "penny stock" rules may restrict the
ability of  broker-dealers  to sell our shares of common stock. The market price
of our shares would likely suffer as a result.

ENFORCEMENT OF LEGAL PROCESS MAY BE DIFFICULT.

All members of our Board of Directors and management  reside in Canada. As well,
our address for service is a Canadian address.  Accordingly,  investors will not
be able to:

1.       effect service of process upon us, or upon individuals related to us
         within the United States;

2.       enforce judgments  obtained in United States courts against us based
         upon the civil liability  provisions of the United States  securities
         law; or

3.       enforce judgments of United States court judgments based upon the
         civil liability provisions of the United States federal securities law.

However,  investors may commence  original actions against us, our directors and
officers  and our  experts  in British  Columbia  courts.  However,  as our sole
mineral property asset is located in Ontario, additional legal proceedings would
need to be commenced in that province in order to satisfy any judgment.


                                                                               7

<page>

Investors may not be able to seek judgment in British Columbia or Ontario if the
court  determines  that  it  is  unable  to  rule  in  a  matter  that  involves
determinations  respecting United States securities laws. In such circumstances,
investors would be prevented from obtaining judgment that is enforceable against
us.

As we are incorporated  pursuant to the laws of British Columbia,  duties of our
directors and officers, and the ability of shareholders to initiate a lawsuit on
our behalf, are governed by the British Columbia Business Corporations Act.


ITEM 4            INFORMATION ON THE COMPANY

     4.1          HISTORY AND DEVELOPMENT

We were  incorporated  under the name "Gemstar  Resources  Ltd." pursuant to the
Company Act in the Province of British  Columbia,  Canada by registration of our
Memorandum  and Articles of  Association  and the  issuance by the  Registrar of
Companies of a Certificate of Incorporation on March 31, 1988. In March 2006, we
transitioned to the province's Business  Corporations Act. We are an exploration
stage company that beneficially owns mineral claims in Ontario, Canada. There is
no assurance  that a commercially  viable mineral  deposit exists on our claims.
Further  exploration  will be  necessary  before  a final  evaluation  as to the
economic and legal feasibility of our claims is determined.

Our head  office is located at 220  Decourcy  Drive,  Gabriola  Island,  British
Columbia, Canada, V0R 1X0. Our telephone number is (604) 837-2739.

We  have  not  been  involved  in  any   bankruptcy,   receivership  or  similar
proceedings, nor have we been a party to any material reclassification,  merger,
consolidation or purchase or sale of a significant amount of assets.

We currently  own a 100%  interest in 78  contiguous  mineral  claim units known
collectively  as the Dotted Lake property  which are situated in the Blake River
area, Thunder Bay Mining Division of Ontario, Canada. There is no assurance that
a  commercially  viable  mineral  deposit  exists on the Dotted  Lake  property.
Further  exploration  will  be  required  before  a final  evaluation  as to the
economic feasibility of the property is determined.

We  originally  acquired  the Dotted Lake  property  from LCM  Equities  Ltd., a
private  British  Columbia  company,  pursuant  to a mineral  property  purchase
agreement dated October 27, 2000.  Pursuant to that agreement,  we paid $200,000
to acquire a 100% interest in the Dotted Lake property.

In 2003,  our interest in the Dotted Lake property  lapsed due to our failure to
complete  the  minimum  required  assessment  exploration  work  on the  claims.
Management  determined  that it would be less  expensive  to allow the claims to
lapse and then restake  them,  rather than  completing  the required  assessment
work.


                                                                               8

<page>

We reacquired  the property by staking the property in  accordance  with Ontario
laws. This involved  retaining a prospector to go to the location of the claims,
drive  wooden  posts  into the  ground  and affix  metal  tags to the posts that
describe information  respecting the claims.  Information  regarding the staking
procedures  was filed with the  Ontario  Ministry of  Northern  Development  and
Mines.

During the quarter  ended April 30, 2005, we undertook a ground VLF and magnetic
survey over 100 meter  spaced cut clines (for a total of 15  kilometers)  at the
northwestern  side of the Dotted Lake  property at a cost of $14,636.  A VLF, or
very low  frequency  survey,  uses radio waves to determine  whether  rocks on a
mineral property conduct electricity. Almost all of the precious and base metals
that we seek are above  average  conductors of  electricity  and will affect VLF
readings.  Magnetic  surveys  involve  measuring  the  strength  of the  earth's
magnetic field.  Variations in the magnetic  readings on a property may indicate
the increased likelihood of precious or base minerals in the area.

Concurrently, we retained Andre M. Pauwels, a professional geologist, to prepare
a geological  report on the  property.  He  recommends  a two phase  exploration
program  on the  property  to  determine  whether it has the  potential  to host
economic mineralization.

     4.2          DOTTED LAKE PROPERTY

Location and Access
-------------------

The Dotted Lake property is situated in north central Ontario,  approximately 50
kilometers northeast of Lake Superior and 260 kilometers east-northeast from the
city of Thunder Bay.  Manitouwadge  (45  kilometers to the north),  Marathon (45
kilometers  southwest) and White River (50 kilometers southeast) are the closest
towns.  The latter two  communities  are situated  along Highway 17, part of the
Trans-Canada Highway network,  while the property itself lies some 20 kilometers
north of Highway 17.

Currently, there is no road access directly on to the Dotted Lake property. From
Highway 614,  located 13 kilometres north of Highway 17, a bush road leads seven
kilometers north-eastward to the southwest shore of Dead Otter Lake. From there,
the property may be  conveniently  reached by boat in summer or by snowmobile in
winter.  Alternatively,  another bush road that  connects with Highway 614, some
19.2 kilometers north of Hwy 17,  terminates  approximately 0.7 kilometers north
of the north claim boundary.

Title and Claim Status
----------------------

We beneficially own a 100% interest in the Dotted Lake property,  which consists
of 78 contiguous  mineral claims units registered in the name of 1179406 Ontario
Ltd., a private  Ontario  company that holds the claims in trust for us. It is a
common  procedure  to have such claims  held in trust given the expense  that we
would incur in  registering  as a recorded  claim holder and an  extraprovincial
company in Ontario.  We can request that the claims be registered in our name at
any time.



                                                                               9

<page>

The mineral  claims cover  approximately  1,216  hectares.  In order to keep the
claims in good  standing,  we must spend at least $31,200 on  exploration of the
Dotted  Lake  property by March 14,  2007.  We do not have any other third party
obligations with respect to the claims.

The principal  benefit of having a trustee hold the claims on our behalf is that
we avoid the expense  that we would  incur in  registering  as a recorded  claim
holder  and an  extraprovincial  company in  Ontario.  However,  if the  trustee
becomes  bankrupt  or  transfers  the  claims  to a third  party,  we may  incur
significant  legal  expenses in enforcing  our interest in the claims in Ontario
courts.

The  registration of the claims in the name of a trustee does not impact a third
party's  ability to commence  an action  against us  respecting  the Dotted Lake
property or to seize the claims after obtaining judgment.

