10KSB form10ksb.htm FORM 10-KSB



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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-KSB

/A

(Mark One)



[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the fiscal year ended December 31, 2007



[     ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to __________________



Commission file number: 0-49942





STRATECO RESOURCES INC.

(Name of small business issuer in its charter)



|                                                               |                                     
|-------------------------------------------------------------- | ------------------------------------
|Quebec, Canada                                                 | N/A                                 
|(State or other jurisdiction of incorporation
or organization) | (I.R.S. Employer Identification No.)
|                                                               |                                     
|1225 Gay-Lussac, Boucherville, Quebec                          | J4B 7K1                             
|(Address of principal executive offices)                       | (Zip Code)                          



Issuers telephone number: (450) 641-0775



Securities registered under Section 12(b) of the Exchange Act: None



Title of each class      Name of each exchange on which registered



Common shares                      Toronto Stock Exchange, Canada (RSC)





Securities registered under Section 12(g) of the Exchange Act:



Common Shares

(Title of class)



- 2 -



Check whether the issuer (1) 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 X No  ̈



SEC 2337 (12-05)



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.



State issuers revenues for its most recent fiscal year: None- Junior Exploration Company



State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.)



All dollar amounts set forth in this report are in Canadian dollars except where otherwise indicated.



As of March 10, 2008, the average bid for the common shares was $2.59 per share for and aggregate market value of $297,588,065.



Note: If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.



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



Check whether the issuer has filed all documents and reports required to be file 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  ̈



(APPLICABLE ONLY TO CORPORATE REGISTRANTS)



State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date: As of March 10, 2008: 114,898,867.



DOCUMENTS INCORPORATED BY REFERENCE



Part II



Item 7: Financial Statements of an exploration stage company



The Company, an exploration stage company, incorporates for reference to the present document the Strateco Resources Inc. audited financial statements for the fiscal year ending December 31, 2007 and audited financial statements for the fiscal year ending December 31, 2006 that include the report of U.S. GAAP reconciliation at Note 18. These financial statements follow the signature page of the present document.



Transitional Small Business Disclosure Format (Check one): Yes ____; No __X__







- 3 -



PART 1



Item 1  Business.



The Company was incorporated under the Canada Business Corporations Act by articles of incorporation dated April 13, 2000.



The Company is primarily engaged in the exploration of mining properties with a view to commercial production. It currently owns or holds interests in various mining properties in Québec but does not have any mines in production. Its activities are focused on the development of three uranium properties, including the Matoush project in the Otish Mountains of northern Quebec.



Recovery of the cost of mining assets is subject to the discovery of economically recoverable reserves, the Companys ability to obtain the financing required to pursue exploration and development of its properties, and profitable future production or the proceeds from the sale of its properties. The Company must periodically obtain new funds in order to pursue its activities. While it has always succeeded in doing so to date, there can be no assurance that it will continue to do so in the future.



The Company is involved in exploration of uranium in its project Matoush and Apple and to its cognizance; there exists no competition between companies involved in that kind of exploration. The main business of the Company is to discover by exploration as much as possible of resources of uranium to eventually become a producer of uranium and to sell this uranium at the market value.



As of December 31, 2007, the Company had initiated voluntarily an Environmental Impact Study for the Matoush Project through a specialized firm, Golder Associates, at approximate costs of $268,000 during the year 2007, representing less than 1.5% of the Companys expenses in exploration in the approximate amount of $18.5M. Compliance with Environmental Laws at the Federal, provincial and local levels, for as long as the Company remains at the exploration stage for uranium, does not require material capital expenditures for the Company.



The Company has no employees nor consultants since it has a Services Agreement with BBH Géo-Management Inc. that provides employees and consultants in management, secretarial, geology, legal affairs, investor relations, technical matters and professional services as fully disclosed in

Item 6 (b) Managements Discussion and Analysis of Financial Condition and Results of Operation - Related-Party Transactions

 and

Item 10 Executive Compensation

..



Item 2: Properties.



At December 31, 2007, the Company had a portfolio of four wholly owned mining properties and interests or options on three mining properties in Quebec covering more than 47,633 hectares.



On the next page is inserted as Figure 1 the regional location map of all properties and projects of the Company as of March 2008:



- 4 -



[form10ksba31dec07001.jpg]



FIGURE 1



MATOUSH PROJECT  U3O8



The map in Figure 2 below represents the Company interest in different properties constituting the Matoush Project including Matoush property, Eclat property, Matoush Extension and Pacific Bay-Matoush property.



- 5 -

[form10ksba31dec07002.jpg]





FIGURE 2



MATOUSH PROPERTY

100% INTEREST



Location and Access



The Matoush project is located in the Otish Mountains in northern Québec, about 300 kilometres north of Chibougamau, and consists of the Matoush, Matoush Extension and Eclat properties. The Matoush project presently covers 313 claims for a total area of 16,619 hectares. The project is accessible by air, and in winter by the Eastmain winter road, which runs about seven kilometres to the west of the property. Please see Figure 2 supra.



Mining Claims



The property consists of 25 claims covering an area of 1,330 hectares.



A letter of intent dated May 12, 2005 provided for the Company to earn a 51% interest from Ditem Explorations Inc. (Ditem), which owned a 100% interest, in consideration of payments totalling $125,000 over two years, including $5,000 on signature of the agreement; $750,000 in exploration work over three years, including $200,000 the first year; and the issuance of 600,000 common shares of the Company over two years. The Beaver Lake Area project, which lies approximately 20 kilometres to the west, was also covered by this agreement.



- 6 -



A new letter of intent was signed with Ditem on February 21, 2006, giving the Company a 100% interest in the Matoush property under the following terms:



|                                                                                                                                                                                     |         
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------
|Upon signature of the letter of intent                                                                                                                                               | $10,000 
|Within five days following approval of the transaction by regulatory authorities                                                                                                     | $140,000
|The issuance of 400,000 shares of Strateco Resources Inc. within five days following regulatory approval. The shares were subject to a resale restriction of four months plus a day. |         
|A 2% NSR, as defined by industry standards                                                                                                                                           |         



The claims in the Beaver Lake area project have not been renewed by the Company.



Uranium Potential



The Otish Mountain area is well known for its uranium potential, particularly due to exploration conducted by Uranerz Mining and Cogema in the late 1970s and early 1980s. Mining giant Cameco Corporation, the largest public uranium producer in the world, holds a large number of claims immediately to the south of the Companys Matoush and Eclat properties, and has conducted a range of exploration activities in recent years, primarily geophysics..



The results of exploration conducted by Uranerz Exploration and Mining in the early 1980s before uranium prices tumbled, as well as those obtained by the Company in 2006 and 2007, indicate that the Matoush property has a very good potential.



Uranerz only explored a 900-metre section of the Matoush structure, which had been traced over 3,900 metres on this property. This exploration work included holes drilled at a spacing of about 200 metres.  Hole AM-15, which returned a 16-metre intersection grading 0.95% U3O8 (19 lbs/ton),  served as the Companys point of departure for exploration of the property.



The holes drilled on the Matoush property indicate that the uranium mineralization is closely linked to the fuschite and tourmaline alteration on both sides of a gabbro dike in the sediments. The alteration envelope associated with the Matoush structure is symmetrical, with an average thickness of 40 metres. Typically, adjacent to and moving outward from the dike is first a tourmaline zone, then a chlorite-fuschite-muscovite zone and a limonite-hematite zone.



Exploration analytical procedures:



All reported samples are split with hydraulic splitter by dedicated personnel. Samples are individually bagged and tagged and shipped as per transportation protocols. Blanks, duplicates, and standards are randomly inserted in the sample shipment within the sample number sequence.



Analytical results are received and imported into our data base. Laboratory replicates and laboratory standards are checked. Internal duplicates, blanks and standards are checked. Analytical drift from expect results triggers re-analysis.



Results are also compared with estimated GT values from in-situ downhole probing, and with CPS values logged during initial core logging procedures.



- 7 -



Sampling Methods, Quality Assurance and Quality Control



The sampling program at Matoush, including all aspects of Quality Assurance and Quality Control, is supervised by Stratecos Chief Geologist, Jonathan Lafontaine, P.Geo., who is a Qualified Person as defined under National Instrument 43-101.



Drill core is hydraulically split on-site and samples are collected over 30 cm to 3 m intervals based on geology. Prior to shipping, sealed sample bags are stored in a locked facility. Samples are shipped via air to Témiskamie float plane base, trucked to Chibougamau and from there sent by courier to the Geoanalytical Laboratories at the Saskatchewan Research Council (SRC) in Saskatoon.  The laboratory is accredited by the Standards Council of Canada as an ISO/IEC 17025 Laboratory for Mineral Analysis Testing.  On arrival at SRC, samples are sorted into lots according to radioactivity level and prepped and analyzed in that order.  Samples are dried and jaw crushed to 60% passing -2 mm and 100 g to 200 g sub sample split out using a riffler.  The sub-sample is pulverized to 90% passing 106 microns using a ring and puck grinding mill.  The mills are cleaned between samples using steel wool and compressed air.  After sample preparation, SRC analyzes for U3O8 content by several means.  ICP 4-3R (partial digestion) and fluorimetry are used on samples with U3O8 less than 100 PPM.  ICP 4-3 (total digestion) is employed on samples with normal to high radioactivity, hence for the majority of the samples submitted.  Samples with greater than 1,000 ppm U3O8 are also subjected to an Aqua Regia digestion before determination of wt% U3O8 also by ICP.  Strateco independently adds one blank sample and one quarter split duplicate each with every 14 samples.  Results are reviewed on an ongoing basis.



In addition to chemical analysis, Strateco employs a down-hole gamma probe instrument to estimate uranium grades.  Prior to probing, the holes are washed to eliminate minor mineralization smearing or radon effects.  Probe results, in cps units, are converted to eU3O8 (equivalent U3O8) using well established algorithms specifically calibrated to the Matoush deposit.  A calibration hole (MT-07-29), for which there are complete chemical analyses, is probed at least once per month to ensure the probe is calibrated accurately and functioning properly.  Results are also compared with chemical analysis when received.  Discrepancies in results are immediately investigated and corrected.



Exploration Work



The Company was very active in exploration on the Matoush property in 2006, with various activities carried out from February 2006 on, mainly drilling. The results were encouraging. A helicopter-borne radiometry, magnetic and electromagnetic survey covering the entire Matoush project over about 1,410 line-kilometres was also done, along with prospecting.



The holes drilled on the Matoush property served to confirm the presence of the ACF (Active Channel Facies), favourable to the deposition of uranium mineralization. This observation, based on the technical report for the last drilling program by Uranerz in 1984, as well as in-depth reading of each of the holes drilled by the Company in 2006, proved to be a valuable guide for exploration, and particularly for the identification of future drill targets.

The Matoush mineralized showing lies in the Indicator Formation, in the the Otish Mountain Paleoproterozoic sedimentary basin. Locally, the Indicator Formation is subdivided into repetitive sequences of two main facies. The first, the Active Channel Facies, or ACF, is composed of relatively coarse, immature arkosic-to-sub-arkosic sandstone. The second, the Channel Bar Facies, or CBF, consists of relatively fine, mature arkosic sandstone, finely laminated with some cross-lamination. Three pairs of ACF-CBF have been identified in holes drilled by the Company in 2006 and the old Uranerz drill holes.



In 2006, three main ACF and two intercalated CBF have been identified from surface. The first ACF extends from surface to -40 metres, the second from -200 to -260 metres and the third from -360 to -460 metres, remaining open at depth as the deepest hole drilled by the Company was to -460 metres.



- 8 -



From March 22 to December 17, 2006, 38 holes totalling 13,668 metres were drilled by one drill operated by Major Drilling International Ltd of Val dOr. Drilling was ongoing, except for during the thaw period from April 17 to June 16.



With the exception of one hole (MT-06-17) that targeted the upper part of the ACF below -400 metres and another drilled in the upper facies near surface (MT-06-24), the 2006 holes were drilled in the AM-15 zone and its northern extension. The Matoush structure, which has been identified over a distance of eight kilometres, was tested by drilling over 720 metres in 2006, and remains open in both directions. The Company received chemical analysis results in 2006 from Saskatoon Research Centre (SRC) laboratories for 25 of the 38 holes drilled during the year and for the remaining 13 holes on February 16, 2007. The results were released on February 20, 2007. The results obtained on the AM-15 zone, confirmed the high-grade potential over notable widths.



The results obtained included the following holes.



|         |            |                      
|-------- | ---------- | ---------------------
|MT-06-04 | 1.01% U3O8 | 14.1 m.  20.2 lb/ton
|MT-06-05 | 1.54% U3O8 | 9.5 m.  30.8 lb/ton 
|MT-06-09 | 1.68% U3O8 | 5.6 m.  33.6 lb/ton 
|MT-06-10 | 1.12% U3O8 | 10.8 m.  22.4 lb/ton
|MT-06-30 | 2.10% U3O8 | 12.4 m.  42.0 lb/ton
|MT-06-35 | 2.13% U3O8 | 15.2 m.  42.6 lb/ton



These results compare favourably to Hole AM-15 drilled by Uranerz in the early 1980s (0.95% U3O8over 16 metres). The first holes drilled by the Company in March 2006, particularly Hole MT-06-02, which was a duplicate of Hole AM-15, returned 0.74% U3O8 over 18.2 metres. Note that the section of 0.95% U3O8 over 16 metres includes an high grade of 20.4% U3O8 over 0.5 metre. The first 29 holes drilled by the Company did not intersect high grades. However, Hole MT-06-30 with a pierce point 50 metres north of Hole AM-15 in the upper ACF and Hole MT-06-35 with a pierce point in the lower ACF, 42 metres from Hole MT-06-30 and 25 metres from Hole AM-15, confirmed the existence of high grades, with 16.6% U3O8over 0.3 metre for MT-06-30 and 11.16% U3O8over 0.9 metre for MT-06-35. Intersections for holes MT-06-30 (2.10 % U3O8 over 12.4 metres) and MT-06-35 (2.13% U3O8over 15.2 metres) proved to be the best to date for the property as a whole. Radiometry on the core showed counts-per-second (cps) of up to 65,000.



Counts per second, usually abbreviated to CPS, is a measure of radioactivity and the more radioactive elements emitting gamma rays present in a source, the greater the CPS value. The variation is not linear in that if it is determined that 5 000 CPS in one instance is approximately equal to 1% U, it cannot be said that 25 000 CPS is equal to 5% U. But it is indicative that there is more radioactive material in a source emitting 25 000 CPS than in the source emitting 5 000 CPS.



Ergo, counts per second are a rough indication or estimate of possible grade. Although this is not always the case for various radioactive sources, drill core lends itself well to the comparison due to its perfectly consistent size and shape. Although it is more difficult to obtain potential grades from CPS values from outcrop or boulder sources, it qualitatively confirms presence or absence of radioactive elements in a certain source.



Counts per second values are representative enough that we can use them internally as a QC method.



The last holes drilled in 2006 on the AM-15 zone (MT-06-30 to MT-06-38) showed the strength of the system. In addition to holes MT-06-30 and MT-06-35 referred to above, which intersected a high grade of more than 2.0% U3O8over a substantial average width of 13.8 metres (45 feet), Hole MT-06-36 intersected 0.78% U3O8 over an impressive width of 23.4 metres (77 feet).



Definition drilling therefore led to a substantial increase in the number of pounds of uranium in the AM-15 zone.



- 9





Compelling results were generated by holes MT-06-31, 32, 33 and 37, drilled in the northern extension of Hole MT-06-30, and particularly by Hole MT-06-32. These holes were drilled to test the uranium potential at the ACF/CBF contacts. Hole MT-06-32 was a pleasant surprise, intersecting two mineralized sections in the CBF, the first returning 1.66% U3O8 over 5.5 metres from the fault hanging wall, and the second yielding 0.81% U3O8 over 3.3 metres at the level of the fault.



Exploration holes MT-06-20 to MT-06-27, drilled on a grid of about 100 metres to the north of the AM-15 zone, all intersected the fault with typical alteration. Radiometry on the core indicated weak-to-moderate values of up to 2,500 cps, corresponding to Hole MT-06-25, which intersected 0.20% U3O8 over 1.5 metres in the CBF.



|             |        |         |           |          |        |                 |        |        |         |         |      
|------------ | ------ | ------- | --------- | -------- | ------ | --------------- | ------ | ------ | ------- | ------- | -----
|Hole         | Collar | Az.
(o) | Angle
(o) | From
(m) | To
(m) | Core
length
(m) | %
U3O8 | Facies | Max
cps | lb/
ton
|             | East   | North   |           |          |        |                 |        |        |         |         |      
|MT-06-1      | 10+25E | 31+55S  | 279.0     | -47      | 276.4  | 279.0           | 2.6    | 0.172  | CBF     | 6,000   | 3.44 
|MT-06-2      | 10+25E | 31+55S  | 275.0     | -49      | 285.4  | 303.6           | 18.2   | 0.74   | ACF     | 24,000  | 14.8 
|including    |        |         |           |          | 285.4  | 297.2           | 11.8   | 0.91   |         |         | 18.2 
|             |        |         |           |          | 285.4  | 293.0           | 7.6    | 1.03   |         |         | 20.6 
|MT-06-3      | 10+25E | 31+55S  | 270.0     | -45      | 264.0  | 270.0           | 6.0    | 0.056  | CBF     | 1,000   |      
|             |        |         |           |          | 290.7  | 292.8           | 2.1    | 0.069  |         |         |      
|MT-06-4      | 10+25E | 31+55S  | 274.0     | -52      | 295.4  | 309.5           | 14.1   | 1.01   | ACF     | 19,000  | 20.2 
|Hanging wall |        |         |           | 295.4    | 304.5  | 9.1             | 1.39   |        |         | 27.8   
|including    |        |         |           |          | 299.3  | 304.5           | 5.2    | 2.01   |         |         | 40.2 
|Fault zone   |        |         |           |          | 317.5  | 321.0           | 3.5    | 1.47   |         | 22,800  | 29.4 
|MT-06-5      | 10+25E | 31+55S  | 267.0     | -48      | 301.3  | 312.6           | 11.3   | 1.33   | ACF     | 34,000  | 26.6 
|including    |        |         |           |          | 301.3  | 310.8           | 9.5    | 1.54   |         |         | 30.8 
|Fault zone   |        |         |           |          | 319.5  | 321.4           | 1.9    | 1.19   |         | 13,000  | 23.8 
|MT-06-6      | 10+20E | 31+52S  | 272.0     | -55      | 323.6  | 324.0           | 0.4    | 0.1    | CBF     | 750     | 2.0  
|MT-06-7      | 10+20E | 31+53S  | 271.0     | -49      | 302.5  | 313.5           | 11.0   | 0.34   | ACF     | 11,000  | 6.8  
|including    |        |         |           |          | 302.5  | 308.0           | 5.5    | 0.59   |         |         | 11.8 
|             |        |         |           |          | 314.2  | 314.5           | 0.3    | 1.75   |         |         | 35   
|MT-06-8      | 10+30E | 31+80S  | 269.0     | -51      | 334.5  | 341.5           | 7.0    | 0.22   | ACF     | 6,400   | 4.4  
|MT-06-9      | 10+25E | 31+55S  | 270.0     | -48      | 309.4  | 315.0           | 5.6    | 1.68   | ACF     | 22,000  | 33.6 
|including    |        |         |           |          | 311.0  | 313.3           | 2.3    | 3.27   |         |         | 65.4 
|MT-06-10     | 10+48E | 31+29S  | 275.0     | -46      | 309.5  | 320.0           | 10.5   | 1.12   | ACF     | 32,000  | 22.4 
|including    |        |         |           |          | 316.0  | 318.5           | 2.5    | 2.36   |         |         | 47.2 
|             |        |         |           |          | 316.6  | 317.3           | 0.7    | 5.96   |         |         | 119.2
|MT-06-11     | 10+49E | 31+29S  | 283.0     | -45.5    | 305.9  | 312.5           | 6.6    | 0.99   | ACF     | 12,300  | 19.8 
|including    |        |         |           |          | 305.9  | 309.0           | 3.1    | 1.21   |         |         | 24.2 
|MT-06-12     | 10+50E | 30+71S  | 269.0     | -45.5    | 307.0  | 309.0           | 2.0    | 0.75   | ACF     | 11,200  | 15.0 
|MT-06-13     | 10+29E | 31+80S  | 267.0     | -47      | 313.3  | 315.0           | 1.7    | 0.96   | ACF     | 8,200   | 19.2 
|MT-06-14     | 10+29E | 31+80S  | 258.0     | -47.5    | 322.5  | 323.7           | 1.2    | 0.08   | ACF     | 550     | 1.6  
|MT-06-15     | 10+48E | 31+29S  | 271.0     | -48.5    | 330.8  | 331.1           | 0.3    | 0.06   | CBF     | 600     | 1.2  
|MT-06-16     | 10+50E | 30+70S  | 268.0     | -48      | 309.8  | 313.0           | 3.2    | 0.03   | ACF     | 600     | 0.6  
|             |        |         |           |          | 329.0  | 330.6           | 1.6    | 0.09   |         | 1,400   | 1.8  
|MT-06-17     | 11+00E | 31+29S  | 275.0     | -56      | 472.0  | 473.0           | 1.0    | 0.01   | ACF     | 100     | 0.2  
|MT-06-18     | 10+20E | 29+71S  | 275.0     | -49      | 271.0  | 273.0           | 2.0    | 0.27   | ACF     | 3,400   | 5.4  
|including    |        |         |           |          | 272.0  | 272.6           | 0.6    | 0.75   |         | 3,400   | 15.0 
|             |        |         |           |          | 289.0  | 294.0           | 5.0    | 0.1    |         | 700     | 2.0  
|MT-06-19     | 10+20E | 29+71S  | 266.5     | -50.5    | 289.4  | 289.7           | 0.3    | 0.29   | ACF     | 2,150   | 5.8  
|MT-06-20     | 10+50E | 28+50S  | 275.0     | -49      | 338.0  | 338.4           | 0.4    | 0.01   | ACF     | 100     | 0.2  





- 10 -



|          |        |         |           |          |        |                 |        |            |          |            |      
|--------- | ------ | ------- | --------- | -------- | ------ | --------------- | ------ | ---------- | -------- | ---------- | -----
|Hole      | Collar | Az.
(o) | Angle
(o) | From
(m) | To
(m) | Core
length
(m) | %
U3O8 | Facies     | Max
cps  | lb/
ton   
|          | East   | North   |           |          |        |                 |        |            |          |            |      
|MT-06-21  | 10+50E | 27+85S  | 277.0     | -45      | 317.3  | 319.1           | 1.8    | 0.05       | ACF      | 90         | 1.0  
|MT-06-22  | 10+50E | 26+50S  | 276       | -45      | 302.8  | 303.6           | 0.8    | 0.05       | ACF      | 600        | 0.91 
|MT-06-23  | 10+50E | 26+50S  | 276       | -52      | 335    | 336             | 1,0    | low values | ACF      | 120        |      
|MT-06-24  | 8+65E  | 26+50S  | 277       | -45      | 74     | 74.2            | 0.2    | low values | ACF      | 90         |      
|MT-06-25  | 10+50E | 27+10S  | 277       | -52,5    | 358    | 359.5           | 1.5    | 0.20       | CBF      | 2

