**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-KSB**

 

| **x**                                      |   | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**     |
|--------------------------------------------|--------|----------------------------------------------------------------------------------------------|
| **For the fiscal year ended May 31, 2008** |
| **OR**                                     |
| **o**                                      |   | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

**For the transition period from**            **to**

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**Commission file number: 000-52372**

 

**BLACK TUSK MINERALS INC.**

(Exact Name of Registrant as Specified in its Charter)

| **Nevada**                                                     |   | **20-3366333**                       |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State of other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |
|                                                           |   |                                 |
| **408 – 1199 West Pender Street**                        |   |                                 |
| **Vancouver, British Columbia, Canada**                        |   | **V6E 2R1**                          |
| (Address of Principal Executive Offices)                       |   | (Zip Code)                           |

 

**(604)** **689-3443**

(Registrant’s Telephone Number, including Area Code)

 

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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:**None**

 

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:**Common Stock, $0.001 par value**

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**TABLE OF CONTENTS**

**TABLE OF CONTENTS**

| CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS                                                                                                                        | 1  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 1.     DESCRIPTION OF BUSINESS                                                                                                                          | 1  |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| RISK FACTORS                                                                                                                                                                     | 4  |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 2.     DESCRIPTION OF PROPERTY                                                                                                                          | 10 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 3.    LEGAL PROCEEDINGS                                                                                                                                 | 12 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                               | 12 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 5.     MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES                              | 13 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 6.     MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                                                                                  | 14 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 7.     FINANCIAL STATEMENTS                                                                                                                             | 20 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                                        | 32 |
|                                                                                                                                                                                  |    |
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| ITEM 8A(T) CONTROLS AND PROCEDURES                                                                                                                                               | 32 |
|                                                                                                                                                                                  |    |
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| ITEM 8B.   OTHER INFORMATION                                                                                                                                           | 32 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT | 33 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 10.    EXECUTIVE COMPENSATION                                                                                                                                | 35 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                                                   | 36 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                                                        | 37 |
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| ITEM 13.    EXHIBITS                                                                                                                                         | 39 |
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| ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                                                           | 40 |
|                                                                                                                                                                                  |    |
|                                                                                                                                                                                  |    |
| SIGNATURES                                                                                                                                                                       | 41 |

 

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**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**

This annual report on Form 10-KSB and the exhibits attached hereto contain certain statements that constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans        related to our business and matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. We use words like “expects,” “believes,” “intends,” “anticipates,” “plans,” “targets,” “projects” or “estimates” in this annual report. When used,        these words and other, similar words and phrases or statements that an event, action or result “will,” “may,” “could,” or “should” occur, be taken or be achieved, identify “forward-looking” statements. Such forward-looking statements are subject to certain risks and uncertainties, both known and unknown, and assumptions, including, without limitation, risks related to:

|   | **•** | our failure to obtain additional financing; |
|--------|------------|---------------------------------------------|

|   | **•** | our inability to continue as a going concern; |
|--------|------------|-----------------------------------------------|

|   | **•** | the unique difficulties and uncertainties inherent in the mineral exploration business; |
|--------|------------|-----------------------------------------------------------------------------------------|

|   | **•** | the inherent dangers involved in mineral exploration; |
|--------|------------|-------------------------------------------------------|

|   | **•** | our President’s and Secretary/Treasurer’s inability or unwillingness to devote a sufficient amount of time to our business operations; |
|--------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | environmental, health and safety laws in Peru; |
|--------|------------|------------------------------------------------|

|   | **•** | governmental regulations and processing licenses in Peru; |
|--------|------------|-----------------------------------------------------------|

|   | **•** | uncertainty as to the termination and renewal of our Peruvian mining concessions; |
|--------|------------|-----------------------------------------------------------------------------------|

|   | **•** | our drilling and exploration program and Banking Feasibility Study; |
|--------|------------|---------------------------------------------------------------------|

|   | **•** | our development projects in Peru; |
|--------|------------|-----------------------------------|

|   | **•** | Peruvian economic and political conditions; |
|--------|------------|---------------------------------------------|

|   | **•** | the Peruvian legal system; |
|--------|------------|----------------------------|

|   | **•** | native land claims in Peru; |
|--------|------------|-----------------------------|

|   | **•** | natural hazards in Peru; and |
|--------|------------|------------------------------|

|   | **•** | our common stock. |
|--------|------------|-------------------|

 

The preceding bullets outline some of the risks and uncertainties that may affect our forward-looking statements. For a full description of risks and uncertainties, see the sections elsewhere in this Form 10-KSB entitled “Risk Factors”, “Description of the Business” and “Management's Discussion and Analysis”. Should one or more of these risks or uncertainties        materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.