Previous Exploration
--------------------

Several  companies and  individuals  have  conducted  exploration  activities on
various parts of the Dotted Lake property.  To date, no mineral deposit has been
delineated on the property,  and consequently  there has been no production from
the property nor any reserve or resource  estimated.  We have not yet  conducted
any exploration on the Dotted Lake property.

During March 2005,  we completed a magnetic and VLF-EM survey of the Dotted Lake
property using an airplane.  Magnetic  surveys involve  searching for changes in
the magnetic field over property  areas.  Magnetic  anomalies may be a result of
accumulations  of  certain  magnetic  rocks  such as  phrrhotite,  hematite  and
magnetite.  These rock  types are often  found  alongside  base  metals  such as
copper, zinc and nickel, or precious metals such as gold and silver.

VLF-EM surveys consist of two separate surveys:  a very low frequency survey and
an  electromagnetic  survey.  Very low  frequency  surveys  use  radio  waves to
determine whether rocks on a mineral property conduct electricity. Almost all of
the  precious  and base  metals  that we seek are above  average  conductors  of
electricity  and will  affect  VLF  readings.  Electromagnetic  surveys  involve
measuring the strength of the earth's magnetic field. Variations in the magnetic
readings on a property may indicate the increased likelihood of precious or base
minerals in the area.

We will focus  future  exploration  programs  on the  Dotted  Lake  Property  on
specific property areas based on the results of these surveys.

Proposed Exploration
--------------------

In his geological report on the Dotted Lake property,  our consulting geologist,
Andre Pauwels,  a professional  geologist.,  recommends a two phase  exploration
program for the Dotted Lake property.


                                                                              10

<page>

The first phase should consist of a TDEM (time domain electromagnetic) survey at
an estimated cost of $51,500.  The TDEM survey is one of the several geophysical
exploration  methods. In the conventional TDEM survey, an induction coil is used
as the  magnetometer.  It allows  conductivity  of rock below the  surface to be
measured at greater depths.

The second phase  should  consist of a drill  program to  determine  the mineral
content of rock below the surface of the Dotted Lake property. Drilling involves
extracting  a long  cylinder  of rock from the  ground to  determine  amounts of
metals at different  depths.  Pieces of the rock obtained,  known as drill core,
are analysed for mineral content.

Mr. Pauwels suggests the following budgets:

<table>
<caption>
PHASE I:  TDEM SURVEY AND RESEARCH

                                                                                               <c>
Planning , organization, supervision (senior geologist 9 days at $600 each):                        $5,400
Line cutting (15 kilometers at $500 each):                                                          $7,500
TDEM contract (12 kilometers at $1,500 each)                                                       $18,000
Mobilization of TDEM crew:                                                                          $6,000
Supplemental VLF/HLEM ground surveys:                                                               $3,000
Research western area of the claims (senior geologist 6 days at $600 each):                         $3,600
Processing 2005 airborne VLF data:                                                                  $2,500
Drafting, travel costs and miscellaneous:                                                           $3,000
Contingency 5%:                                                                                     $2,500

Total:                                                                                             $51,500

PHASE II:  DIAMOND DRILLING - SIX HOLES

Contract price (1,000 meters at $85 per meter):                                                    $85,000
Drill mobilization and de-mobilization:                                                            $15,000
Drill site preparation:                                                                             $7,200
Core boxes and supplemental drill supplies:                                                         $6,000
Assays (75 samples at $20):                                                                         $1,500
Senior geologist supervision, organization, logging travel:                                        $21,000
Field assistant for sampling and core handling (25 days at $200/day):                               $5,000
Report:                                                                                             $5,000
Drafting:                                                                                           $3,000
Domicile for geologist and field assistant:                                                         $5,200
Transportation (rental of trucks and snowmobiles)                                                   $2,000
Supplies for sampling and surveys, sample transport:                                                $2,000
Permitting and reclamation:                                                                         $6,000
Contingency 5%:                                                                                     $8,000

Total:                                                                                            $171,900
</table>




                                                                              11

<page>

The Dotted Lake property area  experiences a temperate  climate with moderate to
long cold winters and short warm to hot summers.  Total  precipitation  is about
1,000  millimeters,  including over three meters of snow.  Break up or freeze up
conditions may impinge upon exploration activities, but normally exploration and
mining may be conducted year round.  However,  it is more  economical to conduct
exploration  programs in spring and summer when access to and travel  across the
property  are  easier,  and when snow  removal for  surface  exploration  is not
required.

     4.3          COMPETITION

The  mineral  property   exploration   business,   in  general,  is  intensively
competitive and there is not any assurance that even if commercial quantities of
ore are discovered, a ready market will exist for sale of same. Numerous factors
beyond our control may affect the  marketability  of any substances  discovered.
These factors include market fluctuations, the proximity and capacity of natural
resource markets and processing  equipment,  government  regulations,  including
regulations  relating  to  prices,  taxes,  royalties,  land  tenure,  land use,
importing  and  exporting  of mineral and  environmental  protection.  The exact
effect of these factors cannot be accurately  predicted,  but the combination of
these  factors may make it  difficult  for us to receive an  adequate  return on
investment.

We compete  with many  companies  possessing  greater  financial  resources  and
technical facilities for the acquisition of mineral concessions,  claims, leases
and other  mineral  interests as well as for the  recruitment  and  retention of
qualified employees.

     4.4          MANAGEMENT & EMPLOYEES

We do not have any employees other than our directors and officers.

We are a party  to  an  agreement  with  Darcy  Krell,  our  Secretary,  whereby
Mr. Krell is engaged to perform certain  management  relations services  on  our
behalf at a fee of $2,500 per month. Mr. Krell is the  husband of our President,
Ms.  Linda Smith and the father of our director, Ms. Shannon Krell.

We retain Mr. Krell to arrange and negotiate  mineral property  acquisitions and
exploration  contracts  (subject to director  approval),  arrange for and secure
financings for the company,  arrange for the collection of all  receivables  and
the payment of all obligations,  establishing  and maintaining  suitable banking
relations,  ensuring the maintenance of proper  accounting  records and perusing
and replying to all corporate inquiries and correspondence.

     4.5          ENVIRONMENTAL REGULATIONS


We will be required  to comply with all  regulations,  rules and  directives  of
governmental  authorities and agencies applicable to the exploration of minerals
in Canada generally, and in the Province of Ontario,  specifically.  Under these
laws,  prior to production,  we have the right to explore the property,  subject
only to a notice of work which may entail  posting a bond.  To date, we have not
been  required  to post a bond with  respect to  exploration  on the Dotted Lake
property.



                                                                              12

<page>

In addition,  production of minerals in Ontario will require  prior  approval of
applicable  governmental  regulatory  agencies.  We can provide no  assurance to
investors that such  approvals will be obtained.  The cost and delay involved in
attempting to obtain such approvals cannot be known at this time.

We have budgeted for regulatory  compliance costs as part of our operations.  We
will have to sustain the cost of reclamation and environmental mediation for all
exploration work undertaken. The amount of these costs is not known at this time
as we do not know the extent of future exploration.