,

500  | 3.95 
|MT-06-26  | 10+50E | 27+10S  | 276       | -46      | 358.2  | 360.3           | 2.1    | low values | CBF      | 2

,

500  |      
|MT-06-27  | 10+50E | 25+50S  | 277.0     | -53.5    | 333,3  | 333.6           | 0.3    | 0.13       | CBF/
ACF | 700        | 2.6  
|MT-06-28  | 10+20E | 29+71S  | 275.0     | -51      | 285.0  | 285.8           | 0.8    | 0.24       | ACF      | 4,300      | 4.8  
|MT-06-29  | 10+20E | 29+71S  | 275.0     | -54      | 316.7  | 318.6           | 1.9    | 0.01       | ACF      | 80         | 0.20 
|MT-06-30  | 9+93E  | 30+90S  | 269.0     | -52      | 255.1  | 267.5           | 12.4   | 2.10       | ACF      | 65,000     | 42.0 
|          |        |         |           |          | 261.7  | 265.0           | 3.3    | 4.70       |          |            | 94.0 
|          |        |         |           |          | 264.2  | 264.5           | 0.3    | 16.6       |          | 65,000     | 332.0
|          |        |         |           |          |        |                 |        |            |          |            |      
|MT-06-31  | 9+93E  | 30+90S  | 277       | -52      | 253    | 256             | 3,0    | 0.42       | CBF      | 10

,

700 | 8.45 
|          |        |         |           |          | 268    | 271             | 3,0    | 0.07       | ACF      | 1

,

175  | 1.31 
|MT-06-32  | 9+90E  | 30+90S  | 284       | -52      | 241.5  | 247             | 5.5    | 1.66       | CBF      | 36

,

000 | 33.29
|          |        |         |           |          | 250    | 253.3           | 3.3    | 0.81       | CBF      |            | 16.14
|MT-06-33  | 9+90E  | 30+40S  | 275.5     | -52      | 237.5  | 239.9           | 2.4    | 0.46       | CBF      | 11

,

400 | 9.26 
|          |        |         |           |          | 260.6  | 265             | 4.4    | 0.64       | ACF      | 31

,

400 | 12.79
|MT-06-34  | 10+48E | 31+32S  | 273.5     | -47      | 315.3  | 319.2           | 3.9    | 0.02       | ACF      | 540        | 0.42 
|MT-06-35  | 10+48E | 31+32S  | 270       | -46      | 306.4  | 321.6           | 15.2   | 2.13       | ACF      | 65

,

000 | 42.69
|Including |        |         |           |          | 306,8  | 315,2           | 8,4    | 3,20       |          |            | 64,00
|          |        |         |           |          | 308,4  | 309,3           | 0,9    | 11,16      |          |            | 223,0
|MT-06-36  | 10+49E | 31+32S  | 281.5     | -47.5    | 315    | 338.4           | 23.4   | 0.78       | ACF      | 34

,

000 | 15.60
|MT-06-37  | 9+93E  | 30+90S  | 281.5     | -48      | 236    | 237             | 1,0    | 0.41       | CBF      | 3

,

500  | 8.19 
|MT-06-38  | 9+89E  | 30+40S  | 285       | -52      | 233.7  | 239             | 5.3    | 0.16       | CBF      | 3

,

200  | 3.11 



*Mt-06-18:3 metres of core unrecovered at the fault

* ACF:



Active Channel Facies

* CBF:Channel Bar Facies

* Exploration holes MT-06-22 to MT-06-26 each intersected the Matoush fault, with low to moderate grades over thicknesses of up to 1.5 metres in Hole MT-06-25.



Drilling resumed on January 10, 2007 following the Holiday break. The first phase of 2007 drilling is essentially aimed at testing the extension immediately south of the AM-15 zone. Six holes, MT-07-01 to MT-07-06, for which the geological logs were completed, were drilled for a total of 2.073 metres.



At the beginning of the year, Hole MT-07-01, the only hole drilled in the northern extension of the AM-15 zone, tested the possible continuity of the mineralization in the CBF layer above holes MT-06-32 and 33.



- 11 -



The hole confirmed the continuity of the structure and the usual alterations. The maximum radiometry recorded on the core was 2,500 CPS.  Of holes MT-07-02, 03 and 04 drilled in the upper section of the ACF facies, Hole MT-07-03 proved the most interesting, yielding a mineralized intersection of 15.8 metres with up to 20,000 CPS.



Holes MT-07-5 and 06, drilled on the same section in the middle and lower ACF facies about 50 metres south of the AM-15 zone, both intersected mineralization in the form of pitchblende and uranophanes, with up to 13,000 and 15,500 CPS respectively. The mineralized intersection from MT-07-6 was exceptionally large, at 15.1 metres (50 feet).



The following table shows the location of holes MT-07-01 to MT-07-6 for which results have been obtained on April 10, 2007 from the SRC laboratory in Saskatoon



|          |        |         |           |          |        |                 |        |        |         |         |     
|--------- | ------ | ------- | --------- | -------- | ------ | --------------- | ------ | ------ | ------- | ------- | ----
|Hole      | Collar | Az.
(o) | Angle
(o) | From
(m) | To
(m) | Core
length
(m) | %
U3O8 | Facies | Max
cps | lb/
ton
|          | East   | North   |           |          |        |                 |        |        |         |         |     
|MT-07-01  | 9+90E  | 30+40S  | 275       | -46      | 231    | 231.7           | 0.7    | 0.43   | CBF     | 2500    | 8.6 
|MT-07-02  | 10+29E | 31+80S  | 278       | -46.5    | 301    | 307             | 6,0    | 1.45   | ACF     | 22000   | 29.0
|          |        |         |           |          | 301.5  | 303             | 1.50   | 2.29   |         |         | 45.8
|MT-07-03  | 10+29E | 31+80S  | 285       | -45      | 291.6  | 307.55          | 16.05  | 2.00   | ACF     | 20000   | 40.0
|Including |        |         |           |          | 300.7  | 304.25          | 3.55   | 4.02   |         |         | 80.4
|MT-07-04  | 10+29E | 31+80S  | 272       | -45.5    | 302.8  | 304.1           | 1.30   | 0.30   | ACF     | 1000    | 6.0 
|MT-07-05  | 10+29E | 31+80S  | 272       | -49      | 304.6  | 310             | 5.40   | 2.03   | ACF     | 13000   | 40.6
|MT-07-06  | 10+29E | 31+80S  | 273       | -50.5    | 319.05 | 333             | 13.95  | 0.53   | ACF     | 15500   | 10.6
|Including |        |         |           |          | 319.05 | 322.8           | 3.75   | 2.94   |         |         | 58.8
|MT-07-07  | 10+29E | 31+80S  | 283       | -45.5    | 288.6  | 297             | 8.40   | 0.49   | ACF     | 6500    | 9.8 
|MT-07-08  | 10+48E | 31+32S  | 276       | -48.5    | 322.5  | 326             | 3.50   | 1.50   | ACF     | 29600   | 30.0

*ACF:



Active Channel Facies

*CBF:



Channel Bar Facies



The true widths of the mineralized intersections in this release have not yet been determined.



Repairs to the winter road began in mid-January 2007 and a new 12-kilometre section was built. A substantial quantity of equipment has been mobilized, including a 45-person camp, which has been operational two months earlier than expected, in mid-April.



As of June 2007, exploration work had primarily consisted of drilling, with three drills operating on the site. Since the beginning of 2007 (to June 21), 55 holes including one wedge had been drilled for a total of 22,402 metres. Definition drilling continued on Zone AM-15 in preparation for a Canadian National Instrument 43-101 (NI 43-101) compliant resource estimate, as well as drilling on the north and south extensions of the zone. One drill was assigned to deep drilling and has completed four holes, not including one wedge and another hole left uncompleted. Exploration drilling was also testing the uranium potential of the CBF horizon from surface down to the 180-metre level.



As of April 2007, the Company has received chemical analyses for 24 holes from the SRC laboratory in Saskatoon, as well as results for MT-07-01 to MT-07-08.



- 12





Drilling in the AM-15 area has indicated the presence of interesting uranium mineralization over a distance of more than 300 metres, with a core distance of 160 metres. The AM-15 horizon remains open both to the north and to the south.



Holes for which chemical analyses were received included nine holes drilled in the northern extension of AM-15, namely MT-07-26, 27, 28, 29, 31, 32, 33, 34 and 35 (the pierce point locations can be viewed on the Companys web site at www.stratecoinc.com). The true width of the mineralized sections has not yet been determined. Hole MT-07-29returned the best value, with a grade of 1.97% U3O8,representing 39 lb/ton U3O8,over a length of 6.7 metresin the CBF horizon. These results are even more promising as the intersection corresponds to a fault in the hangingwall of the Matoush fault, 135 metres to the north of the Hole AM-15 intersection. Another hole of interest in this area is MT-07-33,drilled 25 metres to the north of MT-07-29. As in MT-07-29, the uranium mineralization is in the hangingwall of the Matoush fault. The mineralization was found in a 4.00-metre section of the hole, but sampling has not yet been completed. To date, grades of 1.49% U3O8(30 lb/ton) over 0.3 m from 244.2 to 244.5 m and 1.18% U3O8(24 lb/ton) over 0.8 m from 247.6 to 248.4 m had been obtained.



In the rich ACF horizon, also in the northern extension of the AM-15, Hole MT-07-35returned the best intersection, 65 metres to the north of AM-15. A grade of 0.95% U3O8(19 lb/ton)over a substantial length of 10.7 metres,including 1.61% U3O8(32 lb/ton)over 5.9 metres,was obtained. This intersection, which displays intense fuschite, tourmaline and chlorite hydrothermal alteration with pichblende and uranophane, confirms the presence of a corridor of high grades and widths in the upper part of the ACF to the north of AM-15.



Three holes (MT-07-48, 50 and 54) were drilled in the southern extension of AM-15, in the lower CBF, between 10 and 20 metres above the ACF-CBF contact, to test the potential presence of a saccharoidal level recently identified in the northern extension of the AM-15. This level, which would add considerable value to the project, consists of fine, moderately silicified, porous sandstone with a sugar structure (saccharoidal). The results of visual examination and radiometry on the core are encouraging. In Hole MT-07-48, the mineralized zone is 7.0 metres long, with a cps of up to 3,000 associated with the pichblende. In Hole MT-07-50, the mineralization was intersected over 1.0 m with a maximum cps of 2,300, and in Hole MT-07-54, over 6.0 metres avec maximum cps of 5,300, but with 50% core loss.



Thirteen exploration holes were drilled in the southern extension of the AM-15 zone, over a strike length of 270 metres, being up to Section 35+15S, with Hole AM-15 lying on Section 31+50S. Most of these holes intersected the Matoush fault in the ACF. Chemical analysis results have been received for these thirteen holes. Except for Hole MT-07-18, which was drilled on the lake last winter and returned a grade of 0.21% U3O8over 3.4 m, including 0.83% U3O8(17 lb/ton) over 1.5 m, grades were below 0.10% U3O8(4 lb/ton). For instance, Hole MT-07­10, with a pierce point 100 m south of AM-15 in the upper part of the ACF, returned a grade of 0.06% U3O8over 4.0 m, including 0.19% U3O8over 0.8 m.



One of the three drills was mobilized on February 10, 2007, for deep drilling to test the uranium potential of the basement rock (unconformity). In February 2007, the Company obtained the results for the first hole to reach the basement on the Matoush property, namely Hole MT-07-09, with a total length of 1,296 metres. In addition to Hole MT-07-09, three other holes were drilled, namely MT-07-15, 22 and 30, as well as a wedge (MT-07-22-A). A fourth exploration hole (MT-07-47) was drilled to test the basement 170 metres north of MT-07-30, but was left unfinished for technical reasons. One of these holes, MT-07-22,can be considered significant, as it intersected two intrusives, both containing uranium mineralization. The mineralization was intersected in the ACF at an average vertical depth of 700 metres, with the basement lying at 792 metres. The two intrusives are 60 metres apart down hole, with the second corresponding to the Matoush fault. Chemical analysis results were revealing, with respective grades of 1.18% U3O8 (24 lb/ton)over 0.6 metresand 0.30 U3O8(6 lb/ton)over 1.40 metre.



Nine exploration holes (MT-07-36, 38, 40, 41, 43, 44, 45, 49 and 53) were drilled to test the uranium potential of the CBF at a vertical depth between the -80 m and -160 m. This horizon typically contains low uranium grades. The five holes, centred at -100 m over a strike length of about 240 m, do not appear to have returned any significant mineralization, with counts per second ("cps") of less than 700. However, Holes MT-07-36 and 44, 105 metres apart with a pierce point at 160 m, are more promising. Hole MT-07-36 intersected a mineralized zone of interest over 3.15 metres with a cps of up to 6,300, and Hole MT-07-44 intersected two mineralized zones, the first 2.0 metres long with a cps of up to 3,900 in the CBF, and the second about 13 metres long in the ACF with a maximum cps oscillating from 650 to 2,700.



- 13 -



Hole MT-07-49 had a pierce point 185 metres to the north of AM-15 in the middle part of the ACF, this hole shows that the mineralization extends to the north. The 3.8-metre length of mineralized zone showed the presence of pichblende over its entire length, with a cps of 11,500.



Hole MT-07-23, drilled to test an IP geophysical anomaly outside the Matoush corridor, did not intersect any abnormal structure, and the anomaly remains unexplained.



In addition to the delay in obtaining chemical analysis results from the laboratory, the Company has experienced delays in sampling and consequently in shipments of samples due to a personnel shortage. The situation was recently remedied with the hiring of three geologists.



Exploration work on the Matoush project intensified in the third quarter, particularly as the summer season permitted prospecting and use of the heliportable drill.



Between July 3 and October 3, 2007, 65 holes were drilled on the Matoush project for a total of 14,983 metres.



Exploration drilling in the third quarter took place mainly along the Matoush fault, from the northwest end of the project (Matoush Extension) to the southern part of the Eclat property, 9 km south of the AM-15 zone. The holes in the northern and southern parts of the Matoush project were drilled with a Versa-type drill moved using an Astar 350 B-2 helicopter assigned permanently to the site by Canadian Helicopters. The location of the holes drilled in the third quarter of 2007 can be found in the Form 10QSB for the period ending September 30, 2007.



Aside from the exploration holes drilled from surface to the 60-metre thick ACF-3 level (which hosts the AM-15 zone), including those drilled in the AM-08 sector (ACF-1, 15 metres thick), the emphasis was on exploration drilling at depth in the nearly 400-m thick ACF-4. These holes were drilled to test a new geological model based on the potential presence of other zones lying parallel to the plunge of the AM-15 zone. The best results were obtained from holes MT-07-101, 110 and 116 drilled in mid-October.



Logging of Hole MT-07-101 showed 0.30% eU3O8 over 1.9 m in the upper part of the ACF-4, at -360 m. A maximum of 5,900 cps was recorded on the core. Hole MT-07-110, drilled 60 metres deeper and 50 metres further north, intersected two mineralized sections 4.2 metres apart, with the second corresponding to the Matoush fault. Logging indicated 0.09% eU3O8 over 1.11 m and 0.06% eU3O8 over 2.23 m.  Finally, Hole MT-07-116, drilled 110 m further north and 150 metres deeper than MT-07-110, intersected a 0.40 m mineralized section at the contact of the fault (-525 m), with up to 32,000 cps.  This hole could not be logged.



The "e" in eU3O8 represents the

estimated

 or

equivalent

 value of U3O8 as determined by downhole geophysical probing. The

e

 indicates that the value is not obtained by drill core assay, but rather by converting gamma radiation measured

in-situ

 in the drill hole into U3O8 values by assuming that all gamma radiation can be directly attributed to the quantity of uranium present in the rock. The Company can clearly show that all our mineralized intersections typically have a negligible quantity of radioactivity related to thorium or potassium that would skew this analysis. Furthermore, after isotopic analysis, the Company can safely say that, like most other deposits older and 0.35 million years, the uranium is in equilibrium (i.e. that daughter elements are produced and disintegrated at a steady state, correlated to the quantity of uranium).



This method of distinguishing analytical assay values from geophysical measurements is common in the industry.



Although the Company may indicate that reported U3O8 values are estimated from gamma probe readings, it is best to use eU3O8 for clarity, if applicable, as per CIM guidelines cited here:



Equivalent Assay: Determination of uranium content by radiometric methods. The validity of Equivalent Assays must be demonstrated with chemical assay determinations. Where employed, equivalent uranium determinations should be reported and appropriately illustrated in the database (e.g. eU3O8). Excerpt

:http://www.cim.org/committees/estimation2003.pdf

at page 50 of 55.



- 14 -



In-hole logging has become essential as the Saskatchewan Research Council (SRC) is literally overloaded. Pending receipt of its own probe, the Company is using a Gamma probe on loan from Cameco.



The third quarter was also very active at the prospecting level on the Matoush property, with conclusive results.



The primary objective of the summer 2007 prospecting program was the discovery of new uranium-bearing radioactive boulders or outcrops that could lead to a new mineralized zone. More than 10,000 hectares were covered. Prospecting was conducted systematically on lines spaced at 100 metres.



Most notably, this work led to the discovery of strongly radioactive blocks (5,000 to 61,000 cps) in the east-northeast corner of the Matoush property (Laurent-Martin showing), an outcropping radioactive zone (600 to 10,000 cps) at the northern edge of the North Block and a number of radioactive boulders on both the South and North blocks of the property.



The highly significant discovery of radioactive boulders of up to 61,000 cps made by prospectors from Exploration Sans Frontière subcontracted by the Company lies 5 km northeast of the AM-15 zone.



Geotechnical and metallurgy studies continued in parallel with field exploration work, along with the gathering of data for the environmental impact study.



On September 2

7


6

, 2007, Scott Wilson Roscoe Postle & Associates (Scott Wilson RPA) completed a NI 43-101 technical report on the Matoush property, including a resource estimate on the AM-15 core zone.



Scott Wilson RPA prepared the initial mineral resource estimate for the AM-15 core zone at Matoush using drillhole data available as of September 27, 2007. A set of cross sections and plan views were interpreted to construct three dimensional (3D) grade-shell wireframe models at a cut-off grade of 0.05% U3O8and a minimum horizontal thickness of 2 metres. High grade assays were cut to 7% U3O8. Forty-four of the 119 drill holes in the AM-15 zone area were used to estimate the mineral resources. The mineralization making up the mineral resource is shared among four vertical lenses controlled by the Matoush Fault Zone (MFZ): Main Lens, South Lens, North Lens and an Upper Lens. Block model U3O8grades within the wireframe models were estimated by ordinary kriging.



Mineral Resource and Mineral Reserve Estimates



Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources. This section uses the terms measured and indicated resources. We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.



Cautionary Note to U.S. Investors concerning estimates of Inferred Resources. This section uses the term inferred resources. We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. Inferred resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally minable.



1.



Mineral Resource Classification, Category and Definition



The Canadian Institute of Mining, Metallurgy and Petroleum (CIM) guideline for resource classification includes the following definitions which are pertinent to the classification of the Matoush Property resource:





- 15 -



A Mineral Resourceis a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earths crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.



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



An Indicated Mineral Resourceis that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.  The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.



On the Matoush Property, Indicated mineral resources are estimated to total 201,000 tonnes grading 0.79% U3O8containing 3.48 million pounds of U3O8. Inferred mineral resources are estimated to total 65,000 tonnes grading 0.43% U3O8containing 0.62 million pounds.



The solid representing the AM-15 core zone plunging to the southeast (source of the new model) can be viewed on the longitudinal section on Stratecos website, at www.stratecoinc.com.



Details of the estimation are presented in the following table:

|                    |        |            |         
|------------------- | ------ | ---------- | --------
|AM-15 Core Zone     | Tonnes | Cut U3O8   | Cut U3O8
|(000)               | (%)    | (000 lbs )
|INDICATED
Main Lens | 164    | 0.87       | 3,162   
|South Lens          | 37     | 0.40       | 323     
|Upper Lens          | 0      |            | 0       
|North Lens          | 0      |            | 0       
|TOTAL INDICATED     | 201    | 0.79       | 3,484   
|INFERRED
Main Lens  | 36     | 0.54       | 421     
|South Lens          | 6      | 0.19       | 25      
|Upper Lens          | 11     | 0.08       | 20      
|North Lens          | 12     | 0.55       | 152     
|TOTAL INFERRED      | 65     | 0.43       | 619     





- 16 -

Notes:



1. CIM Definitions were followed for mineral resources.

2. Cut-off grade: 0.05% U3O8

3. Grade-shell wireframes at 0.05% U3O8were used to constrain the grade interpolation.

4. U3O8values were interpolated by ordinary kriging.

5. Wireframes were constructed with a minimum horizontal thickness of two metres.

6. High U3O8grades were cut to 7%

7. Downhole radiometric logging was used for assays in one drill hole.

8. Blocks are 10 m by 10 m by 3 m.

9. Several blocks less than 0.05% U3O8were included for continuity or to expand the lenses to the two metre minimum horizontal thickness.

10. Totals may not sum correctly due to rounding

1

1.

 Gemcom Software International Inc. Resource Evaluation Edition Version GEMS 6.11 was used.



Development of the Matoush deposit would require an underground mining method given its depth below surface and geometry.  Part of the deposit would be amenable to long-hole methods while other parts would require narrow vein mining.  The following economic assumptions were used to calculate an economic breakeven grade

:



·

U3O8 price: US$55/lb

·

Processing cost: US$20/t

·

Underground mining cost: US$55/t

·

General and Administrative cost: US$15/t

·

Power cost: US$10/t

·

U3O8 recovery: 98%



Cut-off grade

= Operating cost/(Metal Price x Recovery)

= $100/t/ ($55/lb x 98%)

= 1.86 lb/t

= 0.084% U3O8



Scott Wilson RPA used 60% of the fully costed cut-off grade to estimate a marginal cut-off grade of 0.05% U3O8 for reporting of Mineral Resources.  The material with grade above the marginal cut-off grade, but below the fully costed cut-off grade, represents mineralization that has a reasonable prospect of economic extraction assuming sunk development costs and that this marginal material does not displace higher grade mineralization in the mill feed.  The marginal material is included largely for purposes of maintaining resource continuity, and does not make up a large proportion of the total Mineral Resource.



