UNITED STATES

SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549

________________

FORM 20-F



ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended January 31, 2007

Commission file number:  0-21968



BRAZAURO RESOURCES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)



|British Columbia(State or Other Jurisdiction of
Incorporation or Organization) | 76-0195574(I.R.S. Employer Identification No.)
|------------------------------------------------------------------------------ | ----------------------------------------------

16360 Park Ten Place, Suite 217

Houston, TX 77084

(Address of Principal Executive Offices, including Zip Code)

(281) 579-3400

(Registrants Telephone Number, Including Area Code)



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

|Title of Each ClassNone | Name of Exchange on Which RegisteredNone
|----------------------- | ----------------------------------------

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



Title of Each Class

COMMON STOCK

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

None



Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as January 31, 2007:

53,259,288 Common Shares



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

|Yes | No
|--- | --



Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Act.

|Yes | No
|--- | --



Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesNo



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

|Large accelerated filer | Accelerated filer | Non-accelerated filer
|----------------------- | ----------------- | ---------------------



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



|Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | Yes | No
|------------------------------------------------------------------------------------------------------- | --- | --





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BRAZAURO RESOURCES CORPORATION

FORM 20-F

TABLE OF CONTENTS

|Item   | Page   | 
|------ | ------ | 
|Number | Number
|       |        | 



|Item 1.  | Identity of Directors, Senior Management and Advisers      | 1 
|-------- | ---------------------------------------------------------- | --
|Item 2.  | Offer Statistics and Expected Timetable                    | 1 
|Item 3.  | Key Information                                            | 1 
|Item 4.  | Information on the Company                                 | 5 
|Item 4A. | Unresolved Staff Comments                                  | 10
|Item 5.  | Operating and Financial Review and Prospects               | 10
|Item 6.  | Directors, Senior Management and Employees                 | 14
|Item 7.  | Major Shareholders and Related Party Transactions          | 20
|Item 8.  | Financial Information                                      | 21
|Item 9.  | The Offer and Listing                                      | 22
|Item 10. | Additional Information                                     | 23
|Item 11. | Quantitative and Qualitative Disclosures About Market Risk | 35
|Item 12. | Descriptions of Securities Other than Equity Securities    | 36
|         |                                                            |   



PART II



|Item 13.  | Defaults, Dividend Arrearages and Delinquencies                              | 36
|--------- | ---------------------------------------------------------------------------- | --
|Item 14.  | Material Modifications to the Rights of Security Holders and Use of Proceeds | 36
|Item 15.  | Controls and Procedures                                                      | 36
|Item 16A. | Audit Committee Financial Expert                                             | 37
|Item 16B. | Code of Ethics                                                               | 37
|Item 16C. | Principal Accountant Fees and Services                                       | 37
|Item 16D. | Exemptions from the Listing Standards for Audit Committees                   | 37
|Item 16E. | Purchase of Equity Securities by the Issuer and Affiliated Purchasers        | 38



PART III



|Item 17. | Financial Statements | 38
|-------- | -------------------- | --
|Item 18. | Financial Statements | 38
|Item 19. | Exhibits             | 38





|Signatures | 60
|---------- | --





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|Item 1. | Identity of Directors, Senior Management and Advisors
|------- | -----------------------------------------------------



This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934, and as such, there is no requirement to provide any information under this item.



|Item 2. | Offer Statistics and Expected Timetable
|------- | ---------------------------------------



This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934, and as such, there is no requirement to provide any information under this item.



|Item 3. | Key Information
|------- | ---------------



A. Selected Financial Data



The selected consolidated  financial information set forth below for each of the
five years ended January 31, 2003,  2004,  2005,  2006 and 2007 has been derived
from the consolidated  financial  statements of Brazauro  Resources  Corporation
(the  Company)  for the years indicated and is expressed in Canadian
dollars.  The  selected  consolidated  financial  information  should be read in
conjunction  with the discussion in Item 5. Operating and Financial Review
and Prospects  and the Consolidated Financial Statements and related notes
thereto  included in Item 17. Financial Statements herein.  References in this Annual Report on
Form  20-F to  Notes  are  intended  to  refer  to the  Notes to the
consolidated financial statements included herein.



In this Annual Report on Form 20-F all currency refers to Canadian Dollars (Cdn$) unless indicated otherwise.



Since its formation, the Companys activities have consisted primarily of acquiring interests in mineral properties, exploration of those properties and acquiring financing for such purposes. Consequently, the selected consolidated financial data may not indicate the Companys future financial performance.



Selected Consolidated Financial Data



|                                     | Fiscal Year Ended January 31                     
|------------------------------------ | -------------------------------------------------
|                                     | 2007                                             
|                                     | (000s except for net loss per common share data)
|Operating revenues                   | -                                                
|Write-down of mineral properties     | 795                                              
|Net loss for the year                | (5,193)                                          
|Basic and diluted net loss per share | (0.10)                                           
|Working capital (deficit)            | 4,518                                            
|Total assets                         | 11,330                                           
|Total liabilities                    | 412                                              
|Net assets                           | 10,918                                           
|Common share capital                 | 53,729                                           
|Dividends per share                  | -                                                
|Weighted average shares outstanding  | 53,063                                           



The  consolidated  financial  statements  have been prepared in accordance  with
generally accepted accounting principles in Canada (Canadian  GAAP),
which differ in certain  respects  from the  principles  the Company  would have
followed had its consolidated  financial  statements been prepared in accordance
with generally accepted accounting  principles in the United States (United States GAAP).  A
discussion  of  differences  between  Canadian  GAAP and United  States  GAAP is
contained in Note 13 to the consolidated financial statements.



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If the Company had followed United States GAAP, certain items in the consolidated financial statements would have been reported as follow:



Selected Consolidated Financial Data (United States GAAP)



|                                            | Fiscal Year Ended January 31                     
|------------------------------------------- | -------------------------------------------------
|                                            | 2007                                             
|                                            | (000s except for net loss per common share data)
|Operating revenues                          | -                                                
|Write-down of mineral properties            | 31                                               
|Net loss for the year                       | (6,174)                                          
|Basic and diluted net loss per common share | (0.12)                                           
|Working capital (deficit)                   | 4,518                                            
|Total assets                                | 7,598                                            
|Total liabilities                           | 412                                              
|Net assets                                  | 7,186                                            
|Common share capital                        | 53,729                                           
|Dividends per share                         | -                                                
|Weighted average common shares outstanding  | 53,063                                           



Exchange Rates



On April 16, 2007, the noon buying rate in New York City for cable transfers in Canadian dollars, as certified for customs purposes by the Federal Reserve Bank of New York, was $1.00 (Canadian) = U.S. $0.8843. The following table sets forth, for each of the years indicated, additional information with respect to the noon buying rate for $1.00 (Canadian). Such rates are set forth as U.S. dollars per Canadian $1.00 and are based upon the rates quoted by the Federal Reserve Bank of New York.



|Rate        | 2006   | 2005   | 2004   | 2003   | 2002  
|----------- | ------ | ------ | ------ | ------ | ------
|Last Day    | 0.8582 | 0.8579 | 0.8310 | 0.7539 | 0.6542
|Average (1) | 0.8844 | 0.8276 | 0.7745 | 0.7289 | 0.6386
|High        | 0.9100 | 0.8690 | 0.8493 | 0.7880 | 0.6619
|Low         | 0.8528 | 0.7872 | 0.7177 | 0.6530 | 0.6200



(1) The average rate means the average of the exchange rates on the last day of each month during the year.



Canadian/United States Dollar Exchange Rates for the Previous Six Months

|Rate | October, 2006 | November, 2006 | December, 2006 | January, 2007 | February, 2007 | March, 2007
|---- | ------------- | -------------- | -------------- | ------------- | -------------- | -----------
|High | 0.8965        | 0.8869         | 0.8760         | 0.8586        | 0.8631         | 0.8673     
|Low  | 0.8784        | 0.8715         | 0.8582         | 0.8457        | 0.8437         | 0.8467     



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B. Capitalization and Indebtedness



This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934, and as such, there is no requirement to provide any information under this item.



C. Reason for the Offer and Use of Proceeds



This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934, and as such, there is no requirement to provide any information under this item.



D. Risk Factors



An investment in the Companys common shares is highly speculative and subject to a number of risks. Only those investors who can bear the risk of the entire loss of their investment should participate, and an investor should carefully consider the risks described below and the other information that we file with the Securities and Exchange Commission and with Canadian securities regulators before investing in the Companys common shares. Additional risks that the Company is unaware of or that are currently believed to be immaterial may become important factors that affect the Companys business. If any of the following risks occur, or if others occur, the Companys business, operating results and financial condition could be adversely impacted.



The Companys business plan to acquire additional exploration prospects, continue exploration activities on its current projects, and, if warranted, undertake development and mining operations, is subject to numerous risks and uncertainties, including the following:



Lack of Proven Properties and Development Funds. At this point, all of the Companys exploration prospects and property interests (collectively the Properties) are gold prospects in Brazil, and the Company has no income from operations. While the Company has sufficient funds to complete the exploration phase currently underway, additional funds will likely be necessary in order for the Company to pursue further exploration on its existing properties and to acquire and develop additional exploration prospects. Certain of the Companys planned expenditures are discretionary and may be increased or decreased based upon funds available to the Company.



As of April 20, 2007, the Company had sufficient cash to fund general and administrative expenses and to complete planned exploration and property payments during fiscal 2008. As discussed above, the Company will likely be required to raise additional capital for additional exploration activity on its existing properties and acquisition of new exploration prospects subsequent to fiscal 2008. There can be no assurance that additional funds can be raised. See Item 5. Operating and Financial Review and Prospects.



Limited Exploration Prospects.The Companys existing properties are all gold prospects in Brazil. Accordingly, the Company does not have a diversified portfolio of exploration prospects either geographically or by mineral targets. The Companys operations could be significantly affected by changes in the market price of gold, as the economic viability of the Companys projects is heavily dependent upon the market price of gold. Additionally, the Companys projects are subject to the laws of Brazil and can be negatively impacted by the existing laws and regulations of that country, as they apply to mineral exploration, land ownership, royalty interests and taxation, and by any potential changes of such laws and regulations.



Title to Properties.The Company cannot guarantee title to all of its Properties as the Properties may be subject to prior mineral rights applications with priority, prior unregistered agreements or transfers or native land claims, and title may be affected by undetected defects. Certain of the mineral rights held by the Company are held under applications for mineral rights and, until final approval of such applications is received, the Companys rights to such mineral rights may not materialize and the exact boundaries of the Companys properties may be subject to adjustment. The Company does not maintain title insurance on its properties.



Environmental  Laws. The exploration programs conducted
by the Company are subject to national, state and/or local regulations regarding
environmental  considerations in the jurisdiction  where they are located.  Most
operations involving  exploration or production activities are subject to existing laws and
regulations relating to exploration and



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mining procedures,  reclamation,  safety
precautions,  employee health and safety,  air quality  standards,  pollution of
stream and fresh water  sources,  odor,  noise,  dust,  and other  environmental
protection controls adopted by federal, state and local governmental authorities
as well as the rights of adjoining  property owners. The Company may be required
to prepare and present to federal, state or local authorities data pertaining to
the effect or impact that any proposed exploration or production of minerals may
have upon the environment.  All requirements imposed by any such authorities may
be  costly,  time  consuming,  and may delay  commencement  or  continuation  of
exploration  or production  operations.  However,  at this time,  the Company is
exploring its Properties and does not anticipate preparing  environmental impact
statements or assessments until such time as the Company believes one or more of
its Properties will prove to be commercially feasible.



Exploration and Development Risks.The business of exploring for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. At present, none of the Companys properties have a known body of commercial ore. The grade of any ore ultimately mined may differ from that indicated by drilling results. Major expenses may be required to establish ore reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the current development programs planned by the Company will result in a profitable commercial mining operation. Mineral deposits and production costs are affected by such factors as environmental permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or
unexpected geological formations and work interruptions.



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



Political Risk.Properties in which the Company has an interest are located in the Amazon basin in Brazil, which may be of particular interest or sensitivity to one or more interest groups, including aboriginal groups claiming title to land. Consequently, mineral exploration and mining activities in those areas may be affected in varying degrees by political uncertainty, expropriations of property and changes in applicable government policies and regulation such as business laws, environmental laws, native land claims entitlements or procedures and mineral rights and mining laws, affecting the Companys business in that area. Any changes in regulations or shifts in political conditions are beyond the control or influence of the Company and may adversely affect its business, or if significant enough, may result in the impairment or loss of mineral concessions or other mineral
rights, or may make it impossible to continue its mineral exploration and mining activities in such areas.



Potential  Dilution to Existing  Shareholders.The Company
will require  additional  financing in order to complete full exploration of its
mineral properties. The Company anticipates that it will have to sell additional
equity  securities  including,  but not  limited  to,  its common  stock,  share
purchase warrants or some form of convertible security. The effect of additional
issuances   of  equity   securities   will   result  in   dilution  to  existing
shareholders.



Limited Market for Common Shares.The liquidity of the common shares of the Company, or ability of the shareholder to buy or sell the Companys common stock, may be significantly limited for various unforeseeable periods. The average daily volume of the Companys shares traded on the TSX Venture Exchange during fiscal 2007 was approximately 56,000 shares. The market price of the Companys shares has historically fluctuated in a large range, as disclosed in Item 9 - The Offer and Listing. The price of the Companys common shares may be affected by many factors, including adverse change in the Companys business, a decline in gold price and general economic trends.



Insurance Coverage.Mineral exploration is subject to risks of human injury, environmental and legal liability and loss of assets. The Company may elect not to have insurance for certain risks because of the high premiums associated with insuring those risks or, in some cases, insurance may not be available for certain risks. Occurrence of events for which we are not insured could have a material adverse effect on the Companys financial position or results of operations.



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Key Executives.The Company is dependent on the services of key executives, including its Chairman, Mark E. Jones, III and its Director and retired President, Leendert G. Krol. Each of the above individuals has many years of background in the mining industry. The Company may not be able to replace that experience and knowledge with other individuals.



Fluctuations in Foreign Currency Exchange Rates. The Company raises its equity in Canadian dollars and its exploration expenditures are generally denominated in United States dollars. As a result, the Companys expenditures are subject to foreign currency fluctuations. Foreign currency fluctuations may materially and adversely increase the Companys operating expenditures and reduce the amount exploration activities that the Company is able to complete with its current capital. The Company does not engage in any hedging or other transactions to protect itself against such currency fluctuations.



Enforcement of Judgments against the Company.The Company is incorporated in the Province of British Columbia, Canada. Certain of our directors and officers live in Canada, and many of the Companys assets are located in Brazil and Canada. As a result, it may be difficult for investors to effect service of legal process within the United States upon directors and officers who are not United States residents. Also, there is uncertainty as to the enforceability in Canada, in original actions or for enforcement of judgments of U.S. courts, of civil liabilities predicated upon U.S. federal or state securities laws.



|Item 4. | Information on the Company
|------- | --------------------------



A. History and Development of the Company



The Company was incorporated  under the Company Act (British  Columbia) on March
12, 1986 under the name Texas Star Resources  Corporation.  The Company became a
public company in January 1988 when it undertook an initial  public  offering of
its Common Stock in British Columbia,  Canada and became listed on the Vancouver
Stock Exchange,  a predecessor to the TSX Venture Exchange.  The  Companys
name was amended to Star Resources Corp. in October 1996 and was further amended
to  Jaguar   Resources   Corporation  in  July  2003.  In  September  2004,  the
Companys name was changed to Brazauro Resources Corporation.



The authorized  capital of the Company consists of an unlimited amount of shares
of common  stock  without  par value (the  Common  Stock),  of which
76,362,621  shares were issued and  outstanding as of April 20, 2007. The Common
Stock  of  the  Company  ranks  equally  as  to  dividends,  voting  rights  and
participation  in assets and is traded under the symbol  BZO  on the
TSX Venture Exchange.



The Companys principal office is located at 16360 Park Ten Place, Suite 217, Houston Texas, U.S.A. 77094, and its phone number is (281) 579-3400. The Companys website may be found at www.brazauroresources.com.



The Company is engaged in the business of exploring for and, if warranted, developing mineral properties and is concentrating its current acquisition and exploration efforts on those properties which the Company believes have large scale gold potential. From inception and prior to 1988 the Company had limited business activities and through 1993 explored and abandoned several mineral properties. During fiscal 1993, the Company elected to pursue prospects with the potential for commercial diamond production.



The Company completed three acquisitions in fiscal 1993 consistent with its focus on diamond exploration prospects in the United States. During fiscal 1995 through 2003, the Company completed additional acquisitions in the United States and directly managed and funded exploration efforts on certain properties. In fiscal 2003 the Company decided to cease exploration efforts in Arkansas due to disappointing exploration results, and began to pursue mineral exploration prospects, particularly gold prospects in South America.



From fiscal 2003 through the present, the Company has concentrated its efforts on gold prospects in Brazil and currently holds interests in properties located in the Tapajós Gold District of Brazils northerly Pará State.





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Principal Capital Expenditures During Three Most Recent Fiscal Years



During fiscal 2005 the Company capitalized expenditures to mineral properties and deferred expenditures totaling approximately $2,100,000. These expenditures consisted of acquisition costs of approximately $550,000 and exploration costs of $1,550,000, primarily related to the Companys Tocantinzinho Properties in the Tapajós Gold District of Brazil, which are described in more detail in D. Property below. During fiscal 2005, the Company also conducted exploration on its Mamoal Property and acquired the Batalha Property, both located in the Tapajós Gold District of Brazil.



During fiscal 2006, the Company conducted further exploration activities on the Tocantinzinho and Mamoal Properties. Acquisition and exploration costs of approximately $750,000 and $1,830,000, respectively, were capitalized related to the activities on the Companys Tocantinzinho, Mamoal and Batalha Properties. Based upon the exploration results at the Mamoal Property, the Company determined that it was likely further exploration activities would not be conducted at the project. Accordingly, the net capitalized costs related to the Mamoal Property totaling approximately $910,000 were written off during the fourth quarter of fiscal 2006, and the property was abandoned.



In fiscal 2007, the Company acquired three additional properties in the Tapajós Gold District of Brazil, the Circulo, the Crepori and the Sucuri Properties. Significant exploration activities were conducted at the Companys Tocantinzinho and Sucuri Properties during fiscal 2007, resulting in the capitalization of acquisition and exploration costs of approximately $930,000 and $1,740,000, respectively. Based on the exploration results to date on the Sucuri Property, the Company has ceased exploration on the project in fiscal 2008 but intends to retain the property at this time. Accordingly, the capitalized exploration costs totaling approximately $710,000 were written off in fiscal 2007. Additionally, the Company conducted limited exploration activities on the Batalha Property in fiscal 2007 prior to abandoning the project and writing off the capitalized costs totaling approximately $70,000.



In February 2007, the Company completed the acquisition of certain mineral rights to the Tocantinzinho Property via the acquisition of the following three corporations. The Company acquired Resource Holdings 2004 Inc. (RH 2004, a British Virgin Islands corporation), and its wholly-owned subsidiary, Empresa Internacional de Mineração do Brasil Ltda. (EIMB, a Brazil corporation), in exchange for the issuance of 13,150,000 common shares of the Company and the payment of $50,000 (U.S.) to a third party. Additionally, the Company acquired Mineração Cachambix Ltda. (Cachambix, a Brazil corporation) from third parties upon payment of $850,000 (U.S.) and two future payments of $1,000,000 (U.S.) each, due in February 2008 and 2009.



