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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KSB/A

AMENDMENT #1

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended MAY 31, 2008

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT 
For the transition period from _______ to _______

Commission file number: 000-51775

STERLING GROUP VENTURES,
INC.(Exact name of small business issuer in its
charter)

|Nevada                                           | 72-1535634                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     
|                                                 |                                     
|900  789 West Pender Street                     |                                     
|Vancouver BC                                     | V6C 1H2                             
|(Address of principal executive offices)         | (Zip Code)                          

Issuers telephone number: (604) 893-8891

Securities Registered Under Section 12(b) of the Exchange
Act:None

Securities Registered Under Section 12(g) of the Exchange
Act:Common Stock, $0.001 par value(Title of class)

Check whether the Issuer (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes XNo ______

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. X

The issuer's revenues for its most recent fiscal year ended May
31, 2008 were nil

Aggregate market value of the voting and non-voting share of
Common Stock held by non-affiliates was approximately $2,422,617 based on the
closing trading price for the common equity as of August 28, 2008 (at $0.10 per
share closing price).

(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST
FIVE YEARS)

1

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Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes ___ No
X

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practicable date: 43,826,175 common
shares issued and outstanding as of August 28, 2008.

Transitional Small Business Disclosure Format (Check one): Yes
____No X

2

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|STERLING GROUP VENTURES, INC.
|-----------------------------
|FORM 10-KSB/A                
|INDEX                        

|           |                                                                                                      | Page 
|---------- | ---------------------------------------------------------------------------------------------------- | -----
|           | Part I                                                                                               |      
|Item 1.    | Description of
      Business                                                                        | 4    
|Item 2.    | Description of Property                                                                              | 7    
|Item 3.    | Legal Proceedings                                                                                    | 10   
|Item 4.    | Submission of Matters to a Vote
      of Security Holders                                            | 10   
|           | Part II                                                                                              |      
|Item 5.    | Market for Common Equity and
      Related Stockholder Matters                                       | 10   
|Item 6.    | Management's
      Discussion and Analysis or Plan of Operation                                      | 11   
|Item 7.    | Financial Statements                                                                                 | 19-39
|Item 8.    | Changes in and Disagreements
      with Accountants on Accounting and Financial Disclosure           | 40   
|Item 8A .  | Controls and Procedures (Item
      8A (T))                                                          | 40   
|Item 8B.   | Other Information                                                                                    | 41   
|           | Part III                                                                                             |      
|Item 9.    | Directors, Executive Officers,
      Promoters and Control Persons                                   | 41   
|Item 10.   | Executive Compensation                                                                               | 42   
|Item 11.   | Security Ownership
      of Certain Beneficial Owners and Management And Related Stockholder Matters | 44   
|Item 12.   | Certain Relationships and Related
      Transactions                                                 | 44   
|Item 13.   | Exhibits                                                                                             | 45   
|Item 14.   | Principal Accountant Fees and
      Services                                                         | 45   
|Signatures |                                                                                                      | 46   

3

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PART I

Item 1. Description of Business.

Cautionary Statement Regarding Forward-Looking
Statements

This annual report contains forward-looking statements as that
term is defined in the Private Securities Litigation Reform Act of 1995. These
statements relate to future events or our future financial performance. Some
discussions in this report may contain forward-looking statements that involve
risk and uncertainty. A number of important factors could cause our actual
results to differ materially from those expressed in any forward-looking
statements made by us in this report. Forward-looking statements are often
identified by words like: believe, expect, estimate, anticipate,
intend, project and similar expressions or words which, by their nature,
refer to future events.

In some cases, you can also identify forward-looking statements
by terminology such as may, will, should, plans, predicts, potential
or continue or the negative of these terms or other comparable terminology.
These statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks in the section entitled
"Risk Factors", that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.

Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles. All references to  $ refer to US Dollars, all
references to CA $ refer to Canadian Dollars , all references to RMB refer
to Renminbi Yuan and all references to "common shares" refer to the common
shares in our capital stock.

As used in this annual report, the terms "we", "us", "our", 
the Company and "Sterling" mean Sterling Group Ventures, Inc., unless otherwise
indicated.

Sterling is an exploration stage company. There is no assurance
that commercially viable mineral deposits exist on the claims that we have under
option. Further exploration will be required before a final evaluation as to the
economic and legal feasibility of the claims is determined.

Business Development During Last Three Years

We were incorporated in the state of Nevada on September 13,
2001. Since our incorporation, we have engaged in the business of exploration
and development of a mineral property. On January 20, 2004, Sterling completed
the acquisition of all of the issued and outstanding shares of Micro Express
Ltd. (Micro), which was incorporated on July 17, 1994. Pursuant to the
transaction, the Company issued an aggregate of 25,000,000 shares of Sterlings
common stock to the stockholders of Micro in exchange for 100% of the shares of
Micro common stock. The business combination was accounted for as a reverse
acquisition whereby the purchase method of accounting was used with Micro being
the accounting parent and the Company being the accounting subsidiary.

Our Current Business

We were incorporated in the State of Nevada on September 13,
2001 and established a fiscal year end of May 31. We are a start-up, exploration
stage company engaged in the search and exploration of lithium and related
minerals. There is no assurance a commercially viable mineral deposit exists on
any of our properties. Further exploration will be required before a final
evaluation as to the economic and legal feasibility of our claims is determined.
We have not yet generated or realized any revenues from our business operations.
Our statutory registered agent's office is located at 2050 Russett Way, Carson
City, Nevada 89703 and our business office is located at 900  789 West

4

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Pender Street, Vancouver, B.C., Canada, V6C 1H2. Our telephone
number is (604) 893-8891 and fax number is (604) 408-8515

DXC SALT LAKE PROJECT

On July 11, 2005, the Company signed a letter of intent with
Beijing Mianping Salt Lake Research Institute for the development of
Dangxiongcuo (DXC) salt lake property in Nima county of Naqu district in Tibet,
China. Pursuant to the Letter of Intent, the parties have agreed to set up a
Joint Venture Company in Tibet, China to share the benefits, risks and losses of
the project.

On September 16, 2005, the Company through its wholly owned
subsidiary, Micro Express Holdings Inc. (MEH), signed an agreement (the
initial agreement) with Beijing Mianping Salt Lake Research Institute
(Mianping) for the development of Dangxiongcuo salt lake property in Nima
county of Naqu district in Tibet, China. The Agreement follows a Letter of
Intent signed between the parties on July 11, 2005.

Beijing Mianping Salt Lake Research Institute (Mianping)
which is a private company holds the exploration permit on the Dangxiongcuo Salt
Lake and the surrounding area issued by Tibet Bureau of Land and Resources of
China. Dangxiongcuo Salt Lake is a classic brine type deposit. The number of the
exploration permit is 5400000620013. The area covered by the permit is 89.06 km2
(8,906 hectares) and it was valid until Feb 23, 2007. The recording date is
February 24, 2006. Mianping has renewed its permit on March 4th 2007.
The new number is 5400000730283. The area covered by the permit is 89.06 km2
(8,906 hectares) and it was valid until March 14th2008. The
recording date is March 4, 2007. The license is now under renewal process. There
is a mandated routine for converting this exploration permit into a mining
permit.

Pursuant to the agreement signed on September 16, 2005, the
parties have agreed to set up a Cooperative Company, Tibet Saline Lake Mining
High-Science & Technology Co. Ltd. (the Cooperative) to develop DXC Salt
Lake. The objective of the Cooperative is to use the funds provided by Sterling
through MEH and the skills and technology provided by Mianping to produce
lithium carbonate (Li2CO3), potash and other chemicals from brine. MEH was to
own 65% and Mianping 35% of the Cooperative. It was anticipated that the total
investment in the Cooperative will be approximately 240 million RMB (or
approximately US$35 million) and would result in production of 5,000 tonnes per
year of lithium carbonate and by products (potash and other chemicals). Mianping
guaranted the production cost of lithium carbonate would be less than 11,000 RMB
per tonne (or approximately US $1,600 per tonne).

On July 3, 2007, MEH received a letter from Mianping stating
that the agreement between MEH and Mianping should be deemed terminated as a
result of lack of progress in the approval for the establishment of the joint
venture company and is considering a lawsuit against the Company and MEH. MEH
has responded that Mianpings claim has no legal grounds as the lack of progress
is not caused by MEH or the Company. There has been no legal action to date and
none is expected. By letter dated August 25, 2008, Mianping has confirmed to the
Companys auditor that the agreement dated Sept. 16, 2005 has terminated
effective July 8, 2008. This agreement was replaced by the agreement with
Zhongchuan International Mining Holdings Co. Ltd. dated July 8, 2008.

On July 8, 2008, the Company signed an agreement (the
"Agreement") with Zhong Chuan International Mining Holding Co., Ltd. ("Zhong
Chuan"), Ximing Sun and Charles Yan - shareholders of Monte Sea Holdings Ltd.
(collectively hereinafter "Monte Sea Shareholders") to restructure the
transactions contemplated under the initial agreement signed by Mianping and MEH
on September 16, 2005. Pursuant to the Agreement, the parties wish to establish
a Sino-foreign cooperative joint venture company ("CJV") for the purpose of
applying for and holding required approvals, permits and licenses with respect
to the development of the Dangxiongcuo Salt Lake property (the "Property")
located in Tibet of China.

Zhong Chuan is a Chinese mining company with connections and
mineral properties in Tibet, China. Zhong Chuan is interested in expanding into
lithium business. Zhong Chuan has also acquired interests in certain other salt
lakes in Tibet ("Other Interests"). Monte Sea Shareholders are the shareholders
holding all the issued and outstanding shares in the stock of Monte Sea Holdings
Ltd. ("Monte Sea"), a company incorporated in Hong Kong.

Under the Agreement, the initial agreement between Mianping and
the Company shall be replaced and superseded by this Agreement upon this
Agreement becoming effective. Upon this Agreement being effective and
termination of the initial agreement, Zhong Chuan shall cause Mianping to repay
to the Company RMB 6,000,000($875,000) by depositing the said amount into an
account designated by the Company.

5

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The Parties agree that Zhong Chuan shall cause an operating
company ("Opco") to be established in Tibet prior to the establishment of the
CJV for the purpose of applying for and holding required approvals, permits and
licenses with respect to the development of the Property. The Opco shall hold
all such approvals, permits and licenses in trust for the CJV, and pursuant to
the letters and spirit of this Agreement.

Under the Agreement, Monte Sea Shareholders and Zhong Chuan
shall cause the CJV to be established within 90 days from date of this
Agreement, subject to required regulatory approval and based on a joint venture
agreement by way of acquisition of interest in the Opco by Monte Sea, or by way
of incorporation under the Chinese laws. Monte Sea shall hold up to 65% but no
less than 51% of shares in the CJV. CJV shall own and hold all Mianping's
(and/or Opco's) title to and interest in any exploration or mining licenses in
lithium resources in Tibet including the Exploration license and Other
Interests.

If for any Chinese regulatory or policy reasons, Monte Sea is
not permitted to have more than fifty-one percent (51%) interest in the CJV,
then Monte Sea and Zhong Chuan shall cause the JV Agreement to be revised such
that:

(a) Mont Sea shall have a forty-nine percent (49%) interest in
the CJV;

(b) Mont Sea shall be entitled to receive returns on its
investment in the CJV on a priority and accelerated basis until its investment
in the CJV and the Property is fully recovered; and

(c) Mont Sea shall be permitted to manage the daily operation
of the CJV pursuant to a management agreement to be entered into between Mont
Sea and Zhong Chuan, on terms and conditions satisfactory to Sterling.

The Parties shall cause all necessary corporate actions to be
taken to approve and effect the transactions contemplated above, and to make any
adjustment, registration or filings necessary to meet applicable regulatory
requirements.

Upon signing of this Agreement and subject to applicable
regulatory approval, Monte Sea Shareholders shall subscribe for 5,000,000 units
(the "Units") to be issued by the Company at $0.15 per unit. Each Unit shall
consist of One (1) common share in the stock of the Company, and One (1) warrant
which shall entitle Monte Sea Shareholders to purchase One (1) common share in
the stock of the Company at $0.16 per share within two (2) years from the date
of the issuance of the Units.

Subject to applicable regulatory approval, the Company shall
cause 200,000,000 shares to be issued to Monte Sea Shareholders within ten (10)
working days from the date transfer of the Exploration License to the CJV is
approved by the Chinese regulators, in exchange for all the shares then issued
and outstanding in the stock of Monte Sea and held by Monte Sea shareholders
(the "Share Exchange"). The Share Exchange may be conducted and completed at an
earlier date so long as the Company and Monte Sea Shareholders may agree in
writing.

Subject to applicable regulatory approval, the Company shall
cause 87,910,000 shares in the capital of the Company to be issued to Monte Sea
Shareholders at no additional cost, upon receipt by the CJV of a mining license
and such other permits or approvals for the Property, permitting the full
exploitation and development of the Property.

The Company shall use its best efforts to secure business
relationships with selected major companies outside China in the form of equity
participation or off-take arrangement for lithium products from the CJV.

The Company shall, when and as required by the CJV, arrange and
complete financing for the operation of the CJV.

Zhong Chuan shall, together with Monte Sea Shareholders,
provide funds no less than RMB 100,000,000 (or US dollar equivalent thereof) for
the purpose of meeting registered capital payment requirements in the
registration and operation of the CJV. Zhong Chuan shall keep other Parties
informed of any development in the registration of the CJV and transfer of the
Exploration License.

Monte Sea Shareholders shall, together with Zhong Chuan, make
funds available for the purpose of acquisition and meeting registered capital
payment requirements in the registration and operation of the CJV.

CJV will be located in Tibet, China and will develop
Dangxiongcuo lithium property, extract and process commercially lithium
carbonate using internationally advanced technologies.

Lithium carbonate is the starting point in the manufacturing of
lithium and various lithium chemicals which are used in batteries, ceramics and
glass, in primary aluminum production, in the manufacture of lubricants and
greases,

6

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drugs and others products. According to the Mineral Information
Institute (MII), most lithium is recovered from brine, or water with a high
concentration of lithium carbonate. Brines trapped in the Earths crust (called
subsurface brines) are the major source material for lithium carbonate. These
sources, which are recovered generally through solar evaporation, are less
expensive to mine than sources from rock such as spodumene, petalite, and other
lithium-bearing minerals.

JIAJIKA PROJECT

On September 16, 2003, the Company, through its wholly owned
subsidiary, Micro Express Ltd. (Micro), entered into an agreement (the
Agreement) with Sichuan Province Mining Ltd. to acquire a 75% interest in a
30-year mining joint venture company. The joint venture company will hold the
mining licenses to develop the Jiajika spodumene property located in Sichuan
Province, China for the extraction of lithium and lithium salts. Pursuant to the
Agreement, the total investment required is estimated at 88.5 million RMB
(US$10.8 million) for the initial capacity of 240,000 tonnes/annum. The initial
registered capital is 56 million RMB (US$6.8 million). Sichuan Province Mining
Ltd. will contribute 14 million RMB (US$1.7 million) including the mining
permits to hold 25% of the JV Company. Micro will contribute 42 million RMB (US$
5.1 million) to hold 75% of the JV Company.

On April 5, 2005, the Company through Micro, signed a joint
venture contract (JV Contract) with Sichuan Province Mining Ltd. for setting
up a joint venture company, Jihai Lithium Ltd. , and the development of the
Jiajika lithium deposit. The Contract follows an agreement signed between the
parties on September 16, 2003.