The resource estimate does not take in account other mineralized zones intersected by drilling on the Matoush property.  The smaller and eroded AM-8 Zone is found at surface in ACF-1, approximately 200 metres vertically above the AM-15 zone.  Uranium mineralization of undefined extent has also been intersected in ACF-2 (L-43 occurrence) and ACF-4 (22 Deep Occurrence, 0.31% U3O8 over 1.4 metres).  The 22 Deep Occurrence is 200 metres above the basement unconformity and about 330m vertically beneath the AM-15 zone. All of this mineralization is located within the MFZ and is, as referred to it earlier, Otish-type uranium mineralization. (Scott Wilson RPA, Sept. 2007)



In the last quarter of 2007, drilling was mainly concentrated in the new MT-22 zone sector, located in the ACF-4 at a vertical depth of between -350 and -650 m, with the main goal of identifying new mineralization in order to increase the resource. During this last period, 20 holes were drilled for a total of 11,238 m.



- 17 -



Most of the holes drilled in this area (ACF-4) intersected significant U3O8 values at the intersection of the Matoush fault, generally over small widths. While MT-07-116, for instance, intersected 50,000 cps over 0.3 m, the gamma probe has not yet been used in this hole due to the excessive length of cable required (intersection at -600 vertical metres). The best results were obtained in the last two holes drilled in 2007, MT-07-129 and MT-07-130, 80 m apart at the same elevation (- 350m).



Hole MT-07-129, with a 5.3-m intersection grading 0.37% eU3O8 including 3.3 m of 0.51% eU3O8, was particular as the alteration halo in this hole is identical to the one around the AM-15 zone.



Hole MT-07-130 intersected a 5.8-metre mineralized zone grading 0.37% eU3O8. Exploration work stopped on December 21, 2007, for the holiday break.



ECLAT PROPERTY



Location and Access



The Eclat property is located in the Otish Mountains of northern Québec, immediately south of the Matoush property. The property is accessible by helicopter as well as by the winter road that links the Eastmain mine to Témiskamie. Please see Figure 1 at page 4 for the general location of Eclat property mining claims.



Mining Claims



The property consists of 90 mining claims covering 4,787 hectares. Vija Ventures Corporation holds a 100% interest in the property. Please see the General location map of the Matoush project Figure 2 at page 5 for the location of the mining claims of Eclat property.



A letter of intent dated July 12, 2005 granted  the Company an option on a 100% interest.  The interest applies to all minerals except diamonds.



The agreement provides for the Company to earn its 100% interest by making payments totalling $150,000 over four years, including $7,000 on signature of the agreement and $7,000 on the first, $20,000 on the second, $20,000 on the third and $96,000 on the fourth anniversary, by carrying out $500,000 in exploration over four years and by issuing 600,000 common shares of the Company over three years, of which 400,000 have already been issued. The property is subject to a 2% NSR.



Uranium Potential



The property is strategically located in a relatively unexplored area with known uranium potential. It is bordered to the north by the Matoush property, wholly-owned by the Company, and to the south by ground recently staked by Cameco Corporation.



The property lies in the southern extension of the Matoush structure, which was traced by Uranerz over 3,900 metres using ground VLF surveys conducted in the early 1980s. The holes drilled by Uranerz and the Company clearly show uranium potential.



The Matoush structure also appears to continue for at least two kilometres on the Eclat property, which adds to its value.



Exploration Work



Hole EC-06-01, drilled 5.8 kilometres south of Uranerz Hole AM-15, primarily to maintain certain mining claims in the area, confirmed the southern extension of the Matoush fault.



- 18 -



The results were compelling. The structure was intersected at 111 metres down the hole, at a vertical depth of 76 metres. While unmineralized, the typical tourmaline alteration of the structure was intersected over a 10-metre section, with the fault appearing to be strongly choritized. This hole therefore confirms the presence of the Matoush structure over a distance of more than seven kilometres.



The radiometry and magnetometry survey carried out by Aeroquest Limited in the fall of 2006 on the Matoush property also covered the entire Eclat property.



On the southern portion of the Matoush project, on Eclat property, 10 holes were completed (EC-07-01 to 07-10) for a total of 2,260 metres. These exploration holes drilled with the assistance of the helicopter allowed the Matoush fault to be accurately located on the Eclat property, with radiometry on the core showing a low cps. More drilling will be done in this area during winter 2008.



MATOUSH EXTENSION PROPERTY



The Matoush Extension property is located north, west and east of the Matoush property. Please see Figure 1 at page 4.



Mining Claims



Wholly-owned by the Company, the Matoush Extension property consists of 198 claims covering 11,504 hectares. These mining claims were acquired by the Company in the fall of 2005 and the winter and summer of 2006 to protect the area in the vicinity of the Matoush and Eclat properties.  Please see the general location map of the Matoush project in Figure 2 at page 5.



The northern border of the property is very close to the northern edge of the Otish Basin. The property is broken up by a row of mining claims belonging to Pacific Bay.



With the addition of the Matoush Extension property, the Matoush project as a whole covers 23 kilometres along its north-south axis, intersected by a 900-metre section belonging to Consolidated Pacific Bay Minerals Ltd (See section on Pacific-Bay Matoush property below).



Exploration Work



No significant exploration work was conducted on the Matoush Extension property except for the radiometry and magnetometry survey, which covered most of the property. On the northern portion of the Matoush project, on Matoush Extension property, exploration work in 2007 consisted in prospection and limited drilling. Prospecting was successful with the identification of an outcropping radioactive zone with 600 to 10,000 cps. Four drill holes were completed in the area for a total of 1,290 metres. Mixed results were obtained, the Matoush fault being laterally displaced.



PACIFIC-BAY MATOUSH PROPERTY



On October 29, 2007, the Company entered into an agreement in principle with Consolidated Pacific Bay Minerals Ltd. (Pacific Bay) allowing the Company to earn a 60% interest in 277 mining claims owned by Pacific Bay located in the Matoush District of Québec's Otish Mountains. The agreement was subject to the completion of a definitive option agreement and regulatory approval that took place on January 14, 2008. It calls for the Company to pay Pacific Bay a total of $500,000, issue 200,000 Strateco shares and incur $3 million in exploration expenditures over four years, including a minimum of 10,000 meters of drilling. As part of the transaction, the Company acquired one million units of Pacific Bay at a price of $0.30 per unit on January 14, 2008. Each unit consists of one common share and one warrant to purchase a common share at $0.60 per share for a period of 24 months.



As of October 29, 2007, the Company assumed direction of exploration activities on the property, including supervision of the drilling program completed in December 2007. The property covers an area of 145 square kilometres (56 square miles) in the Otish Mountains, where the Company has been drilling the Matoush high-grade uranium orebody originally discovered by Uranerz Exploration and Mining in the 1980's. The resource estimate for the property predates NI 43-101.



- 19 -

MONT-LAURIER PROPERTY  U3O8

100% INTEREST



Location and Access



The Mont-Laurier project is located in Pérodeau Township, 40 kilometres northeast of Mont-Laurier, Québec. The property is easily accessible by paved road from Mont Laurier.



Please see Figure 1 for the general location map of the Mont-Laurier property and the following Figure 3 for the location of the claims of the Company on the Mont-Laurier property.

[form10ksba31dec07003.jpg]

Figure 3



- 20 -



Mining Claims



The project consists of 80 claims that cover an area of 4,710 hectares. The Company owns a 100% interest in the property, acquired at the end of March 2005.



[form10ksba31dec07004.jpg]



Figure 4



- 21 -

Uranium Potential



The ground acquired lies within the Cabonga-Mont-Laurier radioactive district of the Grenville geological province. Intensive exploration work was conducted in the area from 1969 to 1981, after Canadian Johns-Manville discovered uranium mineralization in 1967.



The Companys property covers ground previously held by Mont-Laurier Uranium Mines in the 1970s. The claims block straddles the crest of a northeast-trending anticline and covers the high-potential southern extension of the Tom Dick uranium zones.



The uranium occurs mainly as disseminated uraninite in metamorphosed white pegmatites, as well as in biotite gneiss and impure biotite feldspath quartzites. The paragneiss covers Archean granite gneiss exposed mainly in the eroded windows along the crest of the major northeast-trending anticlinal folds.



Two white pegmatite uranium zones have been identified in the centre-south portion of the ground held by the Company, previously known as the Lac Hanson claims. The largest zone, which is six metres thick and dips 20o to the northwest, has been traced over a distance of 365 metres to the northeast by trenching.  The central portion of the Companys property, on the same axis between the Lac Hanson and the Tom Dick zones, remains virtually unexplored due to the fluvio-glacial overburden.



The renewed interest in uranium exploration has been prompted by the meteoric rise in uranium prices from US $6.00 to $85.00/lb in recent years. Given its location, the sustained rise in uranium prices and growing demand for alternative energy sources, the Mont-Laurier property is a solid addition to the Companys property portfolio.



Exploration Work



The Company initiated exploration work on the Mont-Laurier project in the summer and fall of 2006.



First, in mid-June 2006, a helicopter-borne geophysical survey was done over the entire property. The radiometry, Mag and VLF survey was flown along lines spaced at 100 metres, totalling 885 line-kilometres. Various anomalous zones were identified.



The radiometry anomalies, particularly the uranium anomalies, are primarily concentrated along a 200- to 1,000-metre wide, northeast striking band that crosses the entire property. This band of anomalies covers a distance of over 14 kilometres. The two most strongly-anomalous areas are in the north and south of the property.



Following this survey, prospecting was carried out on the most promising areas. This work primarily consisted of scintillometry prospecting over approximately 26 line-kilometres, blasting and collection of 73 samples in the Tom Dick area. Some 11.2 kilometres of linecutting was done in the Lac Hanson area.

This exploration work resulted in the identification of zones of high radioactivity (many times the background level) in the Tom Dick South, Hanson West and Hanson Centre areas. Occasional readings of over 10,000 cps were seen.



Local outcrop spectrometry measurements (GR-135 spectrometer) confirmed the presence of uranium in association with the target helicopter-borne anomalies. For instance, on an outcrop containing white pegmatite on Tom Dick South, the unit recognized as the host of uranium mineralization showed readings of 1,800 to 2,500 cps. Readings of 2,000 to 10,250 cps were recorded at sites on Hanson West, and 4,800 cps on Hanson Centre.



In 2007, the exploration program on the property consisted essentially of drilling.



From January to March 2007, a 2,614 metres - 32-holes drilling program was completed on Area A, B and C. This is the first program carried by the Company since the staking of the property in 2005 and since the work done by Mont-Laurier Uranium Mines in 1971 and SOQUEM in 1973.



- 22 -



In Area A (Lake Hanson West) the 2007 drilling was aimed at testing this zone on a 100-meter spacing drill grid over 1,000 metres of strike. A series of 28 mostly vertical holes (2,274 metres) were drilled to an average depth of about 81 metres. The key white pegmatite units alternating with granitic gneiss were intersected as expected but the dissemination of uranium-bearing minerals seems greater than expected. Decimetric to metric assayed intervals returned values below 0.05 % U3O8.



In Area B between Hanson West and Tom Dick South, only one hole was drilled and abandoned at 54 metres. Water and logistic problems were encountered.



For the Area C (Tom Dick South) three drill holes totalling 285 metres were completed.  Only minor intersections of decimetric width with grades below 0.02% U3O8 were obtained.



Even with the mixed results of the 2007 drilling program, the property still shows many exploration targets.



APPLE PROPERTY



Mining claims



On August 28, 2007, the Company has acquired 100% the Apple uranium property, wholly owned by Virginia Mines Inc (Virginia) in consideration of 3,250,000 shares of the Company.



The agreement also provides for a 2% NSR royalty payable to Virginia, half of which can be bought back for CAN $1.0 million. The transaction closed on September 6, 2007.



The Apple property consists of 194 mining claims covering 9,928 hectares 80 km southeast of Radisson.



Location and access



The property is located at 75 km southwest of the Radisson airport, in the James Bay area. The property is accessible by a 40 km winter road from km 510 on the paved James Bay road. In summer, the property can be accessed by boat from the Trans-Taïga road.  Please see Figure 1 at page 4 for the general location of the property and the Figure 5 on the next page for location of the claims.



- 23-

[form10ksba31dec07005.jpg]

Figure 5



Uranium potential



The project covers a portion of the Apple Formation, which came to light in the early 1970s with the discovery of several extensive uranium-pyrite matrix, quartz pebble conglomerate zones.



The Apple uranium deposit was in fact discovered in 1971 during an airborne survey. The International Nickel Company of Canada Limited (INCO) and James Bay Development Corporation subsequently conducted an extensive joint exploration program from 1972 to 1975, with INCO as the operator. A total of 65 holes were drilled for a total of 14,000 metres, and the uranium conglomerates were traced over a distance of eight kilometres along an east-west axis.



Exploration work



In the fall of 2007, the Company conducted a helicopter-borne radiometry survey covering the entire property. This survey led to the identification of new radiometry anomalies and confirmed those identified by earlier surveys.



In early January 2008, the Company began construction of a 14-person camp. A 4,000-metre drilling program began in mid-February. Various targets will be tested.



- 24 -

MISTASSINI PROPERTY



On November 26, 2007, the Company signed an agreement in principle to earn a 60% interest in the uranium rights on the Mistassini property owned by Majescor Resources Inc. (Majescor), subject to signature of a definitive option agreement and regulatory approval. Majescor currently owns 100% of the uranium rights and Superior Diamonds Inc. ("Superior Diamonds ") owns 100% of the diamond rights on the Mistassini property, which is located in the Otish Mountains of Quebec, approximately 40 km south-west of the Companys Matoush property.



The proposed option agreement calls for the Company to allow Majescor to contract Major Drilling's heliportable-drill rig, currently leased to the Company, to drill the Lac Mantouchiche showing in November-December 2007 in return for the Company securing a 30-day right of first refusal to enter into an option agreement with Majescor on the property, with the 30-day period to commence upon the Company's receipt of the drill results from Majescor.



Under the option agreement, the Company can earn an undivided 60% interest in the uranium rights on the property by incurring an aggregate of $1.3 million in exploration expenditures over three years. The Company must reimburse Majescor the cost of the drilling program (approx. $250,000) and incur an additional $250,000 in exploration expenses on the property in the first year, for a total first year firm commitment of $500,000. The remaining $800,000 in exploration expenses will be incurred equally in second year and third year.



During the option period, the Company will be the sole operator for all uranium exploration and will have full access to the property. Superior Diamonds will have access to the property to conduct exploration for diamonds and will be the sole operator of all diamond exploration. Superior Diamonds is entitled to a 2.0% Yellow Cake Royalty on the property. The parties agree to finalize a formal joint venture agreement within 90 days of the Company's election to option the property.  The Company elected on February 14, 2008 to enter into this Option Agreement with Majescor.



OTHER PROPERTY



QUéNONISCA PROPERTY  ZN, PB, CU, AG

OPTION TO EARN A 50% INTEREST



The Quénonisca property consists of 33 claims for a total area of 1,799 hectares. It lies 180 kilometres northwest of Chibougamau, Québec, Canada.



On February 26, 1996, Altavista Mines Inc. (Altavista) obtained an exclusive, irrevocable option from SOQUEM to acquire a 50% undivided interest in the Quénonisca property as consideration for exploration work to be carried out under SOQUEMs direction for a total of $75,000, plus an undertaking by Altavista to subsequently finance a minimum of $127,500 in exploration work by February 28, 1997.  In 1997, stripping and drilling were carried out on the property. In 1998, three sulfide occurrences in stockworks were discovered on the Montagnes-Nord grid by SOQUEM.



- 25 -



|           |                      |            |                                |                               
|---------- | -------------------- | ---------- | ------------------------------ | ------------------------------
|Drill Hole | Localisation (m)     | Length (m) | Results                       
|From:      | To:                 
|1187-97-01 | 116.6                | 118.1      | 1.5                            | 0.12% Zn                      
|136.1      | 137.6                | 1.5        | 0.16% Zn                      
|1187-97-02 | 110.5                | 111.1      | 0.6                            | 0.15% Zn, 0.16 g/t Ag         
|113.5      | 114.4                | 0.9        | 0.28% Zn, 2.4 g/t Ag          
|120.4      | 124.9                | 4.5        | 0.20% Zn, 1.2 g/t Ag          
|1187-97-03 | 37.5                 | 38.7       | 1.2                            | 0.25% Zn, 1.9 g/t Ag          
|65.1       | 72.3                 | 7.2        | 0.18% Zn, 2.6 g/t Ag          
|including  |                      |            |                               
|68.1       | 69.6                 | 1.5        | 0.26% Zu, 3.5 g/t Ag, 0.12% Cu
|1187-97-04 | 96.3                 | 98.8       | 2.5                            | 0.34% Zn, 6.0 g/t Ag, 0.17% Pb
|102.4      | 103.5                | 1.1        | 0.32% Zn, 5.9 g/t Ag, 0.57% Pb
|112.0      | 113.5                | 1.5        | 0.21% Zn, 3.0 g/t Ag, 0.13% Pb
|120.8      | 123.8                | 3.0        | 0.19% Zn, 2.3 g/t Ag, 0.12% Pb
|1187-97-05 | 79.4                 | 83.2       | 3.8                            | 1.08% Za, 7.5 g/t Ag, 0.44% Pb
|including  | 81.0                 | 81.9       | 0.9                            | 2.00% Zn, 7.0 g/t Ag, 0.53% Pb
|1187-97-06 | No significant value
|1187-97-07 | 60.9                 | 61.5       | 0.6                            | 6.58 g/t Au                   
|1187-97-08 | 22.1                 | 22.8       | 0.7                            | 0.48 g/tAu                    



In 1999, SOQUEM carried out a linear 19.6 line-kilometre magnetometer and Max-Min survey on the Montagnes-Nord grid. Various conductors were detected by this survey.



In the fall of 2000, SOQUEM conducted a 1,050-metre, eight-hole drilling program in order to test the best conductors detected in 1999. Numerous sections of mineralized cherts were intersected. Several lenses of pyrrhotite-rich massive sulfides were identified. The Company contributed 50% of the total $201,173 program cost for 2000.



No significant work was carried out on the Quénonisca property since 2001. The mining claims have been renewed.



Action Plan



In the coming months, the Company will continue to focus its exploration efforts on exploration and development of its best uranium and metals projects using advanced exploration methods. Based on industry trends and demand, the Company will also consider acquiring new mining properties for exploration. Financing may be required for this purpose in 2008.



The Company foresees drilling expenses of $26M on its properties in 2008 as follows: $22M on the Matoush property, $2.5M on Apple project, $450,000 on Pacific Bay-Matoush, $650,000 on Eclat property and $400,000 on Mistassini property.



Item 3:  Legal proceedings.



There are no legal proceedings pending against the Company.



Item 4: Submission of Matters to a Vote of Security Holders.



There were no new matters submitted to a Vote of Security Holders since the filing of Form 10-QSB as of September 30, 2007.



- 26

-

PART 11



Item 5:

Market for Registrants Common Equity and Related Stockholder Matters

(a)

Market information



CURRENCY AND EXCHANGE RATES



All dollar amounts set forth in this report are in Canadian dollars, except where otherwise indicated.  The following table sets forth (i) the rates of exchange for the Canadian dollar, expressed in the U.S. dollars, in effect at the end of each of the periods indicated; (ii) the average exchange rates in effect on the last day of the end of each such period; (iii) the high and low exchange rate during such periods, in each case based on the noon buying rate in cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York. Prices based on the period January 1 to December 31 yearly, and quoted in U.S. Dollars.



|                           |        |        |       
|-------------------------- | ------ | ------ | ------
|                           | 2007   | 2006   | 2005  
|Rate at end of Period      | 0.9881 | 1.1652 | 1.1656
|Average Rate During Period | 1.0750 | 1.131  | 1.2115
|High Rate                  | 1.1852 | 1.172  | 1.2703
|Low Rate                   | 0.9168 | 1.099  | 1.1507



The high and low exchange rates for each month during the previous six months are as follows:



|          |           |         |          |          |         |         
|--------- | --------- | ------- | -------- | -------- | ------- | --------
|          | September | October | November | December | January | February
|          | 2007      | 2007    | 2007     | 2007     | 2008    | 2008    
|High rate | $1.0546   | $1.0002 | $1.0007  | $1.1838  | $1.0294 | $1.0188 
|Low rate  | $0.9959   | $0.9496 | $0.9168  | $0.9784  | $0.9905 | $0.9717 



On March 10, 2008 the noon buying rate in New York City for cable transfer in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York was$ 1.00 USD=$0.9975CND.



The Companys securities were traded in Canada as Strateco Resources Inc. (RSC) on the Bourse de Montréal Inc. from November 7, 2000 to September 30, 2001, from October 1, 2001 to May 15, 2002 on Canadian Venture Exchange (CDNX) and from May 15, 2002 to June 5, 2007 on TSX Venture Exchange. The Company graduated to the Toronto Stock Exchange on June 6, 2007.



- 27 -

(b) Prior sales of common shares in Canada



Bourse de Montréal Inc.



From November 7, 2000 to September 30, 2001 the Companys shares were listed as Strateco Resources Inc. (RSC) at the Bourse de Montréal  (Montreal Exchange).



|                                      |       |       |          
|------------------------------------- | ----- | ----- | ---------
|                                      | High  | Low   | Volume   
|2000                                  |       |       |          
|November 7, 2000
to December 31, 2000 | $0.40 | $0.11 | 1,458,375
|2001                                  |       |       |          
|First Quarter                         | $0.28 | $0.11 | 646,741  
|Second Quarter                        | $0.25 | $0.12 | 446,125  
|Third Quarter                         | $0.18 | $0.10 | 216,750  



Canadian Venture Exchange (CDNX) now called TSX Venture Exchange



The Companys shares were listed on the Canadian Venture Exchange (CDNX), from October 1, 2001 to May 15, 2002 as Strateco Resources inc. (RSC). Since May 1, 2002 Canadian Venture Exchange (CDNX) is called TSX Venture Exchange.



|               |        |        |          
|-------------- | ------ | ------ | ---------
|               | High   | Low    | Volume   
|2001           |        |        |          
|Fourth Quarter | $0.350 | $0.110 | 1,317,805
|2002           |        |        |          
|First Quarter  | $0.300 | $0.120 | 1,724,608
|Second Quarter | $0.290 | $0.140 | 2,494,500
|Third Quarter  | $0.210 | $0.140 | 704,700  
|Fourth Quarter | $0.190 | $0.120 | 2,227,000
|2003           |        |        |          
|First Quarter  | $0.210 | $0.100 | 3,268,900
|Second Quarter | $0.140 | $0.070 | 1,825,600
|Third Quarter  | $0.155 | $0.090 | 2,908,500
|Fourth Quarter | $0.190 | $0.120 | 7,377,600
|2004           | High   | Low    | Volume   
|First Quarter  | $0.220 | $0.130 | 7,652,400
|Second Quarter | $0.200 | $0.125 | 2,795,600
|Third Quarter  | $0.180 | $0.120 | 1,551,000
|Fourth Quarter | $0.140 | $0.090 | 3,672,200
|2005           |        |        |          
|First Quarter  | $0.145 | $0.075 | 1,613,000
|Second Quarter | $0.150 | $0.070 | 1,682,900
|Third Quarter  | $0.125 | $0.060 | 2,260,400
|Fourth Quarter | $0.195 | $0.075 | 9,092,011





- 28 -



As of June 6, 2007, the Company graduated from the TSX Venture Exchange (TSX-V) to the Toronto Stock Exchange (TSX) under the same symbol RSC.



|                            |        |        |            
|--------------------------- | ------ | ------ | -----------
|2006                        | High   | Low    | Volume     
|First Quarter               | $0.920 | $0.165 | 55,573,549 
|Second Quarter              | $1.800 | $0.880 | 81,566,000 
|Third Quarter               | $1.330 | $0.920 | 28,079,772 
|Fourth Quarter              | $3.120 | $0.700 | 124,821,769
|2007                        | High   | Low    | Volume     
|First Quarter               | $3.890 | $2.170 | 58,241,235 
|Second Quarter              | $4.000 | $2.050 | 46,563,334 
|Third Quarter               | $2.610 | $1.400 | 51,358,227 
|Fourth Quarter              | $3,460 | $2,110 | 39,830,756 
|2008                        | High   | Low    | Volume     
|January 2008                | $3.150 | $2.390 | 13,202,092 
|February 2008               | $2.680 | $2.010 | 10,437,729 
|March 1st to March 10, 2008 | $2.450 | $2.020 | 2,658,712  



On March 10, 2008, the closing bid price of the Common Shares on the TSX was $2.07 per share. The Company is not listed for trading on any securities exchange in the United States, and there has been no active market in the United States for the Common Shares.