B. Business Overview



Brazauro Resources Corporation is engaged in the business of exploring for and, if warranted, developing mineral properties and is concentrating its current acquisition and exploration efforts on those properties which the Company believes have large scale gold potential. The Company holds interests in properties located in the Tapajós Gold District of Brazils northerly Pará State.



The Companys mission is to discover and outline significant gold mineralization at its projects to bring on a major mining partner for development of its Properties. Upon acquisition of an exploration property, the Company typically performs geologic evaluation and exploration efforts to determine if the project warrants further work including, but not limited to geologic mapping and sampling, geophysical surveys, and drilling. The Company will continue to pursue mineral exploration prospects, focusing on the Tapajós and on a worldwide basis as opportunities arise, subject to adequate acquisition and exploration funding.



The Tapajós Gold District has a rich history of alluvial gold production. During the 1970s and 1980s, the Tapajós area annually produced approximately 30% to 40% of Brazils total gold output. Geologically, the Tapajós region is situated within the gold-productive, Archaean to Middle Proterozoic-aged Brazilian Shield that extends from Brazil through Guyana and into Venezuela. In the immediate area of the Companys projects, granitic basement rocks are intruded by subvolcanic andesitic and rhyolitic bodies, all of lower Proterozoic age. The widespread alluvial gold deposits point to the areas strong bedrock exploration potential.



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The Company is subject to regulation by the Federal mineral land agency in Brazil, the Departamento Nacional de Produção Mineral (DNPM). The Companys holds exploration licenses granted by the DNPM for the Tocantinzinho and Sucuri Properties and has applied for licenses to the DNPM for the Circulo and Crepori Properties.



Since its inception, the Company has had limited revenues from operations other than interest income on invested cash balances.



|C. | Organizational Structure
|-- | ------------------------



As of January 31, 2007, the Company had two wholly-owned subsidiaries; Brazauro Holdings (Brazil) Ltd., a British Columbia corporation (Brazauro Holdings), and Star U.S. Inc., a Delaware corporation (Star). Star in turn owns 100% of the stock of three corporations, Diamond Exploration, Inc. and Continental Diamonds, Inc., both of which are Arkansas corporations (DEI and CDI, respectively), and Diamond Operations, Inc., a Delaware corporation (DOI). The Company and Brazauro Holdings own 98% and 2%, respectively, of Jaguar Resources do Brasil Ltda., a Brazilian corporation. All references to the Company herein include its subsidiaries unless otherwise noted. The Companys Consolidated Financial Statements referred to herein also include its subsidiaries. The Companys fiscal year ends January 31.



D. Properties



Currently, all of the Companys Properties are located in the Tapajós Gold District of Brazils northerly Pará State. The general location of the Companys Brazilian Properties is shown on the map provided below. The map is followed by a description of the Companys rights and interests in each of the Properties.



























(This portion of the page is intentionally left blank.)





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Tocantinzinho Properties



In August 2003 the Company entered into an option to acquire exploration rights to a total of 28,275 hectares in the Tapajós gold district in Pará State, Brazil under an option agreement with two individuals (herein referred to as optionors). The option agreement entitles the Company to acquire a 100% interest in the exploration rights to such area (referred to herein as the Tocantinzinho Properties) over a four-year period in consideration for the staged payment of US$465,000 and the staged issuance of 2,600,000 shares of the Company.



Additionally, the option agreement required the Company to assume all existing obligations of the optionors to certain Brazilian residents in respect of the mineral rights to the Tocantinzinho Properties (the Underlying Agreements) totaling $1,600,000 (U.S.) over a four-year period. The optionors are entitled to a sliding scale gross revenues royalty ranging from 2.5% for gold prices below $400 (U.S.) per ounce to 3.5% for gold prices in excess of $500 (U.S.) per ounce in respect of the applications for exploration licenses subject to the option agreement.





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In fiscal 2006 the Company received exploration licenses in respect of the central 4,000 hectare area of the Tocantinzinho Properties on which it has been focusing its exploration efforts as well as for a 9,315 hectare area forming the north eastern and eastern boundary of the Tocantinzinho Properties. Under the option agreement the Company also holds rights to acquire two other applications for exploration licenses filed with the regulatory authorities in Brazil:  one covering 4,275 hectares that lies to the south of the central 4,000 hectare area and one (the Extension Area) covering 10,000 hectares that lies immediately to the east but continues well south of the central 4,000 hectare area. The mineralized zone discovered by the Company on the Tocantinzinho Properties starts on the central 4,000 hectare area and extends eastward beyond the boundary of the central 4,000 hectare area into the
Extension Area.



During fiscal year 2006, the Company became aware that third parties also had applied for exploration licenses to certain areas of the Tocantinzinho Properties, including large parts of the Extension Area on which a significant percentage of the mineralized zone discovered by the Company lay. In response, the Company undertook an extensive review of its title position. As a result of this review it became apparent that the application for an exploration license in respect of the Extension Area that the Company could earn under the Option Agreement did not have priority and that two third parties had claims to mineral rights over the Extension Area predating those subject to the Option Agreement. In fiscal 2007, the Company entered into agreements with the two third parties whereby the Company would acquire their interests in the area of the Tocantinzinho Properties (the Extension Area
Agreements) in exchange for 13,150,000 shares of the Company and payments totaling $3,000,000 (U.S.) over three years. During fiscal 2007, the Company made an initial payment of $150,000 (U.S.).



In December 2006, the Company was informed by the DNPM that the application to which one of the Extension Area Agreements relates had been confirmed as having the paramount title. During February 2007, the Company completed the transactions by the issuance of 13,150,000 common shares of the Company and payments totaling $900,000 (U.S.). To complete its obligations under the Extension Area Agreements the Company must pay two future payments of $1,000,000 (U.S.) each due in February 2008 and 2009.



Under a separate option agreement, the Company holds exploration permits for an additional 16,052 hectares adjacent to the western border of the above Tocantinzinho Properties. The Company has agreed to make payments totaling $300,000 (U.S.) over a period of approximately four years to an individual as a finders fee related to this 16,000 hectare property. This additional property is not subject to the option agreement and therefore is not subject to the royalty. The Company received an exploration license from the Brazilian regulatory authority with respect to the additional 16,052 hectares in fiscal year 2005.



The Company completed a diamond drill program consisting of twenty holes (4,693 meters) at the Tocantinzinho Properties during fiscal 2005 in which 19 of 20 holes encountered mineralization. The Company completed a follow-up fourteen-hole (3,759 meters) drilling program at the Tocantinzinho Properties in fiscal 2006.  In fiscal 2007, the Company completed a diamond drilling campaign, consisting of twelve core holes for a total of 3,022 meters, at the Tocantinzinho Properties. Drill results to date indicate an extended strike length of mineralization of greater than 650 meters and a width of up to 150 meters. Mineralization is open-ended to the South East and is still open at depth of a vertical 300 meters. The drilling results confirm the earlier reported intercepts of continuous lower grade mineralization with several zones of high grade from 26.82 to 374.40 grams of gold per ton over widths of 2.5 to 0.85
meters. In December 2006, the Company received a Canadian National Instrument 43-101 compliant estimate of the gold resource at the Tocantinzinho Properties.



Crepori Property



In July 2006 the Company entered into an option agreement under which it may acquire the exploration license to the 8,175 hectare Crepori Property, located in Pará State, approximately 220 kilometers from Itaituba. The Company has an option to earn 100% of the Crepori Property, with no residual production royalty obligations, by payment of a total of $800,000 (Brazilian reals) over three years. The Company may terminate the option agreement at any time without further obligation.





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Circulo Property



In the third quarter of fiscal 2007, the Company applied for exploration licenses with the DNPM for a total of approximately 38,096 hectares in Pará State located approximately 190 kilometers southwest from the city of Itaituba.



Sucuri Property



In July 2006 the Company entered into an option agreement under which it may acquire the exploration license to the 5,400 hectare Sucuri Property, located in Pará State, approximately 390 kilometers from the city of Itaituba, the city nearest to the Companys Tocantinzinho Properties. The Company has an option to earn 100% of the Sucuri Property by payment of a total of $1,000,000 (Brazilian Reals) over three years. The Company may terminate the option agreement at any time without further obligation. There are no production royalties in the option agreement. In addition to the optioned property, the Company has applied for an exploration license with the DNPM on an additional 4,861 hectares immediately south of the optioned property.



The Company has reviewed its exploration results related to the Sucuri property and has determined that exploration activities will be suspended during fiscal 2008. Accordingly, the capitalized exploration costs totaling $707,863 were written off in fiscal 2007. The Company will evaluate the viability of future exploration efforts at the Sucuri property during fiscal 2008.



Item 4A. Unresolved Staff Comments



Not applicable.



|Item 5. | Operating and Financial Review and Prospects
|------- | --------------------------------------------



A. Operating Results



For the Years Ended January 31, 2007, 2006 and 2005



The following discussion should be read in conjunction with the information contained in the consolidated financial statements and notes thereto included in Item 17. Financial Statements.



The Company is engaged in the business of exploring for and, if warranted, developing mineral properties and is concentrating its current acquisition and exploration efforts on those properties which the Company believes have large scale gold potential. The Company has been focusing on its Properties located in the Tapajós Gold District of Brazils northerly Pará State.



The Companys current Properties are in the exploration stage and have not been proven to be commercially developable to date. The Companys existing Properties are gold prospects in Brazil which were acquired during fiscal years 2004 through 2007. The Company capitalizes expenditures associated with the direct acquisition, evaluation and exploration of mineral properties. When an area is disproved or abandoned, the acquisition costs and related deferred expenditures are written-off. The net capitalized cost of each mineral property is periodically compared to managements estimation of the net realizable value and a write-down is recorded if the net realizable value is less than the cumulative net capitalized costs.



The Companys mineral properties and deferred expenditures increased to $6,368,126 at January 31, 2007 from $4,492,503 at January 31, 2006 as a result of acquisition costs totaling $926,402 and exploration costs totaling $1,744,921 related to the activities on the Companys Brazilian Properties, less the write-off of all of the capitalized costs related to the Batalha Property and the write-off of the exploration costs related to the Sucuri Property. As of January 31, 2007, the capitalized costs related to the Companys primary exploration target, the Tocantinzinho Properties, totaled approximately $6,310,000. The capitalized costs related to the Companys remaining three properties, the Circulo, Crepori and Sucuri Properties, totaled approximately $60,000 as of January 31, 2007.



10

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Based on the results of exploration  activities conducted during fiscal 2006 and
2007,  the Company  decided to terminate the Batalha  lease and the  capitalized
costs  totaling  approximately  $70,000  were  written off in fiscal  2007.  The
Company has reviewed its exploration  results related to the Sucuri property and
has determined that exploration activities will be suspended during fiscal 2008.
Accordingly,  the capitalized  exploration costs totaling approximately $710,000
were written off in fiscal  2007.  The Company  will  evaluate the  viability of
future exploration efforts at the Sucuri property during fiscal 2008.



The net increase during fiscal 2006 in mineral properties and deferred expenditures of $1,674,757 represented the total of acquisition costs of $753,897 and exploration costs of $1,827,395 related to the activities on the Companys Brazilian Properties less a writeoff of $906,535 related to the Mamoal Property. As a result of the Companys review of the exploration results from the Mamoal Property, the decision was made to abandon the property and all capitalized costs as of January 31, 2006 were written off.



The Company completed a diamond drill program consisting of twenty holes (4,693 meters) at the Tocantinzinho Properties during fiscal 2005 in which 19 of 20 holes encountered mineralization. The Company completed a follow-up fourteen-hole (3,759 meters) drilling program at the Tocantinzinho Properties in fiscal 2006.  In fiscal 2007, the Company completed a diamond drilling campaign, consisting of twelve core holes for a total of 3,022 meters, at the Tocantinzinho Properties. Drill results to date indicate an extended strike length of mineralization of greater than 650 meters and a width of up to 150 meters. Mineralization is open-ended to the South East and is still open at depth of a vertical 300 meters. The drilling results confirm the earlier reported intercepts of continuous lower grade mineralization with several zones of high grade from 26.82 to 374.40 grams of gold per ton over widths of 2.5 to 0.85 meters.



In December 2006, the Company received a Canadian National Instrument 43-101 qualified estimate of the gold resource at the Tocantinzinho Properties. The Company commenced a twelve hole drilling campaign at the Tocantinzinho Properties in the first quarter of fiscal 2008.



The Company has not received any revenues from mining operations since inception. During the years ended January 31, 2007, 2006 and 2005 the Companys revenues were comprised primarily of interest income on proceeds received from prior financings.



General and administrative expenses totaled approximately $4,759,000 during fiscal 2007 as compared to approximately $7,048,000 during fiscal 2006, representing a decrease of approximately $2,289,000 or 32%. The decrease in general and administrative expenses from fiscal 2006 as compared to fiscal 2007 is primarily related to the decrease in stock compensation expense. Included in general and administrative expenses during fiscal 2007 and 2006 were approximately $2,700,000 and $4,482,000, respectively, of stock compensation expense recorded using the fair value method. The Companys common stock options vest over a period of 18 months, with 25% of the fair value of the common stock options vested upon the date of issuance and 12.5% of the value of the common stock options vesting each quarter thereafter. In fiscal 2006, the Company issued 4,100,000 common stock options as compared to the 250,000 common
stock options issued in fiscal 2007. Additionally, most options issued in fiscal 2005 became fully vested in fiscal 2006, further reducing the stock compensation expense recorded in fiscal 2007.



General and administrative expenses increased by approximately $3,301,000 or 88%, from approximately $3,747,000 in fiscal 2005 to approximately $7,048,000 in fiscal 2006. Included in general and administrative expenses for fiscal 2006 and 2005 was approximately $4,482,000 and $2,123,000, respectively, of stock compensation expense recorded using the fair value method, which was an increase of approximately $2,359,000 from fiscal 2005 to fiscal 2006. The remaining increase in general and administrative expenses of approximately $942,000 was primarily related to the increased activities surrounding the exploration program underway in Brazil during fiscal 2006. After excluding the effect of the stock compensation expense recorded in fiscal 2006 and 2005, in comparison to fiscal 2005, salaries in fiscal 2006 increased by approximately $424,000 as additional personnel were added in Brazil, a vice president of
exploration was hired, and bonuses totaling approximately $270,000 were awarded to certain directors. Consulting and professional fees related to the additional activity in the Brazilian exploration program increased by approximately $302,000 during fiscal 2006 as compared to fiscal 2005.





11

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The Company anticipates that general and administrative expenses during fiscal 2008 will increase from the level experienced in fiscal 2007 as the Company incurs additional consulting and exploration expenditures related to the Brazilian Properties.



Differences Between Canadian and United States Generally Accepted Accounting Principles



At the present stage of the Companys business development, there are no significant differences between Canadian and United States generally accepted accounting principles that impact the Consolidated Balance Sheets, the Consolidated Statements of Operations, the Consolidated Statements of Shareholders Equity and the Consolidated Statements of Cash Flows except for the capitalization of mineral properties and deferred expenditures  as discussed in Note 13 to Notes to Consolidated Financial Statements.



Impact of Inflation.



As the Company is not anticipating recording sales and revenues from operations in the short term, a discussion of the effect of inflation and changing prices on its operations is not relevant.



B. Financial Condition; Liquidity and Capital Resources.



As of January 31, 2007, the Company had working capital of $4,517,581 as compared to working capital of $8,610,778 at January 31, 2006. At January 31, 2007, the Company had current assets of $4,929,151, including $4,846,358 in cash and $82,793 in other current assets compared to total current liabilities of $411,570.



In September, 2002, the Company completed a private placement of 2,819,774 units at a price of $0.20 per unit, each unit consisting of one common share and one share purchase warrant with an exercise price of $0.25 per unit. The share purchase warrants had an expiration date of September 18, 2004. The Company received a total of $563,955 during fiscal 2003 representing subscriptions for the private placement. During fiscal year 2005, all 2,819,774 common share warrants were exercised, and the Company received total exercise proceeds of $704,943.



In November 2004, the Company completed a private placement of 2,112,500 common shares of the Company at a price of $0.85 per share and received proceeds totaling $1,795,625. In consideration for assistance with the private placement, the Company paid finders fees of $96,950 in cash and issued 113,000 share purchase warrants entitling the finders to purchase 113,000 common shares of the Company at $1.05 per share until November 2, 2005. In fiscal 2006, the holders of the share purchase warrants elected to exercise all 113,000 warrants and the Company received proceeds of approximately $118,650.



In December 2004, the Company completed a private placement of 2,150,000 common shares of the Company at a price of $1.00 per share and received proceeds of $2,150,000.



During August 2005 the Company closed a private placement of 5,000,000 units at $1.90 per unit for gross proceeds of $9,500,000. The Company paid a brokerage commission on the placement of $475,000. Each unit consisted of one common share and one half of one share purchase warrant. Each whole warrant would entitle the holder to purchase one additional share of the Company at $3.80 for a period of one year. If the shares of the Company traded at $4.80 or higher on each trading day during a thirty day period, the exercise period of the warrants would accelerate and holders would have a period of 30 days thereafter to exercise their warrants, failing which they would expire. All of the 2,500,000 warrants expired unused in August 2006.



During March 2007 the Company closed a private placement of 9,253,333 units at $0.90 per unit for gross proceeds of $8,327,999. The Company paid a brokerage commission on the placement of $375,511. Each unit consists of one common share and one half of one share purchase warrant. Each whole warrant will entitle the holder to purchase one additional share of the Company at $1.60 for one year.



During fiscal 2007, 2006 and 2005 the Company received cash proceeds of $46,900, $1,287,142, and $477,577 representing the exercise of 127,643, 2,748,929, and 1,638,571 stock options, respectively, by officers, directors, employees and consultants at exercise prices from $0.10 to $1.30.





12

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In February 2007, the Company completed its acquisition of the mineral rights to
the Extension Area within Tocantinzinho  Property as a result of the acquisition
of the following three corporations. The Company acquired Resource Holdings 2004
Inc.  (RH  2004,  a British  Virgin  Islands  corporation),  and its
wholly-owned subsidiary,  Empresa Internacional de Mineração do Brasil
Ltda. (EIMB,  a Brazil corporation), in exchange for the issuance of
13,150,000 common shares of the Company and payment of $50,000 (U.S.) to a third
party. Additionally,  the Company acquired  Mineração  Cachambix Ltda.
(Cachambix,  a Brazil  corporation) from third parties by payment of
$850,000  (U.S.) and its  agreement  to make two future  payments of  $1,000,000
(U.S.) each, due in February 2008 and 2009.



All financings described herein were private placements and were made pursuant to the private placement laws of Canada and pursuant to the exemptions provided by Section 4(2) and Regulation S under the United States Securities Act of 1933.



The Company has no properties that have proven to be commercially developable and has no significant revenues from mining operations. The rights and interests in the Tocantinzinho, Sucuri, Crepori and Circulo Properties in Brazil constitute the Companys current mineral holdings. While the Company believes its has sufficient working capital as of the date to meet its commitments during fiscal 2008, the Company cannot estimate with any degree of certainty either the time or the amount of funds that will be required to acquire and conduct additional exploration activities on new prospects. The Company may seek additional equity financing during fiscal 2008, including the potential exercise of outstanding options and warrants. The inability of the Company to raise further equity financing could adversely affect the Companys business plan, including its ability to acquire additional properties and
perform exploration activities on existing properties. If additional equity is not available, the Company may seek exploration partners to assist in funding acquisition or exploration efforts. Historically, the Company has been able to successfully raise capital as required for its business needs; however, no assurances are made by the Company that it can continue to raise debt or equity capital for a number of reasons including its history of losses and property writedowns, the fluctuation in the price of its common stock, the number of shares outstanding and the Companys limited and speculative asset base of exploration properties and prospects.