Permits and  regulations  will control all aspects of any production  program if
the  project  continues  to that stage  because of the  potential  impact on the
environment. Examples of regulatory requirements include:

  -       Water discharge will have to meet water standards;

  -       Dust generation will have to be minimal or otherwise re-mediated;

  -       Dumping of material on the surface will have to be re-contoured and
          re-vegetated;

  -       An assessment of all material to be left on the surface will need to
          be environmentally benign;

  -       Ground water will have to be monitored for any potential contaminants;

  -       The socio-economic impact of the project will have to be evaluated and
          if deemed negative, will have to be re-mediated; and

  -       There will have to be an impact report of the work on the local fauna
          and flora.

While we do not require any  authorization  to proceed with the initial phase of
the recommended  exploration program, we will be required to obtain work permits
from the Ontario  Ministry of  Northern  Development  and Mines for the Phase II
drilling program and any subsequent  exploration work that results in a physical
disturbance  to the land if the program calls for the  disturbance  of more than
10,000  square  meters of the property  surface,  or such areas that would total
that amount when combined.  There is no charge to obtain a work permit under the
Mining Act.

When our exploration  program proceeds to the drilling stage, we may be required
to post small bonds if the rights of a private  land owner may be  affected.  We
may also be required to file  statements  of work with the  Ministry of Northern
Development and Mines and to undertake  remediation work on any exploration that
results in physical  disturbance to the land. The cost of remediation  work will
vary according to the degree of physical disturbance.


ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS



                                                                              13

<page>

         5.1      RESULTS OF OPERATIONS

We are an exploration  stage company that owns the Dotted Lake property  located
in Ontario. To date, a majority of our operations and our expenditures have been
as a result of related party transactions.

In the fiscal year ended  January 31,  2006,  we incurred a net loss of $138,379
consisting  of office  expenses of $38,855,  accounting  and audit fees $35,128,
management fees of $30,000, travel and promotion costs of $23,061,  professional
fees of $5,000,  transfer  agent and filing  fees of  $4,239,  convertible  note
accretion recorded at $1,356 and depreciation expense of $740.

Our net loss  increased  from  $92,349 in fiscal 2005 to $138,379 in fiscal 2006
primarily  due to an  increase  in  accounting  and audit fees (from  $14,605 to
$35,128),  offices  expenses  (from $26,430 to $38,855) and travel and promotion
costs (from $9,971 to $23,061).


At January 31, 2006, we had assets recorded at $101,089 consisting of $16,945 in
cash,  a term  deposit of $6,900,  a tax  receivable  of  $5,080,  property  and
computer equipment of $1,725 and mineral claims of $70,439. At the same date, we
had  liabilities  of $1,060,566  consisting  of $79,698 in accounts  payable and
accrued  liabilities,  $941,192 in loans from related parties and long term debt
of $39,676.

     5.2          LIQUIDITY AND CAPITAL RESOURCES

Since our  incorporation,  we have financed our  operations  almost  exclusively
through  the sale of our common  shares to  investors  and  through  director or
shareholder loans. We expect to finance operations in this manner in the future,
as we have no  source  of  revenue  from our  business  operations.  There is no
guarantee that we will be successful in arranging financing on acceptable terms.

In the next twelve months,  we expect to complete the recommended  phase one and
phase two exploration  programs on the Dotted Lake property.  We anticipate that
the programs will cost approximately $51,500 and $171,900 respectively.

We  also  anticipate  spending  an  additional  $30,000  on  professional  fees,
including  fees payable in connection  with the filing of this annual report and
complying with other  reporting  obligations.  Administrative  expenses over the
period are expected to be approximately $60,000.

Total  expenditures  over  the  next 12  months  are  therefore  expected  to be
$313,400.  We do not have sufficient  funds on hand in order to proceed with the
phase two  recommended  program  or to cover our  anticipated  professional  and
administrative costs.

We  anticipate  that  additional  funding will be required in the form of equity
financing  from  the  sale of our  common  stock.  However,  we  cannot  provide
investors  with any assurance that we will be able to raise  sufficient  funding
from the sale of our common  stock to fund the second  phase of the  exploration
program.  We believe that debt financing will not be an alternative  for funding
the complete  exploration  program. We do not have any arrangements in place for
any future equity financing.



                                                                              14

<page>

To a significant  extent, our ability to raise capital is affected by trends and
uncertainties  beyond our control.  These include the market prices for base and
precious metals and results from our exploration programs. Our ability to attain
our business objectives may be significantly  impaired if prices for metals such
as gold,  copper and platinum  fall or if results from our intended  exploration
programs on our properties are unsuccessful.


ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

     6.1          DIRECTORS AND SENIOR MANAGEMENT


Directors:

Name of Director              Age
----------------------       ----
Linda Smith                   55
Shannon Krell                 27
Alexander Mancor              56

Executive Officers:

Name of Officer               Age        Office
--------------------         -----       -------
Linda Smith                   55         President and Chief Executive Officer
Darcy Krell                   57         Secretary

Ms. Linda Smith and Mr. Darcy Krell  are  husband  and wife.  Mr. Krell  is  the
father of Ms. Shannon Krell.

The following  describes the business  experience of our directors and executive
officers, including other directorships held in reporting companies:

Linda Smith

Linda Smith has acted as our president and as a director since October 27, 2000.
Ms. Smith also acted as Blue  Lightning  Ventures  Inc.'s  president  and  as  a
director from October 1999 to July 2004. She also acted in the  same  capacities
for Big Bar Gold  Corporation from August  1999 to  June 2003  and for Candorado
Operating  Company Ltd. from June 2000 to November 2001.  All of these companies
are British Columbia and  Alberta  reporting  corporations  involved  in mineral
property  exploration.  Ms. Smith also acted as treasurer and a director of Zeno
Inc. from January 2003 to November 2005.  Zeno Inc. was a U.S. reporting company
involved  in  mineral  property  exploration.   Mr.  Smith  was  also   employed
part-time  as a dental  assistant  from 1995 to 2002.  Ms. Smith aids Mr.  Darcy
Krell in providing management services to us.  She is not currently  compensated
for her services.



                                                                              15

<page>

Ms.  Smith  does not have any  professional training or technical credentials in
the  field of  mineral property exploration or development.  All of her business
time is devoted to our affairs.

Shannon Krell

Shannon Krell has acted as our director  since October 27, 2000.  She has been a
psychology  student for the past six years and is  currently  attending  Douglas
College  and  the   University  of  British   Columbia.   She  is  pursuing  her
undergraduate degree.

Ms.  Krell  does not have any  professional training or technical credentials in
the  field  of  mineral  property  exploration  or   development.   She  devotes
approximately 10% of her time to our affairs.

Alexander Mancor

Mr. Mancor has acted as our director  since October 27, 2000.  For the past five
years,  Mr.  Mancor  has  owned  and  managed  a series  of  residential  rental
properties  in  Burnaby,  British  Columbia.  From  1973 to 1995,  he acted as a
contract  distributor for Pacific Press Ltd. where he was in charge of wholesale
and retail  distribution of the Vancouver  Province and Vancouver Sun newspapers
in the Burnaby region.