Price Fluctuations, Share Price Volatility



Securities markets in Canada have experienced a high level of price and volume volatility in recent years, with many resource companies experiencing wide price fluctuations not necessarily related to operating performance or underlying asset values of such companies. The Companys shares traded between $0.165 and $3.12 during 2006 and between $1.40 and $4.00 during 2007. The Companys shares traded between $1.40 and $2.61 during the third quarter of 2007, between $2.11 and $3.46 during the fourth quarter of 2007 and between $2.01 and $3.15 from January 1, 2008 to March 10, 2008. No assurance can be made that the Companys share price and volume will not continue to fluctuate materially.



(c)

  

Private offerings in Quebec, Canada



During the fourth quarter of the year ending December 31, 2007, the Company did not close any public or private placements in Québec, Canada.. The Company completed only one private placement for financing  in January 2007 and obtained a statutory exemption from the prospectus requirements from the Quebec Securities Commission now called Autorité des marchés financiers in filing required documents pursuant to new Regulation 45-106 in Canada and in obtaining the authorizations from the TSX Venture Exchange for this offering:



|              |                                                        |             |           |                |           |                |         
|------------- | ------------------------------------------------------ | ----------- | --------- | -------------- | --------- | -------------- | --------
|2007-01-31(1) | Accredited Investors through syndicate of underwriters | $25,012,000 | 9.620,000 | $2.60 per unit | 4,810,000 | $3.50          | 09-01-31
|2007-01-31    | Underwriters remuneration options                     |             |           |                | 577,200   | $2.60 per unit | 09-01-31





- 29

 -



(1)

On January 31, 2007, in the context of a private placement with a syndicate of underwriter led by Orion Securities Inc. and including Dundee Securities Corporation, Blackmont Capital and Sprott Securities Inc., the



Company has sold 9,620,000 units at $2.60 per unit. Each unit consists of a common share and half of one warrant. The Company has issued 9,620,000 common shares and a total of 4,810,000 warrants for total proceeds of $25,012,000. Each whole warrant entitles its holder to purchase one common share at $3.50 for a 24-month period following the closing date. As part of the private placement, the underwriters received a cash fee equal to 6% of the gross proceeds of the financing ($1,500,720). The underwriters also received remuneration options equal to 6% of the total number of units sold under the offering (577,200 units). Each remuneration option enables the underwriters to purchase one unit at the issue price until January 31, 2009.



At any time after June 1, 2007, the Company may notify holders of warrants and remuneration options of its intention to force the exercise of warrants and remuneration options should its shares trade on the TSX Venture Exchange at a price equal to or greater than $4.50 per share for a period of 20 consecutive trading days. The net proceeds of the private placement will be used to finance additional exploration work on the Companys Matoush Apple, Mont-Laurier project and other properties in Québec and for general working capital purposes.



Agreements to issue securities for acquisition of mining properties



On July 2007, the Company issued 200,000 common shares pursuant to the Option Agreement with Vija Corporation for the acquisition of a 100% interest in Eclat Property.



On August 28, 2007, the Company has acquired 100% of the Apple uranium property, wholly owned by Virginia Mines Inc. (Virginia), in consideration of issuance of 3,250,000 Companys common shares. The Apple property consists of 194 mining claims covering 9,928 hectares 80 km southeast of Radisson.



The agreement also provides for a 2% NSR royalty payable to Virginia, half of which can be bought back for  $1.M. The transaction closed on September 6, 2007.



On October 29, 2007, the Company entered into an agreement in principle with Consolidated Pacific Bay Minerals Ltd. (Pacific Bay) allowing the Company to earn a 60% interest in 277 mining claims owned by located in the Matoush District of Québec's Otish Mountains (the Property). The agreement was subject to the completion of a definitive option agreement and regulatory approval that took place on January 14, 2008. It calls for the Company to pay Pacific Bay a total of $500,000, issue 200,000 Strateco shares and incur $3 million in exploration expenditures over four years, including a minimum of 10,000 meters of drilling. As part of the transaction, the Company acquired one million units of Pacific Bay at a price of $0.30 per unit on January 14, 2008. Each unit consists of one common share and one warrant to purchase a common share at $0.60 per share for a period of 24 months.



These private placements are exempted from registration in the United States pursuant to sections 4 (2) and 5 of the Securities Act 1933.



(d) Public offering in Quebec, Canada



The Company did not realize any public offering in 2007.





- 30 -

(e) Use of proceeds



The proceeds of the private placements during the period consisted of non flow-through proceeds realized in the year 2006, in the remaining amount of $9,242,201 as of January 1, 2007 and in the year 2007 in the amount of $30,756,550 that includes the sums obtained from the exercise of stock options and warrants. Part of this sum has been used in the last quarter of the period of the following manner: $4,179,258 has been spent on exploration of Matoush, Mont-Laurier Uranium, Eclat Property, Apple property and Pacific Bay-Matoush property and $298,308 on working capital expenses. The Company anticipates possibly using the proceeds for another project if the results obtained do not justify further expenses and the Company reserves the right to reallocate the use of proceeds as it deems appropriate in the best interests of the Company and its shareholders.



The Company conducted during the last quarter of 2007 exploration works on Matoush Property in the amount of $3,472,826 representing 11.90 % of the issuers net offering proceeds in the approximate amount of $29,187,530. A summary of exploration works conducted during this reporting period on the Matoush Property can be consulted in the sections Report to Shareholders and Management Discussion and Analysis of Financial Position in PART 1.



The Company also spent during that period exploration related expenses in the amount of $340,330, on Eclat Property and $2,561 on Mont-Laurier Property, $77,002 on Apple property and $286,539 on Pacific Bay-Matoush property representing each less than 5 % of the issuers net offering proceeds.



The Company paid payments in the last quarter to independent directors fixed fees for their presence to the Board of Directors Meetings and Audit committee meetings in the amount of $4,900 for a total amount during the year of $19,800 (See Item 10 Executive Compensation for U.S. dollar amounts and details).



(f) Holders



As of March 10, 2008, the Company has no holder of debentures and had 63 holders of record of which 17 are registered holders in the United States. Depository Trust Company (DTC) is holder of record in the United States and represents an unidentified numbers of holders residing in the United States of America holding according to Computershare of Canada, approximately 1,600,000 common shares or 0.90% of the shares capital of the Company. The Company has 41 registered holders in Canada holding 99% of the shares capital of the Company. The Company has 5 registered holders in other countries.

(g) Dividends



The Company has not paid any dividends since its incorporation and does not anticipate as of March 10, 2008, the payment of dividends in the foreseeable future. At present, the Companys policy is to retain earnings, if any, to finance exploration on its properties. The payment of dividends in the future will depend upon, among other factors, of the Companys earnings, capital requirements and operating financial conditions.





- 31





(h) Equity compensation plan information as at December 31, 2007



|                                                                         |                                                                                             |                                                                            |                                                                                                                                           
|------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------
|Plan Category                                                            | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighed-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a))
|Stock option plan
Equity compensation plans approved by security holders | 2,106,500                                                                                   | $2.32                                                                      | 5,703,586                                                                                                                                 
|Equity compensation plans not approved by security holders               | N.A.                                                                                        | N.A.                                                                       | N.A.                                                                                                                                      
|Total:                                                                   | 2,106,500                                                                                   | $2.32                                                                      | 5,703,586                                                                                                                                 



Item 6.  Managements Discussion and Analysis of Financial Condition and Results of Operation



(a) Plan of operation



The Company believes it can satisfy its cash requirements through December 31, 2008 since it completed four private offerings in the provinces of in Canada and in other foreign countries in 2006 with a remaining balance



available remaining as of January 1st, 2007 in the amount of $9,242,200. Furthermore on January 31, 2007, the Company obtained financing in the amount of $25,012,000. Of these sums, $26M will be used to fund exploration commitments through to December 31, 2008.



As discussed in the Property section, the Company foresees drilling expenses on its property in 2008 as follows: $22M on the Matoush property, $2.5M on Apple project, $450,000 on Pacific Bay-Matoush, $650,000 on Eclat property and $400,000 on Mistassini property.



For 2008, the Company will concentrate its efforts on the uranium exploration sectors in Canada. The Company is already engaged in and will continue during this period exploration works on Matoush, Eclat, Mont-Laurier Uranium, Pacific Bay-Matoush and Apple properties. Following the industry trends and demands, the Company is also considering the acquisition of properties to conduct exploration works. To that end, a new public offering in Quebec, Canada, might be needed and completed during that period.



At December 31, 2007, the Company also obtained $171,050 from the exercise of 320,500 stock options and,  $5,573,500 from the exercise of 4,404,000 warrants to purchase for an amount additional applicable to working capital of $5,744,550.



The Company does not expect any changes or more hiring of employees since the contracts are given to consultants and sub-contractors specialized in specific fields of expertise for the exploration works.



(b) Managements Discussion and Analysis of Financial Condition and Results of Operations.



Scope of Managements Financial Analysis



The following analysis should be read in conjunction with the Companys audited consolidated financial statements and notes thereto for the years ended December 31, 2007 and 2006. The financial statements were prepared in accordance with Canadian generally accepted accounting principles (GAAP) except for Note 18 that reflects the effect of applying United States generally accepted accounting principles (U.S. GAAP)





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Forward-Looking Statements



This document may contain forward-looking statements that reflect managements current expectations with regard to future events. Such forward-looking statements are subject to certain factors and involve a number of risks and uncertainties. Actual results may differ from expected results. Factors that could cause our results, our operations and future events to change materially compared to the expectations expressed or implied by such forward-looking statements include, but are not limited to, volatility in the gold price, risks inherent to the mining industry, uncertainty regarding the mineral resource estimation and additional funding requirements and the Companys ability to obtain such funding.



Selected Annual Information



Selected financial information for the years ended December 31, 2007, 2006 and 2005 is shown in the following table:



|                                      |            |            |           
|------------------------------------- | ---------- | ---------- | ----------
|                                      | 31-12-2007 | 31-12-2006 | 31-12-2005
|                                      | $          | $          | $         
|Total income                          | 963,895    | 264,008    | 2,246     
|General and administrative expenses   | 3,091,795  | 1,675,854  | 639,050   
|Loss before write-down                | 522,579    | 1,411,846  | 636,804   
|Net loss                              | 522,579    | 2,251,590  | 823,224   
|Net loss per share, basic and diluted | 0.01       | 0.03       | 0.02      
|Current assets                        | 28,884,998 | 11,561,056 | 1,383,442 
|Total assets                          | 52,744,147 | 15,270,641 | 4,731,443 
|Current liabilities                   | 1,162,814  | 1,555,924  | 700,951   
|Working capital                       | 27,722,184 | 10,005,132 | 682,491   
|Shareholders equity                  | 50,377,333 | 13,714,717 | 4,006,092 



As at December 31, 2007, the Company had total assets of $52,744,147 compared to $15,270,641 in 2006. This change in total assets was mainly due to an increase of over $28 million in working capital, the acquisition of 100% of the Apple property in consideration of over $8 million in shares, a $10 million increase in deferred expenditures and the acquisition of $465,000 in fixed assets.



Dividend Policy



The Company has not declared any cash dividend on its outstanding common shares since incorporation. Any dividend payment will depend on the Companys financial requirements for its exploration programs, its level of growth and other factors deemed pertinent by the Board of Directors under the circumstances. It is unlikely that a dividend will be paid in the foreseeable future.



Exploration Activities



The technical data in this text that is summarized from a technical report on the Matoush Property dated September 27, 2007 and complies with National Instrument 43-101 on standards of disclosure for mineral projects (NI 43-101), was reviewed by Mr David A. Ross, M.Sc. P.Geo of Scott Wilson Roscoe Postle & Associates (Scott Wilson RPA), who is a qualified person as defined in NI 43-101. Exploration expenses for the year ended December 31, 2007 totalled $18,763,939 ($4,715,754 in 2006). Expenses for the past year were higher than in 2006 as the Company carried out more exploration and development work on its properties. The Matoush property was the most active, with a total of $17,655,159 in exploration.



The Company incurred allowable exploration expenses of $18,763,939 during the year and therefore qualifies for Québec refundable tax credit related to resources of up to 38.75% and a credit on duties refundable from Québec of 12% of all eligible exploration expenses. The estimated value of such credits receivable as at December 31, 2007 is $8,664,000.





-

33

 



Projects and New Acquisitions



As at December 31, 2007, the Company had a portfolio of four wholly-owned mining properties and interests or options on three mining properties in Québec covering more than 47,633 hectares.



On August 28, 2007, Strateco announced that it had increased its uranium assets with the signature of a formal letter of intent with Virginia Mines Inc. (Virginia) on the Apple property in the James Bay region of northern Québec.



Under the agreement, Strateco acquired 100% interest of the Apple uranium property, wholly owned by Virginia, in consideration of 3,250,000 shares of Strateco. The agreement also provides for a 2% NSR royalty payable to Virginia, half of which can be bought back for $1.0 million. The transaction closed on September 6, 2007.



The Apple property consists of 194 mining claims covering 9,928 hectares, 80 km southeast of Radisson. The property is accessible by a 40 km winter road from km 510 on the paved James Bay road. In summer, the property can be accessed by boat from the Trans-Taïga road.



The project covers a portion of the Apple Formation, which came to light in the early 1970s with the discovery of several extensive uranium-pyrite matrix, quartz pebble conglomerate zones.



The Apple uranium deposit was in fact discovered in 1971 during an airborne survey. The International Nickel Company of Canada Limited (INCO) and James Bay Development Corporation subsequently conducted an extensive joint exploration program from 1972 to 1975, with INCO as the operator. A total of 65 holes were drilled for a total of 14,000 metres, and the uranium conglomerates were traced over a distance of eight kilometres along an East-West axis.



On October 29, 2007, the Company announced the execution of an agreement in principle allowing Strateco to earn a 60% interest in 277 mining claims of the Pacific Bay-Matoush property owned by Consolidated Pacific Bay Minerals Ltd. (Pacific Bay) located in the Matoush District of Québec's Otish Mountains (the Property). The agreement is subject to the completion of a definitive option agreement and regulatory approval. It calls for Strateco to pay Pacific Bay a total of $500,000, issue 200,000 Strateco shares and incur $3 million in exploration expenditures over four years, including a minimum of 10,000 meters of drilling. As part of the transaction, Strateco has acquired, on January 15, 2008, one million units of Pacific Bay at a price of $0.30 per unit. Each unit consists of one common share and one warrant to purchase a common share at $0.60 per share for a period of 24 months.



As of October 29, 2007, Strateco assumed direction of exploration activities on the property, including supervision of the drilling program recently announced by Pacific Bay. Strateco began drilling on the property and is working closely with Pacific Bay field personnel to maximize the value of the exploration programs still underway.  The property covers an area of 145 square kilometres (56 square miles) in the Otish Mountains, where Strateco has been drilling the Matoush high-grade uranium orebody originally discovered by Uranerz Exploration and Mining in the 1980's.



On November 26, 2007, the Company signed an agreement in principle to earn a 60% interest in the uranium rights on the Mistassini property owned by Majescor Resources Inc. (Majescor), subject to signature of a definitive option agreement and regulatory approval. Majescor currently owns 100% of the uranium rights and Superior Diamonds Inc. ("Superior Diamonds ") owns 100% of the diamond rights on the Mistassini property, which is located in the Otish Mountains of Québec, approximately 40 km south-west of Stratecos Matoush property.



The proposed option agreement calls for Strateco to allow Majescor to contract Major Drilling's heliportable-drill rig, leased to Strateco, to drill the Lac Mantouchiche showing in November-December 2007. In return, the Company has exercised its 30-day right of first refusal (RFR), on January 14, 2008, to enter into an option agreement with Majescor on the property, with the 30-day period to commence upon Strateco's receipt of the drill results from Majescor.





- 34 -



Under the option agreement, Strateco can earn an undivided 60% interest in the uranium rights on the property by incurring an aggregate of $1.3 million in exploration expenditures over three years. Strateco must reimburse Majescor the cost of the drilling program (approx. $250,000) and incur an additional $250,000 in exploration expenses on the property in the first year, for a total first year firm commitment of $500,000. The remaining $800,000 in exploration expenses will be incurred equally in second year and third year.



During the option period, Strateco will be the sole operator for all uranium exploration and will have full access to the property. Superior Diamonds will have access to the property to conduct exploration for diamonds and will be the sole operator of all diamond exploration. Superior Diamonds is entitled to a 2.0% Yellowcake Royalty on the property. The parties agree to finalize a formal joint venture agreement within 90 days of Strateco's election to option the property.



Operating Results



The Company posted a net loss of $522,579 for 2007 compared to a net loss of $2,251,590 for 2006 since the interest income for the current year amounted to $963,895 compared to

restated

 $264,008 in 2006. During the Fourth quarter, the Company posted earnings of $1,525,034 due to income tax savings arising from the loss and share issue costs for the fourth quarter of the year, compared to a net loss of $1,092,509 for the fourth quarter of last year. These earnings were mainly due to decrease of $148,000 in investor relations expenses, $49,000 in share issue costs and $1,605,321 in future income taxes.



General and administrative expenses were in the order of $3,091,795 compared to an average of $1,802,233 for the last three years.



Operating costs were strongly affected by the following factors: 1) the increase in the Companys operating and marketing activities since 2006, resulting in higher travel, investor relations and office expenses and a $100,000 donation to Fonds Restor-Action-Nunavik; 2) higher listing and registrar fees related to listing of the shares on the Toronto Stock Exchange (TSX); and 3) charges related to stock options, which represent a substantial portion of general and administrative expenses.



The Company benefited from an increase in cash obtained from common shares issuance in the amount of $30,701,350 in the year 2007. This amount represents the aggregate sum of a private financing of $25,012,000,

Item 5 ( c ) Private Offerings in Quebec, Canada

and the sums obtained from the exercise of stock options  in the amount of $171,050 and from the exercise of warrants in the amount of  $5,573,500 as discussed in this

Item 6. (a) Plan of Operation

 and in

Financial Statements, Note 7: Warrants

 and in

Financial Statements, Note 8: Stock Option Plan

.. These additional amounts generated higher cash and cash equivalents. As a consequence, the Company increased deferred exploration expenditures in the year 2007 in the amount of $

18,763,939compared to an amount of $

4,715,754in the year 2006 and received credits for duties and other related exploration credits in Canada of ($8,664,378) in the year 2007 compared to credits of ($1,472,454) for the year 2006.



The Company has no sales as it has no producing properties.



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Quarterly Financial Information



The following table contains selected financial information for the last eight quarters.

|                                                              |             |            |            |            |            |            |            |           
|------------------------------------------------------------- | ----------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
|                                                              | 31-12-2007  | 30-09-2007 | 30-06-2007 | 31-03-2007 | 31-12-2006 | 30-09-2006 | 30-06-2006 | 31-03-2006
|                                                              | $           | $          | $          | $          | $          | $          | $          | $         
|Total income                                                  | 218,021     | 232,777    | 269,484    | 243,613    | 114,002    | 111,752    | 30,798     | 7,456     
|General and administrative expenses                           | 298,308     | 339,047    | 1,651,913  | 802,527    | 433,312    | 321,625    | 514,689    | 406,228   
|Loss (benefit) before write-down and Stock-based compensation | (1,525,034) | 106,270    | 416,063    | 147,931    | 1,038,324  | 209,873    | 440,621    | 251,687   
|Net loss (Net benefit)                                        | (1,525,034) | 106,270    | 1,382,429  | 558,914    | 1,092,509  | 274,118    | 483,891    | 401,072   
|Net loss per share, basic and diluted                         | 0.01        | 0.02       | 0.02       | 0.01       | 0.01       | 0.00       | 0.01       | 0.01      
|Current assets                                                | 28,884,998  | 26,939,926 | 29,634,886 | 31,761,695 | 11,561,056 | 11,023,525 | 10,250,315 | 1,849,130 
|Total assets                                                  | 52,744,147  | 45,543,398 | 39,712,848 | 38,686,899 | 15,270,641 | 13,983,050 | 15,655,580 | 5,888,754 
|Current liabilities                                           | 1,162,814   | 1,353,849  | 1,568,029  | 1,417,067  | 1,555,924  | 523,851    | 560,294    | 372,174   
|Working capital                                               | 27,722,184  | 25,586,077 | 28,066,857 | 30,344,628 | 10,005,132 | 10,499,674 | 9,690,021  | 1,476,956 
|Shareholders' equity                                          | 50,377,333  | 44,189,549 | 38,144,819 | 37,269,832 | 13,714,717 | 13,434,799 | 15,070,886 | 5,492,180 



Discussion of Quarterly Financial Information



In the last eight quarters, general and administrative expenses and losses before write-downs and stock-based compensation expenses have averaged $595,956 and $239,873.



Operating costs have been strongly affected by the following factors: 1) the increase in the Companys operating and marketing activities since 2006, resulting in higher travel, investor relations and office expenses and a $100,000 donation to Fonds Restor-Action-Nunavik; 2) higher listing and registrar fees related to listing of the shares on the Toronto Stock Exchange (TSX); and 3) charges related to stock options, which represent a substantial portion of general and administrative expenses.



Taking the above into account, on average it costs $300,000 per quarter to run the Company, less non-recurring expenses like stock-based compensation, registrar expenses related to listing the Company on the Toronto Stock Exchange (TSX) and the Fonds Restor-Action-Nunavik donation. Of this amount, $160,000 per quarter represents consultants fees, legal expenses, investor relations expenses and rent payable to a company of which Guy Hébert, a director of the Company, is also a director (See Note 13, Related-Party Transactions for more details).