C. Research and Development, Patents and Licenses



The Company is a mineral exploration company with no producing properties, so the information required by this item is not applicable.



D. Trend Information



The cyclical nature of the prices of metals, particularly the price of gold, is reasonably likely to have an effect on the Companys liquidity and capital resources. If the price of gold or the worldwide demand for gold decreases, there would likely be an adverse effect on the Companys ability to raise additional funding and attract exploration partners for its Properties.



E. Off-Balance Sheet Arrangements.



As of April 30, 2007, the Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Companys financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.



F. Contractual Obligations



As of January 31, 2007, the Company had no outstanding long-term debt, capital leases or other purchase obligations. The Companys operating lease obligations as of January 31, 2007 are as follows (in U.S. dollars):





13

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|Contractualobligations                         | Payments due by period
|---------------------------------------------- | ----------------------
|Total                                          | Lessthan1 year        
|Operating Lease Obligations-Mineral Properties | $ 3,245,000           







Additionally, the Company has lease payments required to maintain its current interests in its mineral properties. While these payments are not fixed obligations since the Company can abandon the mineral properties at any time without penalty or further payments, these payments are required in order to maintain the Companys interests. The timing of all such payments is as follows (all amounts are in U.S. dollars):  $1,208,000 and 700,000 common shares of the Company for the year ended January 31, 2008, and $733,000 for the two years ended January 31, 2009 and 2010.



G. Safe Harbor



Certain statements in this Form 20-F under Item 3. Risk Factors, Item 4. Properties, Item 5. Operating and Financial Review and Prospects, and Item 8. Financial Information and other factors may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; competition; success of operating initiatives; the success of the Companys exploration and development operations on its Properties; the Companys ability to raise capital and the terms thereof; the acquisition of additional properties; the continuity, experience and quality of the Companys management; changes in or failure to comply with government
regulations or the lack of government authorization to continue the Companys projects; and other factors referenced in this Form 20-F. The use in this Form 20-F of such words as believes, plans, anticipates, expects, intends and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. The success of the Company is dependent on the efforts of the Company, its employees and many other factors including, primarily, its ability to raise additional capital and establishing the economic viability of its exploration Properties.



Item 6. Directors, Senior Management and Employees



The directors and executive officers of the Company, their ages and term of continuous service are as follows:



|Name                                               | Age | Position withRegistrant      | Served As a Directorand/ or Officer Since
|-------------------------------------------------- | --- | ---------------------------- | -----------------------------------------
|D. Harry W. Dobson                                 | 59  | Director                     | May 27, 2005                             
|Patrick L. Glazier                                 | 49  | Director                     | July 8, 1998                             
|Brian C. Irwin                                     | 67  | Director                     | October 3, 1995                          
|Mark E. Jones, III                                 | 67  | Director, Chairman & CEO     | March 12, 1986                           
|Leendert G. Krol                                   | 67  | Director                     | March 6, 2003                            
|Daniel B. Leonard                                  | 70  | Director                     | October 20, 1999                         
|Dr. Roger Howard Mitchell                          | 65  | Director                     | June 14, 1993                            
|Dr. Roger David Morton                             | 71  | Director                     | June 14, 1993                            
|Stephen Zahony                                     | 65  | Vice President - Exploration | April 1, 2005 (1)                        
|(1)  Mr. Zahony resigned effective April 30, 2007.





14

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D. Harry W. Dobson.Mr. Dobson has served as the Chairman of Kirkland Lake Gold Inc. for the past five years. Mr. Dobson also serves as a Director of Mountain Province Diamonds, Inc, Belvedere Resources Ltd., Navan Capital Corp., Western Uranium Corporation and Suroco Energy Inc.



Patrick L. Glazier.Mr. Glazier has served as the President of East Fraser Fiber Co. Ltd. based in Prince George, British Columbia for the past five years.



Brian C. Irwin.For the past five years,Mr. Irwins principal occupation was been the practice of law as a partner of DuMoulin Black in Vancouver, British Columbia, until his retirement in June 2005. Mr. Irwin serves as a Director of Callinan Mines Ltd., Carlin Gold Corporation, Constantine Metal Resources Ltd., and Goldbelt Resources Ltd.



Mark E. Jones, III. Mr. Jones has served as Chairman of the Company from 1986 to the present. In his capacity as Chairman of the Board of Directors, Mr. Jones is the chief executive officer and chief financial officer of the Company. Additionally, Mr. Jones served as the President of the Company from 1986 to June 1990, from July 2001 to March 2003, and from May 2005 until the present. Mr. Jones has served as a Director of Crown Resources Corporation (Crown) from 1987 to 2006, when Crown was sold to Kinross Gold Corp. Mr. Jones is also a director of Solitario Resources Corporation, where he has served since 1992 and is currently Vice-Chairman of the Board of Directors.



Leendert G. Krol.Until his retirement in April 2001, Mr. Krol had spent 13 years with Newmont Mining Corporation including the last 10 years, successively, as Director of Foreign Operation, Vice President Exploration and Vice President International Exploration. Mr. Krol served as the Companys president from March 2003 until May 2005. Mr. Krol also serves as a Director of Romarco Minerals Inc.



Dan Leonard.Mr. Leonard served as Senior Vice President of INVESCO for twenty-four years until his retirement in January 1999. Mr. Leonard also serves as a Director of Solitario Resources Corporation.



Dr.Roger Howard Mitchell. For the past five years, Dr. Mitchell has served as a Professor of Geology at Lakehead University, Thunder Bay, Ontario.  Dr. Mitchell received his B.Sc. from the University of Manchester, 1964; M.Sc. from Manchester, 1966; Ph.D from McMaster University, 1969; and a D.Sc in 1978 from the University of Manchester.  He was elected a Fellow of the Royal Society of Canada in 1994.



Dr.Roger David Morton. For the past five years, Dr. Morton has been Professor Emeritus in Geology with the Department of Earth and Atmospheric Sciences at the University of Alberta. He also serves as Chairman of the Board for Mindoro Resources Inc., and is President of Muskox Minerals Corp. He is a member of the Board of Directors of Uruguay Mineral Resources and Black Swan Resources. Dr. Morton obtained his B.Sc. (Hons. 1st class) in Geology and his Ph.D. in Geology from the University of Nottingham, England.



Mr.Stephen G. Zahony. Prior to his employment with the Company, Mr. Zahony worked as a self-employed consultant. Mr. Zahony served as Chief Geologist for Saudi Arabian Mining Co. from March, 2000 to April, 2002. Mr. Zahony has a M.A. degree from Dartmouth College and has forty years of exploration and mining experience with a number of major and junior mining and exploration companies.



No director or officer of the Company has any family relationship with any other officer or director of the Company.



B. Compensation



Officers



The Company has no long-term incentive plans. However stock options are awarded from time-to-time at the discretion of the Board of Directors and the Compensation Committee. The following tables set forth all annual and long-term compensation for services in all capacities to the Company and its subsidiaries for the three most recently completed financial years, including information regarding stock option awards made under the Companys Stock Option Plan.



15

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Summary Compensation Table



|                                    |              | Annual Compensation   | Long Term Compensation |                            
|----------------------------------- | ------------ | --------------------- | ---------------------- | ---------------------------
|                                    |              |                       |                        |                            
|NameandPrincipalPosition            | FiscalYear   | SalaryUS ($)          | BonusUS ($)            | Other AnnualCompensation($)
|Mark E. Jones, IIIChairman          | 200720062005 | 120,000120,000120,000 | 6,000106,0008,000      | -
-
-                      
|Leendert G. KrolPresident (1)       | 200720062005 | 60,00088,000120,000   | 6,000106,00010,000     | ---                        
|Stephen G. ZahonyVice President (2) | 20072006     | 120,000
85,333        | 4,000
4,000            | --                         



(1) Mr. Krol began serving as the Companys President in March 2003 and retired in May 2005.

(2) Mr. Zahony began serving as the Companys Vice President - Exploration in May 2005 and resigned in April 2007. In April 2005, the Company entered into an employment agreement with Mr. Zahony with a one year term and annual compensation of US$120,000. The contract was renewed in April 2006.

(3) Car allowance.



Long Term Incentive Plan (LTIP) Awards

The Company does not have a LTIP, pursuant to which cash or non-cash compensation intended to serve as an incentive for performance over a period greater than one financial year (whereby performance is measured by reference to financial performance or the price of the Companys securities) was paid to the officers during the most recently completed financial year.



Option/Stock Appreciation Rights (SAR) Grants During the Most Recently Completed Financial Year

The following  table sets forth stock options  granted under the  Companys
stock option plan or otherwise during the most recently completed financial year
to each of the officers.

Option Grants During the Most Recently Completed Fiscal Year



|Individual Grants (1)
|---------------------
|Name                 
|Mark E. Jones, III   
|Leendert G. Krol     
|Stephen G. Zahony    



(1)  The options are subject to vesting requirements (25% on the date of grant and 12.5% on each quarter end thereafter).

(2)  The exercise price of stock options is determined by the Board of Directors but shall in no event be less than the trading price of the common shares of the Corporation on the TSX Venture Exchange (the Exchange) at the time of the grant of the option, less the maximum discount permitted under the regulations of the Exchange.



The following  table sets forth details of all exercises of stock options during
the  most  recently  completed  financial  year by each of the  Named  Executive
Officer  of  the  Corporation,  and  as of  January  31,  2007,  the  number  of

16

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unexercised  options held by the Named  Executive  Officers,  and the  financial
year-end  value of  unexercised  in-the-money  options on an  aggregated  basis.



Option Exercises in Last Fiscal Year







|Name               | Securities
Acquired
on Exercise

(#) | Aggregate
Value
Realized

($) | Unexercised
Options
at Fiscal
Year-End
(#)
Exercisable/
Unexercisable | Value of Unexercised
In-the-Money
Options
at Fiscal Year-End
($)
Exercisable/
Unexercisable
|------------------ | ------------------------------------ | ----------------------------- | --------------------------------------------------------------------- | -------------------------------------------------------------------------------------------
|Mark E. Jones, III | Nil                                  | Nil                           | 1,500,000 - Exercisable
Nil  Unexercisable                           | Nil - Exercisable
Nil  Unexercisable                                                      
|Leendert G. Krol   | Nil                                  | Nil                           | 1,500,000 - Exercisable
Nil  Unexercisable                           | 5,566 - Exercisable
Nil  Unexercisable                                                    
|Stephen G. Zahony  | Nil                                  | Nil                           | 656,250 - Exercisable
93,750  Unexercisable                          | Nil - Exercisable
Nil  Unexercisable                                                      



Directors



Beginning July 1, 2005, the Company and Mr. Irwin entered into a consulting agreement with a term of one year and a monthly fee of $5,000. During fiscal 2007, in addition to the cash bonuses disclosed above for Mr. Jones and Mr. Krol, Mr. Irwin received a bonus of $9,623. The Company maintains no pension, profit sharing, retirement or other plan providing benefits to its officers and directors.



The Company has no arrangements, standard or otherwise, pursuant to which directors are compensated by the Company or its subsidiaries for their services in their capacity as directors during the most recently completed fiscal year or subsequently, up to and including the date of this Annual Report other than the payments disclosed above.



C. Board Practices



All directors are elected annually by the shareholders and hold office until the next Annual Meeting of Shareholders. There are no directors service contracts with the Company that provide for benefits for the directors upon termination of service.



Messrs. Leonard, Mitchell and Morton are members of the Companys Audit Committee, all of whom are independent directors under the rules of the Securities Exchange Act of 1934, as amended. Mr. Leonard serves as the Audit Committees financial expert.



The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders, the Companys systems of internal controls regarding finance and accounting and the Companys auditing, accounting and financial reporting processes. Consistent with this function, the Audit Committee will encourage continuous improvement of, and should foster adherence to, the Companys policies, procedures and practices at all levels. The Audit Committees primary duties and responsibilities are to:

| | Serve as an independent and objective party to monitor the Companys financial reporting and internal control system and review the Companys financial statements.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Review and appraise the performance of the Companys external auditors.
|- | -----------------------------------------------------------------------

| | Provide an open avenue of communication among the Companys auditors, financial and senior management and the Board of Directors.
|- | ---------------------------------------------------------------------------------------------------------------------------------

17

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Messrs. Jones,  Mitchell  and  Morton  are  members  of the  Companys
Environmental  Committee,  and Messrs. Morton and Jones serve as members of
the  Companys  Compensation  Committee.  The  Compensation  Committee  has
responsibility  for  determining  compensation  for  the  directors  and  senior
management. To determine compensation payable, the Compensation Committee reviews compensation paid for directors and CEOs of companies of similar size and stage of development in the mineral exploration industry and determines an appropriate compensation reflecting the need to provide incentive and compensation for the time and effort expended by the directors and senior management while taking into account the financial and other resources of the Company. In setting the compensation, the Compensation Committee annually reviews the performance of the CEO in light of the Companys objectives and considers other factors that may have impacted the success of the Company in achieving itsobjectives.



D. Employees



The Companys principal office is located in Houston, TX. The Company also maintains administrative offices in Belem, Brazil and field offices in Itaituba, Brazil. The Company had 24 full-time employees at January 31, 2007; however, the Company retains consultants, independent contractors and part-time employees on an as-needed basis in connection with its exploration and development activities. Three of the Companys full-time employees were based in the United States and the remaining employees were based in Belem and Itaituba, Brazil.



Beginning in fiscal 2006, the Companys exploration manager in Brazil provided services to a subsidiary of the Company under a consulting contract with a term of one year for total compensation of approximately $120,000 (U.S.) per year. Additionally, in fiscal 2006 the Company granted the exploration manager options with a term of five years to purchase 100,000 and 300,000 common shares at exercise prices of $1.15 and $2.00, respectively. In the first quarter of fiscal 2008, the exercise price of the 400,000 options to purchase common shares was amended to $0.86.



E. Share Ownership



The following table sets forth, as of April 20, 2007, the number of the Companys common shares beneficially owned by the directors and members of senior management of the Company, individually, and as a group, and the percentage of ownership of the outstanding common shares represented by such shares.



The shareholders listed below possess sole voting and investment power with respect to the shares shown.



|Name of Beneficial Owner                                    | Number of Shares | Percent of Class
|----------------------------------------------------------- | ---------------- | ----------------
|D. Harry W. Dobson                                          | 600,000 (1)      | *               
|Patrick L. Glazier (2)                                      | 1,965,547 (1)    | 2.6 %           
|Brian C. Irwin                                              | 500,000 (1)      | *               
|Mark E. Jones, III                                          | 2,923,752 (1)    | 3.8 %           
|Leendert G. Krol                                            | 1,500,000 (1)    | 1.9 %           
|Daniel B. Leonard                                           | 1,479,124 (1)    | 1.9 %           
|Dr. Roger Howard Mitchell                                   | 405,494 (1)      | *               
|Dr. Roger David Morton                                      | 405,428 (1)      | *               
|Stephen G. Zahony                                           | 750,000 (1)      | *               
|Officer and Directors of the Company as a group
(9 persons) | 10,529,345 (1)   | 12.7 %          



* Less than 1%.



18

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(1)  A director of the Company. Includes the following options to purchase common shares:



|Name                      | Number of Options
(#)                          | Exercise Price
($)       | Date of Expiration                                                                     
|------------------------- | ---------------------------------------------- | ------------------------ | ---------------------------------------------------------------------------------------
|D. Harry W. Dobson        | 300,000300,000                                 | 1.252.00                 | May 31, 2010August 4, 2010                                                             
|Patrick L. Glazier        | 33,484
120,995
141,875
55,000
61,000
187,646   | 0.400.921.021.101.302.00 | October 21, 2008June 11, 2009July 29, 2009November 19, 2009March 22, 2010July 21, 2010 
|Brian C. Irwin            | 17,283
228,844
47,000
50,500
156,373           | 0.921.021.101.302.00     | June 11, 2009July 29, 2009November 19, 2009March 22, 2010July 21, 2010                 
|Mark E. Jones, III        | 51,765
657,245
135,500
155,100
500,390         | 0.921.021.101.302.00     | June 11, 2009July 29, 2009November 19, 2009March 22, 2010July 21, 2010                 
|Leendert G. Krol          | 17,956
251,328
470,001
136,500
155,100
469,115 | 0.490.921.021.101.302.00 | November 26, 2008June 11, 2009July 29, 2009November 19, 2009March 22, 2010July 21, 2010
|Daniel B. Leonard         | 54,252
191,875
47,000
50,500
156,373           | 0.921.021.101.302.00     | June 11, 2009July 29, 2009November 19, 2009March 22, 2010July 21, 2010                 
|Dr. Roger Howard Mitchell | 55,027
141,875
38,000
40,000
125,098           | 0.921.021.101.302.00     | June 11, 2009July 29, 2009November 19, 2009March 22, 2010July 21, 2010                 
|Dr. Roger David Morton    | 31,652
166,250
37,000
40,000
125,098           | 0.921.021.101.302.00     | June 11, 2009July 29, 2009November 19, 2009March 22, 2010July 21, 2010                 
|Stephen G. Zahony         | 343,627
156,373
250,000                        | 1.302.001.36             | April 1, 2010July 21, 2010April 1, 2011                                                



(2)  The beneficial owner has sole ownership, with the exception of a total of 275,376 shares, where ownership is shared.



19

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Shares Subject to Options



The Company maintains a stock option plan for its directors, officers and employees and may issue up to 10,000,000 options. The following table sets forth the Corporations compensation plans under which equity securities are authorized for issuance at the dates indicated.



|Equity Compensation Plan Information as of January 31, 2007
|-----------------------------------------------------------
|Plan category                                              
|                                                           
|Equity compensationplans approved bysecurity holders       
|Equity compensationplans not approved bysecurity holders   
|Total                                                      



Under the terms of the plan, the exercise price of each option equals the closing market price of the Companys stock on the date of grant. The options granted under the Companys stock option plan are subject to vesting requirements (25% on the date of grant and 12.5% on each quarter end thereafter) and have a term of five years. Options are issued at the discretion of the Board of Directors. As of April 20, 2007, included in the 8,077,000 common share options outstanding were the common stock options granted to directors and officers as disclosed in the second preceding table plus a total of 395,000 and 932,000 common stock options issued to employees and consultants, respectively.



Item 7. Major Shareholders and Related Party Transactions



A.  Major Shareholders



The following table sets forth, as of April 20, 2007, the number of Common Stock and the corresponding percentage ownership of each person who held of record, or was known by the Company to own beneficially, more than five percent of the Companys Common Stock. Unless otherwise indicated, the Company believes the following persons have sole voting and investment power with respect to the number of shares set forth opposite their names.



|Name and Address of Beneficial Owner                                             | Number of Shares | Percent of Class
|-------------------------------------------------------------------------------- | ---------------- | ----------------
|Cede & Co. (1)P.O. Box 20, Bowling Green StationNew York, New York 10274         | 25,863,538       | 33.9%           
|CDS & Co. (1)P. O. Box 1038, Station A, 25 The EsplanadeToronto, Ontario M5W 1G5 | 24,514,435       | 32.1%           

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|Name and Address of Beneficial Owner                                        | Number of Shares | Percent of Class
|--------------------------------------------------------------------------- | ---------------- | ----------------
|BrazMin Corp.Craigmuir Chambers, P.O. Box 1038, Station ARoad Town, Tortola | 13,150,000       | 17.2%           

|Roytor & Co.
Royal Bank Plaza North Tower
15th Floor, 200 Bay Street
Toronto, Ontario | 5,000,000 | 6.6%
|------------------------------------------------------------------------------------- | --------- | ----



(1)  It is the understanding of the Company that all of these shares are held by the record shareholder in a nominal, fiduciary, trustee or similar capacity. The Company is unaware of the identities of the beneficial owners of these shares, with the exception of shares held by the Companys officers or directors included in such share positions.