Sichuan Province Mining Ltd. (SPM) which is a private Chinese
company holds the mining permit on the Jiajika spodumene property in Kangding,
Sichuan province, China issued by the Sichuan Bureau of Land and Resources of
China. The property is an albite  spodumene pegmatite deposit. The number of
mining permit is 5100000410234. The area is 0.88 km2 (88 hectares) and it was
valid until November 11, 2006. The recording date is May 24, 2004. Sterling is
required to contribute 42 million RMB in order to earn 75% of the Joint Venture
to be set up by Sterling and SPM to build an initial capacity of 240,000 tonnes
per year mining and processing plant.

On March 3, 2006, the Company, through its wholly owned
subsidiary, Micro, signed an agreement (the Agreement) with Sichuan Province
Mining Ltd. (SPM) with respect to Micros early investment in the Sichuan
Jiajika Spodumene project.

Pursuant to the Agreement, the parties agreed to terminate the
joint venture and confirmed that Micros early investment of 2.48 million RMB to
the Sichuan Jiajika Spodumene project should be paid back at a rate of 1.2
million RMB before April 15, 2006 and 1.28 million RMB before March 30, 2007.
Payment should be made directly to Micro by SPM. If SPM does not make the
payment of 1.28 million to Micro before March 30, 2007, then 1.28 million RMB
will be converted into Micros interest in the Jiajika project of SPM using the
formula: 1.28 million RMB divided by the registered capital contribution in the
Jiajika project by SPM, multiplied by 100%. Neither party shall have any other
liabilities to the other party and the Agreement shall replace all previously
signed agreements, contracts and MOU between Micro and SPM. SPM has made payment
of 1,900,000 RMB ($249,885) as of May 31, 2008.

Item 2. Description of Property

- DXC Salt Lake Property

Dangxiongcuo Salt Lake (DXC) is located in the south-western
part of Xizang plateau in Nima County, Tibet of China. The geographic
co-ordinates are between 86°38'00" and 86°49'00" east and 31°30'00" to 31°40'00"
north.

The location of the property is shown in following map.

7

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Access to Tibet is through Lhasa which has a good efficient
international airport. Road access into the property area is difficult at best.
The road heads northwest from Lhasa to the town of Zamsar then northeast. This
first 200 km is good paved road. Then down into the valley turning right onto a
rough gravel road near the Nam Tsho Salt Lake. Thence around the eastern and
northern side of the Nam Tsho lake and on 300 kilometers to the isolated village
of Pankgo. Thence proceed 400 kilometers to the City of Nima. Thence proceed
another 90 kilometers of very rough road down to the DXC. The trip takes 26
hours of difficult 4X4 driving from Lhasa.

The deposit is a large salt lake 55.53 km2 (5,553 hectares) in
area with a maximum depth of 14 m. Brines are a common source of lithium and the
DXC Salt Lake is a classic surface brine type deposit as compared with
subsurface brine deposit in South America. This type of deposit is known
throughout the world where ever desert climates allow evaporite deposits to
form. Mineralization in the lake is in the form of dissolved salts of sodium,
potassium, lithium and boron, as chlorides, oxides, sulfates and carbonates.
These can be recovered through fractional precipitation of the various salts by
the evaporation of the water. Variations in salinity, pH and temperature
determine which compound will form crystals and precipitate from the brine.

In 1980s, 1 : 1,000,000 regional geology was conducted by the
Tibet Regional Geology Brigade. 1 : 250,000 regional geology was conducted by
the Jiangxi Regional Geology Brigade in 2004. In 1999, two Chinese geologists
conducted preliminary study in the area. In 2002, Mianping started exploration
work in the area. 1:50,000 geology investigation and hydrogeology was
conducted.1:2,000 salt field site engineering geology and topography mapping was
conducted. 20,000 square meters salt field was built in 2003. In 2004, 10,000
square meters of the salt field was revamped. In December 2005, Sterling and
Mianping commissioned the Tibet Geothermal brigade to conduct measurements for
the 20 km2 salt field (1:2,000 and 1:5,000). In March 2006, Sterling and
Mianping commissioned the Zhengzhou Comprehensive Utilization Institute of China
Academy of Geology to conduct the purification test for the DXC salt lake rough
concentrate. In 2006, the Tibet Geothermal Brigade conducted the geothermal
exploration work. In May 2006, a Canadian standard NI 43-101 report was
conducted by a qualified geologist. In June 2006, Mianping finished Chinese
geology report and the report has passed the auditing of Ministry of Land and
Resources of China. Since 2005, a technical team from Mianping has been working
on the DXC Salt Lake site to conduct salt field technical test, weather
monitoring and related tests and monitoring according to the plan designed by
Sterling and Mianping.

There is almost no local infrastructure. The only solar power,
water, and roads are those installed by the Mianping. Beicun village at the head
of the lake appeared to have perhaps 300 people, local Tibetan herdsman of the
Han ethnic group. They are mainly occupied with herding yaks, sheep, goats, and
a few horses. They plant small gardens of barley and vegetables but are not self
sufficient and import food stuffs from outside. Although people would be
available from this village to work on a project in this area the skill level
would be very low. Communication with

8

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the outside world is by satellite telephone. The nearest land
line is at Nima a distance of 90 km away. Shipment of product does not seem to
be a problem as numerous heavy trucks were noted all along the road to the
property. National rail service is available from Naqu about 700 km distance to
the east.

Generally, the physiography could be termed basin and range
with broad valleys between sharp ridges and arretes. The valleys are generally
gentle in profile both laterally and longitudinally with small to medium rivers
coursing through the bottoms of the valleys. Few of the rivers are bridged and
most of the crossings are by shallow fords. Along these tracks for much of the
route were seen numerous large trucks of 30  40 tonnes. Most were freighting
bagged material, probably salt from one of the salt lake operations. There are
no services along the route except for Pankgo and Nima. The DXC Salt Lake sits
in a rather confined basin between high rugged ridges. There are numerous
benches or beaches around the lake indicating lake levels at one time were 200
meters above the present levels of the lake, as the last glaciation receded.

Vegetation throughout the plateau is sparse grasses which have
been grazed down to the root level. Sheep, goats and yaks graze in large herds
on what appeared to be very lean fodder. Herdsmen and herdswomen tend these
flocks with no visible support and often many miles from the nearest shelter.
Some of the herdsman seem to rely on the 125cc motor bike for transportation.
The women appeared mainly to walk. Occasional five tonne trucks were seen
hauling personal belongings grossly overloaded with household items and
people.

In June 2006, Mianping finished a Chinese geology report
(Chinese reserve report) and the report passed the auditing of the Ministry of
Land and Resources of China on September 13, 2006 which is the basis for
converting the exploration permit into a mining permit. Mianping led by
Professor Mianping Zheng, an academician of Chinese Academy of Engineering, is
still collecting information such as yearly weather information, wind
information and brine chemistry using a test pond system. Development plans are
being studied.

Mianping has installed solar power, water, and roads on the
site. Water comes from mountain springs. There are several rivers which flow
into the lake area.

DXC salt lake Sampling by Mianping was done on a 2 km X 2 km
grid with 106 samples taken at 16 sample points at various depths. Location
control was provided by GPS. If the water depth was less than 2 meters deep, one
sample was taken; if the water depth was between 2 and 10 meters, then two
samples were taken at 3 and 8 meters and if the water was deeper than 10 meters
then three samples were taken. Each sample consisted of two 500 ml. bottles of
brine.

The sampling method used a standard water sampling technique
where a bottle is lowered into the lake to the required depth, the stopper
removed, and the bottle allowed to fill. AAS analytical techniques were used to
determine the composition of the brine sample. This sampling program was
repeated several times during the various seasons of the year. Several hundred
samples have been collected in this way and analyzed by Mianping at their AAS
laboratory on site.

Two samples were collected by Norm Tribe, an independent
geologist, for the confirmation of Mianpings assay and analyzed by an
independent laboratory, ALS Canada Ltd., in Vancouver, BC, Canada in June 2006.
The results indicate that the concentration of salts is comparable with the
results provided by Mianping. The lake water returned values of 376 ppm lithium,
893 ppm boron and 11,300 ppm potassium. This sample was collected from DXC lake
at a depth of 1.0 meter.

Mianpings analytical procedures were also reviewed by the
Resources & Reserve Audit Center of Ministry of Land and Resources of
China.

During the year ended May 31, 2008, the Company was seeking the
joint venture company approval from Tibet Government for the DXC Salt Lake
project and did not proceed with the exploration and engineering study.

As of the date of this report, the application to establish a
joint venture has not yet been approved by the regulators in Tibet, China

As at May 31, 2008, the Company incurred expenses of $989,443
related to the DXC Salt Lake Property.

Employees

At present, we have no employees, other than our officers and
directors. Our officers and directors do not have employment agreements with us,
except consulting agreements which can be cancelled on 30-days notice.

9

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Item 3. Legal Proceedings

We know of no material, active or pending legal proceedings
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial shareholder,
is an adverse party or has a material interest adverse to our interest.

Item 4. Submissions of Matters to a Vote of Security Holders

Within the current fiscal year, no matters have been submitted
to a vote of security holders.

PART II

Item 5. Market for Common Equity and Related Stockholder
Matters

Overview

Our common stock is traded on the OTC Bulletin Board under the
symbol SGGV. The table below sets forth the high and low sales prices for the
Companys common stock for the fiscal years ended May 31, 2006, 2007 and 2008.
The quotations below reflect inter-dealer prices, without retail markup,
markdown or commission and may not represent actual transactions.

Year
    Quarter
    High ($)
    Low ($)2006
    First
    0.44
    0.16Second
    0.25
    0.15Third
    0.26
    0.15Fourth
    0.26
    0.162007
    First
    0.20
    0.13Second
    0.20
    0.08Third
    0.17
    0.08Fourth
    0.16
    0.082008
    First
    0.10
    0.07Second
    0.12
    0.05Third
    0.15
    0.03Fourth
    0.15
    0.04


Pacific Stock Transfer Company is the registrar and transfer
agent for our common shares, and is located at Suite 240, 500 East Warms Springs
Road, Las Vegas, Nevada 89119 (Telephone: (702) 361-3033; Facsimile: (702)
433-1979).

As of May 31, 2008, the shareholders' list of our common shares
showed 35 registered shareholders and 43,826,175 shares outstanding.

10

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We have not declared any dividends since incorporation and do
not anticipate that we will do so in the foreseeable future. Although there are
no restrictions that limit the ability to pay dividends on our common shares,
our intention is to retain future earnings for use in our operations and the
expansion of our business.

Equity Compensation Plan Information

On May 12, 2004, the Company registered a 2004 incentive stock
option plan consisting of 3,636,000 common shares. As of the year ended May 31,
2008, 3,636,000 options were issued and outstanding to various consultants,
officers or directors. The above options are exercisable at US$0.50 per share
with expiry date of February 3, 2009. Pursuant to the stock option plan, the
number of shares that may be issued under the plan may not exceed 15% of the
issued and outstanding shares of the company. 15% of the issued and outstanding
shares of the Company is 6,573,926 as of May 31, 2008. As of the date of this
report, none of the above options have been exercised.

Recent Sales of Unregistered Securities

None.

Share Purchase Warrants

During the year ended May 31, 2008, no warrant was exercised or
cancelled.

As at May 31, 2008, the Company has a total of 3,817,500 and
2,873,990 Series A and C share purchase warrants outstanding, respectively.

On February 14, 2006, the Company reduced the exercise price of
the 3,817,500 Series A Share Purchase Warrants from $0.75 to $0.50 each and
extended the terms of Series A Share Purchase Warrants for two years to the
earlier of:

|(i)  | February 16, 2008; or                                                                                                                                             
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii) | The 90th day after the day on which the weighted average
      trading price of the Companys shares exceed $0.85 per share for 30
      consecutive trading days.

Upon exercise of the Series A Share Purchase Warrants at
$0.50 each, the holder will receive one Common Share of the Company and a Series
B Share Purchase Warrant exercisable at $1.00 expiring one year after the
occurrence of either (i) or (ii) as described above.

On December 22, 2006, the Company extended the expiry date of
the 2,873,990 Series C Share Purchase Warrants from December 29, 2006 to
February 29, 2008. The exercise price of the warrants remains unchanged at $0.18
per share.

On February 7, 2008, the Company extended the expiry date of
the 3,817,500 Series A Share Purchase Warrants from February 16, 2008 to
February 16, 2009. The exercise price of the warrants remains unchanged at $0.50
per share.

On February 7, 2008, the Company extended the expiry date of
the 2,873,990 Series C Share Purchase Warrants from February 29, 2008 to
February 27, 2009. The exercise price of the warrants remains unchanged at $0.18
per share.

Item 6. Management's Discussion and Analysis or Plan of
Operation

Safe Harbor Statement under the United States Private
Securities Litigation Reform Act of 1995: Except for the statements of
historical fact contained herein, the information constitutes forward-looking
statements within the meaning of the Private Securities Litigation reform Act
of 1995. Such forward looking statements, including but not limited to those
with respect to the price of lithium, lithium carbonate, potash, other metals
and chemicals, the timing and amount of estimated production, costs of
production, reserve determination and reserve conversion rates, involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievement 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, risks
relating to the integration of the acquisition, risks that the company may not
be able to raise the necessary capital, risks relating to

11

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international operations, risks relating to joint venture
operations, the actual results of current exploration activities, the actual
results of current reclamation activities, conclusions of economic evaluations,
changes in project parameters as plans continue to be refined, future prices of
lithium, lithium carbonate, potash, and other metals and chemicals, as well as
those factors affecting the mineral industry. Although the Company has attempted
to identify important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be as
anticipated, estimated or intended. There can be no assurance that such
statements will prove to be accurate as actual results and future events could
differ materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking statements.

Introduction

The information presented here should be read in conjunction
with Sterling Group Venture Inc.'s financial statements and other information
included in this Form 10-KSB. When used in this Form 10-KSB, the words
"expects," "anticipates," "estimates" and similar expressions are intended to
identify forward-looking statements. Such statements are subject to risks and
uncertainties, including those set forth below under "Risks and Uncertainties,"
that could cause actual results to differ materially from those projected. These
forward-looking statements speak only as of the date hereof. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herein to
reflect any change in the Company's expectations with regard thereto or any
change in events, conditions or circumstances on which any statement is based.

Plan of Operations

Sterling is an exploration stage company and there is no
assurance a commercially viable mineral deposit exists on any of the properties
the Company has claims over. Further exploration will be required before final
evaluation as to the economic and legal feasibility of the claims is
determined.

On July 11, 2005, the Company signed a letter of intent (the
LOI) with Beijing Mianping Salt Lake Research Institute for the development of
Dangxiongcuo salt lake property (DXC Salt Lake) in Nima county of Naqu
district in Tibet, China. Pursuant to the LOI, the parties have agreed to set up
a joint venture company in Tibet, China to share the benefits, risks and losses
of the project.

On September 16, 2005, the Company through its wholly owned
subsidiary, Micro Express Holdings Inc. (MEH), signed an agreement (the
initial agreement) with Beijing Mianping Salt Lake Research Institute
(Mianping) for the development of Dangxiongcuo salt lake property in Nima
county of Naqu district in Tibet, China, which follows a Letter of Intent signed
between the parties on July 11, 2005.

Pursuant to the initial agreement, the parties have agreed to
set up a Cooperative Company, Tibet Saline Lake Mining High-Science &
Technology Co. Ltd. (the Cooperative) to develop DXC Salt Lake. The objective
of the Cooperative is to use the funds provided by Sterling through MEH and the
skills and technology provided by Mianping to produce lithium carbonate
(Li2CO3), potash and other chemicals from brine. MEH is to own 65% and Mianping
35% of the Cooperative. It is anticipated that the total investment in the
Cooperative will be approximately 240 million RMB Yuan (or approximately US$31
million) and will result in production of 5,000 tonnes per year of lithium
carbonate and by products (potash and other chemicals).