Fourth Quarter Performance



The Company posted earnings of $1,525,034 due to income tax savings arising from the loss and share issue costs for the fourth quarter of the year, compared to a net loss of $1,092,509 for the fourth quarter of last year. These earnings were mainly due to decrease of $148,000 in investor relations expenses, $49,000 in share issue costs and $1,605,321 in future income taxes.



Cash Assets



The Companys working capital stood at $27,722,184 at year end, up from $10,005,132 at the beginning of the year. This increase was mainly due to a private placement completed during the year for proceeds of $25,012,000 and the exercise of stock options for a total of $171,050 and of warrants for a total of $5,573,500. These funds will be used to carry out the exploration programs planned for 2008. The term deposits are not exposed to asset-backed commercial paper.



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During the fourth quarter, warrants were exercised for a total of $4,660,950. Stock options were also exercised for an amount of $1,800. The Company issued 3,418,300 common shares.



Sources of Financing



During the year, the Company completed a private placement completed for a total of $25,012,000 and raised funds of $171,050 through the exercise of stock options and $5,573,500 through the exercise of warrants. The Company issued 17,794,500 common shares for a total of $37,502,050, including 3,450,000 common shares issued in consideration of mining properties valued at $6,745,500.



Off Balance-Sheet Arrangements



The Company does not have any off balance-sheet arrangements.



Related-Party Transactions



The Company conducted the following transactions with a company of which Guy Hébert, an officer and director of the Company, is also an officer and director.



The fees to be paid to this company are equivalent to the compensation that the Company would otherwise pay to an unrelated third party.



|                                                                             |   |           |   |        
|---------------------------------------------------------------------------- | - | --------- | - | -------
|                                                                             |   | 2007      |   | 2006   
|Expenses capitalized in the statement of deferred expenditures               |   |           |   |        
|Consultants and subcontractors                                               | $ | 1,145,000 | $ | 197,000
|Management fees(1)                                                           | $ | 1,823,000 | $ | 583,000
|General and administrative expenses in the statement of earnings and deficit |   |           |   |        
|Professional fees                                                            | $ | 367,000   | $ | 228,000
|Legal expenses                                                               | $ | 68,000    | $ | 61,000 
|Investor relations                                                           | $ | 168,000   | $ | 123,000
|Rent                                                                         | $ | 40,000    | $ | 39,000 
|Share issue costs charged against capital stock                              | $ | 23,000    | $ | 57,000 



(1)As provided for in the services agreement, management fees represent 15% of first quarter exploration expenses. As of April 1st, 2007, a management fee of 10% is applied to exploration expenses and 5% to purchases.



Accounting Value of Mining Properties



At the end of each year, work is assessed to determine the future potential of each property. This assessment did not result in any write-downs in 2007.



Financial Instruments



Fair Value



Cash and temporary investments, term deposits, receivable subscriptions, tax credits receivable, deposits on exploration work and accounts payable and accrued charges are financial instruments whose fair values approximate their carrying values due to their short-term maturities or the prevailing market rates.



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Interest Rate Risk



At December 31, 2007 and 2006, the Companys exposure to interest rate risk is as follows:



·Cash and cash equivalents – variable interest rate

·Amounts receivable – interest free

·Amounts payable – interest free



In management’s opinion, the Company was not exposed to any interest rate risk as at December 31, 2007.



Outstanding Share Data



The Company is authorized to issue an unlimited number of common shares without par value.



The Company had 114,167,867 shares issued and outstanding at December 31, 2007 (96,373,367 at December 31, 2006) for a value of $54,208,910 ($18,962,859 at December 31, 2006).



Risks and Uncertainties

Exploration and Mining



The Company is at an exploration stage. Exploration and mining activities are subject to a high level of risk. Few exploration properties reach the production stage. Unusual or unexpected formations, fires, power failures, labour conflicts, floods, rockbursts, subsidence, landslides and the inability to locate the appropriate or adequate manpower, machinery or equipment are all risks associated with mining activities and the execution of exploration programs.



The development of resource properties is subject to many factors, including the cost of mining, variations in the material mined, fluctuations in the commodities and exchange markets, the cost of processing equipment and other factors such as aboriginal claims, government regulations including in particular regulations on royalties, authorized production, importation and exportation of natural resources and environmental protection. Depending on the price of the natural resources produced, the Company may decide not to undertake or continue commercial production.. Most exploration projects do not result in the discovery of ore.



The probability of an individual prospect ever having reserves that meet the requirements of Industry Guide 7 is extremely remote in all probability the properties do not contain any reserves and any funds spent on exploration will probably be lost.



Even if the Company completes the current exploration program and it is successful in identifying a mineral deposit, the Company will have to spend substantial funds on further drilling and engineering studies before the Company knows if it has a commercially viable mineral deposit, a reserve.



Environmental and Other Regulations



Current, possible or future environmental legislation, regulations and measures may entail unforeseeable additional cost, capital expenditures, restrictions or delays in the Companys activities. The requirements of the environmental regulations and standards are constantly re-evaluated and may be considerably increased, which could seriously hamper the Company or its ability to develop its properties economically. Before a property can enter into production, the Company must obtain regulatory and environmental approvals. There can be no assurance that such approvals will be obtained or that they will be obtained in a timely manner. The cost related to assessing changes in government regulations may reduce the profitability of the operation or altogether prevent a property from being developed. The Company considers that it is in material compliance with the existing environmental legislation.





- 38 -



Financing and Development



The Company has incurred losses to date and does not presently have the financial resources required to finance its planned exploration and development programs. Development of the Companys properties therefore depends on its ability to obtain the additional financing required. There can be no assurance that the Company will succeed in obtaining the required funding. Failure to do so may lead to substantial dilution of its interests (existing or proposed) in its properties. Furthermore, the Company has limited experience in developing a resource property, and its ability to do so depends on the use of experienced people or in the signature of agreements with major resource companies that can produce such expertise.

Commodities Prices



The market for uranium, gold, diamond, base metals or other mineral discovered can be affected by factors beyond the Companys control. Commodities prices have fluctuated widely, particularly in recent years. The impact of these factors cannot be accurately predicted.



Uninsured Risks



The Company could become liable for subsidence, pollution and other risks against which it cannot insure itself or chooses not to insure itself due to the high cost of premiums or for some other reason. Payment of such liabilities could decrease or even eliminate the funds available for exploration and mining activities.



Information Disclosure Controls and Procedures



Company management, including the president and chief financial officer, participated in an assessment of the effectiveness of information disclosure controls and procedures for the year ended December 31, 2007. Based on this assessment, the president and chief financial officer have concluded that such controls and procedures were effective and reliable at the end of the financial year ended December 31, 2007, and were applied in such a way as to provide reasonable assurance that material information on the Company was adequately disclosed.



The management can confirm that there has been no changes concerning the internal control over financial reporting during the exercise ended on December 31, 2007 that is reasonably likely to materially affect on the internal control over financial reporting.



Additional Information and Continuous Disclosure



This management discussion and analysis is dated March 7, 2008 and complies with Canadian Securities Administrators National Instrument 51-102A on continuous disclosure.The purpose of this management discussion and analysis is to help the reader understand and assess the material changes and trends in the Companys results and financial position. It presents managements perspective on the Companys current and past activities and financial results, as well as an outlook of activities planned for the coming months. The Company regularly discloses additional information through press releases and financial statements filed on the Strateco (www.stratecoinc.com), SEDAR (www.sedar.com) and EDGAR (www.sec.gov/edgar.shtml) websites.













(Signed) Guy Hébert

(Signed) Pauline Comtois



Guy Hébert,

Pauline Comtois,



President and Chief Executive Officer

Chief Financial Officer





- 39 -



(c) Legal proceedings



None of the directors and executive officers mentioned above in ITEM 5 has been involved in the following legal proceedings in the last five years:



1.  None of the directors and executive officers has been involved in any bankruptcy petition filed by or against any business of which a director or executive officer was a general partner or executive officer either at the time of bankruptcy or within two years prior to that time;



2.  None of the directors or executive officers of the Company has been subject to any conviction in a criminal proceeding or is being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);



3.  None of the directors or executive officers of the Company has been 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; and



4.  None of the directors or executive officers of the Company has been 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 8A Controls and Procedures



The Companys management, including the Chief Executive Officer, Mr. Guy Hébert, President, and an extern consultant, the Chief Financial Officer, Mrs. Pauline Comtois, Certified General Accountant (CGA), have conducted an evaluation regarding the effectiveness of disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 (e) as of the end of the period covered by the report, based on the evaluation of these controls and procedures required by paragraph (b) of §240.13a-15. The Chief Executive Officer and the Chief Financial Officer concluded that the disclosure controls and procedures are effective.



Managements annual report on internal control over financial reporting of the small business issuer



The Companys management, including the Chief Executive Officer, Mr. Guy Hébert, President, and the Chief Financial Officer, Mrs. Pauline Comtois, Certified General Accountant (CGA), is responsible for establishing and maintaining adequate internal control over financial reporting for the Company;



The management use the following framework to evaluate the effectiveness of the Companys internal control over financial reporting as required by paragraph ( c ) of §240.13a-15 or §240.15s-15:



The management relied on the interpretive guidance issued by U.S. Securities and Exchange Commission in Release 34-55929 and Rule 13 (a) -15 ( c ) under the Securities Exchange Act of 1934 to identify a framework suitable for managements evaluation of the Internal Controls over Financial Reporting (ICFR). The Company first identified the risks to reliable financial reporting or material misstatement including the one related to related parties transactions with BBH Géo-Management for which the sole officer and director is also a director and officer of the Company.



The Company evaluated that the existing controls established in a document entitled Internal Controls of Purchases and Expenses Cycle joined as

Exhibit 99

 addressed those risks.



The management with the participation of the principal executive and financial officers evaluated the effectiveness of the Companys internal control over financial reporting on an on-going monitoring of activities and by direct testing as of the end of the fiscal year.



- 40 -



The framework on which managements evaluation of the Companys internal control over financial reporting is based is a suitable control framework based on top-down approach for expenditures and purchases and an entity-level approach for transactions with related party.



After evaluation of evidence, the Management did not find any deficiency that could constitute a material weakness in the Companys internal controls of financial reporting. Even if the financial statements for the year ending December 31, 2006 have been in part restated in reason of an error at to the provincial tax rate applicable for future incomes (see

Note 9 to Financial Statements

), this error in financial reporting was not the consequence of a deficiency in the internal controls of the Company on financial reporting.



The Board of Directors with recommendation of the audit committee approves the project and budget for exploration programs. An internal control on three levels of authorization and verification is in place for each purchase order, each check issued in payment of invoices and each entry into the books of the Company on a daily basis. Each check that is issued requires two signatures from authorized representatives.



Each financing and its costs and each issuance of shares either related to a financing or to the stock options plan is authorized by the Board of Directors and has to be reported in details to each Securities Commission for which the Company is a reporting issuer and must be published in press releases.



The internal procedures for the financial information within the Company with organizational charts are written in a pamphlet that has been approved by the Board of Directors and the Audit Committee.



The Management proceeded throughout the year to the verification and evaluation of the Companys internal control over financial reporting in verifying the operations described in the pamphlet such as the established process for monitoring of signature of checks, numerical order of checks, issuance of purchase orders, invoices auditing, approval of expenses, distribution of expenses in conformity with the budget of operations and confidential information of documents. As to the verification of the financial information itself the Management analysed the expenses posts and the expenses fluctuations.



Following a sample evaluation, the Management can conclude that the internal control is effective, the persons who are responsible apply effectively and vigorously their functions. In taking into account the small number of persons involved, the internal control of financial information is executed in a way so to provide a reasonable assurance that the controls are operating effectively.



The registered public accounting firm that audited the financial statement included in the annual report did not have to issue an attestation report on the Companys internal control over financial reporting pursuant to Regulation SB Item 308T (a) (4).



This annual report does not include an attestation report of the companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the companys registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits the company to provide only managements report in this annual report.



Changes in internal control over financial reporting.



The Companys management assessment of the effectiveness of the Companys internal control over financial reporting as of the end of the Companys most recent fiscal year the Chief Financial Officer, Mrs. Pauline Comtois, CGA, did not identify during the last fiscal year any material weakness in the framework to evaluate the internal control over financing and concluded that the Companys internal control over financial reporting are effective.



The Companys management did not identify any changes in the Companys internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of §240.13a-15 or §240.15s-15 of this chapter that occurred during the fourth fiscal quarter that has materially affected or is reasonably likely to materially affect the Companys internal control over financial reporting.



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Item 9. Directors and Executive Officers, Promoters and Control persons; Compliance with section 16 (a) of the Exchange Act



The Company incorporates herein by reference  the Management Information Circular dated May 10, 2007 filed as

Exhibit 22

 with

the Form 10-QSB



for the period ending

June

 30, 2007 at pages 12, 13, 14 and 16

.. The Management addressed the independence of directors on the Audit Committee. Mr. Marcel Bergeron, director who replaced Mrs. Francine Bélanger who deceased in November 2006,  is the director seating at the Audit Committee  considered Financial Expert pursuant to Item 407(d)(5) of Regulation S-B . As explained in the Management Information Circular, Mr. Bergeron is not considered an independent director according to Quebec Securities Regulations since he was an associate of the Companys Auditors  firm in charge of the Companys file until June 2006 and will not be considered independent until June 2009. However, Mr. Bergeron benefits from a statutory dispense   to remain on the Audit Committee  pursuant to

Quebec Regulation 52-110

..



At March 10, 2008, the Board of Directors consists of six directors who will serve until the next annual meeting and until they are re-elected or their successors will be elected. This Annual meeting will be held on June 10 at 10.30 a.m. at Fairmount Hotel The Queen Elizabeth Richelieu Room 900 René-Lévesque Blvd. West Montréal, Québec, H3B 4A5 Canada



On February 18, 2004, the Board of directors adopted a Code of ethics. This Code of Ethics can be consulted on the Companys website at www.stratecoinc.com. And any interested person can receive copy of this Code of ethics without charge in addressing its request to the Companys head office mentioned on the Title page of this annual report.

(a) Directors and executive officers



The board of directors of the Company is a multidisciplinary team with recognized practical experience in various fields of activity that enables them to practice good corporate management. The members of the board are:



Guy Hébert  President, Chief executive officer of the Company and director

Jean-Pierre Lachance  Executive Vice President of the Company and director

Jean-Guy Masse  President, Masvil Capital Inc., director and member of the Audit Committee

Robert Desjardins President,

 

Robert G. Desjardins & Associates Inc., director and member of the Audit Committee

Henri Lanctôt  Secretary and Director

Marcel Bergeron, CA Director and member of the Audit Committee



The mandate of the directors will expire at the date of the next Annual Assembly of shareholders unless they are elected at that time for a new mandate.



Mr. Guy Hébert has been President of BBH Géo-Management Inc. since October 1992.  Mr. Hebert has been a director Chief executive officer and President of the Company since April 13, 2000. He was also President of Lyon Lake Mines Ltd. from 1986 to 2001. From 1985 to 1992, he was President and Chief Executive Officer of Audrey Resources Inc. Mr. Hébert was also a director of Orleans Resources Inc. from 1993 to 1998 and President and Chief Executive Officer of Altavista Mines Inc. from 1995 to 2000.



Mr. Jean-Pierre Lachance is Executive Vice President of the Company. He has been a director of the Company since April 13, 2000. He has also been the president of Novontar S.A. from 1996 to 2002. He was also Vice President of Lyon Lake Mines Ltd. from 1996 to 2001, becoming Executive Vice President in May 1999. He has also been the president of Novontar S.A. from 1996 to 2002. From 1992 to 1994, he was a freelance consultant, and from 1991 to 1992 he was Technical Director of Corpomin Management Inc. From 1989 to 1991 he was Expert Co-coordinator with Consortium Sidam-Minorex, and prior to that he was Project Manager, Mines and Geology Division with Groupe-Conseil Roche Ltd.







- 42 -



Mr. Jean-Guy Masse is President of Northern Precious Metals Funds Inc. since 2003 and is President of Masvil Capital Inc. since 1992. He has been President of the Board of Directors of Metco Resources Inc. from 1999 to 2003 and President of Orléans Resources Inc. from 1992 to 1998. He was previously Executive Vice-President of Dundee Capital Inc. and President and Chief Executive Officer of CMP Fund Management Ltd. from 1984 to 1992. Mr. Masse is also a director of mining companies listed on the TSX Venture Exchange. Mr. Masse holds a B.Sc. A. from the École Polytechniqueof Montreal and an M. Sc from Stanford University, California U.S.A. He is a CFA and member of the Association since September 1975.



Mr. Robert Desjardins holds a Bachelors Degree in Commerce from the École des Hautes Études Commercialesand is a member of the Corporation des Administrateurs Agréés du Québec. Since 1989, Mr. Desjardins has been President of Robert G. Desjardins & Associates Inc., a firm specializing in corporate finance and the development of financial products. He is director of the Company since October 30, 2001.



Mr. Henri Lanctôt was appointed director on January 24, 2007 further to the resignation of Mr. Claude Hubert on January 18, 2007 and elected at the annual and special Meeting of shareholders.  Mr. Henri Lanctôt is a partner of Gowling Lafleur Henderson LLP and was admitted to the Quebec Bar in 1968 after graduating in 1967 from the Faculty of Law of the University of Montreal.  In 1984, Mr. Henri Lanctôt joined Lafleur Brown, the law firm that merged with Gowlings on July 1st, 2000.



Mr. Marcel Bergeron was appointed director and member of the Audit Committee on March 21, 2007 further to the death of Ms. Francine Bélanger on November 8, 2006 and was elected at the annual and special meeting of shareholders. Marcel Bergeron acts as the General Director of Devimco Inc., a company specialized in the real estate development since June 2006. Between July 1990 and June 2006, Mr. Bergeron was an associate of Petrie Raymond LLP, Chartered Accountants. Between December 1995 and August 2005, he was on the board of directors of Fairstar Explorations Inc. He is a member of the Quebec Institute of Chartered Accountants and of the Quebec Institute of Certified Management Accountants.



(b) Compliance with section 16 (a) of the Exchange Act.



Section 16 (a) of the Securities Exchange Act of 1934, as amended, requires the Companys officers and directors, and persons who own more than ten percent of a registered class of the Companys equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the Securities and Exchange Commission (SEC). Such officers and directors and 10% stockholders are also required by SEC rules to furnish the Company with copies of all section 16 (a) forms they file.



The directors and officers have since December 31, 2003 filed only with the Quebec Securities Commission now called Autorité des marchés financiers, the principal national securities exchange jurisdiction of the Company as allowed by Rule 16a-3 (c). All transactions by directors and officers have been deposited electronically and can be consulted at http://www.sedi.ca/.



Item 10 Executive Compensation.



The following tables in this Item10: Executive Compensation, have numbers converted in U.S. Dollars based on the exchange rate at December 31, 2007 and at December 29, 2006. The rates of exchange from Canadian dollars to U.S. dollars as of December 29, 2006 was CAN$1.1652 for U.S $1.00 and at December 31, 2007 was CAN$0.9881 for US $1.00 were used to fill in the table.



(a) General



During the year ended December 31, 2007, the Company did not pay any compensation to its executive officers, except for Jean-Pierre Lachance, who received an allowance of $200 per month for the use of his personal vehicle in relation with the Company's activities (See Item 6 Managements Discussion and Analysis of Financial Condition and Results of Operation subsection (b) entitled Related-Party Transactions for further details on transactions between the Company and BBH Géo-Management Inc pursuant to the Services Agreement).





- 43 -



BBH Géo-Management Inc. is a company that provides the Company with project management and administrative services pursuant to a services agreement. Guy Hébert, the Companys Chief executive officer and a director, is the sole director and officer of BBH Géo-Management Inc. and controls another company that is the sole shareholder of BBH Géo-Management Inc. Services rendered to the Company by executive officers, Misters Guy Hébert and Jean-Pierre Lachance, are provided to the Company by BBH Géo-Management Inc.



In U.S. dollars

|                                                       |      |                |           |                  |                   |                                             |                                         |                             |          
|------------------------------------------------------ | ---- | -------------- | --------- | ---------------- | ----------------- | ------------------------------------------- | --------------------------------------- | --------------------------- | ---------
|Name and principal position                            | Year | Salary (1)
($) | Bonus
($) | Stock awards
($) | Option awards
($) | Non-equity incentive plan compen-sation
($) | Non qualified compensation earnings
($) | All other compen-sation
($) | Total
($)
|(a)                                                    | (b)  | ( c )          | (d)       | (e)              | (f)               | (g)                                         | (h)                                     | (i)                         | (j)      
|Guy Hébert, Chief Executive Officer (2) (3)            | 2006 | -              |           |                  |                   |                                             |                                         |                             | -        
|2007                                                   | -    |                |           | $323,302         |                   |                                             |                                         | $323,302                   
|Jean-Pierre Lachance,
Executive Vice-President
(4) (5) | 2006 | -              |           |                  | $17,140           |                                             |                                         | $2,796                      | $19,936  
|2007                                                   | -    |                |           | $194,161         |                   |                                             | $2,371                                  | $196,532                   



(1)



The Company did not pay any salary or other form of compensation directly to its executive officers. This table does not include the salary earned by Mr. Hébert and Mr. Lachance and paid to them by BBH Géo-Management Inc. since BBH Géo-Management inc. is a private company in Quebec, Canada and such information cannot be publicly disclosed by this company under the laws of Quebec, Canada. Also, Strateco Resources Inc. qualifies as a foreign private issuer under Rule 405 of Regulation C and such information is not required to be rendered public by the Autorité des marchés financiers (Quebec Securities Commission) in Quebec, Canada the principal jurisdiction of the Company;



(2)



The Company paid $213,787 in 2007 and $189,198 in 2006 to BBH Géo-Management Inc. for the consulting services of Guy Hébert. These sums are not representative of the amounts actually received by Mr. Hébert from BBH Géo-Management Inc. as salary.



(3)



As reported in column (f) Mr. Hébert was granted by the Board of Directors 250,000 stock options on April 12, 2007 giving him the right to exercise these options at the price of $3.32 per share for a period of five years. Mr. Hébert did not exercise any options during the fiscal year 2007. In the year 2006, Mr. Hébert exercised 200,000 options that he had received in the year 2005 at the price of $0.17 per share for an amount of exercise price of $34,956. The value reported for Option awards is the one calculated pursuant to Black-Scholes model at the price of $1.29 per share for those options awarded in the second quarter of 2007.



During the year ended December 31, 2007, the Company granted 1,499,000 stock options (1,204,000 stock options in 2006) to officers, directors, consultants and employees of service providers. The fair value of each option granted was determined using the Black-Scholes option pricing model. At the date of the grant, the weighted-average fair value of the stock options granted was $1.2954 per option ($0.2367 per option in 2006).



- 44 -



The following weighted-average assumptions were used in the calculations:



|                        |       |        
|----------------------- | ----- | -------
|                        | 2007  | 2006   
|                        |       |        
|Risk-free interest rate | 3.06% | 2.64%  
|Expected life           | 1 yr  | 1 yr   
|Expected volatility     | 103%  | 127.15%
|Expected dividend yield | 0.0%  | 0.0%   



An amount of $1,360,957 was recognized in earnings and credited to contributed surplus in 2007 ($284,939 in 2006).