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



The Companys common stock is issued in registered form and the following information is taken from the records of Computershare Investor Services Inc. located in Vancouver, British Columbia, Canada, the registrar and transfer agent for the common stock. As of March 30, 2007, there were 95 holders of record of the Companys Common Stock including 64 in the United States who collectively held 28,184,198 common shares, representing 37% of the total issued and outstanding shares of 75,662,621 common shares.



In February 2007 the Company and BrazMin Corp. entered into a Voting Trust and Placement Rights Agreement (the Voting Agreement) pursuant to which the Company has the right to direct the voting of the shares issued to BrazMin Corp. except in certain conditions, including but not limited to a merger, amalgamation or a sale of all or substantially all of the Companys assets. Further, the Company has the right to find purchasers for the shares if BrazMin Corp. wishes to sell. The Voting Agreement will terminate on the earliest of: (i) the day following the second shareholders meeting after the Voting Agreement is entered into, (ii) eighteen months after the Voting Agreement is entered into, and (iii) the date on which the shares held by BrazMin Corp. and its affiliates represent in the aggregate less than 10% of the then outstanding shares.



B. Related Party Transactions



During fiscal 2007 and 2006, Mr. Irwin, a director, was paid consulting fees of $64,623 and $69,515 for advisory services to the Company.



C. Interests of Experts and Counsel



This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934, and as such, there is no requirement to provide any information under this item.



Item 8. Financial Information



A. Consolidated Statements and Other Financial Information



Consolidated Financial Statements



The Consolidated Financial Statements of the Company included as part of this Annual Report on Form 20-F are incorporated by reference in response to this Item 8. An index to the Consolidated Financial Statements is included in Item 17.

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Legal or Arbitration Proceedings



Except as described in Note 9 of the Notes to the Companys Consolidated Financial Statements, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their property is subject. The Company is involved from time to time in claims arising in the normal course of business.



Dividend Policy



The Company has never declared or paid cash dividends on its Common Stock. The Company presently intends to retain cash for the operation and development of its business and does not anticipate paying cash dividends in the foreseeable future. A future determination as to the payment of dividends will depend on a number of factors, including future earnings, capital requirements, the financial condition and prospects of the Company and such other factors as the Board of Directors of the Company deems relevant.



B. Significant Changes



In February 2007, the Company completed its acquisition of the mineral rights to the Extension Area of Tocantinzinho Property as a result of the acquisition of the following three corporations. The Company acquired Resource Holdings 2004 Inc. (RH 2004, a British Virgin Islands corporation), and its wholly-owned subsidiary, Empresa Internacional de Mineração do Brasil Ltda. (EIMB, a Brazil corporation), in exchange for the issuance of 13,150,000 common shares of the Company and payments of $50,000 (U.S.) to a third party. Additionally, the Company acquired Mineração Cachambix Ltda. (Cachambix, a Brazil corporation) from third parties by payment of $850,000 (U.S.) and its agreement to make two future payments of $1,000,000 (U.S.) each, due in February 2008 and 2009.



Item 9. The Offer and Listing



A. Offer and Listing Details



The Companys Common Stock is listed on the TSX Venture Exchange (the TSX) in British Columbia, Canada under the symbol BZO (SRS through September 17, 2003 and JRS through September 3, 2004). The Companys Common Stock is not traded on an exchange or market in the United States.



The high and low sales prices (in Canadian dollars) as quoted on the TSX for the below referenced fiscal years were as follows:



|                              | Price Range of Common Stock (1)
|----------------------------- | -------------------------------
|Fiscal Year Ended January 31, | High                           
|2007                          | 1.64                           
|2006                          | 2.50                           
|2005                          | 1.80                           
|2004                          | 0.54                           
|2003                          | 0.85                           



(1)  The Companys stock traded under the symbol SRS through September 17, 2003 and under JRS from September 18, 2003 through September 3, 2004.



The high and low sales prices (in Canadian dollars) as quoted on the TSX for the below referenced quarterly periods were as follows:



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|                     | Price Range of Common Stock 
|-------------------- | ----------------------------
|                     | Fiscal Year Ended January 31
|                     | 2007                        
|Fiscal Quarter Ended | High                        
|April 30             | 1.64                        
|July 31              | 1.62                        
|October 31           | 1.30                        
|January 31           | 1.40                        



The high and low sales prices (in Canadian dollars) as quoted on the TSX for the below referenced months were as follows:



|                  | Price Range of Common Stock
|----------------- | ---------------------------
|Month Ended       | High                       
|October 31, 2006  | 1.27                       
|November 30, 2006 | 1.29                       
|December 31, 2006 | 1.40                       
|January 31, 2007  | 0.96                       
|February 28, 2007 | 1.00                       
|March 31, 2007    | 1.00                       



Trading in the Companys common shares was halted at the Companys request from January 27, 2006 to February 16, 2006 while the Company reviewed the status of the title to certain areas of the Tocantinzinho Properties.



B. Plan of Distribution



This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934, and as such, there is no requirement to provide any information under this item.



C. Markets



The common shares of the Company trade on the TSX Venture Exchange under the symbol BZO.



Item 10. Additional Information



A. Share Capital



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This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934, and as such, there is no requirement to provide any information under this item.



B. Memorandum and Articles of Association



The Company was incorporated on March 12, 1986 and its Notice of Articles and Articles (the Articles) are registered with the British Columbia Registrar of Companies under Corporation No. 305977. A copy of the Articles is filed as an exhibit to this Form 20-F.



Objects and Purposes

The Companys Articles do not specify objects or purposes.



Directors  Powers and Limitations



The Companys Articles do not specify a maximum number of directors. Shareholders at the annual shareholders meeting determine the number of directors annually and all directors are elected at that time and hold office until the next annual shareholders meeting. There are no staggered directorships. There is no mandatory retirement age under the Companys Articles. Directors borrowing powers are not generally restricted where the borrowing is in the Companys best interests. Directors do not need to own any shares of the Company in order to qualify as directors.



Under the Articles the directors are entitled between successive annual general meetings to appoint one or more additional directors but not more than one-third of the number of directors fixed at a shareholders meeting or actually elected at the preceding annual shareholders meeting. Directors automatically retire at the commencement of each annual meeting but may be re-elected thereat.



Under the Articles, a director who is in any way directly or indirectly interested in a proposed contract or transaction with the Company, or who holds any office or possesses any property whereby directly or indirectly a duty might be created which would conflict with his duty or interest as a directors, shall declare the nature and extent of such interest in such contract or transaction. A director shall not vote in respect of any such contract or transaction and if he should vote, his vote shall not be counted, but he may be counted in the quorum present at the meeting. Similarly, under the British Columbia Business Corporations Act (BCA) directors are obligated to abstain from voting on matters in which they may be financially interested after fully disclosing such interest. Directors compensation is not a matter on which they must abstain.



Descriptions of rights, preferences and restriction attaching to each class of shares



Common Shares

The Company has one class of shares, common shares without par value of which an unlimited number are authorized and 76,362,621 are outstanding as of April 20, 2007. All common shares rank pari passu for the payment of dividends and distributions in the event of wind-up or liquidation.



Some of the significant provisions under British Columbia law and the Companys Articles relating to the common shares are summarized as follows:



Capital increases and Other Changes

Authorized capital increases as well as other changes to the constituting documents require a directors resolution or an ordinary resolution.



Shares Fully Paid

All Company shares must, by applicable law, be issued as fully paid for cash, property or services.



Redemption

The Company has no redeemable securities authorized or issued.



Pre-emptive Rights

There are no pre-emptive rights applicable to the Company which provide a right to any person to participate in offerings of the Companys securities



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No Limitation on Foreign Ownership

There are no limitations under the Companys Articles or in the BCA on the right of persons who are not citizens of Canada to hold or vote common shares.



Dividends

Dividends may be declared by the Board out of available assets and are paid ratably to holders of common shares.



Voting Rights

Each common share is entitled to one vote on matters to which common shares ordinarily vote including the election of directors, appointment of auditors and approval of corporate changes.



Shareholder Meetings

The Companys Articles state that the Company will hold an annual shareholders meeting within 15 months of the preceding annual shareholders meeting, will provide to shareholders of record the notice required under the BCA, and will provide for certain procedural matters and rules of order with respect to the conduct of the meeting. The Company must hold an annual shareholders meeting open to all shareholders to attend in person or by proxy.



Change in Control

There are no provisions in the Companys Articles that would have an effect of delaying, deferring, or preventing a change in control of the Company.



Insider Share Ownership Reporting

The articles of the Company do not require disclosure of share ownership. Share ownership of director nominees must be reported annually in proxy materials sent to the Companys shareholders. Insiders of the Company (generally officers, directors and holders of 10% of voting shares) are required under the Securities Act (British Columbia) to disclose trading in the Companys securities within 10 days of the trade. Controlling shareholders (generally those in excess of 20% of outstanding shares) must provide seven days advance notice of share sales.



Securities Act (British Columbia)

This statute applies to the Company and governs matters typically pertaining to public securities such as continuous quarterly financial reporting, immediate disclosure of material changes, insider trade reporting, take-over protections to ensure fair and equal treatment of all shareholders, exemption and resale rules pertaining to non-prospectus securities issuances as well as civil liability for certain misrepresentations, disciplinary, appeal and discretionary ruling maters. All Of the Companys shareholders regardless of residence have equal rights under this legislation.



C. Material Contracts



The following is a summary of the material contracts entered into by the Company for the two years ended April 30, 2007.



The letter agreement dated September 11, 2006 among the Company, BrazMin Corp. and EIMB pursuant to which the Company acquired RH 2004 and EIMB.



The Quota Purchase Agreement, dated February 5, 2007 among Sabino Orlando Conceição Loguercio, Luiz Antonio Gravata Galvão, Jaguar Resources do Brasil, Mineração Cachambix LTDA, and Brazauro Holdings (Brazil) Ltd., relating to the acquisition of certain mineral rights to the Extension Area, pursuant to which the Companys subsidiary acquired Cachambix.



D. Exchange Controls



The Company is not aware of governmental laws, decrees or regulations in Canada restricting the import or export of capital or affecting the remittance to the United States of interest, dividends or other payments to non-resident holders of the Companys Common Stock. However, the payment or crediting of interest or dividends to United States residents may be subject to applicable withholding taxes at a rate prescribed by the Income Tax Act (Canada) as modified by the provisions of the Canada-United States Income Tax Act (Canada) and as further modified by the provisions of the Canada-United States Income Tax Convention, 1980 (see Taxation below).



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Except as provided in the Investment Canada Act (the ICA), there are no limitations under the laws of Canada, the Province of British Columbia or in the charter and organizational documents of the Company on the right of nonresident or foreigner owners to hold and/or vote the shares of the Company.



The  ICA  applies  when  a  non-Canadian  individual  or  entity  or
controlled  group  of  entities  as  defined  in the  ICA  proposes  to  make an
investment to acquire control of a Canadian business enterprise, either directly
or  indirectly,  and by way of purchase of voting shares of a corporation  or of
substantially  all of the assets used in the Canadian  business  enterprise.  An
investment in voting shares of a corporation  is deemed to be an  acquisition of
control where more than 50% of the voting shares are acquired. An acquisition of
less than one-third of the voting shares of a corporation is deemed not to be an
acquisition of control and an  acquisition of between  one-third and one-half of
the voting shares of a corporation  is presumed to be an  acquisition of control
unless it can be  established  that the  acquisition  does not in fact result in
control of the corporation by the investor.



An investment to acquire control of a Canadian business enterprise, the gross assets of which exceed certain thresholds, must be reviewed and approved under the ICA before implementation. An investment to acquire control of a Canadian business enterprise, the gross asset value of which falls below these threshold amounts, is one in respect of which notification must be given under the ICA although approval is not required prior to implementation of the investment.  NAFTA Investors, (i.e.) investors who are nationals, other than Canadian, as defined in the North American Free Trade Agreement, are not considered for the purposes of the ICA to be non-Canadian.



E. Taxation



Dividends. Generally, dividends paid by a Canadian corporation to non-resident shareholders are, under the Income Tax Act (Canada) (the ITA), subject to a withholding tax of 25%. However, paragraph 2 of Article X of the Canada-United States Income Tax Convention (1980) (the Treaty) provides for the following maximum withholding tax rates:



| | a) | 10% of the gross amount of the dividends if the beneficial owner of such dividends is a U.S. resident company which owns at least 10% of the voting stock of the corporation paying the dividends; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) | 15% of the gross amount of the dividends in all other cases.
| | -- | ------------------------------------------------------------



Subject to certain limitations and exceptions, U.S. resident shareholders of a Canadian corporation may be entitled to a credit for all or a portion of such withholding taxes in computing their U.S. federal and possibly their state income tax liability.



Dividends paid by a Canadian corporation to shareholders resident in Canada will not be subject to withholding tax. Any dividends received by a Canadian resident on shares of the Company will be treated for tax purposes as dividends from a taxable Canadian corporation. Accordingly, where a dividend is received from a public company by an individual resident in Canada, the individual will be entitled to claim a federal dividend tax credit, equal to 18.97% of the dividend. Where the dividend is received by a corporation resident in Canada, the dividend will normally be free of tax under Part I of the ITA but may be subject to refundable tax under Part IV of the ITA.



Disposition of Capital Property. If shares of a Canadian
public  corporation  held  by  a  non-resident  shareholder  constitute  capital
property to that shareholder, the disposition of such shares will not be subject
to tax  under  the ITA  unless  the  shares  constitute  taxable  Canadian
property  to the vendor. Where a non-resident  shareholder or persons with
whom the non-resident  shareholder  does not deal at arms  length have, at
any time  during the five year period  immediately  preceding  the  disposition,
owned not less than 25% of the issued  shares of any class of the capital  stock
of  the  public   corporation,   the  shares  so  disposed  of  will  constitute
taxable  Canadian  property.  Under the ITA, a disposition of shares
that constitute taxable Canadian property will give rise to a capital gain (or a
capital loss) equal to the amount by which the proceeds of  disposition  of such
shares,  net of any cost of disposition,  exceeds (or is less than) the adjusted
cost basis of such shares to that investor.  Generally,  one-half of any capital
gain realized by an investor on a disposition or a deemed  disposition of such a
shares must be  included in  computing  his  Canadian  income for that year as a
taxable capital gain.  One-half of any capital loss realized by an investor on a
disposition  or



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deemed  disposition  of  such a share  in a  taxable  year  may
generally  be  deducted  from  his  Canadian  taxable  capital  gains  for  that
year.

Any gains realized by a non-resident shareholder from the disposition of shares which are taxable Canadian property may be exempt from tax under the ITA by virtue of Article XIII of the Treaty if, at the time of the disposition of the subject shares, the value thereof was derived principally from something other than direct or indirect real property interests situated in Canada.



Under the ITA, the disposition of a share by an investor may occur or be deemed to occur in a number of circumstances including on a sale or gift of such share or upon the death of that investor.



The initial adjusted cost base of a share to an investor will be the cost to him of that share. Under the ITA, certain addition or reduction adjustments may be required to be made to the cost base of a share. The adjusted cost base of each common share of a corporation owned by an investor at any particular time will be the average adjusted cost base to him of all common shares of that corporation owned at that time.



Subject to certain limitations and exceptions, U.S. resident shareholders of a Canadian corporation may be entitled to a credit for all or a portion of any capital gain taxation in computing their U.S. federal and possibly their state income tax liability.



In general, the disposition by a shareholder resident in Canada of the capital stock in a Canadian corporation will be subject to Canadian income taxation in the same manner as rules described above relating to a disposition of share which constitutes taxable Canadian property.



Disposition of Non-Capital Property.If the shares of a Canadian public corporation held by a non-resident do not constitute capital property to that shareholder, any gains realized from the disposition thereof will be fully taxable under the ITA if their disposition arises in the course of a business carried on by the shareholder in Canada. Under the ITA, a shareholder will be deemed to carry on business in Canada in respect of particular shares if he offers them for sale in Canada through an agent, including the TSX Venture Exchange. Under the Treaty, any business profits derived by a U.S. resident shareholder of a Canadian public corporation from the disposition of the subject corporations shares will only be taxable in Canada to the extent that such profits are attributable to a permanent establishment of the shareholder in Canada.



The foregoing discussion is a summary of certain tax considerations which may be relevant to stockholders of the Company, but it is not intended as a substitute for personal tax planning and professional tax advice.



U.S. Federal Income Tax Consequences

The following is a summary of certain material U.S. federal income tax consequences to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of Common Stock.



This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax consequences that may apply to a U.S. Holder as a result of the acquisition, ownership, and disposition of Common Stock. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Stock. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder. Each U.S. Holder should consult its own tax advisor regarding the U.S. federal income, U.S. state and local, and foreign tax consequences of the acquisition, ownership, and disposition of Common Stock.



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Scope of this Summary



Authorities



This summary is based on the Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations (whether final, temporary, or proposed), published rulings of the Internal Revenue Service (the IRS), published administrative positions of the IRS, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the Canada-U.S. Tax Convention), and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date of this Annual Report. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive basis. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be
applied on a retroactive basis.



U.S. Holders



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



Non-U.S. Holders



For purposes of this summary, a non-U.S. Holder is a beneficial owner of Common Stock other than a U.S. Holder. This summary does not address the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Stock to non-U.S. Holders. Accordingly, a non-U.S. Holder should consult its own tax advisor regarding the U.S. federal income, U.S. state and local, and foreign tax consequences (including the potential application of and operation of any income tax treaties) of the acquisition, ownership, and disposition of Common Stock.



U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed



This summary does not address the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Stock to U.S. Holders that are subject to special provisions under the Code, including the following U.S. Holders:  (a) U.S. Holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial institutions, insurance companies, real estate investment trusts, or regulated investment companies; (c) U.S. Holders that are dealers in securities or currencies or U.S. Holders that are traders in securities that elect to apply a mark-to-market accounting method; (d) U.S. Holders that have a functional currency other than the U.S. dollar; (e) U.S. Holders that are liable for the alternative minimum tax under the Code; (f) U.S. Holders that own
Common Stock as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (g) U.S. Holders that acquired Common Stock in connection with the exercise of employee stock options or otherwise as compensation for services; (h) U.S. Holders that hold Common Stock other than as a capital asset within the meaning of Section 1221 of the Code; (i) U.S. Holders who are U.S. expatriates or former long-term residents of the United States; or (j) U.S. Holders that own (directly, indirectly, or by attribution) 10% or more of the total combined voting power of all classes of shares of the Company entitled to vote. U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisors regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Stock.



If an entity that is classified as a partnership for U.S. federal income tax purposes holds Common Stock, the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Stock to such partnership and the partners of such partnership generally will depend on the activities of the partnership and the status of such partners. Partners of entities that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Stock.