On July 8, 2008, the Company signed an agreement (the
"Agreement") with Zhong Chuan International Mining Holding Co., Ltd. ("Zhong
Chuan"), Ximing Sun and Charles Yan - shareholders of Monte Sea Holdings Ltd.
(collectively hereinafter "Monte Sea Shareholders") to restructure the
transactions contemplated under the initial agreement signed by Beijing Mianping
Salt Lake Research Institute ("Mianping") and Micro Express Holdings Inc.
("MEH") on September 16, 2005. Pursuant to the Agreement, the parties wish to
establish a Sino-foreign cooperative joint venture company ("CJV") for the
purpose of applying for and holding required approvals, permits and licenses
with respect to the development of the Dangxiongcuo Salt Lake property (the
"Property") located in Tibet of China.

Zhong Chuan is a Chinese mining company with connections and
mineral properties in Tibet, China. Zhong Chuan is interested in expanding into
lithium business. Zhong Chuan has also acquired interests in certain other salt
lakes in Tibet ("Other Interests"). Monte Sea Shareholders are the shareholders
holding all the issued and outstanding shares in the stock of Monte Sea Holdings
Ltd. ("Monte Sea"), a company incorporated in Hong Kong.

12

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Under the Agreement, the initial agreement between Mianping and
the Company shall be replaced and superseded by this Agreement upon this
Agreement becoming effective. Upon this Agreement being effective and
termination of the initial agreement, Zhong Chuan shall cause Mianping to repay
to MEH RMB 6,000,000 by depositing the said amount into an account designated by
MEH.

The Parties agree that Zhong Chuan shall cause an operating
company ("Opco") to be established in Tibet prior to the establishment of the
CJV for the purpose of applying for and holding required approvals, permits and
licenses with respect to the development of the Property. The Opco shall hold
all such approvals, permits and licenses in trust for the CJV, and pursuant to
the letters and spirit of this Agreement.

Under the Agreement, Monte Sea Shareholders and Zhong Chuan
shall cause the CJV to be established within 90 days from date of this
Agreement, subject to required regulatory approval and based on a joint venture
agreement by way of acquisition of interest in the Opco by Monte Sea, or by way
of incorporation under the Chinese laws. Monte Sea shall hold up to 65% but no
less than 51% of shares in the CJV. CJV shall own and hold all Mianping's
(and/or Opco's) title to and interest in any exploration or mining licenses in
lithium resources in Tibet including the Exploration license and Other
Interests.

If for any Chinese regulatory or policy reasons, Monte Sea is
not permitted to have more than fifty-one percent (51%) interest in the CJV,
then Monte Sea and Zhong Chuan shall cause the JV Agreement to be revised such
that:

(a) Mont Sea shall have a forty-nine percent (49%) interest in
the CJV;

(b) Mont Sea shall be entitled to receive returns on its
investment in the CJV on a priority and accelerated basis until its investment
in the CJV and the Property is fully recovered; and

(c) Mont Sea shall be permitted to manage the daily operation
of the CJV pursuant to a management agreement to be entered into between Mont
Sea and Zhong Chuan, on terms and conditions satisfactory to Sterling.

The Parties shall cause all necessary corporate actions to be
taken to approve and effect the transactions contemplated above, and to make any
adjustment, registration or filings necessary to meet applicable regulatory
requirements.

Upon signing of this Agreement and subject to applicable
regulatory approval, Monte Sea Shareholders shall subscribe for 5,000,000 units
(the "Units") to be issued by the Company at US$0.15 per unit. Each Unit shall
consist of One (1) common share in the stock of the Company, and One (1) warrant
which shall entitle Monte Sea Shareholders to purchase One (1) common share in
the stock of the Company at US$0.16 per share within two (2) years from the date
of the issuance of the Units.

Subject to applicable regulatory approval, the Company shall
cause 200,000,000 shares to be issued to Monte Sea Shareholders within ten (10)
working days from the date transfer of the Exploration License to the CJV is
approved by the Chinese regulators, in exchange for all the shares then issued
and outstanding in the stock of Monte Sea and held by Monte Sea shareholders
(the "Share Exchange"). The Share Exchange may be conducted and completed at an
earlier date so long as the Company and Monte Sea Shareholders may agree in
writing. This share issuance will result in a change of control of the
Company.

Subject to applicable regulatory approval, the Company shall
cause 87,910,000 shares in the capital of the Company to be issued to Monte Sea
Shareholders at no additional cost, upon receipt by the CJV of a mining license
and such other permits or approvals for the Property, permitting the full
exploitation and development of the Property.

The Company shall use its best efforts to secure business
relationships with selected major companies outside China in the form of equity
participation or off-take arrangement for lithium products from the CJV.

The Company shall, when and as required by the CJV, arrange and
complete financing for the operation of the CJV.

Zhong Chuan shall, together with Monte Sea Shareholders,
provide funds no less than RMB 100,000,000 (or US dollar equivalent thereof) for
the purpose of meeting registered capital payment requirements in the
registration and operation of the CJV. Zhong Chuan shall keep other Parties
informed of any development in the registration of the CJV and transfer of the
Exploration License.

13

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Monte Sea Shareholders shall, together with Zhong Chuan, make
funds available for the purpose of acquisition and meeting registered capital
payment requirements in the registration and operation of the CJV.

CJV will be located in Tibet, China and will develop
Dangxiongcuo lithium property, extract and process commercially lithium
carbonate using internationally advanced technologies.

Results of Operations

The Company had no operating revenue except interest income of
$5,559 for the year ended May 31, 2008 and interest income of $6,410 for the
year ended May 31, 2007. The Company incurred expenses of $521,999 stemming from
accounting audit and legal fees, consulting fees, mineral property costs ,
travel, stock based compensation, and general and administrative expenditures as
compared to $870,895 for the same period last year. The decrease of $348,896 was
mainly due to the reduction in mineral property costs and the stock based
compensation charge of $409,525, with respect to the revalued warrants relating
to the extension of the expiry date, in 2008 compared to 2007.

The following table shows the companys mineral property costs
in 2007 and 2008. The mining permit cost for DXC Salt Lake Property
significantly increased its mineral property costs for the year ending May 31,
2007:

|                                    |   | DXC       |  |   | Jiajika   | 
|----------------------------------- | - | --------- |  | - | --------- | 
|                                    |   | Salt Lake |  |   | Spodumene | 
|Summary of
      mineral properties |   | Property  |  |   | Property  | 
|                                    |   |           |  |   |           | 
|Year ended May 31, 2008             |   |           |  |   |           | 
|                                    |   |           |  |   |           | 
|Administrative                      | $ | 706       |  | $ | -         | 
|Consulting fees                     |   | 60,548    |  |   | -         | 
|Travel                              |   | 5,456     |  |   | -         | 
|Legal fees                          |   | 11,566    |  |   | -         | 
|                                    | $ | 78,276    |  | $ | -         | 
|                                    |   |           |  |   |           | 
|Year ended May 31, 2007             |   |           |  |   |           | 
|                                    |   |           |  |   |           | 
|Administrative                      | $ | 5,200     |  | $ | -         | 
|Consulting fees                     |   | 134,580   |  |   | -         | 
|Engineering studies                 |   | 38,063    |  |   | -         | 
|Mining permit                       |   | 382,920   |  |   | -         | 
|Topography measurement              |   | 15,001    |  |   | -         | 
|Legal fees                          |   | 9,695     |  |   |           | 
|Travel                              |   | 53,262    |  |   | 488       | 
|Wages and benefits                  |   | 35,687    |  |   | -         | 
|                                    | $ | 674,408   |  | $ | 488       | 

The Company also incurred expenses on the following related
party transactions during year ended May 31, 2008:

|(a) | The Company was charged consulting fees during the year
      ended May 31, 2008 totalling $117,284 (2007: $115,721) by companies
      controlled by two directors of the Company                                   
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                      
|(b) | The Company was charged rental fees included in General
      and Administrative during the year ended May 31, 2008 totalling $22,656
      (2007: $13,869) by a company controlled by a director of the
    Company.
|    |                                                                                                                                                                                                                      
|(c) | The Company was charged mineral property costs -
      consulting during the year ended May 31, 2008 in the amount of $50,051
      (2007: $45,008) by a company controlled by a director of the
    Company.        

14

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|(d) | Included in accounts payable is $414,235 (2007: $219,501)
      which was due to the companies controlled by the directors of the Company
      for their services provided.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company expects the trend of losses to continue at an
increasing rate until we can achieve commercial production on some of the
mineral properties. However, there can be no assurance that commercial
production will be possible on any of the properties in the near or distant
future.

Liquidity and Working Capital

As of May 31, 2008, the Company had total current assets of
$388,395, and total liabilities of $432,505. As of March 31, 2008, the Company
had cash and cash equivalents of $374,127 and negative working capital of
$44,110. The amount of $374,127 cash can provide the Company with working
capitals for about 12 months.

According to the agreement signed with Zhongchuan on July 8,
2008, Mianping will repay the Company RMB 6,000,000 ($875,000) and Monte Sea
Shareholders shall subscribe for 5,000,000 units (the "Units") to be issued by
the Company at $0.15 per unit so the Company will raise working capital in the
amount of $750,000 to meet its short term working capital requirements.

The Company has no other capital resources other than the
ability to use its common stock to raise additional capital or the exercise of
the warrants by the unit holders.

No commitments to provide additional funds have been made by management or other stockholders except as set forth above. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover operation expenses except as set forth in the agreement dated July 8, 2008 where under, Zhongchuan and Monte Sea Shareholders will provide RMB 100,000,000 (US$14,584,000) to put the DXC property into production.  If the above agreement with Zhongchuan is not implemented, this raises substantial doubt that the Company will be able to continue as a going concern unless additional capital is raised.

Off-Balance Sheet Arrangements

None.

RISKFACTORS

We have sought to identify what we believe to be the most
significant risks to our business. However, we cannot predict whether, or to
what extent, any of such risks may be realized nor can we guarantee that we have
identified all possible risks that might arise. Investors should carefully
consider all of such risk factors before making an investment decision with
respect to our Common Stock. We provide the following cautionary discussion of
risks, uncertainties and possible inaccurate assumptions relevant to our
business. These are factors that we think could cause our actual results to
differ materially from expected results. Other factors besides those listed here
could adversely affect us.

Factors That May Affect Future Results and Market Price
of Stock

The business of the Company involves a number of risks and
uncertainties that could cause actual results to differ materially from results
projected in any forward-looking statement, or statements, made in this report.
These risks and uncertainties include, but are not necessarily limited to the
risks set forth below. The Company's securities are speculative and investment
in the Company's securities involves a high degree of risk and the possibility
that the investor will suffer the loss of the entire amount invested.

Limited Operating History; Anticipated Losses;
Uncertainty of Future Results(Risk of Going Concern)

Sterling is in the exploration stage. The Company has entered
into joint venture agreements to explore and develop mineral properties located
in China and has not yet determined whether these properties contain reserves
that are economically recoverable. The Company has not yet achieved profitable
operations and is dependent on its ability to raise capital from shareholders or
other sources to meet its obligations and repay its liabilities arising from
normal business operations when they come due. These factors raise substantial
doubt that the Company will be able to continue as a going concern.

Lack of Technical Training of Management

15

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The Management of our Company has academic and scientific
experience related to mining issues but lacks technical training and experience
exploring for, commissioning and operating a mine. With no direct training or
experience in these areas, management may not be fully aware of many of the
specific requirements related to working within this industry. The decisions and
choices may not take into account standard engineering or managerial approaches
mineral exploration companies commonly use. Consequently, operations, earnings
and the ultimate financial success of the Company could suffer irreparable harm
due to managements lack of experience in this industry.

Exploration Risk

Development of mineral properties is contingent upon obtaining
satisfactory exploration results. Mineral exploration and development involves
substantial expenses and a high degree of risk, which even a combination of
experience, knowledge and careful evaluation may not be able to adequately
mitigate.

The companys exploration properties have not been examined in
the field by professional geologists or mining engineers. There is no assurance
that commercial quantities of ore will be discovered on any of the Companys
exploration properties. There is also no assurance that, even if commercial
quantities of ore are discovered, a mineral property will be brought into
commercial production. The discovery of mineral deposits is dependent upon a
number of factors not the least of which is the technical skill of the
exploration personnel involved. The commercial viability of a mineral deposit,
once discovered, is also dependent upon a number of factors, some of which are
the particular attributes of the deposit, such as size, grade and proximity to
infrastructure, metal prices and government regulations, including regulations
relating to royalties, allowable production, importing and exporting of
minerals, and environmental protection. In addition, assuming discovery of a
commercial ore body, depending on the type of mining operation involved, several
years can elapse from the initial phase of drilling until commercial operations
are commenced. Most of the above factors are beyond the control of the
Company.

The exploration process is conducted in phases. When each phase
of a project is completed, and upon analysis of the results of that phase, the
Company will make a decision whether to proceed with each successive phase of
the exploration program. There is no assurance that projects will be carried to
completion.

Limited Management Resource Development
Experience

The Company does not have a track record of exploration and
mining operation history. The Company's management has limited experience in
mineral resource development and exploitation, and has relied on and may
continue to rely upon consultants and others for development and operation
expertise.

Limited Financial Resources

Furthermore, the Company has limited financial resources with
no assurance that sufficient funding will be available to it for future
exploration and development or to fulfill its obligations under current
agreements. There is no assurance that the Company will be able to obtain
adequate financing in the future or that the terms of such financing will be
favorable. Failure to obtain such additional financing could result in delay or
indefinite postponement of further exploration and development of its projects.

Limited Public Market, Possible Volatility of Share
Price

The Company's Common Stock is currently quoted on the NASD OTC
Bulletin Board under the ticker symbol SGGV and is listed on Berlin Bremen Stock
Exchange under the symbol GD7. As of May 31, 2008, there were approximately
43,826,175 shares of common stock outstanding. There can be no assurance that a
trading market will be sustained in the future.

Dependence on Executive Officers and Technical
Personnel

The success of our business plan depends on attracting
qualified personnel, and failure to retain the necessary personnel could
adversely affect our business. Competition for qualified personnel is intense,
and we may need to pay premium wages to attract and retain personnel. Attracting
and retaining qualified personnel is critical to our business. Inability to
attract and retain the qualified personnel necessary would limit our ability to
implement our business plan successfully.

16

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Need for Additional Financing

The Company believes it has sufficient capital to meet its
short-term cash needs, including the costs of compliance with the continuing
reporting requirements of the Securities Exchange Act of 1934. However, if
losses continue, it may have to seek loans or equity placements to cover
longer-term cash needs to continue operations and expansion.

No commitments to provide additional funds have been made by
management or other stockholders. Accordingly, there can be no assurance that
any additional funds will be available to the Company to allow it to cover
operation expenses.

If future operations are unprofitable, it will be forced to
develop another line of business, or to finance its operations through the sale
of assets it has, or enter into the sale of stock for additional capital, none
of which may be feasible when needed. The Company has no specific management
ability or financial resources or plans to enter any other business as of this
date.

Dilution to the Existing Shareholders

The Company has no other capital resources other than the
ability to use its common stock to raise additional capital or the exercise of
the warrants by the unit holders. Pursuant to the agreement signed on July 8,
2008 with Zhongchuan, the Company shall cause total 292,9100,000 shares to be
issued to Monte Sea Shareholders for the DXC Salt Lake project, which will
significantly dilute the Company's stockholders.

Political Risks

The market in China is monitored by the government, which could
impose taxes or restrictions at any time which would make operations
unprofitable and infeasible and cause a write-off of investment in the mineral
properties. Other factors include political policy on foreign ownership,
political policy to open the doors to foreign investors, and political policy on
mineral claims and metal prices.