(4)



The Company paid $292,890 in 2007 and $208,215 in 2006 to BBH Géo-Management Inc. for the consulting services of Jean-Pierre Lachance. These sums are not representative of the amounts actually received by Mr. Lachance from BBH Géo-Management Inc. as salary.



(5)



As reported in column (f), in 2006, Mr. Lachance was granted by the Board of Directors 100,000 stock options giving him the right to exercise each option at the price of $0.46 per share. In 2006, Mr. Lachance exercised 350,000 options for an exercise amount of $109,237. In 2007, Mr. Lachance was granted by the Board of Directors 150,000 stock options on April 12, 2007 giving him the right to exercise these options at the price of $3.32 per share for a period of five years. In 2007, Mr. Lachance exercised 150,000 options that had been granted to him in 2005 at the price of $0.19 per share for an exercise amount of $29,643. The value reported for Option awards is the one calculated pursuant to Black-Scholes model or $0.17 for the year 2006 for the options awarded in the first quarter of 2006 and at the price of $1.29 per share for those options awarded in the second quarter of 2007 reported in the financial statements.



During the year ended December 31, 2007, the Company granted 1,499,000 stock options (1,204,000 stock options in 2006) to officers, directors, consultants and employees of service providers. The fair value of each option granted was determined using the Black-Scholes option pricing model. At the date of the grant, the weighted-average fair value of the stock options granted was $1.2954 per option ($0.2367 per option in 2006).



|                        |       |        
|----------------------- | ----- | -------
|                        | 2007  | 2006   
|                        |       |        
|Risk-free interest rate | 3.06% | 2.64%  
|Expected life           | 1 yr  | 1 yr   
|Expected volatility     | 103%  | 127.15%
|Expected dividend yield | 0.0%  | 0.0%   



An amount of $1,360,957 was recognized in earnings and credited to contributed surplus in 2007 ($284,939 in 2006).



(6)



As reported in column (j) Mr. Lachance received an allowance of $197 per month for the use of his vehicle for the Companys activities.



(7)



The Company does not have a long-term incentive plan (LTIP)



- 45 



Outstanding Equity Awards at Fiscal Year-End- In U.S. dollars



|                                               |                                                                           |                                                                          |                                                                                                |                           |                       
|---------------------------------------------- | ------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------- | ------------------------- | ----------------------
|Name                                           | Number of securities underlying unexercised options (#) exercisable

 (2) | Number of securities underlying unexercised options  (#)
Non exercisable | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option Expiration Date
|Guy Hébert, Chief Executive Officer            | 300,000                                                                   | 0                                                                        | N/A                                                                                            | $0.19                     | 2010-12-20            
|250,000                                        | 0                                                                         | N/A                                                                      | $3.32                                                                                          | 2012-04-11               
|Jean-Pierre Lachance,
Executive Vice-President | 100,000                                                                   | 0                                                                        | N/A                                                                                            | $0.19                     | 2010-12-20            
|100,000                                        | 0                                                                         | N/A                                                                      | $0.46                                                                                          | 2011-01-24               
|150,000                                        | 0                                                                         | N/A                                                                      | $3.32                                                                                          | 2012-04-11               



(1)

The Company grants only Option awards and does not grant any Stock awards so columns (g) (h) (i) and (j) have been deleted from the table.



(2) These stock options were immediately exercisable at the date of the grants subject only to a resale restriction period of 4 months and one day for the underlying shares, applicable to trades in Canada. On November 23, 2007, the Toronto Stock Exchange approved the Companys amended stock option plan produced as

Exhibit 10

..3 and 10.4

, removing this resale restriction period.


.





Directors Compensation- In U.S. dollars



|                  |                                 |                  |                   |                                 |                           |                            |          
|----------------- | ------------------------------- | ---------------- | ----------------- | ------------------------------- | ------------------------- | -------------------------- | ---------
|Name              | Fees earned or paid in cash ($) | Stock awards
($) | Option awards
($) | Incentive plan compensation
($) | Compensation earnings
($) | All other compensation
($) | Total
($)
|(a)               | (b)

 (1)                       | ( c )            | (d)

 (2)(3)      | (e)                             | (f)                       | (g)                        | (h)      
|Robert Desjardins | $7,015                          |                  | $97,080           |                                 |                           |                            | $104,095 
|Jean-Guy Masse    | $6,916                          |                  | $97,080           |                                 |                           |                            | $103,996 
|Henri Lanctôt     | N/A                             |                  | $97,080           |                                 |                           |                            | $97,080  
|Marcel Bergeron   | $5,632                          |                  | $97,080           |                                 |                           |                            | $102,712 



(1)

The Company did not pay any salary or other form of compensation directly to its executive officers other than the fees for their presences to the Board of directors meetings and Audit Committee Meetings as disclosed in Part III Financial Statements

 and at footnote of the following Table of Directors Fees.



(2) The Company granted on April 12, 2007, to the four directors mentioned in the preceding table, 75,000 stock options at the exercise price of U.S$3.32 per share until April 11, 2012, with an aggregate grant date fair value of US$97,080 computed in accordance with FAS 123 R of $1.2954 per share as indicated at Note 8 Stock Option Plan  of Financial Statements that reads as follows in U.S. Dollars.



- 46 -



During the year ended December 31, 2007, the Company granted 1,499,000 stock options (1,204,000 stock options in 2006) to officers, directors, consultants and employees of service providers. The fair value of each option granted was determined using the Black-Scholes option pricing model. At the date of the grant, the weighted-average fair value of the stock options granted was $1.2954 per option ($0.2367 per option in 2006).



The following weighted-average assumptions were used in the calculations:



|                        |       |        
|----------------------- | ----- | -------
|                        | 2007  | 2006   
|                        |       |        
|Risk-free interest rate | 3.06% | 2.64%  
|Expected life           | 1 yr  | 1 yr   
|Expected volatility     | 103%  | 127.15%
|Expected dividend yield | 0.0%  | 0.0%   



An amount of $1,360,957 was recognized in earnings and credited to contributed surplus in 2007 ($284,939 in 2006).



(3) As at December 31, 2007, Mr. Robert Desjardins had an aggregate number of option awards outstanding at fiscal year end of 75,000 stock options at the exercise price of US$3.32.



As at December 31, 2007, Mr. Jean-Guy Masse had an aggregate number of option awards outstanding at fiscal year end of 125,000 stock options of which 75,000 are at the exercise price of US$3.32 and 50,000 stock options at the exercise price of US$0.4661.



As at December 31, 2007, Mr. Henri Lanctôt had an aggregate number of option awards outstanding at fiscal year end of 75,000 stock options at the exercise price of US$3.32.



As at December 31, 2007, Mr. Marcel Bergeron had an aggregate number of option awards outstanding at fiscal year end of 75,000 stock options at the exercise price of US$3.32.



During the financial year ended December 31, 2007, the Company granted 400,000 stock options to two executive officers under the terms of the stock option plan, as described in the following table:





|                                               |                         |                                                                                            |                |                                                                     |           
|---------------------------------------------- | ----------------------- | ------------------------------------------------------------------------------------------ | -------------- | ------------------------------------------------------------------- | ----------
|In U.S. dollars




Name                       | Securities under option | Percentage of total options granted to key employees and consultants in the financial year | Exercise price | Market value of the securities under option on the eve of the award | Expiry    
|Guy Hébert, President                          | 250,000                 | 16.10%                                                                                     | $3.32          | $0.00                                                               | 2012/04/11
|Jean-Pierre Lachance,
Executive Vice President | 150,000                 | 9.70%%                                                                                     | $3.32          | $0.00                                                               | 2012/04/11





- 47





The following table shows the options exercised during the financial year by executive officers and the year-end value of unexercised options at December 31, 2007:



|                                                            |                                            |                                  |                                                                                     |                                                                                                          
|----------------------------------------------------------- | ------------------------------------------ | -------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------
|In U.S. dollars





Name                                   | Shares acquired on exercise of options
(#) | Aggregate value realized ($) (1) | Unexercised options at year-end
-------- // --------

Exercisable /
non-exercisable | Value of unexercised in-the-money options at year-end
-------- // --------

Exercisable / non-exercisable
|Guy Hébert,
President and Director                          | 0                                          | 0                                | 550,000
______//_____
550,000/ N.A.                                                 | $770,718
_______//______
550,000 / N.A.                                                                  
|Jean-Pierre Lachance,
Executive Vice President and Director | 150,000                                    | $274,197                         | 350,000
_______//______
350,000/ N.A.                                               | $494,050
______//_____
350,000 / N.A.                                                                    



(1)

Whenever an option is exercised, the aggregate value realized is the difference between the market value on the date of the exercise of the option and the exercise price, multiplied by the number of shares.



Liability Insurance - In U.S. dollars



The Company has an insurance policy that provides directors and officers liability coverage of $4,940,500 per event. The Company paid an annual premium of $18,417 for the policy during the financial year.

Termination of Employment, Change in Responsibilities and Employment Contract

There are no employment contracts between the Company and its executive officers, nor is there any compensatory mechanism that may be triggered in the event of a change of control of the Company or a change in executive officers responsibilities pursuant to a resignation, retirement or any other termination of employment with the Company.

Directors Fees- In U.S. dollars



The external directors receive fees for each board and audit committee meeting they attend with the exception of those directors who are also executive officers of the Company. Directors fees totalled $19,564 for the year ended December 31, 2007 and were allocated as follows:



|                  |                                                    
|----------------- | ---------------------------------------------------
|Name of Director  | Amount of Directors fees paid for fiscal year 2007
|Marcel Bergeron   | $5,632                                             
|Robert Desjardins | $7,015                                             
|Jean-Guy Masse    | $6,916                                             



Aside from stock options granted to directors under the stock option plan, directors do not receive any other fee or benefit from the Company

..



- 48





Loan to Directors and Officer



At the date hereof, no director, nominee as director or officer or anyone associated with them owed any amount to the Company.



The Company does not have a long-term incentive plan (LTIP).



Stock Option Plan



The Company has a stock option plan for its executive officers, directors, consultants and employees of services providers. A total of 10,654,586 common shares are reserved for issuance under the plan. The maximum number of options that can be granted to any participant cannot exceed 5% of the issued and outstanding shares of the capital stock. The exercise price of the options granted may not be less than the average means of the volume weighted average trading price of the listed securities, calculated by dividing the total value by the total volume of securities traded for the five trading days immediately preceding the relevant date of the grant on the Toronto Stock Exchange at the time the options are granted. The optionsgranted are valid for a period established by the Board of Directors, not to exceed five years from the date the options are granted.



The Company has no stock appreciation rights (SAR) plan.



Equity Compensation Plan Information as at December 31, 2007-In U.S. dollars



|                                                                         |                                                                                             |                                                                            |                                                                                                                                           
|------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------
|Plan Category                                                            | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighed-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plan (excluding securities reflected in column (a))
|Stock option plan
Equity compensation plans approved by security holders | 2,106,500                                                                                   | $2.03                                                                      | 5,703,586                                                                                                                                 
|Equity compensation plans not approved by security holders               | N.A.                                                                                        | N.A.                                                                       | N.A.                                                                                                                                      
|Total:                                                                   | 2,106,500                                                                                   | $2.03                                                                      | 5,703,586                                                                                                                                 



(b) Stock options granted during the last financial year -In U.S. dollars



During the year ended December 31, 2007, the Company granted a total of 1,499,000 stock options to officers, directors and key employeesand consultantsof services provider, BBH Géo-Management inc.

Of that number, on April 12, 2007, the Company granted 700,000 stock options to directors at the price of $3.32 per share.



As at March 10, 2008, 320,500 options had been exercised by directors, officers, key employees and consultants of a services provider for a total amount of $169,014.



For further details concerning the stock options granted and exercised during the last fiscal year please refer to NOTE 8 OF FINANCIAL STATEMENTS.



- 49 -



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



(a) Security ownership of certain beneficial owners



The Company is a publicly traded Canadian corporation, the shares of which are owned by Canadian residents, U.S. residents and other countries residents. The Company is not owned or controlled, directly or indirectly by any foreign government or any other companies. Ownership is based on information furnished to the Company by its Transfer

Agent, Computershare Company of Canada. The Company does not know of any person owning more than 5% of any class of the small business issuers voting securities.



|               |                                      |                                                             |                 
|-------------- | ------------------------------------ | ----------------------------------------------------------- | ----------------
|Title of class | Name and address of beneficial owner | Amount and nature of beneficial ownership at March 10, 2008 | Percent of class
|               | N.A.                                 | N.A.                                                        | N.A.            









-

50

 -

(b) Security ownership of management



The following table sets forth the names and addresses of each of the directors and officers of the Company, their principal occupations and their respective date of commencement of their term with the Company. All directors and officers hold office until the next Annual General Meeting of Shareholders of the Company or until a successor is appointed.



|                                                                                                                                        |                                                 |                                                                                                                       |                                                                                                       |                                       
|--------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | --------------------------------------
|1                                                                                                                                       |                                                 | 2                                                                                                                     | 3                                                                                                     | 4                                     
|Title of class                                                                                                                          |                                                 | Name and Position with the Company                                                                                    | Number of Common Shares of the Company Beneficially Owned or Directly/Indirectly Controlled (1)   (6) | Percentage of Issued Share Capital (6)
|Common shares, (1), stock options to purchase common shares and common shares indirectly controlled                                     |                                                 | GUY HEBERT(3)(6)
595 Marie-Victorin, Boucherville, Quebec, Canada J4B 1X4
President & Director 2000                   | 232,000 common shares
4,203,114 common shares
held indirectly
550,000 stock options (3)               | 4.30%                                 
|Common shares, escrowed shares and stock options to purchase common shares                                                              |                                                 | JEAN-PIERRE LACHANCE,(4)(6)
5146 Nantel, St-Hubert, Quebec, Canada J3Y 2Y4
Executive Vice President and Director 2000 | 198,600  common shares
350,000 stock options (4)                                                      | 0

..50%                              
|Common shares and stock options to purchase common shares                                                                               |                                                 | ROBERT DESJARDINS, (2)
236, Notre-Dame, apt. # 5
Repentigny, Quebec, Canada J6A 2R6
Director 2001                     | 100,000 common shares
75,000 stock options                                                            | 0

..20%                              
|Common shares and stock options to purchase common shares                                                                               |                                                 | JEAN-GUY MASSE, (2)(6)
775 Chemin Markham, Montreal, Quebec, Canada H3P 3A6
Director  2000                            | 53,000 common shares
125,000 stock options                                                            | 0.20%                                 
|Common shares and stock options to purchase common shares                                                                               |                                                 | HENRI LANCTOT,
247, Trenton ave., Montreal, Quebec, Canada H3P 1Z8
Corporate secretary and director 2007              | 50,375 common shares
75,000 stock options                                                             | 0.10%                                 
|Common shares and stock options to purchase common shares                                                                               |                                                 | MARCEL BERGERON (2)
108, ave. Kenaston, Mont-Royal Town, Québec H3R 1M2
Director 2007                                 | 75,000 stock options                                                                                  | 0.10%                                 
|Commmon shares and stock options to purchase common shares                                                                              |                                                 | PAULINE COMTOIS,
95, Des Monts,
Boucherville, Québec J4B 4K4
Chief Financial Officer ,
Mars 2007                      | 33,000 common shares
50,000 stock options                                                             | 0.10%                                 
|Total Common shares, escrowed shares and stock options to purchase common shares and warrants to purchase shares indirectly controlled. | 4,945,089 common shares
1,300,000 stock options | 5.40% (5)                                                                                                            



(1)

Information relating to the Shares over which control or direction is exercised was provided by the directors and officers as of March 10, 2008. Common Shares beneficially owned, directly or indirectly, or over which control or direction is exercised, as at the date hereof, based upon information furnished to the Company by individual directors and officers. Unless otherwise indicated, such shares are held directly.



(2)



Member of the Audit Committee



- 51 -



(3)

Of that number, 137,500 common shares were held under escrow and have been released from escrow on January 14, 2008 pursuant to an amended escrow agreement approved by the Toronto Stock Exchange. Mr. Hébert holds directly a total of 282,000 shares and 550,000 stock options. Of the number of shares mentioned under the name of Mr. Guy Hébert, 4,203,114 shares are held by a company disclosed at Item 12:Certain relationships and related transactions of which Mr. Hébert is president and sole director and these shares are controlled by Mr. Hébert.



(4)



Of that number 50,000 common shares were held under escrow and have been released from escrow January 14, 2008, pursuant to an amended escrow agreement approved by the Toronto Stock Exchange.



(5)  The directors, officers and other members of management of the Company, as a group beneficially own, directly or indirectly, common shares of the Company, representing 5.40% of the total issued and outstanding securities of the Company as of March 10, 2008.



(6)



Of the number of common shares mentioned in Column 4 of the preceding table, the directors owned each a number of stock options with right to exercise within 60 days as follows: Mr. Hébert, 550,000; Mr. Lachance, 350,000; Mr. Masse, 125,000; Mr. Lanctôt, 75,000 Mr. Desjardins 75,000 and Mr. Bergeron 75,000 stock options.



(c)   Changes in control



The Company does not anticipate at this time any changes in control of the Company.



Item 12. Certain Relationships and Related Transactions.



(a)



Related parties transactions



During the year, the Company conducted the following transactions with another company for which the Strateco director and President, Mr. Guy Hébert, also serves as sole director and President  On August 1, 2005, the Company and BBH Géo-Management Inc. (BBH), a related company, signed an agreement under which BBH will provide the Company with the following services: office space, office and computer equipment, secretarial, management, accounting and legal, geological consulting, investor and regulatory relations and financing services. The agreement is valid for a three-year period ending on July 31, 2008, and provides for a fixed monthly charge of $3,200 for office rent, office equipment and computers that will be reviewed each year on July 31. See section Related-party Transactions in Management Discussion &Analysis, Executive remuneration and Security management ownership and in Note 13 of Financial Statements



Mr. Henri Lanctôt, secretary and director of the Company, is a Partner of Gowling Lafleur Henderson LLP which is also the legal counsel of the Company.



(b) Transactions with Promoters



Mr. Guy Hébert, President and director of the Company can be considered as the promoter of the Company in consideration of his participation and managing of the business of the Company since its incorporation.



Mr. Hébert does not receive any salary or compensation for his services as Director and Chief Executive Officer from the Company but is entitled to receive stock options as an incentive. See section on Security ownership of management and Executive remuneration.



(c) Conflict of interests



The directors and executive officers of the Company can have functions in other public mining companies or still to detain important assets in other public mining companies and to that effect enter into conflicting interests at the time of negotiation or to conclude the mode or scope related to that venture when these other mining companies can participate in the same joint venture.



-

52

 -



In that case, at the Board of Directors meeting, that director will abstain himself or herself from voting on that subject matter and will leave the room. Joint ventures in acquiring and exploring and mining natural resources are-frequent in that industry. According to the laws regarding companies in Quebec, Canada, a director of the Company must act honestly, in good faith and in the fundamental interests of the Company.



Item 13 Exhibits, Financial Statement Schedules and Reports on Form 8-K.



a)

Table of

Exhibits



|     |  |                                                                                                                                        |          |      
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------- | -------- | -----
|     |  |                                                                                                                                        | F

ormat | Pages
|10.1 |  | Amended Contract of Services between Strateco Resources Inc. and BBH Géo-Management Inc dated April 1, 2007 ( French Language version) | CE       | 78   
|10.2 |  | Amended Contract of Services between Strateco Resources Inc. and BBH Géo-Management Inc dated April 1, 2007 (English language summary) |          | 83   
|10.3 |  | Amended Stock Option Plan dated November 7, 2008 ( French Language version) with Summary in English Language                           | CE       | 84   
|10.4 |  | Amended Stock Option Plan dated November 7, 2008 ( English Language summary)                                                           | CE       | 97   
|23   |  | Consent of expert on technical report, David

A.

 Ross, P.Geo, for Scott Wilson Roscoe Postle Associates Inc.                         | CE       | 99   
|31   |  | Certifications                                                                                                                         | CE       | 100  
|32   |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                 | CE       | 102  
|99   |  | Framework of Internal Control over financial reporting                                                                                 | CE       | 103  



b) Reports on Form 8-K.



February 5, 2007: Item 3.02 Unregistered sales of Equity: Private placement of $25,012,000 and Item 5.02 Departure of directors.



Item 14 Changes in Registrants Certifying Accountant



The mandate of PETRIE RAYMOND, LLP, Chartered Accountants has been renewed on June 12, 2007.



a) Audit Fees



In the last two fiscal years, one firm of accountants rendered to the Company professional services for the total estimated amount of $54,000 for auditing of annual financial statements included in Form 10-KSB, review of quarterly interim financial statements included in the previous Company's Form 10-Q-SB and other services that are normally provided by the accountants in connection with statutory and regulatory filings for that period ("reports").



- 53 -



Services provided by the principal accountant PETRIE RAYMOND, LLP, Chartered Accountants, for the years ending December 31, 2006 and December 31, 2007 concerning the quarterly filings of March, June and September 2007 amounted to estimated fees of $15,000 and the Company estimates the fees to be paid for the annual report filings to $25,000.



|                                                                                                        |  |                    |         
|------------------------------------------------------------------------------------------------------- |  | ------------------ | --------
|March 31, 2006, June 30, 2006, September 30, 2006  and annual reports for year ending
December 31, 2006 |  | PETRIE RAYMOND LLP | $37,000 
|March 31, 2007, June 30, 2007 and September 30, 2007                                                    |  | PETRIE RAYMOND LLP | *$15,000
|Annual Reports 2007                                                                                     |  | PETRIE RAYMOND LLP | *$25,000



b) Audit-Related Fees



None



c) Tax Fees



Aggregate fees billed for tax compliance, tax advice and tax planning in each of the two last fiscal years for professional services rendered by the principal accountants are as follows:



Year ending at December 31, 2006: $3,500.

Year ending at December 31, 2007: $3,500.



d) All other Fees



Other fees: $0.00



e) Audit committees pre approval policies and procedures:The Company engages the accountant, to render audit services, once the Companys audit committee has approved the engagement.



With respect to the provision of services other than audit, review or attest services, the pre-approval by the audit committee is waived if the aggregate amount of all such services provided constitutes no more than five percent of the total amount of revenues paid by the Company to its accountant during the fiscal year in which the services areprovided. Such servicesare promptly brought to the attention of the Companys audit committee and approved prior to the completion of the audit by the audit committee or by one or more members of the audit committee who are members of the board of directors to whom authority to grant such approval has been delegated by the audit committee.





- 54 



SIGNATURE



In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



STRATECO RESOURCES INC.