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



This summary does not address the U.S. state and local, U.S. federal estate and gift, or foreign tax consequences to U.S. Holders of the acquisition, ownership, and disposition of Common Stock. Each U.S. Holder should consult its own tax advisor regarding the U.S. state and local, U.S. federal estate and gift, and foreign tax consequences of the acquisition, ownership, and disposition of Common Stock.



U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Common Stock

Distributions on Common Stock



General Taxation of Distributions



Subject to the passive foreign investment company rules discussed below, a U.S. Holder that receives a distribution, including a constructive distribution, with respect to the Common Stock will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated earnings and profits of the Company. To the extent that a distribution exceeds the current and accumulated earnings and profits of the Company, such distribution will be treated (a) first, as a tax-free return of capital to the extent of a U.S. Holders tax basis in the Common Stock and, (b) thereafter, as gain from the sale or exchange of such Common Stock. (See Disposition of Common Stock below).



Reduced Tax Rates for Certain Dividends



For taxable years beginning after December 31, 2002 and before January 1, 2011, a dividend paid by the Company generally will be taxed at the preferential tax rates applicable to long-term capital gains if (a) the Company is a qualified foreign corporation (as defined below), (b) the U.S. Holder receiving such dividend is an individual, estate, or trust, and (c) such dividend is paid on Common Stock that have been held by such U.S. Holder for at least 61 days during the 121-day period beginning 60 days before the ex-dividend date.



The Company generally will be a qualified foreign corporation under Section 1(h)(11) of the Code (a QFC) if (a) the Company is eligible for the benefits of the Canada-U.S. Tax Convention, or (b) the Common Stock is readily tradable on an established securities market in the U.S. However, even if the Company satisfies one or more of such requirements, the Company will not be treated as a QFC if the Company is a passive foreign investment company (as defined below) for the taxable year during which the Company pays a dividend or for the preceding taxable year.



As discussed below, the Company believes that it was a passive foreign investment company for the taxable year ended January 31, 2007, and expects that it will be a passive foreign investment company for the taxable year ending January 31, 2008. (See Additional Rules that May Apply to U.S. HoldersPassive Foreign Investment Company below). Accordingly, the Company does not expect to be a QFC for the taxable year ending January 31, 2008.



If the Company is not a QFC, a dividend paid by the Company to a U.S. Holder, including a U.S. Holder that is an individual, estate, or trust, generally will be taxed at ordinary income tax rates (and not at the preferential tax rates applicable to long-term capital gains). The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the dividend rules.



Distributions Paid in Foreign Currency



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



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Dividends Received Deduction



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



Disposition of Common Stock



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



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



Foreign Tax Credit



A U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends received on the Common Stock generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holders U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holders income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a taxable year.



Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holders U.S. federal income tax liability that such U.S. Holders foreign source taxable income bears to such U.S. Holders worldwide taxable income. In applying this limitation, a U.S. Holders various items of income and deduction must be classified, under complex rules, as either foreign source or U.S. source.  In addition, this limitation is calculated separately with respect to specific categories of income.  Dividends received on the Common Stock generally will be treated as foreign source and generally will be categorized as passive income. The foreign tax credit rules are complex, and each U.S. Holder should consult its own tax advisor regarding the foreign tax credit rules.



Information Reporting; Backup Withholding Tax



Payments made within the U.S., or by a U.S. payor or U.S. middleman, of dividends on, or proceeds arising from the sale or other taxable disposition of, Common Stock generally will be subject to information reporting and backup withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish such U.S. Holders correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax. However, U.S. Holders that are corporations generally are excluded from these
information reporting and backup withholding tax rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holders U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding tax rules.



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Additional Rules that May Apply to U.S. Holders



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



Controlled Foreign Corporation



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



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



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



Passive Foreign Investment Company



The Company generally will be a passive foreign investment company under Section 1297(a) of the Code (a PFIC) if, for a taxable year, (a) 75% or more of the gross income of the Company for such taxable year is passive income or (b) on average, 50% or more of the assets held by the Company either produce passive income or are held for the production of passive income, based on the fair market value of such assets (or on the adjusted tax basis of such assets, if the Company is not publicly traded and either is a controlled foreign corporation or makes an election). Passive income includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. However, for transactions entered into after December 31, 2004, active business gains arising
from the sale or exchange of commodities by the Company generally are excluded from passive income if substantially all of the Companys commodities are (a) stock in trade of the Company or other property of a kind that would properly be included in inventory of the Company, or property held by the Company primarily for sale to customers in the ordinary course of business, (b) property used in the trade or business of the Company that would be subject to the allowance for depreciation under section 167 of the Code, or (c) supplies of a type regularly used or consumed by the Company in the ordinary course of its trade or business.



For purposes of the PFIC income test and asset test described above, if the Company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another foreign corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other foreign corporation and (b) received directly a proportionate share of the income of such other foreign corporation. In addition, for purposes of the PFIC income test and asset test described above, passive income does not include any interest, dividends, rents, or royalties that are received or accrued by the Company from a related person (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.





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



The Company  believes  that it was a PFIC for the taxable year ended January 31,
2007, and expects that it will be a PFIC for the taxable year ending January 31,
2008.  The  determination  of whether the Company  was, or will be, a PFIC for a
taxable year depends, in part, on the application of complex U.S. federal income
tax rules, which are subject to various  interpretations.  In addition,  whether
the Company will be a PFIC for the taxable year ending
January  31, 2008 and each  subsequent  taxable  year  depends on the assets and
income  of the  Company  over the  course of each such  taxable  year and,  as a
result, cannot be predicted with certainty as of the date of this Annual Report.
Accordingly,  there  can be no  assurance  that the IRS will not  challenge  the
determination made by the Company concerning its PFIC status or that the Company
was not, or will not be, a PFIC for any taxable year.



Default PFIC Rules Under Section1291 of the Code



If the Company is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of Common Stock will depend on whether such U.S. Holder makes an election to treat the Company as a qualified electing fund or QEF under Section 1295 of the Code (a QEF Election) or a mark-to-market election under Section 1296 of the Code (a Mark-to-Market Election). A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election will be referred to in this summary as a Non-Electing U.S. Holder.



A Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale or other taxable disposition of Common Stock and (b) any excess distribution received on the Common Stock. A distribution generally will be an excess distribution to the extent that such distribution (together with all other distributions received in the current taxable year) exceeds 125% of the average distributions received during the three preceding taxable years (or during a U.S. Holders holding period for the Common Stock, if shorter).



Under Section 1291 of the Code, any gain recognized on the sale or other taxable disposition of Common Stock, and any excess distribution received on the Common Stock, must be ratably allocated to each day in a Non-Electing U.S. Holders holding period for the Common Stock. The amount of any such gain or excess distribution allocated to prior years of such Non-Electing U.S. Holders holding period for the Common Stock (other than years prior to the first taxable year of the Company beginning after December 31, 1986 for which the Company was not a PFIC) will be subject to U.S. federal income tax at the highest tax rate applicable to ordinary income in each such prior year. A Non-Electing U.S. Holder will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year. Such a Non-Electing U.S. Holder
that is not a corporation must treat any such interest paid as personal interest, which is not deductible. The amount of any such gain or excess distribution allocated to the current year of such Non-Electing U.S. Holders holding period for the Common Stock will be treated as ordinary income in the current year, and no interest charge will be incurred with respect to the resulting tax liability for the current year.



If the Company is a PFIC for any taxable year during which a Non-Electing U.S. Holder holds Common Stock, the Company will continue to be treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether the Company ceases to be a PFIC in one or more subsequent taxable years. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such Common Stock were sold on the last day of the last taxable year for which the Company was a PFIC.



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QEF Election



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



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



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



However, for each taxable year in which the Company is a PFIC, a U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such U.S. Holders pro rata share of (a) the net capital gain of the Company, which will be taxed as long-term capital gain to such U.S. Holder, and (b) and the ordinary earnings of the Company, which will be taxed as ordinary income to such U.S. Holder. Generally, net capital gain is the excess of (a) net long-term capital gain over (b) net short-term capital loss, and ordinary earnings are the excess of (a) earnings and profits over (b) net capital gain. A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such amounts for each taxable year in which the Company is a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder by the
Company. However, a U.S. Holder that makes a QEF Election may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge. If such U.S. Holder is not a corporation, any such interest paid will be treated as personal interest, which is not deductible.



A U.S. Holder that makes a QEF Election generally (a) may receive a tax-free distribution from the Company to the extent that such distribution represents earnings and profits of the Company that were previously included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holders tax basis in the Common Stock to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election.



Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a QEF Election. U.S. Holders should be aware that there can be no assurance that the Company will satisfy record keeping requirements that apply to a QEF, or that the Company will supply U.S. Holders with information that such U.S. Holders require to report under the QEF rules, in the event that the Company is a PFIC and a U.S. Holder wishes to make a QEF Election.





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Mark-to-Market Election



A U.S.  Holder may make a  Mark-to-Market  Election  only if the Common Stock is
marketable   stock.   The  Common  Stock  generally  will  be   marketable
stock  if the Common Stock is regularly traded on a qualified  exchange or
other market. For this purpose, a qualified exchange or other market
includes  (a) a  national  securities  exchange that is registered with the
Securities  and  Exchange  Commission,   (b) the   national  market  system
established  pursuant to section 11A of the Securities and Exchange Act of 1934,
or (c) a foreign  securities  exchange that is regulated or supervised by a
governmental  authority of the country in which the market is located,  provided
that  (i) such  foreign  exchange has trading  volume,  listing,  financial
disclosure,  surveillance, and other requirements designed to prevent fraudulent
and  manipulative  acts and  practices,  remove  impediments  to and perfect the
mechanism of a free, open, fair, and orderly market,  and protect investors (and
the laws of the country in which the  foreign  exchange is located and the rules
of the foreign exchange ensure that such requirements are actually enforced) and
(ii) the rules of such foreign exchange  effectively promote active trading
of listed stocks. If the Common Stock is traded on such a qualified  exchange or
other market,  the Common Stock generally will be  regularly  traded
for any calendar year during which the Common Stock is traded,  other than in de
minimis quantities, on at least 15 days during each calendar quarter.



A Mark-to-Market Election applies to the taxable year in which such Mark-to-Market Election is made and to each subsequent taxable year, unless the Common Stock cease to be marketable stock or the IRS consents to revocation of such election. Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.



A U.S. Holder that makes a Mark-to-Market Election generally will not be subject to the rules of Section 1291 of the Code discussed above. However, if a U.S. Holder makes a Mark-to-Market Election after the beginning of such U.S. Holders holding period for the Common Stock and such U.S. Holder has not made a timely QEF Election, the rules of Section 1291 of the Code discussed above will apply to certain dispositions of, and distributions on, the Common Stock.



A U.S. Holder that makes a Mark-to-Market Election will include in ordinary income, for each taxable year in which the Company is a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the Common Stock as of the close of such taxable year over (b) such U.S. Holders adjusted tax basis in such Common Stock. A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an amount equal to the lesser of (a) the excess, if any, of (i) such U.S. Holders adjusted tax basis in the Common Stock over (ii) the fair market value of such Common Stock as of the close of such taxable year or (b) the excess, if any, of (i) the amount included in ordinary income because of such Mark-to-Market Election for prior taxable years over (ii) the amount allowed as a deduction because of such Mark-to-Market Election for prior taxable years.



A U.S. Holder that makes a Mark-to-Market Election generally will adjust such U.S. Holders tax basis in the Common Stock to reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election. In addition, upon a sale or other taxable disposition of Common Stock, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market Election for prior taxable years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior taxable years).



Other PFIC Rules



Under Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would cause a U.S. Holder that had not made a timely QEF Election to recognize gain (but not loss) upon certain transfers of Common Stock that would otherwise be tax-deferred (such as gifts and exchanges pursuant to tax-deferred reorganizations under Section 368 of the Code). However, the specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in which Common Stock is transferred.





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Certain additional adverse rules will apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder makes a QEF Election. For example under Section 1298(b)(6) of the Code, a U.S. Holder that uses Common Stock as security for a loan will, except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such Common Stock.



The PFIC rules are complex, and each U.S. Holder should consult its own tax advisor regarding the PFIC rules and how the PFIC rules may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Stock.



F. Dividends and Paying Agents



This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934, and as such, there is no requirement to provide any information under this item.



G. Statement By Experts



This Form 20-F is being filed as an annual report under the Securities Exchange Act of 1934, and as such, there is no requirement to provide any information under this item.



H. Documents on Display



The documents referred to in this Form 20-F can be viewed at the office of the Company, which is located at 16360 Park Ten Place, Suite 217, Houston, TX  77084. The Company is required to file financial statements and other information with all of the Securities Commissions in Canada electronically through the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) which can be viewed at www.sedar.com.



I. Subsidiary Information



This information is not required for reports filed in the United States.



Item 11. Quantitative and Qualitative Disclosures About Market Risk.



Transaction Risk and Currency Risk Management



The Company is not exposed to market risk related to derivative financial instruments, other financial instruments and derivative financial instruments. At the present time the Company has no long-term debt or source of revenue as the Company is in the resource exploration and development stage on its mineral property interests.



Foreign Currency Exchange Rate Risk



The Company is engaged in mineral exploration in Brazil. The Companys significant contracts related to its Brazilian activities are denominated in U.S. dollars. The Companys equity financings are denominated in Canadian dollars. Changes in the price of foreign exchange rates could significantly affect the Companys profitability and cash flows. See Key Information under Item 3 above, for a description of factors relating to foreign exchange and currency fluctuations. Its liabilities are all denominated in Canadian dollars.



Interest Rate Risk and Equity Price Risk



The Company has been equity financed and does not have any debt that is subject to interest rate change risks.



Commodity Price Risk



While the value of the Companys Properties is affected by the price of gold, the Company does not have any operating mines and hence does not have any hedging or other commodity based risk respecting its operations.





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Item 12. Descriptions of Securities Other than Equity Securities



Not applicable.

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. | Controls and Procedures.
|-------- | ------------------------

(a)  Evaluation of disclosure controls and procedures.



The term disclosure controls and procedures (defined in SEC rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed, summarized and reported within required time periods. The Companys Chief Executive Officer, who also serves as the Companys principal financial officer, has evaluated the effectiveness of the Companys disclosure controls and procedures as of the end of the period covered by this annual report, and he concluded that, as of such date, the Companys disclosure controls and procedures were effective.

(b)  Internal control over financial reporting.

Internal control over financial reporting is defined as a process designed by, or under the supervision of our Chief Executive and Financial Officer, and effected by our Board of Directors, through our audit committee, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. These include procedures that (i) pertain to maintenance in reasonable detail to accurately reflect our transactions and disposition of assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

We are not required to report managements assessment of the effectiveness of our internal controls over financial reporting, and we have not undertaken the kind of review of such controls that we would have been required to undertake if we were required to make such a report. However, we have noted certain deficiencies in our systems of internal control, from our limited reviews of such controls in connection with our review of disclosure controls and procedures above. These deficiencies include lack of segregation of duties, lack of adequate documentation of our system of internal controls, lack of formal accounting policy and procedures and related documentation, and lack of a formal budgeting process. We have not instituted new internal control processes related to these deficiencies, as has been characteristic of companies that have completed their review of internal controls
and have had to report on the effect of such review. Accordingly, our internal control over financial reporting may be subject to control deficiencies as a result of the identified deficiencies reported herein as well as any that we have not identified.



(c)  Changes in internal controls.

There were no changes in internal control over financial reporting that occurred during our fiscal quarter ended January 31, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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Item 16A. Audit Committee Financial Expert



Mr. Daniel Leonard is a member of the audit committee of the Company who qualifies as an audit committee financial expert based on his education and experience. Mr. Leonard is independent, as that term is defined by the rules of the British Columbia Securities Commission and the Securities and Exchange Commission.



The  Securities and Exchange  Commission  has indicated that the  designation of
Mr. Leonard  as an audit  committee  financial  expert does not make him an
expert  for any purpose,  impose on him any duties,  obligations  or
liability that are greater than the duties,  obligations or liability imposed on
him as a member of the Audit  Committee and the Board of Directors in absence of
such  designation,  or affect the duties,  obligations or liability of any other
member of the Audit Committee or Board of Directors.



Item 16B. Code of Ethics.



A formal code of ethics has not been adopted by the Company. The Board of Directors of the Company (the Board) views good corporate governance as an integral component to the success of the Company and to meet responsibilities to shareholders. The Board has responsibility for the stewardship of the Company including responsibility for strategic planning, identification of the principal risks of the Companys business and implementation of appropriate systems to manage these risks. In addition, the Board is responsible for succession planning and the integrity of the Companys internal controls. The Board seeks to foster a culture of ethical conduct by striving to ensure that the Company conducts its business in line with high business and moral standards and applicable legal and financial requirements. In that regard, the Board encourages management to consult with legal and financial
advisors to ensure that the Company is in compliance with legal and financial requirements; is aware of the Companys continuous disclosure obligations and reviews prior to their distribution such material disclosure documents including, but not limited to, the interim and annual financial statements and Managements Discussion and Analysis; relies on the Audit Committee to review and discuss the Companys systems of financial controls with the external auditor; and actively monitors the Companys compliance with the Boards directives to ensure that all material transactions are reviewed and authorized by the Board before being undertaken by management.



Item 16C. Principal Accountant Fees and Services



At the annual and special meeting held on July 31, 2006, the shareholders appointed Morgan & Company, Chartered Accountants (Morgan), to serve as the independent auditors for the 2007 fiscal year. The chart below sets forth the total amount billed the Company by Morgan for services performed in the fiscal years 2007 and 2006, and breaks down these amounts by category of service.



|Financial Year Ending | Audit Fees | Audit Related Fees | Tax Fees | All Other Fees
|--------------------- | ---------- | ------------------ | -------- | --------------
|January 31, 2007      | $50,887    | $0                 | $1,242   | $0            
|January 31, 2006      | $22,170    | $0                 | $900     | $0            



Audit Committees pre-approval policies and procedures



The Audit Committee makes recommendations concerning the engagement of public accountants, reviews the scope and results of the audit engagement, considers the range of audit and non-audit fees and reviews the adequacy of internal controls. Any services provided by Morgan that are not specifically included within the scope of the audit must be pre-approved by the audit committee prior to any engagement. In fiscal 2007, all fees paid to Morgan for audit and tax services were approved by the audit committee prior to the services being rendered.



Item 16D. Exemptions from the Listing Standards for Audit Committees



Not applicable.





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Item 16E. Purchase of Equity Securities by the Issuer and Affiliated Purchasers



Not applicable.



|Item 17. | Financial Statements
|-------- | --------------------



The Companys consolidated financial statements are stated in Canadian dollars and are prepared in accordance with Canadian GAAP, the application of which, in the case of the Company, conforms in all material respects for the periods presented with Unties States GAAP, except as disclosed in Note 13 to the consolidated financial statements.





The financial statements and notes thereto as required under Item 17 are attached hereto and found immediately following the text of this Annual Report. The audit report of Morgan and Company, independent Chartered Accountants, is included herein immediately preceding the consolidated financial statements.