Market Risk

The Company does not hold any derivatives or other investments
that are subject to market risk. The carrying values of any financial
instruments, approximate fair value as of those dates because of the relatively
short-term maturity of these instruments, which eliminates any potential market
risk associated with such instruments.

Other Risks and Uncertainties

The business of mineral deposit exploration and development
involves a high degree of risk. Few properties that are explored are ultimately
developed into production. Other risks facing the Company include competition,
reliance on third parties and joint-venture partners, environmental and
insurance risks, political and environmental instability, statutory and
regulatory requirements, fluctuations in mineral prices and foreign currency,
share price volatility, title risks, and uncertainty of additional financing.

Circumstances related to Tibet political activities and
resulting political upheaval are beyond the control of the Company and
constitute a risk to investors.

The Company has sought to identify what it believes to be the
most significant risks to its business, but cannot predict whether or to what
extent any of such risks may be realized, nor can there be any assurances that
the Company has identified all possible risks that might arise. Investors should
carefully consider all of such risk factors before making an investment decision
with respect to the Company's stock.

OUTLOOK

The Company is under going feasibility studies and engineering
studies for the development of the DXC salt lake property in Tibet and seeking
the approval for the establishment of Joint Venture Company from Tibet
regulatory authorities. The Company is also seeking to identify undervalued
mineral assets in China and other countries.

17

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Application of Critical Accounting Policies

Our consolidated financial statements and accompanying notes
are prepared in accordance with generally accepted accounting principles in the
United States. Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our consolidated financial statements is critical
to an understanding of our financial statements.

Impairment of Long-lived Assets

In accordance with Financial Accounting Standards Board
(FASB) Statement of Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, the carrying
value of intangible assets and other long-lived assets are reviewed on a regular
basis for the existence of facts or circumstances that may suggest impairment.
The Company recognizes impairment when the sum of the expected undiscounted
future cash flows is less than the carrying amount of the asset. Impairment
losses, if any, are measured as the excess of the carrying amount of the asset
over its estimated fair value.

Mineral Properties

Costs of acquiring mineral properties are capitalized by the
project area unless the mineral properties do not have proven reserves. Costs to
maintain mineral rights and leases are expensed as incurred. When a property
reaches the production state, the related capitalized costs are amortized using
the unit of production method on the basis of annual estimates of ore reserves.
Management reviews the carrying value of mineral properties at least annually
and will recognize impairment in value based upon current exploration results,
and any impairment or subsequent losses are charged to operations at the time of
impairment. If a property is abandoned or sold, its capitalized costs are
charged to operations. Mineral property exploration costs are expensed as
incurred. Exploration activities conducted jointly with others are reflected at
the Companys proportionate interest in such activities. As at May 31, 2008, the
Company did not have proven or probable ore reserves.

Stock-based Compensation

On June 1, 2006, the Company adopted the fair value recognition
provisions of SFAS No. 123(R), Share-Based Payment. Prior to June 1, 2006, the
Company accounted for stock-based payments under the recognition and measurement
provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees (APB
25), and related Interpretations, as permitted by SFAS No. 123, Accounting for
Stock-Based Compensation. In accordance with APB 25, no compensation cost was
required to be recognized for options granted that had an exercise price equal
to the market value of the underlying common stock on the date of grant. The
Company adopted SFAS No. 123R using the modified-prospective transition method.
Under that transition method, compensation cost recognized for the year ended
May 31, 2007 and thereafter will include: (a) compensation costs for all
share-based payments granted prior to, but not yet vested as of June 1, 2006,
based on the grant-date fair value estimated in accordance with the original
provisions of SFAS No. 123, and (b) compensation cost for all share-based
payments granted subsequent to June 1, 2006, based on the grant-date fair value
estimated in accordance with the provisions of SFAS No. 123R. The financial
results for the prior periods have not been restated. The Company will amortize
stock compensation cost rateable over the requisite service period. Adoption of
SFAS No. 123R has no impact on the financial statements of the Company.

Going Concern

These consolidated financial statements have been prepared on a
going concern basis which assumes that adequate sources of financing will be
obtained as required, and that our assets will be realized and liabilities
settled in the ordinary course of business. These consolidated financial
statements do not include any adjustments related to the recoverability of
assets and classification of assets and liabilities that might be necessary if
we are unable to continue as a going concern.

In order to continue as a going concern, we require additional
financing. There can be no assurance that additional financing will be available
to us when needed or, if available, that it can be obtained on commercially
reasonable terms. If we are not able to continue as a going concern, we would
likely be unable to realize the carrying value of our assets reflected in the
balances set out in the preparation of the consolidated financial statements.

18

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The Company is in the exploration stage, has not yet achieved
profitable operations and is dependent on its ability to raise capital from
shareholders or other sources to meet its obligations and repay its liabilities
arising from normal business operations when they come due. These factors raise
substantial doubt that the Company will be able to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of these uncertainties.

Item 7. Financial Statements.

STERLING GROUP VENTURES, INC.

(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2008 and 2007

(Stated in US Dollars)

19

---

|                                   | BDO DunwoodyLLP               | 
|---------------------------------- | ----------------------------- | 
|Chartered Accountants and Advisors | 604  750 West Pender Street 
|                                   | Vancouver, BC, Canada V6C 2T7
|                                   | Telephone: (604) 689-0188    
|                                   | Telefax: (604) 689-9773      

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
  FIRM

To the Stockholders,
  Sterling Group Ventures, Inc. 
  (An Exploration Stage Company)

We have audited the accompanying consolidated balance sheet of
  Sterling Group Ventures, Inc. (the Company) (An Exploration Stage
  Company) and its subsidiaries as of May 31, 2008 and the consolidated related
  statements of operations, cash flows and stockholders' equity (deficiency) for
  the year then ended and for the period from July 27, 1994 (Date of Inception)
  to May 31, 2008. These consolidated financial statements are the responsibility
  of the Company's management. Our responsibility is to express an opinion on
  these financial statements based on our audit. We did not audit the financial
  statements of the Company for the period from the inception of the development
  stage, July 27, 1994 to May 31, 2007. Such statements are included in the cumulative
  inception to May 31, 2008 totals of the statements of operations, cash flows
  and stockholders equity (deficiency) and reflect a net loss of 96% of
  the related cumulative totals. Those financial statements were audited by other
  auditors whose report has been furnished to us and our opinion, insofar as it
  relates to the amount for the period from July 27, 1994 (Date of Inception)
  to May 31, 2007 included in the cumulative totals, is based solely upon the
  report of the other auditors.

We conducted our audit in accordance with the standards of the
  Public Company Accounting Oversight Board (United States of America). Those
  standards require that we plan and perform the audit to obtain reasonable assurance
  about whether the financial statements are free of material misstatement. The
  Company is not required to have, nor were we engaged to perform, an audit of
  its internal control over financial reporting. Our audit included consideration
  of internal control over financial reporting as a basis for designing audit
  procedures that are appropriate in the circumstances, but not for the purpose
  of expressing an opinion on the effectiveness of the Companys internal
  control over financial reporting. Accordingly, we express no such opinion. An
  audit also includes examining, on a test basis, evidence supporting the amounts
  and disclosures in the financial statements, assessing the accounting principles
  used and significant estimates made by management, as well as evaluating the
  overall financial statement presentation. We believe that our audit and the
  report of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the report of the other
  auditors, the consolidated financial statements referred to above present fairly,
  in all material respects, the financial position of Sterling Group Ventures,
  Inc. and its subsidiaries as of May 31, 2008 and the results of their operations
  and their cash flows for the year then ended and for the period from July 27,
  1994 (Date of Inception) to May 31, 2008, in conformity with accounting principles
  generally accepted in the United States of America.

The accompanying financial statements referred to above have
  been prepared assuming that the Company will continue as a going concern. As
  discussed in Note 1 to the financial statements, the Company is in the exploration
  stage, has not yet achieved profitable operations and is dependent on its ability
  to raise capital from shareholders or other sources to meet its obligations
  and repay its liabilities arising from normal business operations when they
  come due. These factors, along with other matters as set forth in Note 1, raise
  substantial doubt that the Company will be able to continue as a going concern.
  The financial statements do not include any adjustments that might result from
  the outcome of these uncertainties.

(signed) BDO Dunwoody LLP

Chartered Accountants

Vancouver, Canada 
  August 28, 2008

BDODunwoodyLLPisa LimitedLiabilityPartnershipregisteredinOntario

20

---

|A PARTNERSHIPOFINCORPORATEDPROFESSIONALS | AMISANOHANSON       
|---------------------------------------- | --------------------
|                                         | CHARTEREDACCOUNTANTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
  FIRM

To the Stockholders, 
  Sterling Group Ventures, Inc. 
  (An Exploration Stage Company)

We have audited the accompanying consolidated balance sheet of
  Sterling Group Ventures, Inc. (An Exploration Stage Company) and its subsidiaries
  as of May 31, 2007 and the related consolidated statements of operations, cash
  flows, and stockholders' equity (deficiency) for the year ended May 31, 2007
  and for the period July 27, 1994 (Date of Inception) to May 31, 2007. These
  consolidated financial statements are the responsibility of the Company's management.
  Our responsibility is to express an opinion on these financial statements based
  on our audit.

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

In our opinion, these consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Sterling Group Ventures, Inc. and its subsidiaries as of May 31, 2007 and the
  results of their operations and their cash flows for the year ended May 31,
  2007 and for the period July 27, 1994 (Date of Inception) to May 31, 2007, in
  conformity with accounting principles generally accepted in the United States
  of America.

The accompanying consolidated financial statements referred to
  above have been prepared assuming that the company will continue as a going
  concern. As discussed in Note 1 to the financial statements, the Company is
  in the exploration stage, has no established source of revenue and is dependent
  on its ability to raise capital from shareholders or other sources to sustain
  operations. These factors, along with other matters as set forth in Note 1,
  raise substantial doubt that the Company will be able to continue as a going
  concern. The financial statements do not include any adjustments that might
  result from the outcome of these uncertainties.

AMISANO HANSON

|Vancouver, Canada                 |                       |                  
|--------------------------------- | --------------------- | -----------------
|August 1, 2007                    | Chartered Accountants
|                                  |                       |                  
|                                  |                       |                  
|                                  |                       |                  
|                                  |                       |                  
|750 WEST PENDER STREET, SUITE 604 | TELEPHONE:            | 604-689-0188     
|VANCOUVER CANADA                  | FACSIMILE:            | 604-689-9773     
|V6C 2T7                           | E-MAIL:               | amishan@telus.net

21

---

|STERLING GROUP VENTURES, INC. 
|------------------------------
|(An Exploration Stage Company)
|CONSOLIDATED BALANCE SHEETS   
|May 31, 2008 and 2007         
|(Stated in US Dollars)        

|                                                              |   | May 31,    |   |   | May 31,    |  
|------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                              |   | 2008       |   |   | 2007       |  
|                                                              |   |            |   |   |            |  
|ASSETS                                                        |   |            |   |   |            |  
|                                                              |   |            |   |   |            |  
|Current Assets                                                |   |            |   |   |            |  
|Cash and cash equivalents - Note 6                            | $ | 374,127    |   | $ | 289,330    |  
|GST receivable                                                |   | 5,407      |   |   | 9,128      |  
|Prepaid expenses and other receivable                         |   | 11         |   |   | 1,964      |  
|Exploration advance - Notes 3 and 6                           |   | 8,850      |   |   | 14,189     |  
|Total current assets                                          |   | 388,395    |   |   | 314,611    |  
|                                                              |   |            |   |   |            |  
|Equipment - Note 5                                            |   | 1,741      |   |   | 2,911      |  
|                                                              |   |            |   |   |            |  
|Total Assets                                                  | $ | 390,136    |   | $ | 317,522    |  
|                                                              |   |            |   |   |            |  
|LIABILITIES                                                   |   |            |   |   |            |  
|                                                              |   |            |   |   |            |  
|Current Liabilities                                           |   |            |   |   |            |  
|Accounts payable and other accrued liabilities - Note
      6 | $ | 432,505    |   | $ | 272,456    |  
|                                                              |   |            |   |   |            |  
|SHAREHOLDERS' EQUITY (DEFICIENCY)                             |   |            |   |   |            |  
|                                                              |   |            |   |   |            |  
|Common Stock : $0.001 Par Value - Note 7                      |   |            |   |   |            |  
|Authorized : 500,000,000                                      |   |            |   |   |            |  
|Issued and Outstanding : 43,826,175 (2007: 43,501,490)        |   | 43,826     |   |   | 43,502     |  
|Additional Paid In Capital                                    |   | 2,652,924  |   |   | 2,633,768  |  
|Warrants                                                      |   | 461,112    |   |   | 51,587     |  
|Accumulated Other Comprehensive Loss                          |   | (583       | ) |   | (583       | )
|Deficit accumulated during the exploration stage              |   | (3,199,648 | ) |   | (2,683,208 | )
|Total Stockholders' Equity (Deficiency)                       |   | (42,369    | ) |   | 45,066     |  
|Total Liabilities and Stockholders' Equity                    | $ | 390,136    |   | $ | 317,522    |  

Nature of Operations and Ability to Continue as a Going Concern
  - Note 1 
  Commitments - Notes 4 and 7 
  Subsequent Events - Note 10

SEE ACCOMPANYING NOTES

22

---

|STERLING GROUP VENTURES, INC.                                              
|---------------------------------------------------------------------------
|(An Exploration Stage Company)                                             
|CONSOLIDATED STATEMENTS OF OPERATIONS                                      
|for the years ended May 31, 2008 and 2007 and                              
|for the period from July 27, 1994 (Date of Inception)
      to May 31, 2008
|(Stated in US Dollars)                                                     

|                                               |   |             |   |   |            |   |   | Cumulative    |  
|---------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ------------- | -
|                                               |   |             |   |   |            |   |   | July 27, 1994 |  
|                                               |   |             |   |   |            |   |   | (Date of      |  
|                                               |   | Years ended |   |   | Inception) |  
|                                               |   | May 31,     |   |   | to May 31, |  
|                                               |   | 2008        |   |   | 2007       |   |   | 2008          |  
|                                               |   |             |   |   |            |   |   |               |  
|Expenses                                       |   |             |   |   |            |   |   |               |  
|Accounting, audit and legal fees               | $ | 40,239      |   | $ | 90,297     |   | $ | 316,431       |  
|Bank charges                                   |   | 215         |   |   | 360        |   |   | 1,518         |  
|Consulting fees - Note 6                       |   | 118,268     |   |   | 116,655    |   |   | 564,839       |  
|Depreciation                                   |   | 1,734       |   |   | 2,708      |   |   | 7,605         |  
|Filing fees and transfer agent                 |   | 1,656       |   |   | 2,724      |   |   | 34,519        |  
|Foreign exchange gain                          |   | (9,929      | ) |   | (11,047    | ) |   | (23,312       | )
|General and administrative - Note 6            |   | 26,855      |   |   | 19,288     |   |   | 79,102        |  
|Mineral property costs - Notes 4 and 6         |   | 78,276      |   |   | 674,896    |   |   | 1,211,670     |  
|Printing and mailing                           |   | -           |   |   | -          |   |   | 16,883        |  
|Shareholder information and investor relations |   | -           |   |   | -          |   |   | 59,700        |  
|Stock-based compensation - Note 7              |   | 409,525     |   |   | -          |   |   | 778,166       |  
|Travel and entertainment                       |   | 2,314       |   |   | 15,395     |   |   | 121,398       |  
|Recovery of doubtful collection - Note 4(b)    |   | (147,154    | ) |   | (40,381    | ) |   | (187,535      | )
|Allowance for doubtful collection - Note 4(b)  |   | -           |   |   | -          |   |   | 246,708       |  
|                                               |   |             |   |   |            |   |   |               |  
|                                               |   |             |   |   |            |   |   |               |  
|                                               |   | (521,999    | ) |   | (870,895   | ) |   | (3,227,692    | )
|                                               |   |             |   |   |            |   |   |               |  
|Other item                                     |   |             |   |   |            |   |   |               |  
|Interest income                                |   | 5,559       |   |   | 6,410      |   |   | 28,044        |  
|                                               |   |             |   |   |            |   |   |               |  
|Net loss for the period                        | $ | (516,440    | ) | $ | (864,485   | ) | $ | (3,199,648    | )
|                                               |   |             |   |   |            |   |   |               |  
|Basic and diluted loss per share               | $ | (0.01       | ) | $ | (0.02      | ) |   |               |  
|                                               |   |             |   |   |            |   |   |               |  
|Weighted average number of shares outstanding  |   | 43,715,871  |   |   | 42,508,578 |   |   |               |  