Mr. Mancor does not have any professional  training or technical  credentials in
the  field  of  mineral   property   exploration  or  development.   He  devotes
approximately  10% of his time to our affairs.  The rest of his business time is
devoted to his private property management business.

Darcy Krell

Since 1996, Mr. Krell has acted as a private  investor in various  reporting and
private  companies.  He also  acted as a  director  of Big Bar Gold  Corporation
(March 2002 to April 2004) and Blue Lightning  Ventures Inc. (March 2002 to July
2004),  both of which are  Alberta  and  British  Columbia  reporting  companies
involved in mineral  property  exploration.  In  addition,  Mr.  Krell acts as a
director of  Algorithm  Media Inc.,  an Alberta and British  Columbia  reporting
company that is pursuing mineral property acquisitions.

Mr. Krell  does not have any  professional training or technical credentials  in
the   field  of  mineral  property  exploration   or  development.  He   devotes
approximately 35% of his time to our affairs.

There are no  arrangements  or  understandings  between any of our  directors or
executive  officers,  pursuant  to which they were  selected to be a director or
executive  officer,  nor are there  any  family  relationships  among any of our
directors and officers other than as follows:


                                                                              16

<page>

Ms. Linda  Smith  and  Mr. Darcy  Krell  are husband and wife.  Mr. Krell is the
father of Ms. Shannon Krell.

         6.2      COMPENSATION OF DIRECTORS

We are required,  under applicable securities legislation in Canada, to disclose
to our shareholders details of compensation paid to our directors. The following
fairly  reflects all material  information  regarding  compensation  paid to our
directors in our fiscal year ended January 31, 2005.

<table>
<caption>

                           Summary Compensation Table
=======================================================================================================================
    Name and                                                                    Long-term Compensation
   Principal
    Position        Year            Annual Compensation
-----------------------------------------------------------------------------------------------------------------------
                                                    Other
                              Salary       Bonus    Annual                Awards                LTIP         All Other
                                                    Compensation                                payouts    Compensation
-----------------------------------------------------------------------------------------------------------------------
                                                                                 Securities
                                                                                 Underlying
                                                                  Restricted      Options/
                                                                 Stock Awards       SAR's
-----------------------------------------------------------------------------------------------------------------------

              <c>          <c>           <c>       <c>       <c>             <c>             <c>         <c>
  Linda Smith       2006        Nil          Nil        Nil           Nil            Nil          Nil          Nil

   President,
Chief Executive
  Officer and
    Director
-----------------------------------------------------------------------------------------------------------------------
 Shannon Krell      2006        Nil          Nil        Nil           Nil            Nil          Nil          Nil

    Director
-----------------------------------------------------------------------------------------------------------------------
Alexander Mancor    2006        Nil          Nil        Nil           Nil            Nil          Nil          Nil

    Director
-----------------------------------------------------------------------------------------------------------------------
  Darcy Krell      2006      $30,000        Nil        Nil           Nil            Nil          Nil          Nil

   Secretary
=======================================================================================================================
</table>


We did not paid  compensation  to our  directors in our most  recently completed
fiscal year. Management fees are paid to Mr. Darcy Krell at a rate of $2,500 per
month.  Mr. Krell is our secretary.

         6.3      BOARD PRACTICES

Linda Smith has acted as our  President  and a director  since October 27, 2000.
Alexander  Mancor and Shannon Krell were  appointed as our directors on the same
date.  The directors  hold office until the next annual  general  meeting of the
shareholders  at which time they may stand for  re-election.  We are required to
hold an annual  general  meeting once in every calendar year and not longer than
thirteen months from the last annual general meeting.


                                                                              17

<page>

We are a party to an agreement  with Darcy  Krell,  our  secretary,  whereby Mr.
Krell is engaged to perform certain management  relations services on our behalf
at a fee of $2,500 per month.

Our audit  committee is comprised of Linda Smith,  Alexander  Mancor and Shannon
Krell. We have not appointed a remuneration committee.

         6.4      EMPLOYEES

We have not had any  employees  other  than our  directors  and  officers.  When
required, we have retained geological and other consultants.

         6.5      SHARE OWNERSHIP OF DIRECTORS AND OFFICERS

Our directors and officers own  beneficially the following shares as of the date
of this annual report:
                                                   Percentage of Outstanding
                     Number of Shares Owned           Common Shares

Linda Smith:                  567,825                     10.05%
Shannon Krell:                      0                      0.00%
Alexander Mancor:                   0                      0.00%
Darcy Krell:                  900,000                     15.92%

The above  percentages  are based on the  number of  common  shares  issued  and
outstanding  in our capital  stock as of the date of this annual report which is
5,651,714.

No incentive stock options are outstanding to our directors and officers.


ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

         7.1      BENEFICIAL OWNERSHIP

As used in this  section,  the term  "beneficial  ownership"  with  respect to a
security is defined by Regulation  228.403 under the Securities  exchange Act of
1934, as amended,  as consisting of: (1) any person who, directly or indirectly,
through any contract, arrangement, understanding,  relationship or otherwise has
or shares  voting  power  (which  includes  the power to vote,  or to direct the
voting of such  security)  or  investment  power  (which  includes  the power to
dispose,  or to direct the disposition  of, such  security);  and (2) any person
who, directly or indirectly,  creates or uses a trust, proxy, power of attorney,
pooling  arrangement  or any other  contract,  arrangement  or  device  with the
purpose or effect of divesting such person of beneficial ownership of a security
or preventing the vesting of such beneficial ownership.



                                                                              18

<page>

As of the date of this annual  report,  5,651,714  common  shares are issued and
outstanding.  The Company is authorized to issue up to 100,000,000 common shares
without par value.

As of the date of this annual report, the following persons known to us were the
beneficial owner of more than five percent of our outstanding common shares.

Name of Shareholder         Number of Shares       Percentage of Issued Shares

Darcy Krell*                     900,000                      15.92%
Sherman Jen                      637,500                      11.28%
Linda Smith*                     567,825                      10.05%
Ryan Krell*                      500,000                       8.85%
Frank McGill                     409,119                       7.24%

* Darcy Krell and  Linda Smith are  husband and wife.  Ryan Krell  is the son of
Darcy Krell.

Each of our issued  shares  entitles the holder to one vote in general  meeting.
There are no disproportionate or weighted voting privileges.

We are not  controlled  directly or indirectly by any other  corporation  or any
other foreign  government or by any other natural or legal person,  severally or
jointly.

There are no arrangements the operation of which at a subsequent date may result
in a change in our control.