The following is a list of and index to the Consolidated Financial Statements filed as part of this Registration Statement:



BRAZAURO RESOURCES CORPORATION

|                                    | Index to Consolidated Financial Statements | 
|----------------------------------- | ------------------------------------------ | 
|                                    | Page                                      
|Auditors Report - Morgan & Company | 40                                         | 
|                                    |                                            | 

Consolidated Financial Statements:

| | Consolidated Balance Sheets - January 31, 2007 and 2006     | 41
| | ----------------------------------------------------------- | --
| | Consolidated Statements of Operations                       |   
| | for each of the years ended January 31, 2007, 2006 and 2005 | 42
| | Consolidated Statements of Shareholders Equity             |   
| | for each of the years ended January 31, 2007, 2006 and 2005 | 43
| | Consolidated Statements of Cash Flows                       |   
| | for each of the years ended January 31, 2007, 2006 and 2005 | 44
| | Notes to Consolidated Financial Statements                  | 45
| |                                                             |   



All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are either not required under the related instructions, are not applicable, or the information required thereby is set forth in the Companys Consolidated Financial Statements or the Notes thereto.



Item 18. Financial Statements



The Company has elected to provide financial statements pursuant to Item 17.



Item 19. Exhibits Filed as Part of this Registration Statement.



See the Index to Exhibits following the Consolidated Financial Statements of the Company.



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AUDITORS' REPORT



To the Shareholders of

Brazauro Resources Corporation



We have audited the consolidated balance sheets of Brazauro Resources Corporation as at January 31, 2007 and 2006, and the consolidated statements of operations, shareholders equity, and cash flows for the years ended January 31, 2007, 2006, and 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.



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



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at January 31, 2007 and 2006, and the results of its operations, shareholders equity, and cash flows for the years ended January 31, 2007, 2006, and 2005, in accordance with Canadian generally accepted accounting principles.





|Vancouver, Canada | Morgan & Company   
|----------------- | ---------------------
|April 24, 2007    | Chartered Accountants
|                  |                      













39

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|Brazauro Resources Corporation            
|------------------------------------------
|Consolidated Balance Sheets               
|                                          
|                                          
|                                          
|Assets                                    
|Current assets:                           
|Cash and cash equivalents                 
|Accounts receivable                       
|Prepaid expenses                          
|Deferred stock issuance costs (Note 3)    
|Total current assets                      
|Property and equipment:                   
|Mineral properties and deferred           
|expenditures (Note 3)                     
|Equipment                                 
|Accumulated depreciation                  
|Total property and equipment, at cost     
|                                          
|Other assets                              
|Total assets                              
|                                          
|Liabilities and shareholders equity      
|Current liabilities:                      
|Accounts payable and accrued liabilities  
|Asset retirement obligations              
|Total current liabilities                 
|                                          
|Shareholders equity                      
|Common share capital, no par value:       
|Authorized shares - unlimited             
|Issued and outstanding shares - 53,259,288
|(52,931,645 at January 31, 2006) (Note 4) 
|Contributed surplus                       
|Deficit                                   
|Total shareholders equity                
|Total liabilities and shareholders equity
|                                          
|Approved by the Board of Directors.       
|                                          
|See accompanying notes.                   







40

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|Brazauro Resources Corporation               
|---------------------------------------------
|Consolidated Statements of Operations        
|                                             
|                                             
|                                             
|                                             
|                                             
|Revenues:                                    
|Interest income                              
|Gains (loss) on sales of plant and equipment 
|                                             
|Expenses:                                    
|General and administrative (Note 10)         
|Finance charges                              
|Write-down of mineral properties (Note 3)    
|Foreign exchange (gains) losses              
|                                             
|Net loss for the year                        
|Basic and diluted net loss per share         
|Weighted-average number of shares outstanding
|                                             
|See accompanying notes.                      
|                                             















41

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|Brazauro Resources Corporation                 
|-----------------------------------------------
|Consolidated Statements of Shareholders' Equity
|(In Canadian Dollars)                          
|                                               
|Balance at January 31, 2004                    
|Issued for cash, net of share issuecost        
|Issued for property acquisition                
|Issued on exercise of warrants                 
|Stock-based compensation                       
|Issued on exercise of stockoptions             
|Net loss for the year                          
|Balance at January 31, 2005                    
|Issued for cash, net of share issuecost        
|Issued for property acquisition                
|Issued on exercise of warrants                 
|Stock-based compensation                       
|Issued on exercise of stockoptions             
|Net loss for the year                          
|Balance at January 31, 2006                    
|Issued for property acquisition                
|Stock-based compensation                       
|Issued on exercise of stockoptions             
|Net loss for the year                          
|Balance at January 31, 2007                    
|                                               
|See accompanying notes.                        





42

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|Brazauro Resources Corporation                                                                    
|--------------------------------------------------------------------------------------------------
|Consolidated Statements of Cash Flows                                                             
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Operating activities                                                                              
|Net loss for the year                                                                             
|Adjustments to reconcile net loss to net cash usedin operating activities:                        
|Depreciation                                                                                      
|Losses (gains) on sales of plant and equipment                                                    
|Stock-based compensation                                                                          
|Write-down of mineral properties                                                                  
|Other                                                                                             
|Changes in non-cash operating working capital:                                                    
|Accounts receivable                                                                               
|Account receivable from a related party                                                           
|Prepaid expenses                                                                                  
|Deferred stock issuance costs                                                                     
|Accounts payable and accrued liabilities                                                          
|Net cash used in operating activities                                                             
|Investing activities                                                                              
|Mineral properties acquisition and exploration                                                    
|Equipment                                                                                         
|Proceeds from sales of plant and equipment                                                        
|Net cash used in investing activities                                                             
|Financing activities                                                                              
|Proceeds from issuances of common shares and      warrants                                        
|Net cash provided by financing activities                                                         
|Effect of exchange rate changes on cash                                                           
|Net (decrease) increase in cash and cash equivalents                                              
|Cash and cash equivalents, beginning of year                                                      
|Cash and cash equivalents, end of year                                                            
|                                                                                                  
|See accompanying notes.                                                                           
|See Note 11 for supplemental cash flow disclosure and non-cash investing and financing activities.







43

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





1.   Operations



Brazauro Resources Corporation, formerly Jaguar Resources Corporation, (the Company) was incorporated in 1986 in British Columbia, Canada, and has been engaged in the acquisition and exploration of mineral properties with the potential for economically recoverable reserves. During fiscal 2007, 2006 and 2005 the Company pursued gold exploration opportunities that have large scale potential, with prospects in South America as the primary focus. See Note 3 for further discussion of the Companys mineral property interests.



The nature of the Companys operations results in significant expenditures for the acquisition and exploration of properties. None of the Companys properties have economically recoverable reserves or proven reserves at the current stage of exploration. The recoverability of the carrying value of mineral properties and deferred expenditures is dependent upon a number of factors including the existence of recoverable reserves, the ability of the Company to obtain financing to renew leases and continue exploration and development and the discovery of economically recoverable reserves.



2.   Significant Accounting Policies



The consolidated financial statements are prepared in accordance with accounting principles generally accepted in Canada. All amounts are in Canadian dollars unless noted otherwise.



Principles of Consolidation



The consolidated financial statements include the accounts of the Company, its wholly owned subsidiary Brazauro Holdings (Brazil) Ltd. (Brazauro Holdings), a Canadian corporation, its wholly owned United States subsidiary, Star U.S. Inc. (Star) and the three wholly-owned subsidiaries of Star, Diamond Operations, Inc. (DOI), Diamond Exploration, Inc. (DEI) and Continental Diamonds, Inc. (CDI) from their respective dates of acquisition. The Company and Brazauro Holdings own 90% and 10%, respectively, of the common shares of Jaguar Resources do Brasil Ltda., a Brazilian corporation. Significant intercompany balances and transactions have been eliminated.



Translation of Foreign Currencies



The Companys subsidiaries are integrated foreign operations. Foreign currency transactions and balances are translated into the reporting currency using the temporal method as follows:



a)    Monetary items are translated at the rates prevailing at the balance sheet date;

b)    Non-monetary items are translated at historical rates;

c)    Revenues and expenses are translated at the average rates in effect during applicable accounting periods, except depreciation, which is translated at historical rates;

d)    Gains and losses on foreign currency translation are reflected in the consolidated statements of operations.



Cash and Cash Equivalents



Cash and cash equivalents includes money market instruments with a maturity of three months or less.





44

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





2.   Significant Accounting Policies (continued)

Fair Value of Financial Instruments



As of January 31, 2007 and 2006, the fair value of cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities approximates carrying values because of the short term of these instruments.



Mineral Properties and Deferred Expenditures



Direct acquisitions, evaluation and exploration expenditures are capitalized, reduced by related sundry income, to be amortized over the recoverable mineral reserves if a property is commercially developed. When an area is disproved or abandoned, capitalized expenditures are written down to net realizable value.



Equipment



Equipment is recorded at cost and depreciated on a straight-line basis over useful lives ranging from 2 to 5 years.



Long-Lived Assets



Long-lived assets include mineral properties and deferred expenditures, and property and equipment. Long-lived assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Carrying amounts are written off to the extent capitalized costs exceed the expected undiscounted net cash flows from their use and eventual disposition proceeds.



Asset Retirement Obligations



The Company follows the recommendations under Section 3110, Asset Retirement Obligations, of the Canadian Institute of Chartered Accountants Handbook (Section 3110) and are applicable to asset retirement obligations incurred after January 1, 2004. These recommendations require accounting for the estimated fair value of legal obligations to reclaim and remediate mineral properties in the period incurred, at the net present value of the cash flows required to settle the future obligations. The corresponding amount is capitalized to the related asset and accounted for in accordance with the Companys accounting policies for mineral properties and deferred expenditures. The liabilities are subject to accretion over time for increases in the fair value of the liabilities.



The operations of the Company may in the future be affected from time to time in varying degree by changes in environmental regulations, including those for future removal and site restoration costs. Both the likelihood of new regulations and their overall effect upon the Company vary greatly and are not predictable. The Companys estimates of its ultimate asset retirement obligations could change as a result of changes in regulations, the extent of environmental remediation required, the means of reclamation or cost estimates. Changes in estimates are accounted for prospectively from the period the estimate is revised.



Remediation and reclamation expenditures are charged against earnings as incurred. At this stage of the Companys exploration programs, remediation activities are performed immediately upon completion of each phase of exploration activities.



Income Taxes



The Company  files a separate  Canadian  income tax return.  The  Companys
United States  subsidiaries file a consolidated United States income tax return.
Income taxes are calculated using the liability method of accounting.



45

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





2.   Significant Accounting Policies (continued)

Temporary
differences  arising  from the  difference  between the tax basis of an asset or
liability and its carrying
amount on the balance sheet are used to calculate  future income tax liabilities
or assets.  The future income tax  liabilities  or assets are measured using tax
rates and laws expected to apply in the periods that the  temporary  differences
are expected to reverse.  Valuation  allowances  are  provided  where net future
income tax assets are not more likely than not to be realized.



Loss Per Share



Basic loss per share is calculated using the weighted average number of shares issued and outstanding during the year. The Company follows the treasury stock method in the calculation of diluted loss per share. No shares were added to the weighted average number of common shares outstanding during the years ended January 31, 2007, 2006, or 2005 for the dilutive effect of employee stock options and warrants as they were all anti-dilutive.



Stock Based Compensation



The Company uses the fair-value based method to account for all stock-based payments to employees and non-employees granted after February 1, 2002 by measuring the compensation cost of the stock-based payments using the Black-Scholes option-pricing model. The fair value of the stock-based compensation is recorded as a charge to net earnings based on the vesting period with a credit to contributed surplus. Upon exercise of the stock options, consideration paid by the option holder, together with the amount previously recognized in contributed surplus, is recorded as an increase to share capital.



Use of Estimates



The preparation of financial statements in conformity with generally accepted accounting principles requires the Companys management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes to the consolidated financial statements. Actual results may differ from those estimates.



3.   Mineral Properties and Deferred Expenditures



The Company cannot guarantee title to all of its Properties as the Properties may be subject to prior mineral rights applications with priority, prior unregistered agreements or transfers or native land claims, and title may be affected by undetected defects. Certain of the mineral rights held by the Company are held under applications for mineral rights and, until final approval of such applications is received, the Companys rights to such mineral rights may not materialize and the exact boundaries of the Companys properties may be subject to adjustment. The Company does not maintain title insurance on its properties.



Brazil Properties



Tocantinzinho Properties



In August 2003 the Company entered into an option to acquire  exploration rights
to a total of 28,275  hectares in the  Tapajós  gold  district in Pará
State, Brazil under an option agreement with two individuals (herein referred to
as optionors).  The option agreement entitles the Company to acquire
a 100% interest in the  exploration  rights to such area  (referred to herein as
the   Tocantinzinho   Properties)   over  a   four-year   period  in
consideration  for the staged  payment of  US$465,000,  the staged  issuance  of
2,600,000  shares of the Company and the  expenditure  of



46

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





3.   Mineral Properties and Deferred Expenditures (continued)

$1,000,000  (U.S.) on
exploration  ($300,000 (U.S.) by July 31, 2004).  The Company received  approval
for the acquisition  from the TSX Venture Exchange in August 2003. As of January
31, 2007, the Company has made payments totaling
$315,000 (U.S.) and 1,900,000  shares under the option agreement and had met the
requirement to expend $1,000,000 (U.S.) on exploration.



As of January 31, 2007, the total commitment remaining under the option agreement is the final payment of $150,000 (U.S.) and 700,000 common shares of the Company, which was made in April 2007.



Additionally, the option agreement requires the Company to assume all existing obligations of the optionors to certain Brazilian residents in respect of the mineral rights to the Tocantinzinho Properties (the Underlying Agreements) totaling $1,600,000 (U.S.) over a four-year period. At January 31, 2007, the remaining payment commitments under the Underlying Agreements total $1,205,000 (U.S.) in fiscal year 2008. The Company made payments totaling $395,000 (U.S.) in respect of the Underlying Agreements during fiscal years 2004 through 2007, including $ 160,000 (U.S.) and $120,000 (U.S.) paid during fiscal 2007 and 2006, respectively.



The optionors are entitled to a sliding scale gross revenues royalty ranging from 2.5% for gold prices below $400 (U.S.) per ounce to 3.5% for gold prices in excess of $500 (U.S.) per ounce from production under the mineral rights relating to the applications subject to the option agreement.



In fiscal 2006 the Company received exploration licenses in respect of the central 4,000 hectare area of the Tocantinzinho Properties on which it has been focusing its exploration efforts as well as for a 9,315 hectare area forming the north eastern and eastern boundary of the Tocantinzinho Properties. Under the option agreement the Company also holds rights to acquire two other applications for exploration licenses filed with the regulatory authorities in Brazil:  one covering 4,275 hectares that lies to the south of the central 4,000 hectare area and one (the Extension Area) covering 10,000 hectares that lies immediately to the east but continues well south of the central 4,000 hectare area. The mineralized zone discovered by the Company on the Tocantinzinho Properties starts on the central 4,000 hectare area and extends eastward beyond the boundary of the central 4,000 hectare area into the
Extension Area.



During fiscal year 2006, the Company became aware that BrazMin Corp. also had applied for exploration licenses to areas of the Tocantinzinho Properties, including large parts of the Extension Area and the areas of the mineralized zone discovered by the Company. In response, the Company undertook an extensive review of its title position.



At the end of fiscal 2006, as a result of a title review by the Company, it came to the Companys attention that a long dormant application for a mining license that covered the Extension Area had never been processed by the Departamento Nacional de Produção Mineral (DNPM) and was still valid. According to advice from Brazilian counsel, the dormant application carried paramount title to the Extension Area. The Company, through its subsidiary, Jaguar Resources do Brasil Ltda., reached an agreement (the Extension Area Agreement) with the holder of such application, Mineração Cachambix Ltda. (Cachambix) to acquire its rights to obtain a mining license over the Extension Area, subject to receipt of confirmation from the DNPM of the granting of the mining license. The Company made a payment of $150,000 (U.S.) to Cachambix in fiscal 2007 upon execution
of the Extension Area Agreement.



In September 2006, the Company entered into an agreement (the Title Consolidation Agreement) with BrazMin Corp. whereby the Company would acquire BrazMin Corps interests in the area of the Tocantinzinho Properties in exchange for 13,150,000 shares of the Company.



In December 2006,  the Company was informed by the DNPM that the  application to
which the Extension Area  Agreement  relates had been confirmed as the paramount
title.  The Company and  Cachambix  reached an agreement



47

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





3.   Mineral Properties and Deferred Expenditures (continued)

to modify the Extension
Area  Agreement in February  2007.  Under this modified  agreement,  the Company
acquired all
of the  outstanding  shares of Cachambix by payment of $850,000  (U.S.) plus its
agreement  to make two  future  payments  of  $1,000,000  (U.S.) each to be made to the
former  shareholders of Cachambix in February 2008 and 2009. The  Companys
obligation   to  make  the  future   payments   is  secured  by  the   Cachambix
shares.



In February 2007, under the terms of the Title Consolidation Agreement, the Company acquired Resource Holdings 2004 Inc. and its wholly-owned subsidiary, Empresa Internacional de Mineração do Brasil Ltda., from BrazMin Corp. in exchange for 13,150,000 common shares of the Company and payment of $50,000 (U.S.). Deferred stock issuance costs totaling $58,250 are included in current assets as of January 31, 2007 related to the issuance of the shares to BrazMin Corp. Upon issuance of the common shares, the Company and BrazMin Corp. entered into a Voting Trust and Placement Rights Agreement (the Voting Agreement) pursuant to which the Company has the right to direct the voting of the shares issued to BrazMin Corp. except in certain conditions, including but not limited to a merger, amalgamation or a sale of all or substantially all of the Companys assets. Further, the Company has the
right to find purchasers for the shares if BrazMin Corp. wishes to sell. The Voting Agreement will terminate on the earliest of: (i) the day following the second shareholders meeting after the Voting Agreement is entered into, (ii) eighteen months after the Voting Agreement is entered into, and (iii) the date on which the shares held by BrazMin Corp. and its affiliates represent in the aggregate less than 10% of the then outstanding shares. In February 2007, the shares issued to BrazMin Corp. represented approximately 19.8% of the issued shares of the Company. Prior to the closing of the transaction, BrazMin Corp. did not own beneficially, directly or indirectly, any shares of the Company.



Under a separate option agreement, the Company holds exploration permits for an additional 16,052 hectares adjacent to the western border of the above Tocantinzinho Properties. The Company has agreed to make payments totaling $300,000 (U.S.) over a period of approximately four years to an individual as a finders fee related to this 16,000 hectare property. As of January 31, 2007, the remaining commitment under this agreement is $150,000 (U.S.). This additional property is not subject to the option agreement and therefore is not subject to the royalty. The Company received an exploration license from the Brazilian regulatory authority with respect to the additional 16,052 hectares in fiscal year 2005.



Crepori Property



In July 2006 the Company entered into an option agreement under which it may acquire the exploration license to the 8,175 hectare Crepori Property, located in Pará State, approximately 220 kilometers from Itaituba. The Company has an option to earn 100% of the Crepori Property, with no residual production royalty obligations, by payment of a total of $800,000 (Brazilian Reals) over three years. The remaining payments under the option agreement total approximately $389,000 (U.S.) and are due as follows (all amounts are in US dollars):  $22,000, $33,000, and $334,000, due in fiscal years 2008, 2009 and 2010, respectively. The Company may terminate the option agreement at any time without further obligation.



Circulo Property



In the third quarter of fiscal 2007, the Company applied for exploration licenses with the DNPM for a total of approximately 38,096 hectares in Pará State located approximately 190 kilometers southwest from the city of Itaituba.