SEE ACCOMPANYING NOTES

23

---

|STERLING GROUP VENTURES, INC.                                              
|---------------------------------------------------------------------------
|(An Exploration Stage Company)                                             
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)                
|for the period from July 27, 1994 (date of inception)
      to May 31, 2008
|(Stated in US Dollars)                                                     

|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   | Deficit     |   |   |          |  
|----------------------------------------------------- |  | ---------- | - | - | --------- | - | - | ---------- | - | - | -------- |  | - | ------------- | - | - | ----------- | - | - | -------- | -
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   | Accumulated   |   |   | Accumulated |   |   |          |  
|                                                      |  |            |   |   | Stock     |   |   | Additional |   |   |          |  |   | Other         |   |   | During The  |   |   |          |  
|                                                      |  | Common     |   |   | Amount At |   |   | Paid In    |   |   |          |  |   | Comprehensive |   |   | Exploration |   |   |          |  
|Stated in U.S.
      dollars                          |  | Shares     |   |   | Par Value |   |   | Capital    |   |   | Warrants |  |   | Loss          |   |   | Stage       |   |   | Total    |  
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, July 27, 1994 (Date of inception)            |  | -          |   | $ | -         |   | $ | -          |   | $ | -        |  | $ | -             |   | $ | -           |   | $ | -        |  
|Common stock                                          |  | 1          |   |   | 1         |   |   | -          |   |   | -        |  |   | -             |   |   | -           |   |   | 1        |  
|Amount contributed by director                        |  | -          |   |   | -         |   |   | 1,881      |   |   | -        |  |   | -             |   |   | -           |   |   | 1,881    |  
|Net loss for the periods                              |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (7,902      | ) |   | (7,902   | )
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2001                                 |  | 1          |   |   | 1         |   |   | 1,881      |   |   | -        |  |   | -             |   |   | (7,902      | ) |   | (6,020   | )
|Net loss of the year                                  |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (1,860      | ) |   | (1,860   | )
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2002                                 |  | 1          |   |   | 1         |   |   | 1,881      |   |   | -        |  |   | -             |   |   | (9,762      | ) |   | (7,880   | )
|Net loss of the year                                  |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (1,360      | ) |   | (1,360   | )
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2003                                 |  | 1          |   |   | 1         |   |   | 1,881      |   |   | -        |  |   | -             |   |   | (11,122     | ) |   | (9,240   | )
|Reverse acquisition                                   |  | (1         | ) |   | (1        | ) |   | (1,881     | ) |   | -        |  |   | -             |   |   | -           |   |   | (1,882   | )
|Issuance of common shares for reverse acquisition     |  | 25,000,000 |   |   | 25,000    |   |   | (23,119    | ) |   | -        |  |   | -             |   |   | -           |   |   | 1,881    |  
|Outstanding common shares of Company prior
      to   |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|acquisition                                           |  | 11,360,000 |   |   | 11,360    |   |   | (10,883    | ) |   | -        |  |   | (583          | ) |   | -           |   |   | (106     | )
|Issuance of shares for cash pursuant to a private     |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|placement - at $0.50                                  |  | 1,766,000  |   |   | 1,766     |   |   | 881,234    |   |   | -        |  |   | -             |   |   | -           |   |   | 883,000  |  
|Stock-based compensation                              |  | -          |   |   | -         |   |   | 368,641    |   |   | -        |  |   | -             |   |   | -           |   |   | 368,641  |  
|Net loss of the year                                  |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (527,446    | ) |   | (527,446 | )
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2004                                 |  | 38,126,000 |   |   | 38,126    |   |   | 1,215,873  |   |   | -        |  |   | (583          | ) |   | (538,568    | ) |   | 714,848  |  
|Issuance of shares for cash pursuant to a private     |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|placement - at $0.50                                  |  | 1,950,000  |   |   | 1,950     |   |   | 973,050    |   |   | -        |  |   | -             |   |   | -           |   |   | 975,000  |  
|Issuance of shares for finder's fee of                |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|private placement                                     |  | 101,500    |   |   | 102       |   |   | 50,648     |   |   | -        |  |   | -             |   |   | -           |   |   | 50,750   |  
|Finders' fees                                         |  | -          |   |   | -         |   |   | (50,750    | ) |   |          |  |   |               |   |   |             |   |   | (50,750  | )
|Fair value of share purchase warrants (finders' fees) |  | -          |   |   | -         |   |   | (40,110    | ) |   | 40,110   |  |   | -             |   |   | -           |   |   | -        |  
|Issuance of shares for services rendered              |  | 100,000    |   |   | 100       |   |   | 41,900     |   |   | -        |  |   | -             |   |   | -           |   |   | 42,000   |  
|Net loss of the year                                  |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (818,954    | ) |   | (818,954 | )
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2005                                 |  | 40,277,500 |   |   | 40,278    |   |   | 2,190,611  |   |   | 40,110   |  |   | (583          | ) |   | (1,357,522  | ) |   | 912,894  |  
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Net loss for the year                                 |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (461,201    | ) |   | (461,201 | )
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2006                                 |  | 40,277,500 |   |   | 40,278    |   |   | 2,190,611  |   |   | 40,110   |  |   | (583          | ) |   | (1,818,723  | ) |   | 451,693  |  
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Issuance of shares for cash pursuant to a private     |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|placement - at $0.15                                  |  | 2,750,300  |   |   | 2,750     |   |   | 409,795    |   |   | -        |  |   | -             |   |   | -           |   |   | 412,545  |  
|Issuance of shares for finder's fee of                |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|private placement                                     |  | 123,690    |   |   | 124       |   |   | 21,522     |   |   | -        |  |   | -             |   |   | -           |   |   | 21,646   |  
|Finders' fees                                         |  | -          |   |   | -         |   |   | (21,646    | ) |   | -        |  |   | -             |   |   | -           |   |   | (21,646  | )
|Share issuance costs                                  |  | -          |   |   | -         |   |   | (3,687     | ) |   | -        |  |   | -             |   |   | -           |   |   | (3,687   | )
|Fair value of share purchase warrants (finders' fees) |  | -          |   |   | -         |   |   | (9,895     | ) |   | 9,895    |  |   | -             |   |   | -           |   |   | -        |  
|Revaluation of share purchase warrants                |  | -          |   |   | -         |   |   | (1,582     | ) |   | 1,582    |  |   | -             |   |   | -           |   |   | -        |  
|Issuance of shares for services rendered              |  | 350,000    |   |   | 350       |   |   | 48,650     |   |   | -        |  |   | -             |   |   | -           |   |   | 49,000   |  
|Net loss for the year                                 |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (864,485    | ) |   | (864,485 | )
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2007                                 |  | 43,501,490 |   |   | 43,502    |   |   | 2,633,768  |   |   | 51,587   |  |   | (583          | ) |   | (2,683,208  | ) |   | 45,066   |  
|Issuance of shares for settlement of accounts         |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|payable - at $0.06                                    |  | 324,685    |   |   | 324       |   |   | 19,156     |   |   | -        |  |   | -             |   |   | -           |   |   | 19,480   |  
|Revaluation of share purchase warrants - Note 7       |  | -          |   |   |           |   |   | -          |   |   | 409,525  |  |   | -             |   |   | -           |   |   | 409,525  |  
|Net loss for the year                                 |  | -          |   |   | -         |   |   | -          |   |   | -        |  |   | -             |   |   | (516,440    | ) |   | (516,440 | )
|                                                      |  |            |   |   |           |   |   |            |   |   |          |  |   |               |   |   |             |   |   |          |  
|Balance, May 31, 2008                                 |  | 43,826,175 |   | $ | 43,826    |   | $ | 2,652,924  |   | $ | 461,112  |  | $ | (583          | ) | $ | (3,199,648  | ) | $ | (42,369  | )

SEE ACCOMPANYING NOTES

24

---

|STERLING GROUP VENTURES, INC.                                              
|---------------------------------------------------------------------------
|(An Exploration Stage Company)                                             
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                      
|for the years ended May 31, 2008 and 2007 and                              
|for the period from July 27, 1994 (date of inception)
      to May 31, 2008
|(Stated in US Dollars)                                                     

|                                                           |   |             |   |   |            |   |   | Cumulative    |  
|---------------------------------------------------------- | - | ----------- | - | - | ---------- | - | - | ------------- | -
|                                                           |   |             |   |   |            |   |   | July 27, 1994 |  
|                                                           |   |             |   |   |            |   |   | (Date of      |  
|                                                           |   | Years ended |   |   | inception) |  
|                                                           |   | May 31,     |   |   | to May 31, |  
|Stated in U.S.
      dollars                               |   | 2008        |   |   | 2007       |   |   | 2008          |  
|Cash flows from operating activities                       |   |             |   |   |            |   |   |               |  
|Net loss for the period                                    | $ | (106,915    | ) | $ | (864,485   | ) | $ | (2,790,123    | )
|Adjustments to reconcile net loss to net cash              |   |             |   |   |            |   |   |               |  
|provided by (Used in) operating
      activities           |   |             |   |   |            |   |   |               |  
|Stock compensation expenses                                |   | -           |   |   | -          |   |   | 368,641       |  
|Depreciation                                               |   | 1,734       |   |   | 2,708      |   |   | 7,605         |  
|Permit and engineering studies                             |   | -           |   |   | -          |   |   | 150,000       |  
|Shareholder information and investor
      relations       |   | -           |   |   | -          |   |   | 20,447        |  
|Accounting, audit and legal fees                           |   | -           |   |   | 49,000     |   |   | 49,000        |  
|Translation adjustment                                     |   | -           |   |   | -          |   |   | (106          | )
|Changes in non-cash working capital items                  |   |             |   |   |            |   |   |               |  
|related to operations                                      |   |             |   |   |            |   |   |               |  
|GST receivable                                             |   | 3,721       |   |   | 4,659      |   |   | (5,407        | )
|Prepaid expenses and other
      receivable                |   | 1,953       |   |   | (768       | ) |   | 21,542        |  
|Exploration advance                                        |   | 5,339       |   |   | 22,342     |   |   | (8,850        | )
|Accounts payable and accrued
      liabilities             |   | 179,529     |   |   | 195,095    |   |   | 451,985       |  
|Net cash provided by (used in) operating activities        |   | 85,361      |   |   | (591,449   | ) |   | (1,735,266    | )
|                                                           |   |             |   |   |            |   |   |               |  
|Cash flows from investing activities                       |   |             |   |   |            |   |   |               |  
|Advance on investment                                      |   | -           |   |   | -          |   |   | (150,000      | )
|Mineral property deposit                                   |   | -           |   |   | 124,600    |   |   | -             |  
|Additions to equipment                                     |   | (564        | ) |   | (2,633     | ) |   | (9,346        | )
|Net cash provided by (used in) investing activities        |   | (564        | ) |   | 121,967    |   |   | (159,346      | )
|                                                           |   |             |   |   |            |   |   |               |  
|Cash flows from financing activities                       |   |             |   |   |            |   |   |               |  
|Net proceeds on issuance of common
      stock             |   | -           |   |   | 408,858    |   |   | 2,266,858     |  
|Amounts contributed by director                            |   | -           |   |   | -          |   |   | 1,881         |  
|Net cash provided by financing activities                  |   | -           |   |   | 408,858    |   |   | 2,268,739     |  
|                                                           |   |             |   |   |            |   |   |               |  
|Net increase (decrease) in cash and cash
      equivalents |   | 84,797      |   |   | (60,624    | ) |   | 374,127       |  
|Cash and cash equivalents - beginning of period            |   | 289,330     |   |   | 349,954    |   |   | -             |  
|Cash and cash equivalents - end of period                  | $ | 374,127     |   | $ | 289,330    |   | $ | 374,127       |  
|                                                           |   |             |   |   |            |   |   |               |  
|Cash and cash equivalents consist of:                      |   |             |   |   |            |   |   |               |  
|Cash                                                       | $ | 65,385      |   | $ | 118,034    |   | $ | 65,385        |  
|Term deposits                                              |   | 308,742     |   |   | 171,296    |   |   | 308,742       |  
|                                                           | $ | 374,127     |   | $ | 289,330    |   | $ | 374,127       |  
|Supplemental Information :                                 |   |             |   |   |            |   |   |               |  
|Cash paid for :                                            |   |             |   |   |            |   |   |               |  
|Interest                                                   | $ | -           |   | $ | -          |   | $ | -             |  
|Income taxes                                               | $ | -           |   | $ | -          |   | $ | -             |  
|                                                           |   |             |   |   |            |   |   |               |  
|Non-cash Transactions :                                    |   |             |   |   |            |   |   |               |  
|Issuance of shares for commission paid
      to broker     |   |             |   |   |            |   |   |               |  
|for private placement                                      | $ | -           |   | $ | 21,646     |   | $ | 72,396        |  
|Issuance of shares for services rendered                   | $ | -           |   | $ | 49,000     |   | $ | 91,000        |  
|Issuance of shares for settlement of accounts payable      | $ | 19,480      |   | $ | -          |   | $ | 19,480        |  
|Issuance of share purchase warrants for
      finder's fee |   |             |   |   |            |   |   |               |  
|paid to broker for private placement                       | $ | -           |   | $ | 11,477     |   | $ | 11,477        |  