     7.2          RELATED PARTY TRANSACTIONS

Since January 31, 2004, there are no transactions which have materially affected
or will  materially  affect  us in which  any  director,  executive  officer  or
beneficial  holder of more than 10% of our  outstanding  common stock, or any of
their respective relatives,  spouses,  associates or affiliates, has had or will
have any direct or material indirect interest except as follows:

       a)  we have paid or accrued  $2,500  per  month  for  management  fees to
           Darcy Krell doing  business  as DK Financial  Consultants.  Mr. Krell
           is our secretary and is the spouse of our president, Ms. Linda Smith;

       b)  we have paid or accrued $1,500 per month for rent and office expenses
           to Darcy Krell doing business as DK Financial Consultants;

       c)  as at January 31, 2006,  Ryan Krell,  brother of Shannon  Krell,  our
           director, and son of Darcy Krell, our secretary, has advanced a total
           of $104,043 to us as a non-interest  bearing loan with no fixed terms
           of repayment.  This amount is currently outstanding.  shall mature on
           January  1, 2008  unless  converted  into  equity  with each $0.05 of
           principal  outstanding  convertible  into one common  share  prior to
           maturity;



                                                                              19

<page>

       e)  as at  January  31,  2006, Linda Smith, our president and a director,
           has  advanced  a total of  $413,535  to us as a  non-interest bearing
           loan  with  no  fixed  terms  of r epayment. This amount is currently
           outstanding; and

       f)  as  at  January 31,  2006,  Darcy  Krell  has  advanced  a  total  of
           $348,614 to us as a non-interest  bearing loan with no fixed terms of
           repayment. This amount is currently outstanding.

       g)  as  at  January  31,  2006,  Shannon  Krell  has  advanced a total of
           $75,000 to us as a  non-interest  bearing loan with no fixed terms of
           repayment. This amount is currently outstanding.

We believe that the above related party  contracts are more favorable than those
that would be obtained in arm's  length  transactions  with third  parties.  All
loans  from  related  parties  do not bear  interest.  Our  management  and rent
agreements  with Mr. Darcy Krell are comparable to other such  agreements in the
industry.

     7.3          INTERESTS OF EXPERTS AND COUNSEL

Our experts and legal counsel have no interest in our shareholdings.

ITEM 8.             FINANCIAL INFORMATION

     8.1          LEGAL PROCEEDINGS

To the best of our  knowledge  there  are no legal  or  arbitration  proceedings
threatened,  pending or in progress  against us,  except for a British  Columbia
Supreme Court action by Ellis Foster, Chartered Accountants, our former auditor,
for $51,680.54 as at June 30, 2001, plus interest accruing  thereafter at a rate
of 1% per month.

Ellis Foster commenced legal action against us, Dalian Maple Leaf  International
School,  Sherman  Investment  Ltd. and Shu Liang  Sherman Jen and Lan Ying Li on
October 19, 2001.  The claim alleges that Ellis Foster  provided  accounting and
audit services to the defendants in connection with the preparation of financial
statements   relating  to  our  proposed   acquisition   of  Dalian  Maple  Leaf
International School.

We have filed a  Statement  of Defence in the action  denying  that we  retained
Ellis Foster to provide  accounting  and audit  services in connection  with the
preparation of financial statements for Dalian Maple Leaf International  School.
We  further  state  that  the  other  defendants  are  responsible  for any fees
incurred.  Ellis  Foster has not taken any steps to proceed with its legal claim
since November 23, 2001.

     8.2          SIGNIFICANT CHANGES

There have been no significant  changes since the date of the audited  financial
statements included herein.



                                                                              20

<page>

ITEM 9.           THE OFFER AND LISTING

     9.1          OFFER AND LISTING DETAILS

Our  common  shares  previously  traded on the  Canadian  Venture  Exchange  and
Vancouver  Stock Exchange  under the symbol "GMS".  On July 12, 2001, our shares
were  suspended  from trading on the TSX Venture  Exchange due to our failure to
meet the exchange's minimum working capital  requirements.  TSX Venture Exchange
rules  require  that  listed  companies  have a minimum of $50,000 in  allocated
working  capital.  At the time, we did not meet this  requirement and trading in
our shares was suspended. Accordingly, there is no current market for our common
shares.

The following table sets forth the high and low closing prices in Canadian funds
of our common shares during the time they traded  through the  facilities of the
Canadian Venture Exchange, and its predecessor, the Vancouver Stock Exchange:

         Period                              High                       Low
         ------                              ----                       ---
February 1, 1999 to January 31, 2000         $0.15                     $0.03
February 1, 2000 to January 31, 2001         $0.25                     $0.06
February 1, 2001 to July 12, 2001            $0.10                     $0.06

We intend to apply to have our common shares quoted on the National  Association
of Securities  Dealers'  over-the-counter  electronic  bulletin board.  However,
there is no certainty that such listing or any other stock exchange listing will
occur.

ITEM 10.    ADDITIONAL INFORMATION

     10.1   SHARE CAPITAL

Our authorized share capital  consists of 100,000,000  common shares without par
value.  Our  issued  share  capital  as of the  date of this  annual  report  is
5,651,714  fully paid  common  shares  without  par value.  We did not issue any
common shares in our capital in our fiscal year ended  January 31, 2003,  and we
have not issued any common shares since that date.

All shares  issued and to be issued in the future must be and have been approved
by  authorizing  resolution  consisting  of a simple  majority  of our  board of
directors.

We do not hold any of our own shares.

We do not have any potential obligations to increase our issued capital.

Since February 1, 2000, we have not issued any common shares in our capital.

     10.2   MEMORANDUM AND ARTICLES OF ASSOCIATION



                                                                              21

<page>

We were  incorporated  under the Company Act of British Columbia by registration
of  our  articles  of  incorporation   and  memorandum  and  were   subsequently
transitioned to the replacement  Business  Corporations Act in 2006. Pursuant to
the  provisions  of the  Business  Corporations  Act, a company  may conduct any
business that it is not restricted by the terms of its articles from conducting.
Our articles contain no such restrictions.

Our  directors are required to disclose to the board of directors the nature and
extent of their  interest  in any  proposed  transaction  or  contract  and must
thereafter refrain from voting in respect thereof. An interested director may be
counted in the quorum when a determination as to such director's remuneration is
being  considered  but may not vote in respect  thereof.  The directors  have an
unlimited power to borrow money,  issue debt  obligations and mortgage or charge
our  assets  provided  such  actions  are  conducted  bona  fide and in our best
interests.  There are no mandatory retirement ages for directors or any required
shareholdings.

All holders of common  shares are  entitled to receive  dividends  out of assets
legally  available  therefor  at such times and in such  amounts as the board of
directors  may from time to time  determine.  All holders of common  shares will
share  equally on a per share  basis in any  dividend  declared  by the board of
directors.  The  dividend  entitlement  time limit will be fixed by the board of
directors at the time any such  dividend is declared.  Each  outstanding  common
share  is  entitled  to one  vote  on all  matters  submitted  to a vote  of our
shareholders in general meeting.  There are no cumulative voting rights attached
to any of our  shares  and,  accordingly,  the  holders of more than half of the
shares  represented  at a general  meeting can elect all of the  directors to be
elected in a general meeting. All directors stand for re-election annually. Upon
any liquidation, dissolution or winding up, all common shareholders are entitled
to share ratably in all net assets available for  distribution  after payment to
creditors.  The common  shares are not  convertible  or  redeemable  and have no
preemptive,  subscription  or  conversion  rights.  In the  event of a merger or
consolidation,  all common shareholders will be entitled to receive the same per
share consideration.