Sucuri Property



In July 2006 the Company  entered  into an option  agreement  under which it may
acquire the exploration license to the 5,400 hectare Sucuri Property, located in
Pará  State,  approximately  390 kilometers from the city of Itaituba,  the
city nearest to the Companys  Tocantinzinho Properties. The Company has an
option to earn 100% of the Sucuri



48

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





3.   Mineral Properties and Deferred Expenditures (continued)

Property by payment of a total of  $1,000,000
(Brazilian  Reals) over three years.  The  remaining  payments  under the option
agreement  total  approximately  $453,000  (U.S.)  and are due as  follows  (all
amounts are in US dollars):  $50,000, $69,000, and $334,000, due in fiscal years
2008,  2009 and  2010,  respectively.  The  Company  may  terminate  the  option
agreement  at any time  without  further  obligation.  There  are no  production
royalties in the option  agreement.  In addition to the optioned  property,  the
Company has applied for an  exploration  license with the DNPM on an  additional
4,861 hectares immediately south of the optioned property.



The Company has reviewed its exploration results related to the Sucuri property and has determined that exploration activities will be suspended during fiscal 2008. Accordingly, the capitalized exploration costs totaling $707,863 were written off in fiscal 2007. The Company will evaluate the viability of future exploration efforts at the Sucuri property during fiscal 2008.



Mamoal Property



The Company entered into an option agreement under which it could acquire the exploration license to the 10,000 hectare Mamoal Property, located 30 kilometers southeast of the Companys Tocantinzinho Properties, in December 2003. The Company had an option to earn 100% of the Mamoal Property by payment of a total of $300,000 (U.S.) over three and one half years. The Company could terminate the option agreement at any time without further obligation. An initial $10,000 (U.S.) payment was made by the Company in December 2003, and the exploration research license was transferred to Jaguar Resources do Brasil Ltda. During fiscal 2005 and 2006, the Company made payments under the option agreement totaling $25,000 (U.S.) and $45,000 (U.S.), respectively.



During fiscal 2005 and 2006, the Company performed exploration activities at the Mamoal Property, including a regional soil auger sampling program, core drilling and a grid soil geochemical survey. The results of the above testing were not encouraging, and the Company ceased exploration of this project in the second quarter of fiscal 2007. An impairment reserve of $906,535 was recorded at January 31, 2006, representing the entire capitalized costs of the Mamoal Property at that date. Additional costs incurred during fiscal 2007 totaling $17,748 were written off in fiscal 2007.



Batalha Property



In September, 2004 the Company applied for an exploration license to the 9800 hectare Batalha Property, located in the Tapajós gold province in northern Brazil. The Company agreed to pay the original holder of artisanal mining rights of Batalha, who controls over 1,700 hectares lying within the exploration license and directly over the Batalha zone, the equivalent of approximately $91,000 Canadian dollars in Brazilian reals over a 42 month period with a buyout after 4 years of $250,000 (U.S.) (if the project was deemed economic by the Company) and an additional sum based on the number of ounces of gold in the proven and probable (or measured and indicated) categories at Batalha as set out in a pre-feasibility or feasibility study. The per ounce payment amount ranges in a sliding scale from $1 (U.S.) per ounce for the first one million ounces up to $10 (U.S.) per ounce for each ounce over four million
ounces. The 9,800 hectare exploration license lies over top of this area, covering extensions to north, south and west. If after four years the Company, in its sole opinion, had not found an economic ore body, the area and all collected data will be returned to the vendor.



Based on the results of exploration activities conducted during fiscal 2006 and 2007, the Company decided to terminate the Batalha lease and the capitalized costs totaling $70,089 were written off in fiscal 2007.



Arkansas Properties



The Company maintained interests in several Arkansas Properties during the period from fiscal 1993 through fiscal 2003. In December 2002, based upon the cumulative exploration results obtained on the Arkansas Properties, the Company made the decision to cease operations in Arkansas.





49

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





3.   Mineral Properties and Deferred Expenditures (continued)

The  Company  recorded a reserve  for  leasehold  reclamation  costs  during the
quarter  ended  April  30,  2003  of  approximately  $70,000,  representing  the
estimated  costs  of the  Companys  obligation  to  restore  the  Arkansas
properties to their original  condition prior to lease expiration and to perform
reclamation  activities  as  required by Arkansas  regulatory  authorities.  The
reserve for  leasehold  reclamation  was adjusted  during the fourth  quarter of
fiscal 2004 to $142,554  representing  the  estimated  net present  value of the
recognized  asset  retirement  obligation  at January  31, 2005 based on a total
future  liability of $150,000.  The Company  expects to complete the restoration
during fiscal 2008.



Mineral properties and deferred expenditures were as follows:



|                                | Balance atJanuary 312006 | Additions | ImpairedWrite-Offs | Balance atJanuary 31,2007
|------------------------------- | ------------------------ | --------- | ------------------ | -------------------------
|Brazilian Properties            |                          |           |                    |                          
|Tocantinzinho Properties:       |                          |           |                    |                          
|Acquisition costs               | $    1,720,296           | $ 857,207 | $  -               | $    2,577,503           
|Exploration costs:              |                          |           |                    |                          
|Drilling                        | 1,038,257                | 526,350   | -                  | 1,564,607                
|Field expenses                  | 1,175,031                | 312,733   | -                  | 1,487,764                
|Geological                      | 341,939                  | 98,183    | -                  | 440,122                  
|Assay                           | 196,451                  | 43,235    | -                  | 239,686                  
|Total exploration costs         | 2,751,678                | 980,501   | -                  | 3,732,179                
|Total Tocantinzinho Properties  | 4,471,974                | 1,837,708 | -                  | 6,309,682                
|                                |                          |           |                    |                          
|Mamoal Property:                |                          |           |                    |                          
|Acquisition costs               | -                        | -         | -                  | -                        
|Exploration costs:              |                          |           |                    |                          
|Field expenses                  | -                        | 13,448    | (13,448)           | -                        
|Geological                      | -                        | 62        | (62)               | -                        
|Assay                           | -                        | 4,238     | (4,238)            | -                        
|Total exploration costs         | -                        | 17,748    | (17,748)           | -                        
|Total Mamoal Property           | -                        | 17,748    | (17,748)           | -                        
|                                |                          |           |                    |                          
|Batalha Property                |                          |           |                    |                          
|Acquisition costs               | 20,529                   | 10,751    | (31,280)           | -                        
|Exploration costs (Field costs) | -                        | 38,809    | (38,809)           | -                        
|                                | 20,529                   | 49,560    | (70,089)           | -                        
|Sucuri Property                 |                          |           |                    |                          
|Acquisition costs               | -                        | 49,818    | -                  | 49,818                   
|Exploration costs:              |                          |           |                    |                          
|Drilling                        | -                        | 374,809   | (374,809)          | -                        
|Field expenses                  | -                        | 290,673   | (290,673)          | -                        
|Geological                      | -                        | 3,719     | (3,719)            | -                        
|Assay                           | -                        | 38,662    | (38,662)           | -                        
|Total exploration costs         | -                        | 707,863   | (707,863)          | -                        
|                                | -                        | 757,681   | (707,863)          | 49,818                   
|                                |                          |           |                    |                          
|Crepori Property                |                          |           |                    |                          
|Acquisition costs               | -                        | 7,742     | -                  | 7,742                    
|Exploration costs (Field costs) | -                        | -         | -                  | -                        
|                                | -                        | 7,742     | -                  | 7,742                    

50

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





3.   Mineral Properties and Deferred Expenditures (continued)

|                                | Balance atJanuary 312006 | Additions    | ImpairedWrite-Offs | Balance atJanuary 31,2007
|------------------------------- | ------------------------ | ------------ | ------------------ | -------------------------
|Circulo Property                |                          |              |                    |                          
|Acquisition costs               | -                        | 884          | -                  | 884                      
|Exploration costs (Field costs) | -                        | -            | -                  | -                        
|                                | -                        | 884          | -                  | 884                      
|Total acquisition costs         | 1,740,825                | 926,402      | (31,280)           | 2,635,947                
|Total exploration costs         | 2,751,678                | 1,744,921    | (764,420)          | 3,732,179                
|Total costs                     | $  4,492,503             | $  2,671,323 | $  (795,700)       | $  6,368,126             



|                               | Balance atJanuary 312005 | Additions    | ImpairedWrite-Offs | Balance atJanuary 312006
|------------------------------ | ------------------------ | ------------ | ------------------ | ------------------------
|Brazilian Properties           |                          |              |                    |                         
|Tocantinzinho Properties:      |                          |              |                    |                         
|Acquisition costs              | $  1,042,977             | $  677,319   | $  -               | $  1,720,296            
|Exploration costs:             |                          |              |                    |                         
|Drilling                       | 607,334                  | 430,923      | -                  | 1,038,257               
|Field expenses                 | 701,236                  | 473,795      | -                  | 1,175,031               
|Geological                     | 181,445                  | 160,494      | -                  | 341,939                 
|Assay                          | 111,870                  | 84,581       | -                  | 196,451                 
|Total exploration costs        | 1,601,885                | 1,149,793    | -                  | 2,751,678               
|Total Tocantinzinho Properties | 2,644,862                | 1,827,112    | -                  | 4,471,974               
|                               |                          |              |                    |                         
|Mamoal Property:               |                          |              |                    |                         
|Acquisition costs              | 45,288                   | 63,348       | (108,636)          | -                       
|Exploration costs:             |                          |              |                    |                         
|Drilling                       | -                        | 245,103      | (245,103)          | -                       
|Field expenses                 | 105,258                  | 332,244      | (437,502)          | -                       
|Geological                     | 10,901                   | 94,234       | (105,135)          | -                       
|Assay                          | 4,138                    | 6,021        | (10,159)           | -                       
|Total exploration costs        | 120,297                  | 677,602      | (797,899)          | -                       
|Total Mamoal Property          | 165,585                  | 740,950      | (906,535)          | -                       
|                               |                          |              |                    |                         
|Batalha Property               |                          |              |                    |                         
|Acquisition costs              | 7,299                    | 13,230       | -                  | 20,529                  
|Exploration costs              | -                        | -            | -                  | -                       
|                               | 7,299                    | 13,230       | -                  | 20,529                  
|Total acquisition costs        | 1,095,564                | 753,897      | (108,636)          | 1,740,825               
|Total exploration costs        | 1,722,182                | 1,827,395    | (797,899)          | 2,751,678               
|Total costs                    | $  2,817,746             | $  2,581,292 | $ (906,535)        | $  4,492,503            
|                               |                          |              |                    |                         



4.   Share Capital



On September 18, 2002, the Company completed a private placement of 2,819,774 units at a price of $0.20 per unit, each unit consisting of one common share and one share purchase warrant with an exercise price of $0.25 per unit. The share purchase warrants had an expiration date of September 18, 2004. The Company received a total of $563,955 during fiscal 2003 representing subscriptions for the private placement. Included in that amount was a total of $85,240 representing subscriptions for 426,200 units by three of the Companys directors. During fiscal year 2005, all 2,819,774 common share warrants were exercised, and the Company received total exercise proceeds of $704,943.



51

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





4.   Share Capital (continued)

In November 2004, the Company  completed a private placement of 2,112,500 common
shares  of the  Company  at a price of $0.85 per  share  and  received  proceeds
totaling $1,795,625. In consideration for assistance with the private placement,
the Company paid finders  fees of $96,950 in cash and issued 113,000 share
purchase warrants entitling the finders to purchase 113,000 common shares of the
Company at $1.05 per share until  November 2, 2005. In fiscal 2006,  the holders
of the share purchase warrants elected to exercise all 113,000 warrants, and the
Company  received  total  proceeds  of  $118,650.  The fair value of the 113,000
warrants issued to brokers related to the private placement
in  November  2004  was  approximately  $33,000  and was  calculated  using  the
Black-Scholes model and the following assumptions:  expected dividend yield, 0%,
expected  volatility,  115%;  risk-free  interest rate,  2.9%.  expected life of
warrant, 1 year.



In December 2004, the Company completed a private placement of 2,150,000 common shares of the Company at a price of $1.00 per share and received proceeds of $2,150,000.



During August 2005 the Company closed a private placement of 5,000,000 units at $1.90 per unit for gross proceeds of $9,500,000. The Company paid a brokerage commission on the placement of $475,000. Each unit consists of one common share and one half of one share purchase warrant. Each whole warrant would entitle the holder to purchase one additional share of the Company at $3.80 for a period of one year. All of the 2,500,000 warrants expired unused in August 2006.



5.   Stock Option Plan



The  Company  maintains  a stock  option plan for its  directors,  officers  and
employees  and  may  issue  up  to  9,000,000   options.   In  July,   2006  the
Companys  shareholders  approved an  amendment to its stock option plan to
increase the number of shares  reserved for issuance to  10,000,000.  Under
the terms of the plan,  the  exercise  price of each  option  equals the closing
market price of the Companys stock on the date of grant. Any consideration
paid by the  optionee on the  exercise of options is credited to share  capital.
Through  July 2002 all options were  immediately  vested and have a term of five
years.  The  options  granted  subsequent  to July 2002 are  subject  to vesting
requirements (25% on the date of grant and 12.5% on each quarter end thereafter)
and have a term of five years.



The activity in common stock option grants outstanding for the prior three fiscal years is as follows:



|                                  | 2007      | 2006                            | 2005     
|--------------------------------- | --------- | ------------------------------- | ---------
|                                  | Number    | Weighted
Average
Exercise
Price | Number   
|Outstanding, beginning    of year | 7,954,643 | $  1.33                         | 6,603,572
|Granted (1)                       | 250,000   | 1.36                            | 4,100,000
|Exercised                         | 127,643   | 0.37                            | 2,748,929
|Expired                           | -         | -                               | -        
|Outstanding, end of year          | 8,077,000 | $  1.34                         | 7,954,643



(1)  During fiscal 2007 the options were granted to an officer and have an exercise price of $1.36 and an expiration date of April 1, 2011.



The following table summarizes information about stock options outstanding at January 31, 2007:





52

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





5.   Stock Option Plan (continued)



|Range ofExercisePrice | Number ofOptionsOutstanding | WeightedAverageExercisePrice | WeightedAverageRemainingContractualLife in Years | Number of OptionsExercisable | WeightedAverageExercise PriceOf OptionsExercisable
|--------------------- | --------------------------- | ---------------------------- | ------------------------------------------------ | ---------------------------- | --------------------------------------------------
|$ 0.18 to $ 0.49      | 554,474                     | $ 0.39                       | 1.7                                              | 554,474                      | $ 0.39                                            
|$ 0.92 to $ 1.36      | 4,922,526                   | $ 1.10                       | 2.8                                              | 4,828,776                    | $ 1.10                                            
|$ 2.00                | 2,600,000                   | $ 2.00                       | 3.5                                              | 2,525,000                    | $ 2.00                                            



6.   Stock-Based Compensation



Stock-based compensation related to options granted to employees and non-employees increased the following expenses in the consolidated financial statements of the Company in the three years ending January 31, 2007 are as follows:



|           | 2007         | 2006         | 2005       
|---------- | ------------ | ------------ | -----------
|Consulting | $    242,826 | $    291,334 | $   131,367
|Salary     | 2,457,588    | 4,190,297    | 1,991,916  
|           | $ 2,700,414  | $ 4,481,631  | $ 2,123,283



These amounts have also been recorded as contributed surplus on the balance sheet. As of January 31, 2007, the fair market value of the total compensation cost related to nonvested stock options to be recognized upon vesting totals $190,301 and is expected to be recognized in fiscal 2008.



The fair value of each option granted has been estimated as of the date of grant using the Black-Scholes option-pricing model with the following assumptions:



|                                              | 2007     | 2006         | 2005     
|--------------------------------------------- | -------- | ------------ | ---------
|Expected dividend yield                       | 0%       | 0%           | 0%       
|Expected volatility                           | 141-150% | 141-150%     | 160%     
|Risk-free interest rate                       | 4.1%     | 3.4 to 3.6%  | 4.0%     
|Expected life                                 | 2 years  | 2 to 3 years | 3.5 years
|Weighted average fair valueof options granted | $ 0.92   | $ 1.26       | $ 0.75   



7.   Income Taxes



A reconciliation of the combined Canadian federal and provincial income taxes at statutory rates and the Companys effective income tax expense (recovery) is as follows:



53

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





7.   Income Taxes (continued)

|                                   | Years ended January
|---------------------------------- | -------------------
|                                   | 2007               
|                                   |                    
|Statutory rates                    | 34%                
|                                   |                    
|Income tax at statutory rates      | (1,766,000)        
|Increase (decrease) in taxes from: |                    
|Non-deductible items               | 936,000            
|Differences in foreign tax rates   | 680,000            
|Effect of change in tax rate       | 20,000             
|Benefit of losses not recognized   | 130,000            
|                                   | $        -         



Future income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Companys future tax assets as of January 31 are as follows:



|                                          | January 31  
|----------------------------------------- | ------------
|                                          | 2007        
|Future income tax assets                  |             
|Operating loss carryforwards              | $ 10,845,000
|Property and equipment                    | 174,000     
|Share issue cost                          | 119,000     
|Valuation allowance for future tax assets | (11,138,000)
|                                          | $    -      



The Company has available losses for income tax purposes of approximately $37 million, which may be carried forward and applied against future taxable income when earned. Brazilian losses are offset by up to 30% of fiscal profits. United States net operating losses may be limited if more than a 50% ownership change has occurred with respect to any Company included in the consolidated group. If an ownership change has occurred, such losses are limited on an annual basis to the value of the respective Company on the date of change multiplied by the U.S. federal long-term, tax-exempt rate in effect for the period. In addition, some U.S. net operating losses may be subject to other limitations based on taxable income from wholly owned subsidiaries on a stand-alone basis.



The losses expire as follows:



|                  | Canada                | United States | Brazil      | Total       
|----------------- | --------------------- | ------------- | ----------- | ------------
|                  | (in Canadian dollars)
|                  |                      
|2008              | 231,000               | 23,000        | -           | 254,000     
|2009              | 134,000               | 468,000       | -           | 602,000     
|2010              | 439,000               | 156,000       | -           | 595,000     
|2011              | 273,000               | 1,481,000     | -           | 1,754,000   
|2012              | 449,000               | 4,628,000     | -           | 5,077,000   
|2013              | -                     | 1,398,000     | -           | 1,398,000   
|From 2016 to 2027 | 1,301,000             | 16,776,000    | -           | 18,077,000  
|Indefinitely      | -                     | -             | 9,385,000   | 9,385,000   
|                  | $ 2,827,000           | $ 24,930,000  | $ 9,385,000 | $ 37,142,000



At January 31, 2007, the Company has incurred approximately $512,000 of exploration and development costs which may be deducted against future Canadian taxable income subject to certain limitations.



54

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





8.   Related Party Transactions



During fiscal 2007 and 2006, a director was paid consulting fees of $64,623 and $69,515 for advisory services to the Company. During fiscal 2006, the chairman of the Company repaid an accounts receivable totaling $55,900.



Amounts totaling $93,839 and $147,683 were paid by the Company during fiscal 2006 and 2005, respectively, to a law firm in which a director was a partner until his retirement in June 2005. In September, 2004, three directors exercised warrants to purchase common shares at an exercise price of $0.25 per share and received a total of 286,200, 100,000, and 40,000 common shares, respectively.



9.   Contingencies



Except as described below, there are no material pending legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their property is subject.