25

---

|STERLING GROUP VENTURES, INC.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|May 31, 2008 and 2007                         
|(Stated in US Dollars)                        

|Note 1 | Nature of Operations and Ability to Continue
      as a Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | Sterling Group Ventures Inc.
        was incorporated in the State of Nevada on September 13, 2001 and its
        fiscal year-end is May 31. On January 20, 2004, the Company acquired all
        of the issued and outstanding shares of Micro Express Ltd. (Micro),
        which was incorporated on July 27, 1994. The business combination was
        accounted for as a reverse acquisition whereby the purchase method of
        accounting was used with Micro being the accounting acquirer and the Company
        being the accounting subsidiary. The cumulative figures are shown on a
        reverse acquisition basis with respect to the accounting acquirers
        date of inception, July 27, 1994.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | Sterling group Ventures Inc.
        (the Company) is in the exploration stage. The Company has
        entered into joint venture agreements to explore and develop mineral properties
        located in China and has not yet determined whether these properties contain
        reserves that are economically recoverable. The recoverability of amounts
        from these properties will be dependent upon the discovery of economically
        recoverable reserves, confirmation of the Companys interest in the
        underlying properties, the ability of the Company to obtain necessary
        financing to satisfy the expenditure requirements under the joint venture
        agreements and to complete the development of the properties and upon
        future profitable production or proceeds from the sale thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | These consolidated financial
        statements have been prepared in accordance with generally accepted accounting
        principles applicable to a going concern, which assumes that the Company
        will be able to meet its obligations and continue its operations for its
        next fiscal year. Realization values may be substantially different from
        carrying values as shown and these financial statements do not give effect
        to adjustments that would be necessary to the carrying values and classification
        of assets and liabilities should the Company be unable to continue as
        a going concern. At May 31, 2008, the Company had not yet achieved profitable
        operations, has a working capital deficiency of $44,110, has accumulated
        losses of $3,199,648 since its inception and expects to incur further
        losses in the development of its business, all of which casts substantial
        doubt about the Companys ability to continue as a going concern.
        The Companys ability to continue as a going concern is dependent
        upon its ability to generate future profitable operations and/or to obtain
        the necessary financing to meet its obligations and repay its liabilities
        arising from normal business operations when they come due. Management
        has no formal plan in place to address this concern but considers that
        the Company will be able to obtain additional funds by equity financing
        and/or related party advances, however there is no assurance of additional
        funding being available.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Note 2 | Summary of Significant Accounting
        Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | The consolidated financial statements
        of the Company have been prepared in accordance with generally accepted
        accounting principles in the United States of America. Because a precise
        determination of many assets and liabilities is dependent upon future
        events, the preparation of consolidated financial statements for a period
        necessarily involves the use of estimates, which have been made using
        careful judgement. Actual results may vary from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | The consolidated financial statements
        have, in managements opinion, been properly prepared within the
        framework of the significant accounting policies summarized below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

26

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 27              

|Note 2 | Summary of Significant Accounting Policies
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Exploration Stage Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | The Company complies with Financial
        Accounting Standard Board Statement No. 7 and Securities and Exchange
        Commission Act Guide 7 for its characterization of the Company as an exploration
        stage company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | These consolidated financial
        statements include the accounts of the Company and its wholly- owned subsidiaries,
        Micro Express Holdings Inc., Micro Express Ltd., Huyana Ventures Limited.,
        Makaelo Holdings Inc. and Makaelo Limited. All inter-company transactions
        and account balances have been eliminated. The Companys subsidiaries
        were all incorporated under the laws of the Territory of the British Virgin
        Islands on the following dates: Micro Express Holdings Inc. was incorporated
        on February 25, 2004; Micro Express Ltd. was incorporated on July 27,
        1994; Huyana Ventures Limited was incorporated on August 18, 2004; Makaelo
        Holdings Inc. was incorporated on March 21, 2005 and Makaelo Limited was
        incorporated on February 14, 2005.                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | For the purposes of the statements
        of cash flows, the Company considers all highly liquid investments with
        original maturities of three months or less to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Mineral Properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Costs of acquiring mineral properties
        are capitalized by the project area unless the mineral properties do not
        have proven reserves. Costs to maintain mineral rights and leases are
        expensed as incurred. When a property reaches the production state, the
        related capitalized costs are amortized using the unit of production method
        on the basis of annual estimates of ore reserves. Management reviews the
        carrying value of mineral properties at least annually and will recognize
        impairment in value based upon current exploration results, and any impairment
        or subsequent losses are charged to operations at the time of impairment.
        If a property is abandoned or sold, its capitalized costs are charged
        to operations. Mineral property exploration costs are expensed as incurred.
        Exploration activities conducted jointly with others are reflected at
        the Companys proportionate interest in such activities. As at May
        31, 2008, the Company did not have proven or probable ore reserves.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Impairment of Long-lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | In accordance with Financial
        Accounting Standards Board (FASB) Statement of Financial Accounting
        Standards (SFAS) No. 144, Accounting for the Impairment
        or Disposal of Long- Lived Assets, the carrying value of intangible
        assets and other long-lived assets are reviewed on a regular basis for
        the existence of facts or circumstances that may suggest impairment. The
        Company recognizes impairment when the sum of the expected undiscounted
        future cash flows is less than the carrying amount of the asset. Impairment
        losses, if any, are measured as the excess of the carrying amount of the
        asset over its estimated fair value.                                                                                                                                                                                                                                                                                                                                                                                               

27

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 28              

|Note 2 | Summary of Significant Accounting Policies
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | Asset Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | The Company recognizes the fair
        value of a liability for an asset retirement obligation in the year in
        which it is incurred when a reasonable estimate of fair value can be made.
        The carrying amount of the related long-lived asset is increased by the
        same amount as the liability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | Changes in the liability for
        an asset retirement obligation due to the passage of time will be measured
        by applying an interest method of allocation. The amount will be recognized
        as an increase in the liability and an accretion expense in the statement
        of operations. Changes resulting from revisions to the timing or the amount
        of the original estimate of undiscounted cash flows are recognized as
        an increase or a decrease in the carrying amount of the liability for
        an asset retirement obligation and the related asset retirement cost capitalized
        as part of the carrying amount of the related long-lived asset.                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | Equipment is stated at cost.
        Depreciation is provided on a straight-line basis over 3 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | The Company uses the assets and
        liability method of accounting for income taxes pursuant to SFAS No. 109
        Accounting for Income Taxes. Under the assets and liability
        method of SFAS No. 109, deferred tax assets and liabilities are recognized
        for the future tax consequences attributable to temporary differences
        between the financial statements carrying amounts of existing assets and
        liabilities and their respective tax bases. Deferred tax assets and liabilities
        are measured using enacted tax rates expected to apply to taxable income
        in the years in which those temporary differences are expected to be recovered
        or settled.                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | In June 2006, the Financial Accounting
        Standards Board (FASB) issued FASB Interpretation No. 48,
        Accounting for Uncertainty in Income Taxes. The interpretation
        clarifies the accounting for uncertainty in income taxes recognized in
        a companys financial statements in accordance with SFAS No. 109,
        Accounting for Income Taxes. Specifically, the pronouncement
        prescribes a recognition threshold and a measurement attribute for the
        financial statement recognition and measurement of a tax position taken
        or expected to be taken in a tax return. The interpretation also provides
        guidance on the related derecognition, classification, interest and penalties,
        accounting for interim periods, disclosure and transition of uncertain
        tax positions. The interpretation is effective for fiscal years beginning
        after December 15, 2006. The adoption of FIN 48 did not have a material
        impact on the Companys financial position, results of operations
        or cash flows.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       | The carrying value of cash and
        cash equivalent and accounts payable and accrued liabilities approximates
        fair value because of the short maturity of these instruments. Unless
        otherwise noted, it is managements opinion that the Company is not
        exposed to significant interest, currency or credit risks arising from
        these financial instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

28

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 29              

|Note 2 | Summary of Significant Accounting Policies
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Concentration of Credit Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | The Company places its cash and
        cash equivalents with high credit quality financial institutions. As of
        May 31, 2008, the Company had no deposit in a bank beyond insured limits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Basic Loss per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | The Company reports basic loss
        per share in accordance with SFAS No. 128, Earnings Per Share.
        Basic loss per share is computed using the weighted average number of
        shares outstanding during the years. Diluted loss per share has not been
        provided as it would be antidilutive.                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Comprehensive Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | The Company reports comprehensive
        income (loss) in accordance with SFAS No. 130, Reporting Comprehensive
        Income. Comprehensive loss is comprised of foreign currency translation
        adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Foreign currency transactions
        are translated into US dollars, the functional and reporting currency,
        by the use of the exchange rate in effect at the date of the transaction,
        in accordance with SFAS No. 52, Foreign Currency Translation.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Assets and liabilities denominated
        in a foreign currency are translated at the exchange rate in effect at
        the period end and capital accounts are translated at historical rates.
        Income statement accounts are translated at the average rates of exchange
        prevailing during the period which approximates the exchange rate in effect
        at the date of the transaction. Translation adjustments from the use of
        different exchange rates from period to period are included in the Comprehensive
        Income account in Stockholders Equity, if applicable.                                                                                               
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Transactions undertaken in currencies
        other than the functional currency of the entity are translated using
        the exchange rate in effect as of the transaction date. Any exchange gains
        and losses are included in the Statement of Operations.                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       | On June 1, 2006, the Company
        adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based
        Payment. Prior to June 1, 2006, the Company accounted for stock-based
        payments under the recognition and measurement provisions of APB Opinion
        No. 25, Accounting for Stock Issued to Employees (APB 25),
        and related Interpretations, as permitted by SFAS No. 123, Accounting
        for Stock-Based Compensation. In accordance with APB 25, no compensation
        cost was required to be recognized for options granted that had an exercise
        price equal to the market value of the underlying common stock on the
        date of grant.

29

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 30              

|Note 2 | Summary of Significant Accounting Policies
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | Stock-based Compensation (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | The Company adopted SFAS No.
        123R using the modified-prospective transition method. Under that transition
        method, compensation cost recognized for the year ended May 31, 2007 and
        thereafter will include: (a) compensation costs for all share-based payments
        granted prior to, but not yet vested as of June 1, 2006, based on the
        grant-date fair value estimated in accordance with the original provisions
        of SFAS No. 123, and (b) compensation cost for all share-based payments
        granted subsequent to June 1, 2006, based on the grant-date fair value
        estimated in accordance with the provisions of SFAS No. 123R. The financial
        results for the prior periods have not been restated. The Company will
        amortize stock compensation cost rateable over the requisite service period.
        Adoption of SFAS No. 123R has no impact on the financial statements of
        the Company.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | New Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | In September 2006, the FASB issued
        SFAS No. 157, Fair Value Measurements. This Statement defines
        fair value as used in numerous accounting pronouncements, establishes
        a framework for measuring fair value in generally accepted accounting
        principles and expands disclosure related to the use of fair value measures
        in financial statements. SFAS No. 157 is effective for fiscal years beginning
        after November 15, 2007; unless partially or fully deferred by the FASB.
        The Company is currently evaluating the timing of adoption and the impact
        that adoption might have on its financial position or results of operations.                                                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | On February 15, 2007, the FASB
        issued SFAS No. 159 The Fair Value Option for Financial Assets and
        Financial Liabilities. This Statement establishes presentation and
        disclosure requirements designed to facilitate comparisons between companies
        that choose different measurement attributes for similar types of assets
        and liabilities. SFAS No. 159 is effective for fiscal years beginning
        after November 15, 2007. The Company is currently evaluating the impact
        that the adoption of SFAS No. 159 might have on its financial position
        or results of operations.                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | In December 2007, the FASB issued
        SFAS No. 141R Business Combinations which is effective for
        fiscal years beginning after December 15, 2008. SFAS No. 141R, which will
        replace SFAS No. 141, is applicable to business combinations consummated
        after the effective date of December 15, 2008. The Company is currently
        evaluating the impact that the adoption of SFAS No. 141R might have on
        its financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|       | In December 2007, the FASB also
        issued SFAS No. 160, Non-controlling Interests in Consolidated Financial
        Statements, an amendment of ARB 51. SFAS No. 160 will change the
        accounting and reporting for minority interests, which will be re-characterized
        as non-controlling interests and classified as a component of equity.
        SFAS No. 160 requires retroactive adoption of the presentation and disclosure
        requirements for existing minority interests. SFAS No. 160 is effective
        for fiscal years beginning on or after December 15, 2008 and interim periods
        within those fiscal years. The Company is currently evaluating the impact
        that the adoption of SFAS No. 160 might have on its financial positions
        or results of operations.                                                                                                                                                   

30

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 31              

|Note 2 | Summary of Significant Accounting Policies
      (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       | New Accounting Pronouncements (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       | In March 2008, the FASB issued
        SFAS 161 Disclosures about Derivative Instruments and Hedging Activities
         an amendment of SFAS 133. This Statement requires enhanced disclosures
        about an entitys derivative and hedging activities and thereby improves
        the transparency of financial reporting. This Statement is effective for
        financial statements issued for fiscal years and interim periods beginning
        after November 15, 2008, with early application encouraged. This Statement
        encourages, but does not require, comparative disclosures for earlier
        periods at initial adoption. The Company is currently evaluating the impact
        that the adoption of SFAS 161 might have on its financial position or
        results of operations.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Note 3 | Exploration Advance-
        Note 6                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       | Exploration advance is intended
        to be utilized against expenses in the year ended May 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Note 4 | Mineral Properties
        Note 10                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       | Summary of mineral properties
        expenses for the year ended May 31, 2008 and 2007 and for the cumulative
        period from date of inception (July 27, 1994) to May 31, 2008:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                         |   | DXC       |  |   | Jiajika   | 
| | ----------------------- | - | --------- |  | - | --------- | 
| |                         |   | Salt Lake |  |   | Spodumene | 
| |                         |   | Property  |  |   | Property  | 
| |                         |   |           |  |   |           | 
| | Year ended May 31, 2008 |   |           |  |   |           | 
| |                         |   |           |  |   |           | 
| | Administrative          | $ | 706       |  | $ | -         | 
| | Consulting fees         |   | 60,548    |  |   | -         | 
| | Travel                  |   | 5,456     |  |   | -         | 
| | Legal fees              |   | 11,566    |  |   | -         | 
| |                         | $ | 78,276    |  | $ | -         | 
| |                         |   |           |  |   |           | 
| | Year ended May 31, 2007 |   |           |  |   |           | 
| |                         |   |           |  |   |           | 
| | Administrative          | $ | 5,200     |  | $ | -         | 
| | Consulting fees         |   | 134,580   |  |   | -         | 
| | Engineering studies     |   | 38,063    |  |   | -         | 
| | Mining permit           |   | 382,920   |  |   | -         | 
| | Topography measurement  |   | 15,001    |  |   | -         | 
| | Legal fees              |   | 9,695     |  |   |           | 
| | Travel                  |   | 53,262    |  |   | 488       | 
| | Wages and benefits      |   | 35,687    |  |   | -         | 
| |                         | $ | 674,408   |  | $ | 488       | 

31

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 32              

|Note 4 | Mineral Properties Note 10 
      (contd)
|------ | --------------------------------------------

| |                                                        |   | DXC       |  |   | Jiajika   |  
| | ------------------------------------------------------ | - | --------- |  | - | --------- | -
| |                                                        |   | Salt Lake |  |   | Spodumene |  
| | Summary of mineral
      properties                    |   | Property  |  |   | Property  |  
| |                                                        |   |           |  |   |           |  
| | From Date of Inception (July 27, 1994) to May 31, 2008 |   |           |  |   |           |  
| |                                                        |   |           |  |   |           |  
| | Balance, May 31, 2003                                  | $ | -         |  | $ | -         |  
| | Administrative                                         |   | -         |  |   | 471       |  
| | Consulting fees                                        |   | -         |  |   | 9,263     |  
| | Travel                                                 |   | -         |  |   | 2,763     |  
| | Balance, May 31, 2004                                  |   | -         |  |   | 12,497    |  
| | Administrative                                         |   | -         |  |   | 6,598     |  
| | Consulting fees                                        |   | -         |  |   | 33,799    |  
| | Feasibility study                                      |   | -         |  |   | 157,769   |  
| | Permit costs                                           |   | -         |  |   | 150,000   |  
| | Travel                                                 |   | -         |  |   | 15,085    |  
| | Balance, May 31, 2005                                  |   | -         |  |   | 375,748   |  
| | Administrative                                         |   | 5,560     |  |   | 2,100     |  
| | Consulting fees                                        |   | 46,629    |  |   | 12,062    |  
| | Engineering studies                                    |   | 26,933    |  |   | -         |  
| | Feasibility study                                      |   | 29,080    |  |   | -         |  
| | Geophysical study                                      |   | 31,114    |  |   | -         |  
| | Legal fees                                             |   | 623       |  |   | -         |  
| | Topography measurement                                 |   | 32,266    |  |   | -         |  
| | Travel                                                 |   | 30,953    |  |   | 8,009     |  
| | Wages and benefits                                     |   | 33,601    |  |   | -         |  
| | Cost recovery                                          |   | -         |  |   | (309,058  | )
| | Balance, May 31, 2006                                  |   | 236,759   |  |   | 88,861    |  
| | Administrative                                         |   | 5,200     |  |   | -         |  
| | Consulting fees                                        |   | 134,580   |  |   | -         |  
| | Engineering studies                                    |   | 38,063    |  |   | -         |  
| | Mining permit                                          |   | 382,920   |  |   | -         |  
| | Topography measurement                                 |   | 15,001    |  |   | -         |  
| | Legal fees                                             |   | 9,695     |  |   | -         |  
| | Travel                                                 |   | 53,262    |  |   | 488       |  
| | Wages and benefits                                     |   | 35,687    |  |   | -         |  
| | Balance, May 31, 2007                                  |   | 911,167   |  |   | 89,349    |  
| | Administrative                                         |   | 706       |  |   | -         |  
| | Consulting fees                                        |   | 60,548    |  |   | -         |  
| | Travel                                                 |   | 5,456     |  |   | -         |  
| | Legal fees                                             |   | 11,566    |  |   | -         |  
| | Balance, May 31, 2008                                  | $ | 989,443   |  | $ | 89,349    |  