The rights of  shareholders  may only be altered by the  shareholders  passing a
special resolution at a general meeting. A special resolution may only be passed
when  it has  been  circulated  to  all  shareholders  by way of an  information
circular  and then must be passed by  seventy-five  percent of the votes cast at
the general meeting.

The board of directors may call annual and  extraordinary  general meetings when
required.  One or more shareholders holding in aggregate five percent or more of
our issued shares may requisition an extraordinary meeting and the directors are
required  to hold such  meeting  within four  months of such  requisition.  Only
registered  shareholders  or persons duly  appointed by proxy may be admitted to
meetings unless otherwise permitted by the chairman of the meeting.

There are no national limitations or restrictions on the right to own our common
shares.

There are no  provisions  in our  articles  of  association  that would have the
effect of delaying, deferring or preventing a change in control.


                                                                              22

<page>

There are no  provisions  in our  articles of  association  that  establish  any
threshold for disclosure of ownership. However, the British Columbia and Alberta
Securities  Commissions  require that persons that are the registered owners of,
and/or  have  voting  control  over 10% or more of our common  shares  must file
insider reports disclosing securities holdings.

     10.3     MATERIAL CONTRACTS

We have not entered into any material contracts within the past two years.

     10.4    EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

There is no law or  governmental  decree or  regulation in Canada that restricts
the export  or  import  of  capital,  or  affects  the  remittance of dividends,
interest or other payments to a  non-resident  holder of  common  shares,  other
than withholding tax requirements.  See "Item 10.5. Taxation"

There is no limitation  imposed by Canadian law or by our constituent  documents
on the right of a  non-resident  to hold or vote common  shares,  other than are
provided in the  Investment  Canada Act (Canada).  The following  summarizes the
principal features of the Investment Canada Act (Canada).

The Investment Canada Act (Canada) requires certain "non-Canadian"  individuals,
governments,  corporation  or other  entities  who wish to  acquire a  "Canadian
business"  (as  defined in the  Investment  Canada  Act),  or  establish  a "new
Canadian  business" (as defined in the  Investment  Canada Act) to file either a
notification  or an application  for review with a governmental  agency known as
"Investment Canada". The Investment Canada Act requires that certain acquisition
of control  of  Canadian  business  by a  "non-Canadian"  must be  reviewed  and
approved by the Minister  responsible for the Investment Canada Act on the basis
that the  Minister is  satisfied  that the  acquisition  is "likely to be of net
benefit to Canada", having regard to criteria set forth in the Investment Canada
Act. Only  acquisitions  of control are reviewable  under the Investment  Canada
Act;  however,  the  Investment  Canada  Act  provides  detailed  rules  for the
determination of whether control has been acquired and, pursuant to those rules,
the acquisition of one-third or more of the voting shares of a corporation  may,
in some  circumstances,  be considered to constitute an  acquisition of control.
Certain  reviewable  acquisitions of control may not be implemented before being
approved  by the  Minister;  if the  Minister  does  not  ultimately  approve  a
reviewable acquisition, which has been completed, the acquired Canadian business
must be divested. Failure to comply with the review provisions of the Investment
Canada Act could result in, amongst other things, an injunction or a court order
directing disposition of assets of shares.

     10.5   CANADIAN FEDERAL INCOME TAX CONSEQUENCES TO UNITED STATES INVESTORS

A brief  description of certain  provisions of the tax treaty between Canada and
the United  States is included  below,  together with a brief outline of certain
taxes,  including withholding provisions to which United States security holders
are subject under existing laws and regulations of Canada and United States; the
consequences, if any, of state and local taxes are not considered. The following
information  is general  and  security  holders  are urged to seek the advice of
their  own  tax  advisors,  tax  counsel  or  accountants  with  respect  to the
applicability  or effect on their own individual  circumstances  of not only the
matters referred to herein, but also any state or local taxes.



                                                                              23

<page>

Canadian  federal tax  legislation  generally  requires a 25%  withholding  from
dividends paid or deemed to be paid to the Company's  nonresident  shareholders.
However,  shareholders  resident in the United States will  generally  have this
rate reduced to 15% through the tax treaty between Canada and the United States.
The amount of stock dividends paid to non-residents of Canada will be subject to
withholding tax at the same rate as cash dividends. The amount of stock dividend
(for tax  purposes)  would  generally be equal to the amount by which our stated
capital has increased by reason of the payment of such dividend. We will furnish
additional  tax  information  to  shareholders  in the event of such a dividend.
Interest paid or deemed to be paid on our debt  securities  held by non-Canadian
residents may also be subject to Canadian  withholding  tax,  depending upon the
terms and provisions of such  securities  and any  applicable tax treaty.  Under
present legislation in the United States, we are generally not subject to United
States back up withholding rules,  which would require  withholding at a rate of
20% on dividends and interest paid to certain United States persons who have not
provided us with a taxpayer identification number.

Gains  derived  from a  disposition  of shares of the company by a  non-resident
shareholder  will be subject  to tax in Canada  only if not less than 25% of any
class of our shares was owned by the nonresident shareholder and/or persons with
whom the  nonresident  did not  deal at arm's  length  at any  time  during  the
five-year  period  immediately  preceding the  disposition.  In such cases gains
derived by a U.S.  shareholder  from a disposition of our shares would likely be
exempt from tax in Canada by virtue of the Canada-U.S. tax treaty.

 10.6  UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO UNITED STATES INVESTORS

The following  general  discussion  sets forth a summary of the material  United
States  federal  income tax  consequences  that are  applicable to the following
persons  who  invest in and hold our  common  shares as  capital  assets  ("U.S.
Shareholders"):  (i) citizens or  residents  (as  specially  defined for federal
income tax purposes) of the United States,  (ii)  corporations  or  partnerships
created or organized in the United States or under the laws of the United States
or of any state and (iii)  estates  or trust the  income of which is  subject to
United States federal income taxation  regardless of its source. This discussion
does not deal  with (a) all  aspects  of  federal  income  taxation  that may be
relevant  to a  particular  U.S.  Shareholder  based on such U.S.  Shareholder's
particular  circumstances  (including  potential  application of the alternative
minimum tax,  (b) certain  U.S.  Investors  subject to special  treatment  under
federal income tax laws or foreign  individuals or entities,  (c) U.S. Investors
owning directly or by attribution  10% or more of our common shares,  or (d) any
aspect  of  state,  local or  non-United  States  tax  laws.  Additionally,  the
following  discussion  assumes  that the  Company  will not be  classified  as a
"foreign  personal  holding  company" under the Internal Revenue Code of 1986 as
amended (the "Code").