Our management has included projections and estimates in this annual report, which are based primarily on management's experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the Securities and Exchange Commission or otherwise publicly available. We caution readers not to place undue        reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

**PART I** 

| **ITEM 1.** | **DESCRIPTION OF BUSINESS.** |
|-------------|------------------------------|

As used in this annual report, and unless otherwise indicated, the terms "we", "us", "our", “Black Tusk” and the “Company” refer to Black Tusk Minerals Inc. All dollar amounts in this Annual Report are expressed in U.S. dollars unless otherwise indicated.

**Business Development**

Our corporate contact information is 1199 West Pender Street, Suite 408, Vancouver, British Columbia, Canada V6E 2R1, (604) 689-3443. We were incorporated on August 8, 2005 in the State of Nevada with the intention of acquiring mineral exploration projects. Effective September 21, 2007, the Company incorporated a wholly-owned subsidiary, Black Tusk Minerals Peru SAC (“Black Tusk Peru”), in        Peru.

1

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**Business of Issuer**

We are an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No.7 “*Accounting and Reporting for Development Stage Enterprises*”. Our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether its properties contain mineral reserves        that are economically recoverable.

On August 24, 2006, we entered into a sale and acquisition agreement whereby we acquired a 100% interest in one unpatented mineral claim, representing 440.8066 hectares, or 17.63 mineral units, known as the GOLDEN BEAR Claim. The GOLDEN BEAR Claim is located on the east shore of Harrison Lake in the New Westminster Mining District, British Columbia, Canada. On December 31, 2007, the Company allowed the        GOLDEN BEAR claim to lapse.

On August 13, 2007, we entered into a term sheet with Leonard Raymond De Melt, an individual, and Marlene Ore Lamilla, an individual, detailing the principal terms of our proposed acquisition of certain mining concessions and pediments located in the District of Huanza, Province of Huarochiri, Department of Lima (the “Peru Properties”) owned by Marlene Ore Lamilla.

On December 5, 2007, we entered into a master purchase agreement with Black Tusk Peru, a Peru corporation and our newly-formed subsidiary, Leonard Raymond De Melt, and Marlene Ore Lamilla (“Master Purchase Agreement”), pursuant to which we agreed to issue an aggregate of 10,000,000 common shares, par value $0.001 per share, of the Company to Ms. Lamilla and her designees in consideration        for the transfer by Ms. Lamilla to Black Tusk Peru of the Peru Properties. As additional consideration for the transfer of the Peru Properties, Black Tusk Peru agreed to grant to Marlene Ore Lamilla (or her designee) a 1% royalty on the net smelter returns upon commercial production on the Peru Properties.

Concurrently with the execution of the Master Purchase Agreement, Marlene Ore Lamilla and Black Tusk Peru entered into a mining concessions and claims transfer agreement, dated as of December 5, 2007 (the “Peru Transfer Agreement”), to govern the transfer and registration of the Peru Properties under Peruvian law.

On April 24, 2008 (the “Closing Date”), we consummated the transactions contemplated by the Master Purchase Agreement and the Peru Transfer Agreement. Our consummation of the Master Purchase Agreement and the Peru Transfer Agreement was contingent upon, among other things, the formalization of the Peru Transfer Agreement into a public deed before a Peruvian notary public, recordation of the        Peru Transfer Agreement with the appropriate Peruvian governmental entity and registration of the Peru Properties in the name of “Black Tusk Minerals Peru SAC” with the appropriate Peruvian registries. As of the Closing Date, all of the Peru Properties had been registered with the appropriate Peruvian registries, except for the properties designated “Altococha Mine 2” and “Altococha Mine 10”. We hope to complete the registration of these properties as        soon as possible.