32

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 33              

|Note 4 | Mineral Properties Note 10  (contd)
|------ | --------------------------------------
|       |                                       
|       | a)                                    
|       |                                       
|       |                                       
|       |                                       
|       |                                       
|       |                                       
|       |                                       
|       |                                       
|       | b)                                    
|       |                                       
|       |                                       
|       |                                       
|       |                                       
|       |                                       
|       |                                       

33

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 34              

|Note 4 | Mineral Properties Note 10  (contd)
|------ | --------------------------------------
|       |                                       
|       | b)                                    
|       |                                       
|       |                                       
|       |                                       
|       |                                       
|       |                                       
|Note 5 | Equipment                             

| |                    |   |       |  |   | 2008         |  |   |       | 
| | ------------------ | - | ----- |  | - | ------------ |  | - | ----- | 
| |                    |   |       |  |   | Accumulated  |  |   |       | 
| |                    |   | Cost  |  |   | Depreciation |  |   | Net   | 
| |                    |   |       |  |   |              |  |   |       | 
| | Computer equipment | $ | 9,346 |  | $ | 7,605        |  | $ | 1,741 | 
| |                    |   |       |  |   |              |  |   |       | 
| |                    |   |       |  |   |              |  |   |       | 
| |                    |   |       |  |   | 2007         |  |   |       | 
| |                    |   |       |  |   | Accumulated  |  |   |       | 
| |                    |   | Cost  |  |   | Depreciation |  |   | Net   | 
| |                    |   |       |  |   |              |  |   |       | 
| | Computer equipment | $ | 8,782 |  | $ | 5,871        |  | $ | 2,911 | 

The equipment is located in Canada and
  China.

|Note 6 | Related Party Transactions                                                                                                                                                                                                   
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                              
|       | The Company was charged consulting
        fees during the year ended May 31, 2008 totalling $117,284 (2007: $115,721)
        by companies controlled by two directors of the Company.                                      
|       |                                                                                                                                                                                                                              
|       | The Company was charged rental
        fees included in General and Administrative during the year ended May
        31, 2008 totalling $22,656 (2007: $13,869) by a company controlled by
        a director of the Company.
|       |                                                                                                                                                                                                                              
|       | The Company was charged mineral
        property costs - consulting during the year ended May 31, 2008 totalling
        $6,561 (2007: $18,657) by the Vice President of Micro.                                              
|       |                                                                                                                                                                                                                              
|       | The Company was charged mineral
        property costs - consulting during the year ended May 31, 2008 in the
        amount of $50,051 (2007: $45,008) by a company controlled by a director
        of the Company.        
|       |                                                                                                                                                                                                                              
|       | Cash and cash equivalents at
        May 31, 2008 include $225,700 (2007: $66,136) held in trust by a director
        of the Company.                                                                                       

34

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 35              

|Note 6 | Related Party Transactions
        (contd)                                                                                                                                                               
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                            
|       | Included in exploration advance
        is $8,850 (2007: $14,189) advanced to the Vice-President of Micro. This
        is intended to be utilized against expenses in the year ended May 31,
        2009.
|       |                                                                                                                                                                                                            
|       | Included in accounts payable is
        $414,235 (2007: $219,501) which was due to the companies controlled by
        the directors of the Company for their services provided.                           
|       |                                                                                                                                                                                                            
|Note 7 | Capital Stock                                                                                                                                                                                              
|       |                                                                                                                                                                                                            
|       | Commitments:                                                                                                                                                                                               
|       |                                                                                                                                                                                                            
|       | a)                                                                                                                                                                                                         
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       | b)                                                                                                                                                                                                         
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       | c)                                                                                                                                                                                                         
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            
|       |                                                                                                                                                                                                            

35

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 36              

|Note 7 | Capital Stock (contd)                                                                                   
|------ | ----------------------------------------------------------------------------------------------------------
|       |                                                                                                           
|       | Commitments:  (contd)                                                                                   
|       |                                                                                                           
|       | c)                                                                                                        
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|       |                                                                                                           
|Note 8 | Foreign Currency Risk                                                                                     
|       |                                                                                                           
|       | The Company is exposed to fluctuations
        in foreign currencies through amounts held in China in RMB:
|       |                                                                                                           
|       | -                                                                                                         
|       | -                                                                                                         

36

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 37              

|Note 9 | Deferred Tax Assets                                                                                                                        
|------ | -------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                            
|       | The Company's income tax expense
        for the years ended May 31, 2008 and 2007 differed from the United States
        statutory rates:

| |                                                          |   | 2008    |   |   | 2007     |  
| | -------------------------------------------------------- | - | ------- | - | - | -------- | -
| |                                                          |   |         |   |   |          |  
| | Effective tax rate                                       |   | 35%     |   |   | 35%      |  
| |                                                          |   |         |   |   |          |  
| | Statutory rate applied to loss before income
      taxes | $ | (44,000 | ) | $ | (347,000 | )
| | Increase in income taxes resulting from:                 |   |         |   |   |          |  
| | Non-deductible expenses                                  |   | 1,000   |   |   | 2,000    |  
| | Change in valuation allowance                            |   | 43,000  |   |   | 345,000  |  
| |                                                          |   |         |   |   |          |  
| | Income tax expense                                       | $ | -       |   | $ | -        |  

The significant components of the Companys
  deferred tax assets are as follows:

| |                                                           |   | 2008     |   |   | 2007     |  
| | --------------------------------------------------------- | - | -------- | - | - | -------- | -
| |                                                           |   |          |   |   |          |  
| | Future income tax assets (liabilities)                    |   |          |   |   |          |  
| | Share issuance cost                                       | $ | 10,000   |   | $ | 16,000   |  
| | Equipment                                                 |   | 3,000    |   |   | 3,000    |  
| | Mineral properties and
      related deferred exploration |   | 509,000  |   |   | 482,000  |  
| | Non-capital losses valuation allowance                    |   | 313,000  |   |   | 292,000  |  
| |                                                           |   |          |   |   |          |  
| |                                                           |   | 835,000  |   |   | 793,000  |  
| | Less: valuation allowance                                 |   | (835,000 | ) |   | (793,000 | )
| |                                                           |   |          |   |   |          |  
| |                                                           | $ | -        |   | $ | -        |  

At May 31, 2008, the Company has incurred
  accumulated net operating losses totalling approximately $885,142 which are
  available to reduce taxable income in future taxation years.

These losses expire as follows:

Year of Expiry
      
      Amount2015
      $
      363,0002026
      
      215,0002027
      
      223,0002028
      
      54,000$
      855,000


37

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 38              

|Note 9  | Deferred Tax Assets
        (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | The amount taken into income as
        deferred tax assets must reflect that portion of the income tax loss carryforwards
        that is more likely-than-not to be realized from future operations. The
        Company has chosen to provide an allowance of 100% against all available
        income tax loss carryforwards, regardless of their time of expiry.                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | As at May 31, 2008, the Company
        is in arrears on filing its statutory income tax returns and the amounts
        presented above are based on estimates. The actual losses available could
        differ from these estimates. In addition, the Company could be subject
        to penalties for these unfiled tax returns.                                                                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Note 10 | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | On July 8, 2008, the Company signed
        an agreement (the "Agreement") with shareholders of Monte Sea Holdings
        Ltd. ("Monte Sea Shareholders") and a third party to restructure the transactions
        contemplated under the September 16, 2005 agreement (Note 4). The parties
        wish to jointly develop the DXC Salt Lake property and lithium resources
        in Tibet including an exploration license, and elsewhere (the Property),
        by way of a cooperative joint venture.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | Pursuant to the Agreement, the
        parties wish to establish a Sino-foreign cooperative joint venture company
        ("CJV") for the purpose of applying for and holding required approvals,
        permits and licenses with respect to the development of the Property.                                                                                                                                                                                                                                  
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | The Parties agree that an operating
        company ("Opco") will be established in Tibet prior to the establishment
        of the CJV for the purpose of applying for and holding required approvals,
        permits and licenses with respect to the development of the Property.
        The Opco shall hold all such approvals, permits and licenses in trust
        for the CJV.                                                                                                                         
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | Under the Agreement, the CJV will
        be established within 90 days, subject to required regulatory approval
        and based on a joint venture agreement by way of acquisition of interest
        in the Opco by Monte Sea Holdings Ltd. (Monte Sea), or by
        way of incorporation under the Chinese laws. Monte Sea shall hold up to
        65% but no less than 51% of shares in the CJV. CJV shall own and hold
        all the Property.                                                    
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | If for any Chinese regulatory or
        policy reasons, Monte Sea is not permitted to have more than fifty- one
        percent (51%) interest in the CJV, then the CJV agreement will be revised
        such that:                                                                                                                                                                                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | Upon the Agreement being effective
        and termination of the agreement, the Company will be repaid RMB 6,000,000
        (approximately $865,000).                                                                                                                                                                                                                                                                                                                                                          

38

---

|Sterling Group Ventures, Inc.                 
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|May 31, 2008 and 2007                         
|(Stated in US Dollars)  Page 39              

|Note 10 | Subsequent Events (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | Upon signing of this Agreement
        and subject to applicable regulatory approval, Monte Sea Shareholders
        shall subscribe for 5,000,000 units (the "Units") to be issued by the
        Company at $0.15 per Unit. Each Unit shall consist of one common share
        in the stock of the Company, and one warrant which shall entitle the Monte
        Sea shareholders to purchase one common share in the stock of the Company
        at $0.16 per share within two years from the date of the issuance of the
        Units.                                                                                                                                             
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | Subject to applicable regulatory
        approval, the Company shall cause 200,000,000 shares to be issued to the
        Monte Sea Shareholders within ten working days from the date transfer
        of the exploration license to the CJV is approved by the Chinese regulators,
        in exchange for all the shares then issued and outstanding in the stock
        of Monte Sea and held by Monte Sea Shareholders (the "Share Exchange").
        The Share Exchange may be conducted and completed at an earlier date so
        long as the Company and Monte Sea Shareholders may agree in writing. This
        transaction would be accounted for as a reverse acquisition.
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | Subject to applicable regulatory
        approval, the Company shall cause 87,910,000 shares in the capital of
        the Company to be issued to the Monte Sea Shareholders at no additional
        cost, upon receipt by the CJV of a mining license and such other permits
        or approvals for the Property, permitting the full exploitation and development
        of the Property.                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | The Company shall, when and as
        required by the CJV, arrange and complete financing for the operation
        of the CJV.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | The application to establish
        a joint venture has not yet been approved by the regulators in Tibet,
        China.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

39

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Item 8. Changes In & Disagreements With Accountants on
Accounting & Financial Disclosure

On January 21, 2008, Amisano Hanson, Chartered Accountant
("Amisano Hanson") resigned as principle independent accountants for Sterling
Group Ventures, Inc. (the "Company"). Amisano Hanson entered into an agreement
with BDO Dunwoody LLP ("BDO Dunwoody"), pursuant to which Amisano Hanson merged
its operations into BDO Dunwoody and certain of the professional staff and
partners joined BDO Dunwoody either as employees or partners of BDO Dunwoody and
will continue to practice as members of BDO Dunwoody. Concurrent with the
resignation of Amisano Hanson, the Company engaged BDO Dunwoody, as its
principle independent accountant effective January 21, 2008 and until it chooses
to resign or the Company chooses to dismiss it. The engagement of BDO Dunwoody
has been approved by the Company's board of directors.

The report of Amisano Hanson on the Company's consolidated
financial statements for each of the past two fiscal years ended May 31, 2007
and 2006 did not contain any adverse opinion or disclaimer of opinion, nor was
it qualified or modified as to uncertainty, audit scope, or accounting
principles, except that such report on our financial statements contained an
explanatory paragraph in respect to uncertainty as to the Company's ability to
continue as a going concern.

In connection with the audits of the two most recent fiscal
years ended May 31, 2007 and 2006 and through the subsequent interim period
ending January 21, 2008, there were no disagreements with Amisano Hanson on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedures, which disagreements, if not resolved to the
satisfaction of the Amisano Hanson would have caused them to make reference
thereto in its reports on the financial statements for such years.

The Company has provided Amisano Hanson with a copy of the
foregoing disclosures and has requested in writing that Amisano Hanson furnish
the Company with a letter addressed to the Securities and Exchange Commission
(SEC) stating whether or not they agree with such disclosures. A copy of such
letter has been filed as an exhibit to the 8-K report on March 25, 2008 in
accordance with Item 601 of Regulation S-K.

Prior to engaging BDO Dunwoody, the Company did not consult BDO
Dunwoody on the application of accounting principles to a specific completed or
contemplated transaction, or on the type of audit opinion that might be rendered
on the Company's financial statements, and neither written nor oral advice has
been provided by BDO Dunwoody that was an important factor considered by the
Company in reaching any decision as to accounting, auditing or financial
reporting issues.

Item 8A. Controls and Procedures (Item 8A(T)).

a. Evaluation of Disclosure Controls and Procedures:

The management of the Company has evaluated the effectiveness
of the Company's disclosure controls and procedures as of the end of the period
of the report, May 31, 2008 and has concluded that the disclosure controls,
internal controls and procedures was effective based upon their evaluation as of
the evaluation date.

An evaluation was performed under the supervision and with the
participation of the Companys management, including the chief executive officer
and the chief financial officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures as defined in
Rules 13a-15(e) or 240.15d -15(e) of the Securities Exchange Act of 1934, as
amended, as of May 31, 2008. Based on that evaluation, our management, including
the Chief Executive Officer and Chief Financial Officer, concluded that the
Company's disclosure controls and procedures are effective. There has been no
change in the internal control over financial reporting identified in connection
with the evaluation required by paragraph (d) of ss.240.13a -15 or ss.240.15d
-15 of the Exchange Act that occurred during the Company's last fiscal quarter
that has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.

The Companys management, including its chief executive officer
and chief financial officer, is responsible for establishing and maintaining
adequate internal control over our financial reporting. Internal control over
financial reporting is a process designed by, or under the supervision of, our
chief executive and chief financial officers and implemented by our board of
directors, management and other personnel, 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 and includes those policies and procedures that: (i)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our

40

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

Under the supervision and with the participation of our
management, including the Chief Executive Officer and the Chief Financial
Officer, the Companys management conducted an evaluation of the effectiveness
of the Companys internal control over financial reporting based on the
framework in Internal Control  Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on its evaluation,
the management concluded that the Companys internal control over financial
reporting was effective as of May 31, 2008.

b. Changes in Internal Control over Financial Reporting:

There were no significant changes in the small business issuers
internal control over financial reporting identified in connection with the
Company evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under
the Exchange act that occurred during the small business issuers last fiscal
quarter that has materially affected or is reasonable likely to materially
affect, the small business issuers internal control over financial
reporting.