         PASSIVE FOREIGN INVESTMENT COMPANY



                                                                              24

<page>

For any of our  taxable  years,  if 75% or more of our gross  income is "passive
income" (as  defined in the Code) or if at least 50% of our  assets,  by average
fair market value (or adjusted income basis if the Company  elects),  are assets
that produce or are held for the production of passive income, we will be deemed
to be a Passive Foreign Investment Company ("PFIC").

A U.S.  Shareholder  of a PFIC is subject to  special U.S.  federal  income  tax
rules in Section 1291 to 1297 of the Code.  As described below, these provisions
set  forth  two  alternative  tax  regimes  at  the  election  of each such U.S.
Shareholder, depending upon whether the U.S. Shareholder elects to treat us as a
"qualified electing fund" (a QEF election").

U.S.  SHAREHOLDERS  ARE STRONGLY  URGED TO CONSIDER  MAKING  A  QEF ELECTION  TO
AVOID CERTAIN POTENTIALLY SIGNIFICANT ADVERSE U.S. TAX CONSEQUENCES

         The QEF Election Alternative

Each U.S.  Shareholder  is  strongly  urged to  consider  making a QEF  Election
because of the potential benefits of such election that are discussed below, and
because  we  anticipate  that we will not  have any  earnings  and  profits  (as
computed for United States federal income tax purposes) for the current  taxable
year and little,  if any,  earnings  and profits for any future  taxable year in
which we are a PFIC. There can be no assurance,  however,  that this will be the
case.  Accordingly,  the timely making of the QEF election,  as discussed below,
generally  should,  subject to the  discussion  below under  "Other PFIC Rules",
avoid any  significant  adverse  United State  federal  income tax  consequences
resulting from any classification of us as a PFIC, although this may depend on a
particular U.S. Shareholder's particular circumstances.

A U.S.  Shareholder  who  elects  in a  timely  manner  to treat us as a QEF (an
"Electing U.S. Shareholder") will be subject, under Section 1293 of the Code, to
current  federal  income tax for any taxable  year in which we are a PFIC (or is
treated as a PFIC with respect to the U.S.  Shareholder)  on such  Electing U.S.
Shareholder's  pro-rata  share of our (i) "net capital  gain" (the excess of net
long-term  capital gain over  short-term  capital loss),  which will be taxed as
long-term  capital  gain to the Electing  U.S.  Shareholder  and (ii)  "ordinary
earnings" (the excess of earnings and profits over net capital gain), which will
be taxed as ordinary income to the Electing U.S. Shareholder,  in each case, for
the  shareholder's  taxable year in which, or with which, our taxable year ends,
regardless of whether such amounts  actually are  distributed.  An Electing U.S.
Shareholder, however, would not take into account any income with respect to any
of our taxable years for which we have no earnings and profits.  Adjustments are
provided generally to prevent double taxation at the time of later distributions
on or dispositions of Common Shares.

The QEF election  also allows the Electing  U.S.  Shareholder  to (i)  generally
treat any gain realized on the disposition of our common shares (or deemed to be
realized on the pledge of such  shareholder's  common  shares) as capital  gain;
(ii)  treat  such  shareholder's  share  of our net  capital  gain,  if any,  as
long-term capital gain instead of ordinary income;  (iii) probably  (although in
the absence of  regulations  this  matter is not free from doubt)  retain in the
case of an individual Electing U.S. Shareholder,  the "step-up" in the tax basis
of Common  Shares to the fair  market  value of such  shares on the date of such
Electing U.S.  Shareholder's death (which would otherwise not be retained);  and
(iv) generally avoid interest charges resulting from PFIC status altogether.



                                                                              25

<page>

In the  event we are  deemed a PFIC,  we intend  to  comply  with the  reporting
requirements prescribed by Treasury regulations. In particular, we will maintain
information  so  that  our  ordinary  earnings  and  net  capital  gain  may  be
determined. However, future regulations may contain reporting and record-keeping
requirements  that are so  onerous  that it would not be  practicable  for us to
comply.  If, after review of the requirements,  we decide not to comply with the
PFIC record-keeping requirements, we will so notify our shareholders.

A QEF Election must be made by attaching  the following  documents to the timely
filed U.S.  federal  income tax  return for the first  taxable  year of the U.S.
Shareholder  in which or with which our taxable year during which we were a PFIC
and the U.S.  Shareholder  held (or was  considered  to have held) common shares
ends: (i) a "Shareholder  Section 1295 Election  Statement" executed by the U.S.
Shareholder,  (ii) a "PFIC Annual  Information  Statement"  received by the U.S.
Shareholder  from us, and (iii) a Form 8621.  In  addition,  the  Electing  U.S.
Shareholder must file a copy of the Shareholder  Section 1295 Election Statement
with the Internal Revenue Center, PO Box 21086,  Philadelphia,  PA 19114. In the
case of common  shares owned  through a U.S entity,  the election is made at the
entity level.

THE FOLLOWING THREE PARAGRAPHS APPLY TO ELECTING U.S. SHAREHOLDERS:

         DIVIDENDS PAID ON COMMON SHARES:

Dividends paid on our common shares  (including any Canadian taxes  withheld) to
an Electing U.S.  Shareholder  will be treated as ordinary  dividend  income for
United  States  federal  income tax  purposes  to the extent of our  current and
accumulated  earnings  and  profits (as  computed  for U.S.  federal  income tax
purposes)  unless  paid out of  earnings  and  profits  that  were  taxed to the
Electing U.S. Shareholder under the QEF rules. Such dividends generally will not
qualify for the dividends-received  deduction available to corporations.  Amount
in excess of such earnings and profits will be applied against the Electing U.S.
Shareholder's  tax basis in the  common  shares,  and to the extent in excess of
such tax basis,  will be treated as gain from a sale or  exchange of such common
shares.

         CREDIT FOR CANADIAN TAXES WITHHELD:

Subject to the limitations set forth in Section 904 of the Code (which generally
restricts the  availability of foreign tax credits to a U.S.  Shareholder's  tax
liability  attributable to foreign-source  income of the same type as the income
with respect to which the tax was imposed,  as determined under complex U.S. tax
rules),  the  Canadian  tax  withheld or paid with  respect to  dividends on the
common  shares  generally  may be taken as a foreign tax credit  against  United
States federal income taxes by an Electing U.S. Shareholder who chooses to claim
such a credit for the taxable year. Electing U.S. Shareholders who do not choose
to claim  foreign  tax credits for a taxable  year may claim  United  States tax
deduction for such Canadian tax in such taxable year.


                                                                              26

         DISPOSITION OF COMMON SHARES:

Any gain or loss on a sale or  exchange  of common  shares by an  Electing  U.S.
Shareholder will be capital gain or loss,  which will be long-term  capital gain
or loss if the  common  shares  have  been  held for more  than  one  year,  and
otherwise will be short-term  capital or loss. The sale of common shares through
certain  brokers  may  be  subject  to the  information  reporting  and  back-up
withholdings rules of the Code.