Also on April 24, 2008, Kurt Bordian and the Company entered into a Contribution Agreement pursuant to which Mr. Bordian contributed 3,250,000 common shares to the Company in return for payment by the Company of $1,625 and Peter Watson and the Company entered into a Contribution Agreement pursuant to which Mr. Watson contributed 2,750,000 common shares to the Company in return for a payment by the        Company of $1,375.

**Business Strategy**

Our business strategy to date has been focused on acquiring and developing advanced stage and past producing properties throughout the Americas.To that end, during this past year we have acquired the Peruvian Properties. Our objective is to increase value of our shares through the exploration, development and extraction of mineral deposits, beginning with our Peruvian Properties.        The development and extraction may be performed by us or may be performed by potential partners or independent contractors. To date, the Company had not completed a technical report on the Peru Properties.  The Company has engaged an engineer to assist in the technical review of the Peru Properties and produce a report in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects. Upon completion of this report, the Company will be able to specify its        plan for exploration of the Peru Properties. We will also consider the acquisition and exploration of other potential mineral bearing properties elsewhere within the Americas.

 

**Competition**

 

The mineral exploration industry, in general, is intensively competitive and even if commercial quantities of ore are discovered, a ready market may not exist for the sale of the ore. Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing        equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our not receiving an adequate return on invested capital.

2

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***Peruvian Environmental, Health and Safety Laws***

Our exploration and mining activities are subject to a number of Peruvian laws and regulations, including environmental laws and regulations, as well as certain industry technical standards, permits, licenses and authorizations. Additional matters subject to regulation include, but are not limited to, concession fees and penalties, transportation, production, water use and discharge, power use and        generation, use and storage of explosives, controlled chemical supplies, surface rights, community and stakeholders’ participation and involvement, plant and facilities’ construction approval, housing and other facilities for workers, reclamation, taxation, labor standards, mine safety and occupational health.

 

Environmental regulations and sustainable development standards in Peru have become increasingly stringent over the last decade, which may require us to dedicate a substantial amount of time and money to compliance and remediation activities. We expect additional laws and regulations will be enacted over time with respect to environmental, social and sustainable development matters. Recently, Peruvian        environmental laws have been enacted imposing closure and remediation obligations on the mining industry.

 

The development of more stringent environmental protection programs in Peru and in relevant trade agreements could impose constraints and additional costs on our operations and require us to make significant capital expenditures in the future. Future legislative, regulatory or trade developments may have an adverse effect on our business, properties, results of operations, financial condition or        prospects.

 

***Peruvian Licensing and Regulation***

 

Governmental approvals, licenses and permits are, as a practical matter, subject to the discretion of the applicable governments or governmental offices in Peru. We must comply with known standards, existing laws and regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be permitted and the interpretation of the laws and regulations implemented by the        permitting authority.

 

New laws and regulations, amendments to existing laws and regulations, or more stringent enforcement of existing laws and regulations, could have a material adverse impact on our results of operations, financial condition and prospects. Exploration, mining and processing activities are dependent upon the grant of appropriate licenses, concessions, leases, permits, approvals, certificates and regulatory        consents which may be withdrawn or made subject to limitations. There can also be no assurance that they will be granted or renewed or, if so, on what terms.

 

Certain licenses contain a range of past, current and future obligations, including minimum expenditure requirements. In some cases there could be adverse consequences of breach of these obligations, ranging from penalties to, in extreme cases, suspension or termination of the licenses or related contracts.

 

The level of any royalties or taxes payable to the Peruvian government or any other governmental authority in respect of the production of precious or base metals or minerals may be varied at any time as a result of changing legislation.

 

***Peruvian Mining Concessions***

 

Under the laws of Peru, mineral resources belong to the state and government concessions are required to explore for or exploit mineral reserves. In Peru, our mineral rights derive from concessions from the Peruvian Ministry of Energy and Mines for exploration, exploitation, extraction, transportation and/or production operations. Mining concessions in Peru may be terminated if the requirements of the        concessionaire are not satisfied.