Dated:

September



10, 2008



/s/ Guy Hébert

_________________________________

Name: Guy Hébert

Title: President and Chief Executive Officer



- 55 -



[form10ksba31dec07007.gif]



Auditors' Report

To the Directors of

Strateco Resources Inc.:

We have audited the accompanying balance sheets of Strateco Resources Inc. as at December 31, 2006 and 2007 and the related statements of deferred expenditures, earnings and deficit and cash flows for the years then ended.  These financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as at December 31, 2006 and 2007 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Canadian generally accepted accounting principles vary in certain respects from the accounting principles generally accepted in the United States of America.  Information relating to the nature and aspect of such difference is presented in Note 18 to the financial statements.

[form10ksba31dec07009.gif]

Limited Liability Partnership

Chartered Accountants

Montréal, Canada

March 7, 2008



- 56 -







Financial Statements of



STRATECO RESOURCES INC.  an exploration stage company

For the years ended December 31, 2007 and 2006







- 57

 -







STRATECO RESOURCES INC,an exploration stage company







FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006













Balance Sheets



Statements of Deferred Expenditures



Statements of Earnings and Deficit



Statements of Cash Flows



Notes to Financial Statements



- 58 -

Strateco Resources Inc., an exploration stage company

BALANCE SHEETS

DECEMBER 31, 2007 AND 2006

(in Canadian dollars)



|                                               |   |             |   |            
|---------------------------------------------- | - | ----------- | - | -----------
|                                               |   | 2007        |   | 2006       
|ASSETS                                         |   |             |   | restated   
|CURRENT ASSETS                                 |   |             |   |            
|Cash and short-term investments (Note 3)       | $ | 18,986,096  | $ | 561,344    
|Term deposit  rate of 4.65%                   |   | -           |   | 8,680,857  
|Receivable subscriptions                       |   | 55,200      |   | -          
|Tax credits receivable                         |   | 8,821,310   |   | 1,476,785  
|Sales tax recoverable                          |   | 599,742     |   | 315,633    
|Deposits on exploration work                   |   | 358,031     |   | 500,000    
|Prepaid expenses                               |   | 64,619      |   | 26,437     
|                                               |   | 28,844,998  |   | 11,561,056 
|MINING PROPERTIES (Note 4)                     |   | 10,044,314  |   | 459,000    
|DEFERRED EXPENDITURES (Note 5)                 |   | 13,350,146  |   | 3,250,585  
|FIXED ASSETS (Note 6)                          |   | 464,689     |   | -          
|                                               | $ | 52,744,147  | $ | 15,270,641 
|LIABILITIES                                    |   |             |   |            
|CURRENT LIABILITIES                            |   |             |   |            
|Accounts payable and accrued charges (Note 13) | $ | 1,162,814   | $ | 1,555,924  
|FUTURE INCOME TAXES (Note 14)                  |   | 1,204,000   |   | -          
|SHAREHOLDERS EQUITY                           |   |             |   |            
|Capital stock (Note 7)                         |   | 54,208,910  |   | 18,962,859 
|Contributed surplus (Note 10)                  |   | 3,006,008   |   | 1,066,864  
|Deficit                                        |   | (6,837,585) |   | (6,315,006)
|                                               |   | 50,377,333  |   | 13,714,717 
|                                               | $ | 52,744,147  | $ | 15,270,641 



See notes to financial statements.

ON BEHALF OF THE BOARD



(Signed) Guy Hébert

(Signed) Robert Desjardins

___________________________________

____________________________________

Guy Hébert, Directo

r

Robert Desjardins, Director



- 59



Strateco Resources Inc., an exploration stage company



STATEMENTS OF DEFERRED EXPENDITURES

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)



|                                                        |   |             |   |            
|------------------------------------------------------- | - | ----------- | - | -----------
|                                                        |   | 2007        |   | 2006       
|                                                        |   |             |   |            
|EXPLORATION EXPENSES                                    |   |             |   |            
|Consultants and subcontractors                          | $ | 3,923,186   | $ | 639,488    
|Infrastructure, access roads, fuel depot and other      |   | 1,424,242   |   | 188,989    
|Drilling                                                |   | 6,451,250   |   | 2,243,424  
|Transport and fuel                                      |   | 2,481,051   |   | 199,972    
|Geophysics                                              |   | 239,664     |   | 347,367    
|Geology                                                 |   | 87,075      |   | 70,530     
|Laboratory and analyses                                 |   | 242,499     |   | 44,255     
|Travel expenses                                         |   | 1,126,391   |   | 217,677    
|Management fees                                         |   | 1,823,081   |   | 584,865    
|Supplies and equipment rental                           |   | 273,973     |   | 135,604    
|Maintenance and repairs                                 |   | 68,852      |   | -          
|Depreciation on fixed assets                            |   | 174,540     |   | -          
|General exploration expenses                            |   | 448,135     |   | 43,583     
|                                                        |   | 18,763,939  |   | 4,715,754  
|Credit for duties and other related exploration credits |   | (8,664,378) |   | (1,472,454)
|Write-off of deferred expenditures                      |   | -           |   | (66,544)   
|                                                        |   | (8,664,378) |   | (1,538,998)
|INCREASE IN DEFERRED EXPENDITURES                       |   | 10,099,561  |   | 3,176,756  
|BALANCE, BEGINNING OF YEAR                              |   | 3,250,585   |   | 3,186,251  
|TRANSFERRED EXPLORATION EXPENSES (Note 13)              |   | -           |   | (3,112,422)
|BALANCE, END OF YEAR                                    | $ | 13,350,146  | $ | 3,250,585  



See notes to financial statements.



- 60



Strateco Resources Inc., an exploration stage company



STATEMENTS OF EARNINGS AND DEFICIT

YEARS ENDED DECEMBER 31, 2007 AND 2006

(in Canadian dollars)



|                                                                   |   |             |   |          
|------------------------------------------------------------------ | - | ----------- | - | ---------
|                                                                   |   | 2007        |   | 2006     
|                                                                   |   |             |   | restated 
|INTEREST INCOME                                                    | $ | 963,895     | $ | 264,008  
|GENERAL AND ADMINISTRATIVE EXPENSES                                |   |             |   |          
|Professional fees                                                  |   | 391,800     |   | 259,745  
|Legal and audit expenses                                           |   | 140,031     |   | 159,563  
|Stock-based compensation                                           |   | 1,377,348   |   | 244,541  
|Directors fees                                                    |   | 19,800      |   | 18,600   
|Shareholder communications                                         |   | 130,697     |   | 135,934  
|Investor relations                                                 |   | 414,697     |   | 627,947  
|Listing and registrar fees                                         |   | 285,850     |   | 25,558   
|Social benefits related to stock options                           |   | 4,720       |   | 53,582   
|Travel expenses                                                    |   | 32,215      |   | 9,169    
|Donation to environmental fund                                     |   | 100,000     |   | -        
|Rent                                                               |   | 39,720      |   | 38,400   
|Insurance                                                          |   | 35,621      |   | 23,734   
|Office expenses                                                    |   | 73,902      |   | 24,360   
|Taxes and permits                                                  |   | 36,019      |   | 29,517   
|Interest, penalties and bank charges                               |   | 9,375       |   | 14,129   
|Part XII.6 tax                                                     |   | -           |   | 11,075   
|                                                                   |   | 3,091,795   |   | 1,675,854
|Write-off of deferred expenditures                                 |   | -           |   | 66,544   
|                                                                   |   | 3,091,795   |   | 1,742,398
|LOSS BEFORE INCOME TAXES                                           |   | 2,127,900   |   | 1,478,390
|FUTURE INCOME TAXES (BENEFIT) (Note 14)                            |   | (1,605,321) |   | 773,200  
|NET LOSS                                                           |   | 522,579     |   | 2,251,590
|DEFICIT, BEGINNING OF YEAR, RESTATED (Note 9)                      |   | 6,315,006   |   | 4,063,416
|DEFICIT, END OF YEAR                                               | $ | 6,837,585   | $ | 6,315,006
|NET LOSS PER SHARE, BASIC AND DILUTED                              | $ | 0.01        | $ | 0.03     
|WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUSTANDING
(in thousands) |   | 107,539     |   | 82,855   



See notes to financial statements.



- 61



Strateco Resources Inc., an exploration stage company

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2007 AND 2006

(in Canadian dollars)



|                                                                         |   |              |   |              |  | 
|------------------------------------------------------------------------ | - | ------------ | - | ------------ |  | 
|                                                                         |   | 2007         |   | 2006        
|                                                                         |   |              |   | restated    
|CASH FLOW FROM (USED IN) OPERATING ACTIVITIES:                           |   |              |   |             
|Net loss                                                                 | $ | (522,579)    | $ | (2,251,590) 
|Non-cash items                                                           |   |              |   |             
|Stock-based compensation                                                 |   | 1,377,348    |   | 244,541     
|Write-off of deferred expenditures                                       |   | -            |   | 66,544      
|Future income taxes                                                      |   | (1,605,321)  |   | 773,200     
|Changes in non-cash working capital items (Note 15)                      |   | 1,209,428    |   | (426,217)   
|                                                                         |   | 458,876      |   | (1,593,522) 
|CASH FLOW FROM (USED IN) INVESTING ACTIVITIES:                           |   |              |   |             
|Term deposits (acquisition)                                              |   | 8,680,857    |   | (8,680,857) 
|Acquisition of mining properties                                         |   | (30,493)     |   | (382,000)   
|Transfer of mining properties and deferred expenditures                  |   | -            |   | 225,000     
|Increase in deferred expenditures                                        |   | (19,052,406) |   | (4,058,024) 
|Capital expenditures                                                     |   | (639,229)    |   | -           
|                                                                         |   | (11,041,271) |   | (12,895,881)
|CASH FLOW FROM (USED IN) FINANCING ACTIVITIES:                           |   |              |   |             
|Repayment of term loan                                                   |   | -            |   | (110,000)   
|Common share issuance                                                    |   | 30,701,350   |   | 15,411,589  
|Common share issue costs                                                 |   | (1,694,203)  |   | (1,019,443) 
|                                                                         |   | 29,007,147   |   | 14,282,146  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                     |   | 18,424,752   |   | (207,257)   
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                             |   | 561,344      |   | 768,601     
|CASH AND CASH EQUIVALENTS, END OF YEAR                                   | $ | 18,986,096   | $ | 561,344     
|Additional information related to cash flows                             |   | 2007         |   | 2006        
|Non-cash items related to operating, financing and investing activities: |   |              |   |             
|Acquisition of mining properties in exchange of common shares            | $ | 6,745,500    | $ | 228,000     
|Future income taxes included in the cost of mining properties            | $ | 2,809,321    | $ | -           
|Deferred expenditures financed through increases in accounts payable     | $ | 489,370      | $ | 952,377     
|Transfer of mining properties and deferred expenditures                  | $ | -            | $ | 3,200,172   
|Depreciation on fixed assets included in deferred expenditures           | $ | 174,540      | $ | -           
|Common share issue costs paid for through the issuance of warrants       | $ | 701,875      | $ | 304,140     



See notes to financial statements.



- 62 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)







1.



INCORPORATION AND NATURE OF OPERATIONS



The Company is incorporated under the Canadian Business Corporations Act and is engaged in the exploration of properties.



Recovery of amounts indicated under mining properties and the related deferred expenditures are subject to the discovery of economically recoverable reserves, the Companys ability to obtain the financing required to complete development and profitable future production or the proceeds from the sale of such assets. At December 31, 2007, management determined the net accounting value of mining properties to be the best estimate of their net recoverable value. This value may nonetheless be reduced in the future.



2.



SIGNIFICANT ACCOUNTING POLICIES



NEW ACCOUNTING STANDARDS



Changes in Accounting Policy  Financial Instruments

The Canadian Institute of Chartered Accountants has issued new accounting standards for financial instruments: a) Section 1530 "Comprehensive Income", which introduces a new requirement regarding the temporary exclusion of certain types of gains and losses from net income; b) Section 3855 "Financial Instruments  Recognition and Measurement", which prescribes when an entity must recognize a financial asset or liability or a non-financial derivative instrument on its balance sheet and whether such recognition of the amount must be based on the fair value or the cost, and also specifies how to present the gains and losses on financial instruments; c) Section 3865 "Hedges, which describes when and how hedge accounting may be used. The Company adopted these new recommendations on January 1, 2007, and classified its assets and financial liabilities as financial instruments held for sale and recognizes them at fair value, which corresponds to their cost given their short term. Adoption of these new standards did not have an impact on the Companys interim financial statements.



New Accounting Requirements

As of January 1, 2008, the Company must comply with the following new standards: a) Section 1535, Capital Disclosures, which requires that an entity provide information about the objectives, policies and processes used by the entity to manage its capital; b) Sections 3862, Financial Instruments  Disclosures and 3863, Financial Instruments  Presentation, which replace Section 3861, Financial Instruments  Disclosure and Presentation and assign greater importance to the disclosure of information on the risks associated with recognized and unrecognized financial instruments and the way such risks are managed. These new requirements only affect information to be disclosed and do not have a financial impact on the Companys financial statements.



CASH AND CASH EQUIVALENTS



The Company considers cash and short-term investments maturing within three months of their acquisition date as cash and cash equivalents.





- 6

3

 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006

(in Canadian dollars)





2.



SIGNIFICANT ACCOUNTING POLICIES (CONTD)



MINING PROPERTIES AND DEFERRED EXPENDITURES



Mining properties are recorded at cost. Exploration and development costs are deferred, net of government assistance received. In the event of a production decision, costs related to a deposit and recorded under mining properties and deferred exploration expenditures are transferred to fixed asset, and then amortized on the basis of units of production for the year and proven and probable ore reserves. However, when a project is abandoned, the corresponding costs are charged against earnings.



CREDIT ON DUTIES REFUNDABLE FOR LOSSES AND REFUNDABLE TAX CREDIT RELATED TO RESOURCES



The Company is eligible for a refundable credit on duties under the Québec Mining Duties Act. This refundable credit on duties is equal to 12% of expenses incurred for mining activities in Québec and is recognized as a credit under deferred expenditures.



The Company is also eligible for a refundable tax credit for resources for mining industry companies in relation to eligible expenses incurred. The refundable tax credit related to resources represents up to 38.75% of the amount of eligible expenses incurred. This tax credit is recognized as a credit under deferred expenditures.



FIXED ASSETS



Fixed assets are depreciated using the straight line method over three years for fuel tanks, and using the diminishing balance method at a rate of 20 % for rolling stock, machinery and equipment.



CAPITAL STOCK



Shares issued in consideration of non-monetary items are generally recorded at the market value of the shares over a reasonable period preceding and following the announcement of the agreement regarding their issuance.



Share issue costs and future income taxes arising from the variance between the carrying value and the fiscal value of exploration expenses are included in share capital as a credit.



STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS



The Company recognizes options granted under the stock option plan as well as warrants granted to brokers pursuant to some financings using the fair value method. Options granted to non-employees and brokers warrants are recorded based on fair value determined using the Black-Scholes option pricing model.



When options or warrants are granted to brokers, the remuneration expense is charged to the activity in question and the counterpart to contributed surplus.



Any counterpart paid by the participants when broker options or warrants are exercised, as well as any contributed surplus created when broker options or warrants are granted, are credited to capital stock.



- 6

4

 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)





2.



SIGNIFICANT ACCOUNTING POLICIES (CONTD)



INCOME TAXES



The Company records its income taxes using the balance sheet method. Future income tax assets and liabilities are recognized to take into account the impact on income taxes of variances between the accounting value of certain assets and liabilities shown on the balance sheet and their respective fiscal values. A valuation allowance is recorded as required to reflect an income tax asset that is more likely to be realized than not. The impact of any changes in income tax rates is recognized in the year in which the rates change.



NET LOSS PER SHARE



The basic and diluted net loss per share is calculated based on the weighted-average number of common shares outstanding during the year.



USE OF ESTIMATES



The preparation of financial statements in accordance with generally recognized accounting principles requires management to make estimates and assumptions that affect the assets and liabilities reported, amounts related to revenue and expenses, recoverable values for mining property and deferred exploration expenses, environmental liability provisions and the presentation of future liabilities. Actual results could differ from these estimates.



3.



CASH AND CASH EQUIVALENTS



|                                                                           |   |            |   |        
|-------------------------------------------------------------------------- | - | ---------- | - | -------
|                                                                           |   | 2007       |   | 2006   
|Cash                                                                       | $ | 763,484    | $ | 59,220 
|Term deposits with variable rate of 4.35% to 4.56% (rate of 4.19% in 2006) |   | 18,222,612 |   | 502,124
|                                                                           | $ | 18,986,096 | $ | 561,344



4.



MINING PROPERTIES



|                     |          |   |            |   |         | 
|-------------------- | -------- | - | ---------- | - | ------- | 
|                     | Interest |   | 2007       |   | 2006   
|Mont-Laurier Uranium | 100%     | $ | 10,000     | $ | 10,000 
|Matoush              | 100%     |   | 337,000    |   | 337,000
|Eclat                | 100%     |   | 774,000    |   | 112,000
|Apple                | 100%     |   | 8,923,314  |   | -      
|                     |          | $ | 10,044,314 | $ | 459,000





- 6

5

 -

Strateco Resources Inc., an exploration stage company

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)





5.



DEFERRED EXPENDITURES



|                     |   |                              |   |                      |   |             |   |                             
|-------------------- | - | ---------------------------- | - | -------------------- | - | ----------- | - | ----------------------------
|                     |   | Balance at
December 31,
2006 |   | Exploration
expenses |   | Deduction   |   | Balance at
December 31,
2007
|Mining properties    |   |                              |   |                      |   |             |   |                             
|Mont-Laurier Uranium | $ | 153,062                      | $ | 345,453              | $ | (171,681)   | $ | 326,834                     
|Matoush              |   | 2,990,465                    |   | 17,655,159           |   | (8,115,533) |   | 12,530,091                  
|Eclat                |   | 101,539                      |   | 347,007              |   | (179,804)   |   | 268,742                     
|Apple                |   | -                            |   | 129,781              |   | (60,255)    |   | 69,526                      
|Pacific Bay Matoush  |   | -                            |   | 286,539              |   | (137,105)   |   | 149,434                     
|Prospecting          |   | 5,519                        |   | -                    |   | -           |   | 5,519                       
|                     | $ | 3,250,585                    | $ | 18,763,939           | $ | (8,664,378) | $ | 13,350,146                  



|                     |   |                              |   |                      |   |             |   |                             
|-------------------- | - | ---------------------------- | - | -------------------- | - | ----------- | - | ----------------------------
|                     |   | Balance at
December 31,
2005 |   | Exploration
expenses |   | Deduction   |   | Balance at
December 31, 2006
|Mining properties    |   |                              |   |                      |   |             |   |                             
|Discovery            | $ | 2,333,381                    | $ | 54,294               | $ | (2,387,675) | $ | -                           
|Cameron              |   | 632,028                      |   | 156,963              |   | (788,991)   |   | -                           
|Mont-Laurier Uranium |   | 21,927                       |   | 176,935              |   | (45,800)    |   | 153,062                     
|Matoush              |   | 186,236                      |   | 4,158,544            |   | (1,354,315) |   | 2,990,465                   
|Beaver Lake Area     |   | 2,300                        |   | -                    |   | (2,300)     |   | -                           
|Eclat                |   | 4,860                        |   | 169,018              |   | (72,339)    |   | 101,539                     
|Prospecting          |   | 5,519                        |   | -                    |   | -           |   | 5,519                       
|                     | $ | 3,186,251                    | $ | 4,715,754            | $ | (4,651,420) | $ | 3,250,585                   



6. FIXED ASSETS



|                   |      |                         |                                |                                |   |         |   |    
|------------------ | ---- | ----------------------- | ------------------------------ | ------------------------------ | - | ------- | - | ---
|                   | Cost | Cumulative
depreciation | Net value at
December 31,
2007 | Net value at
December 31,
2006
|Fuel tanks         | $    | 266,191                 | $                              | 85,700                         | $ | 180,491 | $ | -  
|Rolling stock      |      | 176,270                 |                                | 42,147                         |   | 134,123 |   | -  
|Machinery          |      | 105,012                 |                                | 32,083                         |   | 72,929  |   | -  
|Equipment          |      | 76,859                  |                                | 10,700                         |   | 66,159  |   | -  
|Computer equipment |      | 14,897                  |                                | 3,910                          |   | 10,987  |   |    
|                   | $    | 639,229                 | $                              | 174,540                        | $ | 464,689 | $ | Nil



- 66 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006

(in Canadian dollars)





7.



CAPITAL STOCK



AUTHORIZED



An unlimited number of common shares without par value.



An unlimited number of preferred shares without par value issuable in series with rights, privileges, restrictions and conditions to be determined by the board of directors.



|                                           |                   |                   |             |               |   |            
|------------------------------------------ | ----------------- | ----------------- | ----------- | ------------- | - | -----------
|                                           | December 31, 2007 | December 31, 2006
|                                           | Common shares     |                   | Amount      | Common shares |   | Amount     
|ISSUED AND FULLY PAID                      |                   |                   |             |               |   |            
|Balance, beginning of year                 | 96,373,367        | $                 | 18,962,859  | 61,771,257    | $ | 7,898,833  
|In consideration of mining properties      | 3,450,000         |                   | 6,745,500   | 500,000       |   | 228,000    
|In cash                                    |                   |                   |             |               |   |            
|Private placements                         | 9,620,000         |                   | 25,012,000  | 15,700,000    |   | 10,760,000 
|Exercise of stock options                  | 320,500           |                   | 171,050     | 2,524,000     |   | 532,800    
|Exercise of warrants                       | 4,404,000         |                   | 5,573,500   | 15,878,110    |   | 3,616,889  
|Reduction of paid-up capital (Note 13)     | -                 |                   | -           | -             |   | (3,200,172)
|Amounts from contributed surplus (Note 10) |                   |                   |             |               |   |            
|Exercise of warrants                       | -                 |                   | 60,828      | -             |   | 257,139    
|Exercise of stock options                  | -                 |                   | 79,251      | -             |   | 192,953    
|Issue costs                                |                   |                   |             |               |   |            
|Brokerage fees                             | -                 |                   | (1,569,020) | -             |   |            
|Warrant grant                              | -                 |                   | (701,875)   | -             |   | (304,140)  
|Professional fees                          | -                 |                   | (125,183)   | -             |   | (1,019,443)
|Balance, end of year (a)                   | 114,167,867       | $                 | 54,208,910  | 96,373,367    | $ | 18,962,859 



(a)

  

At the end of the 2007 and 2006 financial years, 187,500 common shares were escrowed (Guy Hébert  137,500 and Jean-Pierre Lachance  50,000) and could not be transferred, mortgaged, pledged or otherwise assigned without the consent of the Autorité des marchés financiers. On January 14, 2008, 60 days following the date of the November 14, 2007 press release, the escrow agent Computershare Trust Company of Canada released those shares. Consequently, no shares of the Company remain in escrow.



- 67 -

Strateco Resources Inc., an exploration stage company

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006

(in Canadian dollars)





7.