Item 8B. Other Information

None.

PART III

Item 9. Directors, Executive Officers, Promoters and Control
Persons

All directors of our company hold office until the next annual
general meeting of the shareholders or until their successors are duly elected
and qualified. The officers of our company are appointed by our board of
directors and hold office until the earlier of death, retirement, resignation or
removal.

Our directors, executive officers and other significant
employees, their ages, positions held and duration each person has held that
position, are as follows:

Name
    Position Held with the Company
    Age
    Date First Elected / AppointedRichard Shao
    President, Director
    45
    January 21, 2004Raoul Tsakok
    Chairman
    58
    January 21, 2004Gerald Runolfson
    Director
    68
    April 5, 2004Robert Smiley
    Director
    64
    June 6, 2007


Business Experience

The following sets forth the business experience of each of the
Registrant's directors and executive officers:

Raoul N. Tsakok, Chairman

Mr. Tsakok has worked in the Investment Management business for over 30 years. He has been Chairman of Sagit Investment Management Ltd. since 1987. He has been Chairman and director of Richco Investors Inc. and Constitution Insurance Company of Canada. He holds an MBA degree and is a Chartered Financial Analyst (CFA).

41

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Xuxin (Richard) Shao, President and Director

Mr. Shao was born and educated in China. He received his
degrees from engineering schools in China, specializing in mineral processing.
Between his Bachelor and Ph.D. degrees, he held a research engineer position
with the Chemical Mines Design and Research Institute of the Ministry of
Chemical Industry in Lianyun Harbour, Jiangsu, China. During his graduate
studies at the China University of Mining and Technology, he conducted research
on phosphate flotation using interfacial, colloidal and solution chemical
theories and authored and coauthored more than 50 research reports and
publications on this and other related subjects. After receiving his Ph.D. in
1990 from China University of Mining and Technology, Mr. Shao taught as an
associate Professor and was acting Department Head in Mineral Processing at the
China University of Mining and Technology for six years.

In 1996, Mr. Shao accepted a position as Research Scientist for
the Center for Applied Energy Research at the University of Kentucky in
cooperation with the Department of Energy of the US Federal Government. Since
1998, Dr. Shao has worked as an advisor to a number of companies in the
evaluation and processing of minerals in North America and China.

Gerald Runolfson, Professional Engineer, Director

Mr. Runolfson is a professional engineer (P. Eng.) and has been
in the construction industry for over 35 years. He is currently President and
controlling shareholder of Elkon Products Inc., a company that has the exclusive
distribution rights for all silica fume produced in Canada. Silica fume is used
in oil well cementing operation and concrete construction. Major customers
include Halliburton and BJ Services. Mr. Runolfson has been a Director of a
number of public companies.

Robert G. Smiley, L.L.B., Director

Mr. Smiley is a business consultant working with junior
companies. He has been self-employed in this capacity for the past ten years. He
is a former lawyer who specialized in oil and gas and securities law for
twenty-five years. He is currently president of Richco Investors Inc. and
Drucker, Inc. and a director of Canadian Imperial Ventures Corp., Teuton
Resource Corp. and Silver Grail Resources Inc. He has served on the boards of a
number of junior and intermediate companies in the past.

Our directors, executive officers and control persons have not
been involved in any of the following events during the past five years:

|1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offences);                                                                                                                                                                 
|3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
|4. | being found by a court of competent jurisdiction (in a
      civil action), the Commission or the Commodity Futures Trading Commission
      to have violated a federal or state securities or commodities law, and the
      judgment has not been reversed, suspended, or
vacated.                                           

Item 10. Executive Compensation.

(a) Officers' Compensation.

Compensation paid by the Company for all services provided up
to the fiscal year ended May 31, 2008 to each of the executive officers and to
all officers as a group is set forth below.

42

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SUMMARY COMPENSATION TABLE OF EXECUTIVES

|              |  |      |  |  | Cash Compensation |  |  | Security Grants |  |  |              |  |  |            | 
|------------- |  | ---- |  |  | ----------------- |  |  | --------------- |  |  | ------------ |  |  | ---------- | 
|Name and      |  | Year |  |  | Salary            |  |  | Bonus           |  |  | Annual       |  |  | Restricted | 
|Principal     |  |      |  |  | ( $)              |  |  |                 |  |  | Compensation |  |  | Stock      | 
|Position      |  |      |  |  |                   |  |  |                 |  |  | / Other      |  |  | Awards     | 
|              |  |      |  |  |                   |  |  |                 |  |  | ( $)         |  |  |            | 
|              |  |      |  |  |                   |  |  |                 |  |  |              |  |  |            | 
|Richard Shao  |  | 2006 |  |  | 0                 |  |  | 0               |  |  | 61,852       |  |  | 0          | 
|President     |  | 2007 |  |  | 0                 |  |  | 0               |  |  | 64,298       |  |  | 0          | 
|              |  | 2008 |  |  | 0                 |  |  | 0               |  |  | 71,501       |  |  | 0          | 
|Raoul Tsakok  |  | 2006 |  |  | 0                 |  |  | 0               |  |  | 84,000       |  |  | 0          | 
|Chairman      |  | 2007 |  |  | 0                 |  |  | 0               |  |  | 75,000       |  |  | 0          | 
|              |  | 2008 |  |  | 0                 |  |  | 0               |  |  | 72,000       |  |  | 0          | 
|Kathy Wang    |  | 2006 |  |  | 0                 |  |  | 0               |  |  | 20,617       |  |  | 0          | 
|Secretary     |  | 2007 |  |  | 0                 |  |  | 0               |  |  | 21,432       |  |  | 0          | 
|              |  | 2008 |  |  | 0                 |  |  | 0               |  |  | 23,834       |  |  | 0          | 
|Officers as A |  | 2006 |  |  | 0                 |  |  | 0               |  |  | 166,469      |  |  | 0          | 
|Group         |  | 2007 |  |  | 0                 |  |  | 0               |  |  | 160,730      |  |  | 0          | 
|              |  | 2008 |  |  | 0                 |  |  | 0               |  |  | 167,335      |  |  | 0          | 

(b) Directors' Compensation

Directors who are also officers receive no cash compensation
for services as a director. However, the directors will be reimbursed for
out-of-pocket expenses incurred in connection with attendance at board and
committee meetings. The Company has granted options to directors under its 2004
Incentive Stock Option Plan subsequently adopted.

SUMMARY COMPENSATION TABLE OF DIRECTORS(For fiscal
year ended May 31, 2008)

Cash Compensation
    Security GrantsName and Principal Position
    Year
    Annual Retainer Fees ($)
    Meeting Fees ($)
    Consulting Fees/ Other Fees ( $)
    Number of Shares (#)
    Securities Underlying Options /
      SARs (#) (SHARES)
    LTIP Payments
    All Other CompensationRaoul Tsakok Director
    2006
    0
    0
    0
    0
    0
    0
    02007
    0
    0
    0
    0
    0
    0
    02008
    0
    0
    0
    0
    0
    0
    0Richard Shao Director
    2006
    0
    0
    0
    0
    0
    0
    02007
    0
    0
    0
    0
    0
    0
    02008
    0
    0
    0
    0
    0
    0
    0Patrick Chan Director
      (Resigned on June 4, 2007)
    2006
    0
    0
    0
    0
    0
    0
    02007
    0
    0
    0
    0
    0
    0
    02008
    0
    0
    0
    0
    0
    0
    0Gerald Runolfson Director
    2006
    0
    0
    0
    0
    0
    0
    02007
    0
    0
    0
    0
    0
    0
    02008
    0
    0
    0
    0
    0
    0
    0Robert G. Smiley Director
    2008
    0
    0
    0
    0
    0
    0
    0Directors as a Group
    2006
    0
    0
    0
    0
    0
    0
    02007
    0
    0
    0
    0
    0
    0
    02008
    0
    0
    0
    0
    0
    0
    0


During the year ended May 31, 2004, we granted 2,100,000 stock
options to our directors or officers. The options were granted at an exercise
price of $0.50 per share with an expiry date of February 3, 2009. During the
year ended May 31, 2008, no stock options were granted to our directors or
officers.

Directors are entitled to reimbursement for reasonable travel
and other out-of-pocket expenses incurred in connection with attendance at
meetings of our board of directors. Our board of directors may award special

43

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remuneration to any director undertaking any special services
on our behalf other than services ordinarily required of a director. No director
received and/or accrued any compensation for their services as a director,
including committee participation and/or special assignments.

There are no management agreements with our directors or
executive officers and we do not anticipate that written agreements will be put
in place in the foreseeable future.

We have no plans or arrangements in respect of remuneration
received or that may be received by our executive officers to compensate such
officers in the event of termination of employment (as a result of resignation,
retirement, change of control) or a change of responsibilities following a
change of control.

There are no plans or arrangements in which we provide pension,
retirement or similar benefits for directors or executive officers. We have no
material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to our directors or executive officers, except
that stock options may be granted at the discretion of the Board of Directors or
a committee thereof.

Item 11. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.

The following table sets forth, as of August 28, 2008, certain
information with respect to the beneficial ownership of our common shares by
each shareholder known to us to be the beneficial owner of 5% of our common
shares, and by each of our officers and directors. Each person has sole voting
power with respect to the common shares, except as otherwise indicated.
Beneficial ownership consists of a direct interest in the common shares, except
as otherwise indicated. As of August 28, 2008, there were 43,826,175 common
shares issued and outstanding.

Title of Class
    Name and Address of Beneficial
      Owner (1)
    Amount and Nature of Beneficial
      Ownership
    Percentage of Class(2)Common stock
    Raoul Tsakok
    15,800,000 (3) (4)
    35.4%Common stock
    Richard Shao
    4,800,000 (5)
    10.8%Common stock
    Gerald Runolfson
    1,800,000 (6) (7)
    4.0%Common stock
    Robert Smiley
    0
    0TOTAL
    22,400,000
    50.2%


|(1) | The address of each beneficial owner is 900  789 West
      Pender Street, Vancouver, BC V6C 1H2 Canada                                                                                                                                                                                                    
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Based on 43,826,175 shares outstanding as of August 28,
      2008 and, as to a specific person, shares issuable pursuant to the
      conversion or exercise, as the case may be, of currently exercisable or
      convertible debentures, share purchase warrants and stock options within
      60 days.
|(3) | 15,000,000 common shares held through Cobilco
  Inc.                                                                                                                                                                                                                                                        
|(4) | Raoul Tsakok has 800,000 options to purchase shares at
      $0.50 per share.                                                                                                                                                                                                                               
|(5) | Includes 800,000 options to purchase shares at $0.50 per
      share.                                                                                                                                                                                                                                       
|(6) | Includes 600,000 common shares and 300,000 A warrants,
      300,000 B warrants and 300,000 C warrants held through Elkon Products
      Inc.                                                                                                                                                         
|(7) | Gerald Runolfson has 300,000 options to purchase share at
      $0.50 per share.                                                                                                                                                                                                                            

Changes in Control

Pursuant to the agreement signed on July 8, 2008 with
Zhongchuan, the Company will cause 287,910,000 shares in the capital of the
Company to be issued to Monte Sea Shareholders for the DXC Salt Lake project.
This share issuance will result in a change of control of the Company.

Item 12. Certain Relationships and Related Transactions.

There have been no transactions, or proposed transactions,
which have materially affected or will materially affect us in which any
director, executive officer or beneficial holder of more than 10% of the
outstanding common stock, or any of their respective relatives, spouses,
associates or affiliates, has had or will have any direct or material indirect
interest.

44

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As at the date of this annual report, we do not have any
policies in place with respect to whether we will enter into agreements with
related parties in the future.

Item 13. Exhibits

The exhibits listed below are required by Item 601 of
Regulation S-K. Each management contract or compensatory plan or arrangement
required to be filed as an exhibit to this Form 10-K has been identified.

The following are exhibits to this Annual Report

|31.1 | Certification
        of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
        Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                   
|31.2 | Certification
        of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
        Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|     |                                                                                                                                                                   
|32.1 | Certification
        of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|     |                                                                                                                                                                   
|32.2 | Certification
        of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Item 14. Principal Accountant Fees and Services.

Audit Fees

BDO Dunwoody (BDO) provided audit services to the Company in
connection with its annual report for the fiscal year ended May 31, 2008 and
Amisano Hanson ("AH") provided audit services to the Company in connection with
its annual report for the fiscal year ended May 31, 2007. The aggregate fees
owned to BDO for the May 31, 2008 year ended audit of the Companys annual
financial statements was $20,000 and the aggregate fees billed by BDO for the
fiscal year 2008 quarterly reviews of the Company was $5,326. The aggregate fees
billed by AH for the fiscal year 2008 quarterly reviews of the Company was
$9,962. The aggregate fees billed by AH for the May 31, 2007 year ended audit of
the Company's annual financial statements was $19,398 and the aggregate fees
billed by AH for the fiscal year 2007 quarterly reviews of the Company was
$13,070.

Audit Related Fees

$2,535 was billed by BDO to the Company for amendments to May
31, 2007 audited financial statements according to SEC letter.

No fees were billed by AH to the Company for professional
services that are reasonably related to the audit or review of the Company's
financial statements that are not disclosed in "Audit Fees" above.

Tax Fees

No fees were billed by AH & BDO to the Company in 2008 for
professional services rendered in connection with the preparation of the
Company's tax returns for the period. No fees were billed by AH to the Company
in 2007 for professional services rendered in connection with the preparation of
the Company's tax returns for the year ended May 31, 2007.

All Other Fees

No fees were billed by AH & BDO to the Company for other
professional services rendered or any other services not disclosed above during
the period from June 1, 2007 to May 31, 2008 and no fees were billed by AH to
the Company for other professional services rendered or any other services not
disclosed above during the period from June 1, 2007 to May 31, 2008.

Audit Committee Pre-Approval

45

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The Audit Committee has the sole authority to appoint,
terminate and replace our independent auditor and to approve the scope, fees and
terms of all audit engagements, as well as all permissible non-audit engagements
of our independent auditor.

All audit work was performed by the auditors' full time
employees.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

|                                                                                                                                                                                                                          |     | STERLING GROUP VENTURES, INC.                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- | ---------------------------------------------------------
|                                                                                                                                                                                                                          |     | (Registrant)                                             
|                                                                                                                                                                                                                          |     |                                                          
|                                                                                                                                                                                                                          | By: | /s/
      Richard Shao                                   
|                                                                                                                                                                                                                          |     | Richard Shao, President and Chief Financial
      Officer
|                                                                                                                                                                                                                          |     |                                                          
|                                                                                                                                                                                                                          | By: | /s/
      Raoul Tsakok                                   
|                                                                                                                                                                                                                          |     | Raoul Tsakok, Chairman and Chief Executive
      Officer 
|                                                                                                                                                                                                                          |     | Date: September 4, 2008                                  
|                                                                                                                                                                                                                          |     |                                                          
|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.
|
|                                                                                                                                                                                                                          |     |                                                          
|                                                                                                                                                                                                                          | By: | /s/
      Richard Shao                                   
|                                                                                                                                                                                                                          |     | Richard Shao, President and Chief Financial
      Officer
|                                                                                                                                                                                                                          |     |                                                          
|                                                                                                                                                                                                                          | By: | /s/
      Raoul Tsakok                                   
|                                                                                                                                                                                                                          |     | Raoul Tsakok, Chairman and Chief Executive
      Officer 
|                                                                                                                                                                                                                          |     | Date: September 4, 2008                                  

46

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