On May 15, 1998, a legal action styledJames  Cairns
and Stewart  Jackson vs. Texas Star  Resources  Corporation  d/b/a Diamond Star,
Inc.was filed in the 215th Judicial District Court
of Harris County,  Texas, Cause No. 9822760 wherein the Plaintiffs allege, among
other things,  that the Company  breached  contractual  agreements and committed
fraud by not timely  releasing or causing to be released from an escrow  account
required by  Canadian  law  certain  shares of the  Company to which  Plaintiffs
allege that they were  entitled to receive in calendar  1995 and, as a result of
the  Companys  alleged actions with respect to the release of such shares,
the   Plaintiffs   sought   monetary   damages   for  losses  in  share   value,
attorneys  fees, court costs,  expenses,  interest and exemplary  damages.
Texas Star Resources  Corporation  was the name of the Company in 1998 and 1999.
In 1999, the litigation  against the Company in Houston,  Harris County,  Texas,
was dismissed by the court with  prejudice,  leaving only the claims of James M.
Cairns, Jr. pending in British Columbia which is generally  described below. The
legal action in Texas is similar to one filed against the Company in the Supreme
Court of British  Columbia,  Canada,  in August  1996 styled  Cause No.  C96493;James  M.  Cairns,  Jr.  vs.  Texas  Star  Resources
Corporation.  In January 1993, the Plaintiffs  were
issued  common  stock of the Company in escrow  which shares were to be released
based on exploration expenditures by the Company on certain of its properties in
Arkansas.  The escrow requirements were imposed by the Vancouver Stock Exchange.
Plaintiffs  requested  that all of the shares be released in 1995.  At that time
the Company  believed  that the release of said  shares  when  requested  by the
Plaintiffs was inappropriate due to legal requirements and regulatory  concerns.
The shares were subsequently released to the Plaintiffs.  The Company intends to
vigorously  defend the  allegations of the Plaintiffs in the pending  litigation
for  damages  in  British  Columbia  and in Texas  (if the case is  appealed  or
refiled)
and believes it has meritorious  defenses to such claims.  No proceedings in the
action in British  Columbia  have been taken by the  Plaintiff  since  March 30,
2000.  However,  the  Company  cannot  provide  any  assurances  that it will be
successful,  in whole or in part,  with  respect to its defense of the claims of
the  Plaintiffs.  The  outcome of this  action is not  determinable  and no loss
provision  has  been  recorded  in  the  financial  statements  for  this  item.



55

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





10.   General and Administrative Expenses



General and administrative expenses consist of the following:



| |                         | 2007        | 2006        | 2005       
| | ----------------------- | ----------- | ----------- | -----------
| |                         |             |             |            
| | Consulting fees         | $  506,615  | $  774,405  | $  386,456 
| | Depreciation expense    | 29,981      | 20,047      | 7,089      
| | Entertainment           | 45,747      | 93,818      | 79,831     
| | Insurance               | 23,773      | 26,761      | 1,870      
| | Office expenses         | 144,549     | 202,726     | 181,789    
| | Professional fees       | 374,468     | 267,842     | 194,247    
| | Rent                    | 41,032      | 38,585      | 28,757     
| | Repairs and maintenance | 15,461      | 31,523      | 2,243      
| | Salaries and benefits   | 3,304,909   | 5,216,740   | 2,594,363  
| | Shareholder relations   | 92,669      | 173,703     | 161,749    
| | Travel                  | 180,113     | 202,022     | 109,082    
| | Total                   | $ 4,759,317 | $ 7,048,172 | $ 3,747,476
| |                         |             |             |            



11.   Supplemental Cash Flow and Non-Cash Investing and Financing Disclosure



|                                     | 2007       | 2006       | 2005      
|------------------------------------ | ---------- | ---------- | ----------
|Supplemental cash flow disclosure:   |            |            |           
|Interest paid in cash                | $    -     | $    -     | $    -    
|Income taxes paid                    | -          | -          | -         
|                                     |            |            |           
|Non-cash investing activities:       |            |            |           
|Shares issued for mineral properties | $  220,000 | $  400,000 | $  270,000



12.   Segment Information



The Company acquires and explores mineral properties, and these activities are focused principally in South America. Geographic segmentation of mineral properties is provided in Note 3.



13.   Differences Between Canadian and United States Generally Accepted Accounting Principles (GAAP)



The consolidated financial statements have been prepared in accordance with Canadian GAAP which differs in some respects from United States GAAP. The material differences in respect to these financial statements between Canadian and United States GAAP, and their effect on the Companys financial statements, are summarized below.



Mineral Properties and Deferred Expenditures



Under Canadian GAAP,  companies have the option to defer and capitalize  mineral
exploration expenditures on prospective  properties until such time as it is determined that further work is
not warranted,  at which point property costs would be written off. Under United
States GAAP,  all  exploration  expenditures  are expensed  until an independent
feasibility  study has  determined  that the  property is capable of  commercial
production.  At this  stage,  the Company  has



56

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





13.    Differences   Between  Canadian  and  United  States  Generally
Accepted Accounting Principles (GAAP) (continued)

not yet  identified  economically
recoverable reserves on any of its properties.  Accordingly, under United States
GAAP, all exploration costs incurred are expensed.



The significant differences in the consolidated statements of loss relative to US GAAP were:



|                                                                                                          | 2007 | 2006        | 2005
|--------------------------------------------------------------------------------------------------------- | ---- | ----------- | ----
|Net loss in accordance with Canadian GAAP                                                                 | $    | (5,193,347) | $   
|                                                                                                          |      |             |     
|Deduct:                                                                                                   |      |             |     
|Deferred exploration expenditures capitalized during the period                                           |      | (980,501)   |     
|Add:                                                                                                      |      |             |     
|Deferred exploration expenditures written off in the period thatwould have been expensed in aprior period |      | -           |     
|                                                                                                          |      |             |     
|Net loss in accordance with United States GAAP                                                            | $    | (6,173,848) | $   
|                                                                                                          |      |             |     
|Basic and diluted net loss per share (United States GAAP)                                                 | $    | (0.12)      | $   
|                                                                                                          |      |             |     
|Weighted average shares outstanding (United States GAAP)                                                  |      | 53,062,909  |     
|                                                                                                          |      |             |     

The significant differences in the consolidated balance sheet relative to US GAAP were:



|                                                                         | 2007 | 2006       
|------------------------------------------------------------------------ | ---- | -----------
|                                                                         |      |            
|Shareholders equity  Canadian GAAP                                     | $    | 10,918,491 
|Deferred exploration expenditures                                        |      | (3,732,179)
|                                                                         |      |            
|Shareholders equity  United States GAAP                                | $    | 7,186,312  
|                                                                         |      |            
|                                                                         | 2007 | 2006       
|                                                                         |      |            
|Mineral properties and deferred exploration expenditures  Canadian GAAP | $    | 6,368,126  
|Deferred exploration expenditures expensed per United States GAAP        |      | (3,732,179)
|                                                                         |      |            
|Acquisition costs of mineral properties  United States GAAP             | $    | 2,635,947  

57

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





13.    Differences   Between  Canadian  and  United  States  Generally
Accepted Accounting Principles (GAAP) (continued)

The significant differences in the consolidated statement of cash flows relative
to US GAAP were:



|                                                    | Years ended January 31,
|--------------------------------------------------- | -----------------------
|                                                    | 2007                   
|Net cash used in operations                         |                        
|Canadian GAAP                                       | $ (1,780,306)          
|Deferred exploration expenditures                   | (1,744,921)            
|US GAAP                                             | (3,525,227)            
|                                                    |                        
|Net cash provided by (used in) investing activities |                        
|Canadian GAAP                                       | (2,386,223)            
|Deferred exploration expenditures                   | 1,744,921              
|US GAAP                                             | (641,302)              
|                                                    |                        
|Net cash provided by financing activities           |                        
|Canadian GAAP and U.S. GAAP                         | 46,900                 

Recent Accounting Pronouncements



| | a) | In March 2006 - FASB issued Statement No. 156, Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates
the characterization of declines in fair value as impairments or direct write-downs. Statement No. 156 is effective for an entitys first fiscal year beginning after September 15, 2006. The adoption of this statement is not expected to have a significant effect on the Companys future reported financial position or results of operations.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | June 2006 - FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109.  This Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with FASB No. 109, Accounting for Income Taxes.  This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006. The Company does not expect that the implementation of Statement No.
158 will have any material impact on its financial position and results of operations.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | September  2006   Securities  and Exchange  Commission  (SEC) issued Staff
Accounting  Bulletin  (SAB) No. 108,  Considering  the Effects of Prior
Year  Misstatements  when  Quantifying  Misstatements  in Current Year Financial
Statements.  SAB No.  108  addresses  how the  effects  of prior  year
uncorrected misstatements should be considered when quantifying misstatements in
current year financial  statements.  SAB No. 108 requires  companies to quantify
misstatements  using a  balance  sheet  and  income  statement  approach  and to
evaluate  whether  either  approach  results  in  quantifying  an error  that is
material in light of relevant  quantitative and qualitative factors. SAB No. 108
is  effective  for  periods  ending  after  November  15,  2006.  The Company is
currently evaluating the impact of adopting SAB No. 108 but does not expect that
it   will   have   a   material   effect   on   the    consolidated    financial
statements.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



58

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Brazauro Resources Corporation



Notes to Consolidated Financial Statements

(In Canadian Dollars)



January 31, 2007, 2006 and 2005





13.    Differences   Between  Canadian  and  United  States  Generally
Accepted Accounting Principles (GAAP) (continued)

| | d) | September 2006 - Financial Accounting Standards Board (FASB) issued Statement No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans. This Statement requires an employer to recognize the over funded or under funded status of a defined benefit post retirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position, and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. Statement No. 158 is effective for fiscal years ending after December 15, 2006. The Company does not expect that the implementation of Statement No. 158 will have any material impact on its financial position and results of operations.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | September 2006 - FASB issued Statement No. 157, Fair Value Measures. This Statement defines fair value, establishes a framework for measuring fair value in GAAP, expands disclosures about fair value measurements, and applies under other accounting pronouncements that require or permit fair value measurements. Statement No. 157 does not require any new fair value measurements. However, the FASB anticipates that for some entities, the application of Statement No. 157 will change current practice. Statement No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact of Statement No. 157 but does not expect that it will have a material impact on the consolidated financial statements.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



14.   Subsequent Events



During March 2007 the Company closed a private placement of 9,253,333 units at $0.90 per unit for gross proceeds of $8,327,999. The Company paid a brokerage commission on the placement of $375,511. Each unit consists of one common share and one half of one share purchase warrant. Each whole warrant will entitle the holder to purchase one additional share of the Company at $1.60 for one year.



As discussed in Note 3, in February 2007 the Company acquired Resource Holdings 2004 Inc. and its wholly-owned subsidiary, Empresa Internacional de Mineração do Brasil Ltda. in exchange for the issuance of 13,150,000 common shares and payment of $50,000 (U.S.) to BrazMin Corp. Additionally, the Company acquired Mineração Cachambix Ltda. from third parties by payment of $850,000 (U.S.) and its agreement to make two future payments of $1,000,000 (U.S.) each, due in February 2008 and 2009.









59

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SIGNATURES



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



|May 24, 2007 | BRAZAURO RESOURCES CORPORATION
|------------ | ------------------------------
|             | (Registrant)                  



| | By:/s/ Mark E. Jones, III            | 
| | ------------------------------------ | 
| | MARK E. JONES, III                   | 
| | Chief Executive Officer and Director
| |                                      | 



Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|Signature                                                                          | Title                               | Date        
|---------------------------------------------------------------------------------- | ----------------------------------- | ------------
|/s/ Mark E. Jones, IIIMark E. Jones, III*                                          | Chief Executive Office and Director | May 24, 2007
|/s/ D. Harry W. DobsonD. Harry W. Dobson *                                         | Director                            | May 24, 2007
|/s/ Patrick L. GlazierPatrick L. Glazier*                                          | Director                            | May 24, 2007
|/s/ Brian C. IrwinBrian C. Irwin*                                                  | Director                            | May 24, 2007
|/s/ Leendert G. KrolLeendert G. Krol*                                              | Director                            | May 24, 2007
|/s/ Daniel B. LeonardDaniel B. Leonard*                                            | Director                            | May 24, 2007
|/s/ Dr. Roger Howard MitchellDr. Roger Howard Mitchell*                            | Director                            | May 24, 2007
|/s/ Dr. Roger David MortonDr. Roger David Morton*                                  | Director                            | May 24, 2007
|By:/s/ Mark E. Jones, IIIMark E. Jones, IIIAttorney-in-factFor persons indicated * |                                     |             



60

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Index to Exhibits



| | 1.1 | Certificate of Incorporation, Memorandum and Articles of Texas Star Resources Corporation (the Company) dated March 12, 1986. (a)
| | --- | -----------------------------------------------------------------------------------------------------------------------------------

| | 1.2 | Amendment to Certificate of Incorporation and Memorandum. (b)
| | --- | -------------------------------------------------------------
| | 1.3 | Certificate of Change of Name dated October 30, 1996.        

| | 1.4 | Amendment to the Companys Memorandum, effective November 27, 2001. (h)
| | --- | -----------------------------------------------------------------------

| | 1.5 | Articles of the Company dated August 11, 2004. (m)
| | --- | --------------------------------------------------

| | 4.1 | Agreement dated July 28, 1992, between the Company and certain royalty holders (as set forth therein). (a)
| | --- | ----------------------------------------------------------------------------------------------------------

| | 4.2 | Stock Purchase Agreement dated July 29, 1992, by and among the Company, DEI, James M. Cairns, Jr., Gandy Baugh and Stewart Jackson (such individuals being collectively referred to as the DEI Shareholders), and the Amendment thereto dated January 13, 1993. (a)
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.3 | Prospecting Permit and Option to Lease dated November 4, 1992, between DEI and various interest holders. (a)
| | --- | ------------------------------------------------------------------------------------------------------------

| | 4.4 | Agreement dated December 22, 1992, between the Company and certain royalty interest holders. (a)
| | --- | ------------------------------------------------------------------------------------------------

| | 4.5 | Royalty Interest Agreement dated January 13, 1993, by and between the Company and the DEI Shareholders relating to the properties of the Company and DEI in Arkansas. (a)
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.6 | Mining Lease between the Company and certain royalty interest holders dated November 4, 1996. (c)
| | --- | -------------------------------------------------------------------------------------------------

| | 4.7 | Amendment No. 1 to Mining Lease between the Company and certain royalty interest holders dated
 November 1997. (d)
| | --- | ------------------------------------------------------------------------------------------------------------------

| | 4.8 | Mining Lease between the Company and ABJ Hammett Estate/ Trust dated September 11, 1997. (d)
| | --- | --------------------------------------------------------------------------------------------

| | 4.9 | Mining Lease Agreement and Lease Modification and Escrow Agreement dated December 16, 1999. (e)
| | --- | -----------------------------------------------------------------------------------------------

| | 4.10 | Letter Agreement dated October 26, 2000 between the Company and McGeorge Contracting Co. (f)   
| | ---- | -----------------------------------------------------------------------------------------------
| | 4.11 | Stripping Agreement dated October 31, 2000 between the Company and McGeorge Contracting Co. (f)

| | 4.11 | Lease Confirmation Agreement dated effective March 16, 2000. (g)
| | ---- | ----------------------------------------------------------------

| | 4.12 | Mining Lease between the Company and ABJ Hammett Estate/ Trust dated November 15, 2000. (g)
| | ---- | -------------------------------------------------------------------------------------------

| | 4.13 | Trust Deed for Debentures dated February 16, 2001 between the Company and Montreal Trust Company of Canada. (g)
| | ---- | ---------------------------------------------------------------------------------------------------------------

| | 4.14 | Pledge Agreement for Shares of Star U.S., Inc. between the Company and Montreal Trust Company of Canada dated February 16, 2001. (g)
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------

| | 4.15 | Pledge Agreement for Shares of Diamond Operations, Inc. between the Company and Montreal Trust Company of Canada dated February 16, 2001. (g)
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------

| | 4.16 | Second Supplemental Indenture between the Company and Computershare Trust Company of Canada dated February 11, 2003. (i)
| | ---- | ------------------------------------------------------------------------------------------------------------------------

| | 4.17 | Option Agreement, Tocantinzinho Project  Brazil dated July 31, 2003. (j)
| | ---- | -------------------------------------------------------------------------

| | 4.18 | Letter Agreement between BrazMin Corp. and the Company dated September 12, 2006 (k)
| | ---- | -----------------------------------------------------------------------------------

| | 4.19 | Quota  Purchase   Agreement,   dated  February  5,  2007  among  Sabino  Orlando
Conceição   Loguercio,   LuizAntonio   Gravata
Galvão, Jaguar Resources do Brasil, Mineração Cachambix LTDA, and
Brazauro Holdings(Brazil) Ltd. (l)
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 8    | Subsidiaries of the Registrant. (m)                                                                                                    
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------
| | 12.1 | Certification of Chairman pursuant to Exchange Act Rules 13a-14. (m)                                                                   
| | 12.2 | Certification of Chairman pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (m)

_________________



| | (a) | Filed as an exhibit to Registration Statement on Form 10 as filed on June 23, 1993.
| | --- | -----------------------------------------------------------------------------------

| | (b) | Filed as an exhibit to Form 8 Amendment No. 1 to Form 10 as filed on October 4, 1993.
| | --- | -------------------------------------------------------------------------------------

| | (c) | Filed as an exhibit to Form 10-K for the fiscal year ended January 31, 1997 as filed on May 13, 1997.
| | --- | -----------------------------------------------------------------------------------------------------

| | (d) | Filed as an exhibit to Form 10-K for the fiscal year ended January 31, 1998 as filed on April 29, 1998.
| | --- | -------------------------------------------------------------------------------------------------------

| | (e) | Filed as an exhibit to Form 10-K for the fiscal year ended January 31, 2000 as filed on April 28, 2000.
| | --- | -------------------------------------------------------------------------------------------------------

| | (f) | Filed as an exhibit to Form 10-Q for the fiscal quarter ended October 31, 2000 as filed on December 13, 2000.
| | --- | -------------------------------------------------------------------------------------------------------------

| | (g) | Filed as an exhibit to Form 10-K for the fiscal year ended January 31, 2001 as filed on April 27, 2001.
| | --- | -------------------------------------------------------------------------------------------------------

| | (h) | Filed as an exhibit to Form 10-Q for the fiscal quarter ended October 31, 2001 as filed on December 13, 2001.
| | --- | -------------------------------------------------------------------------------------------------------------

| | (i) | Filed as an exhibit to Form 10-Q for the fiscal quarter ended April 30, 2003 as filed on June 16, 2003.
| | --- | -------------------------------------------------------------------------------------------------------

| | (j) | Filed as an exhibit to Form 10-Q for the fiscal quarter ended July 31, 2003 as filed on September 15, 2003.
| | --- | -----------------------------------------------------------------------------------------------------------

| | (k) | Filed as an exhibit to Form 10-Q for the fiscal quarter ended October 31, 2006 as filed on December 15, 2006.
| | --- | -------------------------------------------------------------------------------------------------------------

| | (l) | Filed as an exhibit to Form 8-K as filed on February 12, 2007.
| | --- | --------------------------------------------------------------

| | (m) | Filed herewith.
| | --- | ---------------



All Exhibits referred to in (a) through (l) above were filed with previous Securities and Exchange Commission filings of the Company (File No. 0-21968) and are incorporated herein by reference.





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