CAPITAL STOCK (CONTD)



WARRANTS



At December 31, 2007, there were 6,118,200 warrants outstanding (5,143,500 in 2006), each entitling its holder to purchase one share of the Company. Changes to the warrants are shown in the following table:



See notes to the following table.

|                                |             |                               |              |                              
|------------------------------- | ----------- | ----------------------------- | ------------ | -----------------------------
|                                | 2007        | 2006                         
|                                | Number      | Weighted-average strike price | Number       | Weighted-average strike price
|                                |             |                               |              |                              
|Balance, beginning of year      | 5,143,500   | $                  1.12       | 8,842,009    | $                  0.20      
|Adjustment to beginning balance | (3,500)     | $                  0.20       | -            | $                        -   
|Issued                          | 5,387,200   | $                  3.40       | 12,800,000   | $                  0.61      
|Exercised                       | (4,404,000) | $                  1.27       | (15,878,110) | $                  0.23      
|Expired                         | (5,000)     | $                  1.50       | (620,399)    | $                  0.24      
|Balance, end of year            | 6,118,200   | $                  3.03       | 5,143,500    | $                  1.12      





The strike prices and the expiry dates of the warrants are as follows:



|             |           |     |                 
|------------ | --------- | --- | ----------------
|Strike price | Number    |     | Expiry          
|$0.20        | 31,000    |     | January 18, 2008
|$0.26        | 700,000   |     | February 8, 2008
|$2.60        | 577,200   | (1) | January 31, 2009
|$3.50        | 4,810,000 |     | January 31, 2009
|             | 6,118,200 |     |                 



(1)

  

On January 31, 2007, pursuant to a private placement with an underwriting syndicate led by Orion Securities Inc. and including Dundee Securities Corporation, Blackmont Capital and Sprott Securities Inc., the Company issued broker options equal to 6% of the total number of units sold under the placement (577,200 units). Each broker option allows the underwriters to purchase one unit at the issue price until January 31, 2009. One unit at $2.60 consisted of one common shares and half a warrant. Each full warrant entitles the holder to purchase one share at $3.50 per share. A total of 288,600 warrants could eventually be exercised. At any time after June 1st, 2007, the Company may notify the holders of broker options of its intention to force the exercise of the broker options should the Companys shares trade on the TSX Venture Exchange at a price equal to or greater than $4.50 per share for a period of 20 consecutive trading days.



During the year ended December 31, 2007, 5,387,200 warrants (12,800,000 in 2006) were issued. From this amount, 4,810,000 (11,600,000 in 2006) were issued pursuant to private placements and 577,200 (1,200,000 in 2006) were issued to brokers.



During the year ended December 31, 2007, 4,404,000 warrants (15,878,110 in 2006) of the Company were exercised.



- 6

8

 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)





7.



CAPITAL STOCK (CONTD)



WARRANTS (CONTD)



The fair value of each broker warrant granted was determined using the Black-Scholes option pricing model. At the date of the grant, the weighted-average fair value of the warrants granted was $1.2160 per warrant ($0.2534 in 2006).



The following assumptions were used in the calculations:



|                        |       |      
|----------------------- | ----- | -----
|                        | 2007  | 2006 
|Risk-free interest rate | 2.80% | 2.68%
|Expected life           | 1 yr  | 1 yr 
|Volatility              | 110%  | 102% 
|Expected dividend yield | 0.0%  | 0.0% 



An amount of $701,875 was recognized in the share issue costs and credited to contributed surplus ($304,140 in 2006).



8.



STOCK OPTION PLAN



The Company has a stock option plan for its officers, directors, key employees and consultants. During the year, the Company increased the number of common shares reserved for issuance under the plan from 3,800,000 to 10,654,586. The maximum number of options that can be granted to any participant may not exceed 5% of the issued and outstanding shares of the capital stock. The strike price of the options granted may not be less than the market price, which corresponds to the weighted average price based on the volume and price of the shares traded on the Toronto Stock Exchange for the five days preceding the option grant. The options granted are valid for a period established by the board of directors, not to exceed five years from the date the options are granted.



Changes to the stock options under the plan are shown in the following table:



|                           |                   |                               |                   |                              
|-------------------------- | ----------------- | ----------------------------- | ----------------- | -----------------------------
|                           | 2007              | 2006                         
|                           | Number of options | Weighted-average strike price | Number of options | Weighted-average strike price
|Balance, beginning of year | 928,000           | $ 0.37                        | 2,248,000         | $ 0.19                       
|Granted                    | 1,499,000         | $ 3.14                        | 1,204,000         | $ 0.37                       
|Exercised                  | (320,500)         | $ 0.53                        | (2,524,000)       | $ 0.21                       
|Balance, end of year       | 2,106,500         | $ 2.32                        | 928,000           | $ 0.37                       





- 6

9

 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)





8.



STOCK OPTION PLAN (CONTD)



The outstanding stock options and the stock options exercisable as at December 31, 2007 are shown in the following table:



|                              |                     |                                   |                               |           | 
|----------------------------- | ------------------- | --------------------------------- | ----------------------------- | --------- | 
|Options

outstanding          | Options exercisable
|Weighted-average strike price | Number              | Weighted-average lifespan
(years) | Weighted-average
strike price | Number   
|$                   0.20      | 400,000             | 3.18                              | $                  0.20       | 400,000  
|$                   0.38      | 25,000              | 3.43                              | $                  0.38       | 25,000   
|$                   0.40      | 175,000             | 3.27                              | $                  0.40       | 175,000  
|$                   1.50      | 7,500               | 4.08                              | $                  1.50       | 4,500    
|$                   2.38      | 45,000              | 4.22                              | $                  2.38       | 15,000   
|$                   2.60      | 100,000             | 4.28                              | $                  2.60       | 100,000  
|$                   2.72      | 120,000             | 4.72                              | -                             | -        
|$                   2.80      | 30,000              | 4.29                              | $                  2.80       | 20,000   
|$                   2.86      | 150,000             | 4.41                              | $                  2.86       | 150,000  
|$                   3.00      | 9,000               | 4.44                              | $                  3.00       | 3,000    
|$                   3.20      | 345,000             | 4.63                              | -                             | 65,000   
|$                   3.37      | 700,000             | 4.47                              | $                  3.37       | 700,000  
|$                   2.12      | 2,106,500           | 4.13                              | $                  2.06       | 1,657,500



During the year ended December 31, 2007, the Company granted 1,499,000 stock options (1,204,000 stock options in 2006) to officers, directors, consultants and employees of service providers. The fair value of each option granted was determined using the Black-Scholes option pricing model. At the date of the grant, the weighted-average fair value of the stock options granted was $1.3110 per option ($0.2031 per option in 2006).



The following weighted-average assumptions were used in the calculations:



|                        |       |        
|----------------------- | ----- | -------
|                        | 2007  | 2006   
|                        |       |        
|Risk-free interest rate | 3.06% | 2.64%  
|Expected life           | 1 yr  | 1 yr   
|Expected volatility     | 103%  | 127.15%
|Expected dividend yield | 0.0%  | 0.0%   



An amount of $1,377,348 was recognized in earnings and credited to contributed surplus in 2007 ($244,541 in 2006).



-

70

 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)





9.



RESTATEMENT OF PRIOR YEARS RESULTS



A provincial tax rate of 8.11% rather than 9.9% was used to calculate future income taxes for the year ended December 31, 2006. The financial statements for that year were restated to correct the error. The restatement resulted in a $44,600 increase in the amount credited to contributed surplus arising from the related-party transaction (Notes 10 and 13) and increased in the same amount future income taxes and the balance of the deficit as at December 31, 2006.



10.



CONTRIBUTED SURPLUS



|                                           |   |           |   |          
|------------------------------------------ | - | --------- | - | ---------
|                                           |   | 2007      |   | 2006     
|                                           |   |           |   | restated 
|Balance, beginning of year                 | $ | 1,066,864 | $ | 170,675  
|Attributions                               |   |           |   |          
|-Warrants                                  |   | 701,875   |   | 304,140  
|- Stock options                            |   | 1,377,348 |   | 244,541  
|Exercise of securities                     |   |           |   |          
|- Warrants                                 |   | (60,828)  |   | (257,139)
|- Stock options                            |   | (79,251)  |   | (192,953)
|Related-party transaction (Notes 9 and 13) |   | -         |   | 797,600  
|Balance, end of year                       | $ | 3,006,008 | $ | 1,066,864



11.



COMMITMENTS AND CONTINGENCIES



MINING PROPERTIES



Quénonisca Property



On February 26, 1996, Altavista Mines Inc. signed an agreement with SOQUEM pursuant to which it owns a 50% undivided interest in the 78 claims making up the Quénonisca property in the Quénonisca and Salamandre Lake district north of Matagami, Québec.



Work is financed in proportion to the respective interests, failing which the undivided interest of the non-participating party is diluted. Any dilution of an interest to 10% entails the loss of that interest in consideration of a 1% net profit interest (as defined in the agreement) from commercial production on the property.



In April 2000, the Company entered into an agreement undertaking to respect all Altavista Mines Inc.s rights and obligations in relation to the Quénonisca agreement with SOQUEM dated February 26, 1996. The property now consists of 33 mining claims covering a total area of 1,799 hectares.



-



7

1

 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)





11.



COMMITMENTS AND CONTINGENCIES (CONTD)



MINING PROPERTIES (CONTD)



Eclat Property



On July 6, 2005, the Company signed a letter of intent with Vija Ventures Corporation granting the Company an option to acquire a 100% interest in the Eclat uranium property in the Otish Mountains of northern Québec.



The agreement provides for the Company to acquire its 100% interest in the Eclat property on all minerals except diamonds by making payments totalling $150,000 over four years, including $7,000 paid on signature of the agreement, $7,000 on the first anniversary, $20,000 on the second anniversary in 2007, $20,000 on the third anniversary in 2008 and $96,000 on the fourth anniversary in 2009; by incurring $500,000 in exploration expenditures over four years; and by issuing 600,000 common shares of the Company over three years, including 100,000 on approval of the agreement by the TSX Venture Exchange, 100,000 on the first anniversary, 200,000 on the second anniversary in 2007 and 200,000 on the third anniversary in 2008. The property is also subject to a 2% NSR royalty.



SERVICES AGREEMENT



On August 1st, 2005, the Company and BBH Géo-Management Inc. (BBH), a related company (Note 13), signed an agreement under which BBH will provide the Company with the following services: office space, office and computer equipment, secretarial, management, administration, accounting and legal, geological consulting, investor and regulatory relations and financing services. The agreement is valid for a three-year period ending on July 31, 2008, and provides for a fixed monthly charge of $3,200 for office rent, office equipment and computers to be reviewed each year on July 31. The estimated amount to be paid over the next year is $38,400.



ROYALTIES



The Company is subject to royalty payments on commercial production from certain properties.



ENVIRONMENT



The Company's exploration activities are subject to various laws and regulations governing environmental protection. These laws and regulations are continually changing and generally tend to impose increasing restrictions. The Company conducts its operations so as to provide adequate protection for public health and the environment.



12.



FAIR VALUE OF FINANCIAL INSTRUMENTS



The carrying value of short-term financial instruments approximates their fair value due to their relatively short term and normal commercial conditions.



- 72 -

Strateco Resources Inc., an exploration stage company

NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)



13.



RELATED-PARTY TRANSACTIONS



On August 17, 2006, the Company created a new company, Cadiscor Resources Inc., so as to separate its gold and uranium properties. The Company therefore transferred its Discovery, Cameron and Montbray properties along with deferred expenditures with respective carrying values of $312,750 and $3,112,422 in consideration of 20,000,000 common shares of Cadiscor resources Inc. valued at $3,200,172 and $225,000 in cash. The Company then transferred its investment in Cadiscor Resources Inc. to its shareholders through a $3,200,172 reduction in paid-capital.



Following this operation, a future income tax benefit of $797,600 was credited to contributed surplus.



During the current year, consultant and subcontractor fees of $1,145,000 ($197,000 in 2006) and management fees of $1,823,000 ($583,000 in 2006) shown in the statement of deferred expenditures were paid to BBH Géo-Management Inc., of which Guy Hébert, a director and officer of the Company, is also a director and officer.



General and administrative expenses of $643,000 ($451,000 in 2006) shown in the earnings statement were paid to the same company.



In addition, legal fees of $23,000 ($57,000 in 2006) included in share issue costs were paid to the same company.



At December 31, 2007, accounts payable and accrued charges included an amount of $148,000 ($344,000 as at December 31, 2006) owed to the same company.



14.



INCOME TAXES



The income tax allowance differs from the amount resulting from the application of the combined Canadian statutory income tax rate as follows:



|                                                                      |   |             |   |          
|--------------------------------------------------------------------- | - | ----------- | - | ---------
|                                                                      |   | 2007        |   | 2006     
|                                                                      |   |             |   | restated 
|Loss before income taxes                                              | $ | 2,127,900   | $ | 1,478,390
|Combined Canadian statutory income tax rate                           |   | 31.52%      |   | 32.02%   
|Income tax benefit at the combined Canadian statutory income tax rate |   | (670,714)   |   | (473,380)
|Share issue costs                                                     |   | (212,691)   |   | (195,285)
|Stock-based compensation                                              |   | 434,140     |   | 78,303   
|Change in valuation allowance                                         |   | (1,555,500) |   | 1,555,500
|Adjustment pursuant to assessment notices                             |   | 582,245     |   | -        
|Non-deductible and other expenses                                     |   | (182,801)   |   | (191,938)
|Future income taxes benefit                                           | $ | (1,605,321) | $ | 773,200  



The combined Canadian statutory income tax rate of 31.52% consists of a federal tax rate of 19.62% and of a provincial rate of 11.90% (22.12% federal and 9.9% provincial in 2006).



- 73 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)





14.



INCOME TAXES (CONTD)



The tax effects of temporary differences giving rise to material future income tax assets and liabilities as at

December 31, 2007 and 2006 are as follows:



|                                            |   |           |   |          
|------------------------------------------- | - | --------- | - | ---------
|                                            |   | 2007      |   | 2006     
|Future income tax asset:                    |   |           |   | restated 
|Net operating losses                        | $ | 1,757,100 | $ | 1,393,000
|Financial expenses                          |   | 662,200   |   | 346,300  
|Fixed assets                                |   | 58,700    |   |          
|                                            |   | 2,478,000 |   | 1,739,300
|Less: valuation allowance                   |   | -         |   | 1,555,500
|Total future income tax asset               | $ | 2,478,000 | $ | 183,800  
|Future income tax liability:                |   |           |   |          
|Mining properties and deferred expenditures | $ | 3,682,000 | $ | 183,800  
|Future income tax liability                 | $ | 1,204,000 | $ | Nil      



- 7

4

 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006

(in Canadian dollars)





14.



INCOME TAXES (CONTD)



At December 31, 2007, the Company had losses other than capital losses and unused share issue costs that could be deferred to later periods and used to reduce future taxable income. These losses and share issue costs expire as follows:



|                                  |   |           |   |           
|--------------------------------- | - | --------- | - | ----------
|                                  |   | Federal   |   | Provincial
|Losses other than capital losses: |   |           |   |           
|2008                              | $ | 242,843   | $ | 218,843   
|2009                              | $ | 527,029   | $ | 479,019   
|2010                              | $ | 537,046   | $ | 516,928   
|2011                              | $ | 643,103   | $ | 643,055   
|2015                              | $ | 710,408   | $ | 654,465   
|2026                              | $ | 1,547,059 | $ | 1,547,059 
|2027                              | $ | 1,423,653 | $ | 1,421,974 
|                                  | $ | 5,631,141 | $ | 5,481,343 
|Share issue costs:                |   |           |   |           
|2008                              | $ | 637,908   | $ | 637,908   
|2009                              | $ | 581,223   | $ | 581,223   
|2010                              | $ | 542,728   | $ | 542,728   
|2011                              | $ | 338,839   | $ | 338,839   
|                                  | $ | 2,100,698 | $ | 2,100,698 



15.



CHANGE IN NON-CASH WORKING CAPITAL ITEMS:



|                                                  |   |           |   |          
|------------------------------------------------- | - | --------- | - | ---------
|                                                  |   | 2007      |   | 2006     
|Tax credits receivable                            | $ | 1,319,853 | $ | 12,653   
|Sales tax recoverable                             |   | (284,109) |   | (236,857)
|Deposits on exploration work and prepaid expenses |   | 103,787   |   | (509,256)
|Accounts payable and accrued charges              |   | 69,897    |   | 307,243  
|                                                  | $ | 1,209,428 | $ | (426,217)



16.



COMPARATIVE FIGURES



Certain comparative figures have been reclassified to conform to the financial statements presentation adopted in the current year.



-7

5

 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)







17.



SUBSEQUENT EVENTS



On January 15, 2008, the Company announced the signature of the final agreement for Strateco to purchase a 60% interest in 277 claims on the Pacific Bay Matoush property belonging to Consolidated Pacific Bay Minerals Ltd. (Pacific Bay) in the Matoush area in Québecs Otish Mountains. The agreement provides for Strateco to pay a total of $500,000, issue 200,000 shares to Pacific Bay and invest $3 million in exploration, including a minimum of 10,000 metres of drilling, over a four-year period.



As part of the transaction, the Company acquired one million units of Pacific Bay at $0.30 per unit. Each unit consisted of one common share and one warrant, with each warrant allowing one common share to be purchased at $0.60 for a 24-month period. The shares and warrants are subject to a 12-month hold period lasting until January 14, 2009.



On February 12, 2008, 731,000 warrants were exercised, and the Company issued 731,000 common shares for proceeds of $188,200.



On February 21, 2008, Strateco and Majescor Resources Inc. (Majescor) announced the signing of a letter of intent allowing Strateco to acquire an option to earn an undivided 60% interest in Majescors uranium rights on the Mistassini property, located in Québecs Otish Mountains. The Mistassini property consists in 721 mining claims covering 391 km2. The Company decided to exercise its option right following receipt of analyses for three holes drilled by Majescor in December 2007 on the Lac Mantouchiche uranium prospect.



The option agreement provides for Strateco to acquire a 60% interest in the uranium rights on the property by carrying out a total of $1.3 million in exploration expenditures over three years. Strateco must reimburse Majescor approximately $250,000 for the cost of the drilling program completed in December 2007 and conduct another $250,000 in exploration on the property in the first year, for a total firm commitment of $500,000 for the first year of the option. The remaining $800,000 in exploration expenses will be spent in the second year and third year.



During the option period, Strateco will be the sole operator for all uranium exploration and will have full access to the property. Superior Diamonds Inc. (Superior Diamonds), which holds 100% of the diamond rights, will have access to the property to explore for diamonds and will be the sole party authorized to do so. Superior Diamonds is entitled to a 2.0% Yellowcake Royalty on the property. The parties have agreed to finalize a formal option and joint venture agreement within 90 days. This agreement will also be subject to the approval of the regulatory authorities and Superior Diamonds.





- 7

6

 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)







18.  THE EFFECT OF APPLYING UNITED STATES ACCEPTED ACCOUNTING PRINCIPLES



These financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in Canada. The effect of applying United States generally accepted accounting principles (U.S. GAAP) on net earnings would be as follows:



|                                                                       |   |            |   |          
|---------------------------------------------------------------------- | - | ---------- | - | ---------
|                                                                       |   | 2007       |   | 2006     
|Net loss per Canadian GAAP, as reported                                | $ | 522,579    | $ | 2,251,590
|Properties and deferred expenditures (1)                               |   | 19,684,875 |   | 361,584  
|Deferred tax expenses (recovery) (2)                                   |   | 0          |   | (299,578)
|Net loss and comprehensive income for the year,
according to U.S. GAAP | $ | 20,207,454 | $ | 2,313,596
|Net loss per share per Canadian GAAP, as reported                      | $ | 0.01       | $ | 0.03     
|Effect of adjustments:                                                 |   |            |   |          
|Properties and deferred expenditures (1)                               |   | 0.18       |   | -        
|Deferred tax expenses (recovery) (2)                                   |   | 0.00       |   | -        
|Loss per share, according to U.S. GAAP                                 | $ | 0.19       | $ | 0.03     



(1) Properties and deferred expenditures are accounted for in accordance with Canadian GAAP as disclosed in note 2. Under Canadian GAAP, the propertys potential for development is sufficient to permit the capitalization of exploration expenditures incurred as property acquisition costs and deferred expenditures and the management intends to pursue the development. Under U.S. GAAP, a final feasibility study showing economically recoverable proven and probable reserves is required for capitalization of property acquisition costs and exploration expenditures. Accordingly, the property related costs must be expended as incurred.



(2)Under Canadian GAAP, shares issued as flow-through shares are recorded at their face value when issued. When the entity acquires assets the carrying value may exceed the tax basis as a result of the enterprise renouncing the deductions to the investors. The tax effect of the temporary difference is recorded as a share issue cost. Under US GAAP, the proceeds from issuance should be allocated between the offering of shares and the sale of tax benefits. The allocation is made based on the difference between the quoted price of the existing shares and the amount the investor pays for the shares. A liability is recognized for this difference. The liability is reversed when tax benefits are renounced and a deferred tax liability is recognized at that time. Income tax expense is the difference between the amount of the deferred tax liability and the liability recognized on issuance.





- 7

7

 -

Strateco Resources Inc., an exploration stage company



NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2007 AND 2006



(in Canadian dollars)







18.THE EFFECT OF APPLYING UNITED STATES ACCEPTED ACCOUNTING PRINCIPLES (CONTD)



The effect of the application of the above adjustments on the balance sheet of the Company at December 31, 2007 would be to decrease properties by $10,344,314 to $0 ($459,000 in 2006 to $0), decrease deferred expenditures by $13,350,146 to $0 ($3,250,585 in 2006 to $0) (1) and decrease shareholders equity by $23,394,460 ($3,872,793 in 2006).



The effect on cash flows would be to decrease cash flows from operating activities by $19,082,899 ($4,440,024 in 2006) and decrease cash flows used in investing activities by $19,082,899 ($4,440,024 in 2006).



(1) There would be no effect on long-term liability (increase by $163, 208 in 2006)



-

78

 -

LIST OF EXIBITS

|     |  |                                                                                                                                        |          |      
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------- | -------- | -----
|     |  |                                                                                                                                        | Fo

rmat | Pages
|10.1 |  | Amended Contract of Services between Strateco Resources Inc. and BBH Géo-Management Inc dated April 1, 2007 (French Language version)  | CE       | 78   
|10.2 |  | Amended Contract of Services between Strateco Resources Inc. and BBH Géo-Management Inc dated April 1, 2007 (English language summary) | CE       | 83   
|10.3 |  | Amended Stock Option Plan dated November 7, 2008 (French Language version) with Summary in English Language                            | CE       | 84   
|10.4 |  | Amended Stock Option Plan dated November 7, 2008 (English Language summary)                                                            | CE       | 97   
|23   |  | Consent of expert on technical report, David A. Ross, P.Geo, for Scott Wilson Roscoe Postle Associates Inc.                            | CE       | 99   
|31   |  | Certifications                                                                                                                         | CE       | 100  
|32   |  | Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                 | CE       | 102  
|99   |  | Framework of Internal Control over financial reporting                                                                                 | CE       | 103