1.       THE NON-QEF ELECTION ALTERNATIVE

If a U.S.  Shareholder does not timely make a QEF Election for the first taxable
year  during  which he holds (or is  considered  to hold) the  common  shares in
question and we are a PFIC (a  "Non-electing  U.S.  Shareholder"),  then special
rules under Section 1291 will apply to (i) gains realized on the disposition (or
deemed to be realized by reason of a pledge) of common shares,  and (ii) certain
"excess  distribution"  (as  defined  in the Code) by us. We have never made any
distributions  with respect to our common shares and we do not anticipate making
any such distribution in the foreseeable future.

A  non-electing  U.S.  Shareholder  generally  would be required to pro-rate all
gains  realized  on  the  disposition  of  our  common  shares  and  all  excess
distributions  over such  shareholder's  entire  holding  period  for the common
shares. All gains or excess  distributions  allocated to prior years of the U.S.
Shareholder (provided such U.S. Shareholder's holding period and beginning after
December  31,  1986 for which it was a PFIC)  would be taxed at the  highest tax
rates for each such prior year  applicable to ordinary  income.  Special foreign
tax credit rules apply with respect to withholding taxes imposed on amounts that
are treated as excess  distributions.  The  Non-electing  U.S.  Shareholder also
would be liable for interest on the  foregoing tax liability for each such prior
year  calculated  as if such  liability  had been due with  respect to each such
prior year. A Non-electing U.S. Shareholder that is not a corporation must treat
this interest charge as "personal interest" which is non-deductible. The balance
of the gain or the excess distribution will be treated as ordinary income in the
year of the disposition or distribution  and no interest charge will be incurred
with respect to such balance.

If we are a  PFIC  for  any  taxable  year  during  which  a  non-electing  U.S.
Shareholder  holds,  or is considered to hold, our common  shares,  then we will
continue to be treated as a PFIC with respect to such common shares,  even if we
no longer meet the definition of a PFIC. A  Non-electing  U.S.  Shareholder  may
determine  this deemed PFIC status by electing to recognize  gain (which will be
taxed under the rules discussed above for Non-electing U.S.  Shareholders) as if
such common  shares had been sold on the last day of the last  taxable  year for
which it was a PFIC.  Certain other elections are also available to Non-Electing
U.S. Shareholders.

         OTHER PFIC RULES

Certain special,  generally adverse, rules will apply with respect to our common
shares while we are a PFIC, regardless of whether the common shares are held, or
considered  to be held, by an Electing or  Non-electing  U.S.  Shareholder.  For


                                                                              27

<page>
example,  under Section 1297(b)(6) of the Code, a U.S. Shareholder who uses PFIC
stock as security for a loan  (including  a margin loan) will,  except as may be
provided in regulations, be treated as having made a taxable disposition of such
stock.  In  addition,  under  Section  1291(f)  of the Code,  the  Treasury  has
authority to issue  regulations  that would treat as taxable  certain  transfers
that  are  generally  not so  treated,  such as  gifts,  exchanges  pursuant  to
corporate reorganizations, and transfers at death, although it is not clear that
such authority extends to transfers by Electing U.S. Shareholders.

         FUTURE DEVELOPMENTS

The foregoing  discussion is based on existing  provisions of the Code, existing
and proposed  regulations  thereafter,  and current  administrative  rulings and
court  decisions,  all of which are subject to change.  Any such  changes  could
affect the validity of this  discussion.  In  addition,  the  implementation  of
certain aspects of the PFIC rules requires the issuance of regulations  which in
many such instances have not yet been promulgated and which may have retroactive
effect. Furthermore,  legislation has been proposed which would replace the PFIC
provisions with a consolidated  anti-deferral regime. While this legislation was
vetoed, it may be re-introduced in subsequent years.

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

     10.7   STATEMENT BY EXPERTS

We have placed  reliance upon Morgan & Company,  Chartered  Accountants,  of 701
West Georgia Street, Suite 1400, Vancouver,  B.C., Canada V7Y 1C6, as experts in
accounting and auditing matters relating to the disclosure in this annual report
and the financial statements included therein.

All financial  information and related  contents  included in this annual report
has been reviewed and authorized by Morgan & Company.

     10.8   DOCUMENTS ON DISPLAY

You may  review  a copy of our  filings  with the SEC,  including  exhibits  and
schedules  filed  with it, at the SEC's  public  reference  facilities  at 100 F
Street NE,  Washington,  D.C. 20549. You may call the SEC at 1-800-SEC-0330  for
further  information on the public reference rooms. The SEC maintains a Web site
(HTTP://WWW.SEC.GOV) that contains reports, proxy and information statements and
other information  regarding  registrants that file electronically with the SEC.
We may make our  filings  with the SEC  electronically  as a  reporting  foreign
private issuer.


ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.



                                                                              28

<page>

ITEM 12. DESCRIPTIONS OF SECURITIES OTHER THAN EQUITY SECURITIES

         12.1     WARRANTS

We have no warrants issued and outstanding.

         12.2     STOCK OPTIONS

We have no incentive stock options issued and outstanding.

                                     PART II
                                     -------

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable

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

Not applicable

ITEM 15.

Not applicable



ITEM 16.

Not applicable




                                                                              29

<page>

                                    PART III


ITEM 17. FINANCIAL STATEMENTS

Our audited financial statements include:

o our balance sheets as at January 31, 2006 and January 31, 2005;

o the following statements for the fiscal years ended January 31, 2006 and 2005:

         o        statements of operations and deficit; and

         o        statements of cash flows; and

o notes to the financial statements.

All  of  these  were  audited  by  our  auditor,  Morgan  &  Company,  Chartered
Accountants.  The financial statements are prepared in accordance with generally
accepted  accounting  principles  in Canada and are  reconciled to United States
generally accepted accounting principles in the note disclosure. All figures are
expressed in Canadian dollars.

ITEM 18. FINANCIAL STATEMENTS

         See "Item 17 Financial Statement"
                      -------------------


ITEM 19. EXHIBITS

Exhibit 1:      Financial Statements

Exhibit 2:      Certificate of Incorporation*

Exhibit 3:      Memorandum and Articles of Association*

Exhibit 4:      Management  Agreement  dated  November 1, 2000 between  Gemstar
                Resources  Ltd. and Darcy Krell doing business as DK Financial
                Consultants.*

Exhibit 5:      Consent of Geologist**

Exhibit 12.1:   Certification pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 12.2:   Certification pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 13.1:   Certification of Chief Executive Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002

Exhibit 13.2:   Certification of Chief Financial Officer pursuant to Section 302
                of the Sarbanes-Oxley Act of 2002

  *  Previously filed with Form 20-F on September 16, 2003

  **  Previously filed with Form 20-F on December 20, 2004



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<page>


                                    SIGNATURE

The registrant hereby certifies that it meets all of the requirements for filing
on Form 20-F and that it has duly cause and authorized  the  undersigned to sign
this statement on its behalf.





                                                     GEMSTAR RESOURCES LTD.

Dated:  November 24, 2006
                                                     By:  /s/ Linda Smith

                                                         Linda Smith, President








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