 

In order to maintain our mining concessions in good standing in Peru, we are obligated to pay annual fees and to reach minimum production levels after the first six years after the concession title has been granted. If said minimum production is not reached, the holder of the concession would have to pay a US$6.00 penalty per hectare per year. It is possible to avoid payment of the penalty if evidence is        provided to the mining authorities that an amount equivalent to not less than ten times the applicable penalty has been invested. Therefore, if it is proven that an investment of US$60.00 per hectare per year has been made in the concession, there will be no obligation to pay the penalty (US$200.00 as of the twelfth year).

3

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***Peruvian Native Land Claims***

 

We are unaware of any outstanding native land claims on the Peru Properties. However, it is possible that a native land claim could be made in the future. Should we encounter a situation where a native person or group claims an interest in our claims, we may be able to provide compensation to the affected party in order to continue with our exploration work, or if such an option is not available, we may        have to relinquish our interest in these claims. In either case, the costs and/or losses could be greater than our financial capacity and our business would fail. Notwithstanding the foregoing, we currently have a ten year term agreement with the Peasant Community of Huanza, which is the registered titleholder of the land in which our Peru Properties are located, for the use of their land to conduct mining exploration activities. This agreement is in the process of being recorded with        the public registry in order to have enforceability against the State and third parties.

 

**Employees**

There are no significant employees other than Kurt Bordian and Gavin Roy.

**RISK FACTORS**

Much of the information included in this annual report includes or is based upon estimates, projections or other forward-looking statements. Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect        our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

Such estimates, projections or other forward-looking statements involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other forward-looking statements.        Prospective investors should consider carefully the risk factors set out below.

**Risks Relating to the Company**

***If we do not obtain additional financing, our business will fail.***

 

As of May 31, 2008, we had cash in the amount of $214 and a working capital deficit in the amount of $103,778. We currently do not have any operations and we have no revenue from operations. Our business plan calls for expenses in connection with the technical review and exploration of the Peru Properties. Our current operating funds will not be sufficient to carry out our planned exploration program on        the Peru Properties. In addition, we will require additional financing to provide funds for anticipated operating overhead, professional fees and regulatory filing fees. We will need to obtain additional financing to complete our planned programs and to sustain our business operations. If our exploration programs are successful in discovering ore of commercial tonnage and grade, we will require additional funds in order to place the Peru Properties into commercial production, if        warranted. The Company’s plans for the next twelve months are to focus on the exploration of the Peru Properties and we estimate that cash requirements of approximately $350,000 will be required for exploration, administration, and working capital costs for the fiscal year ending May 31, 2009. However, we do not have any commitments to fund these costs. Therefore, we need to raise an additional $350,000 in the next twelve months. We believe that such funds, if raised, will be        sufficient to meet our liquidity requirements through May 31, 2009. Failure to raise needed financing could result in our having to discontinue our mining exploration and development business. Subsequent to May 31, 2008, we obtained proceeds in the amount of $128,000 through a private placement of our common shares.

4

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5

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The development of more stringent environmental protection programs in Peru and in relevant trade agreements could impose constraints and additional costs on our operations and require us to make significant capital expenditures in the future. We cannot assure you that future legislative, regulatory or trade developments will not have an adverse effect on our business, properties, results of operations,        financial condition or prospects.

 

***Governmental regulations and processing licenses.***

 

Governmental approvals, licenses and permits are, as a practical matter, subject to the discretion of the applicable governments or governmental offices. We must comply with known standards, existing laws and regulations that may entail greater or lesser costs and delays depending on the nature of the activity to be permitted and the interpretation of the laws and regulations implemented by the permitting        authority.

 

New laws and regulations, amendments to existing laws and regulations, or more stringent enforcement of existing laws and regulations, could have a material adverse impact on our results of operations, financial condition and prospects. Exploration, mining and processing activities are dependent upon the grant of appropriate licenses, concessions, leases, permits, approvals, certificates and regulatory        consents which may be withdrawn or made subject to limitations. There can also be no assurance that they will be granted or renewed or, if so, on what terms.

 

Certain licenses contain a range of past, current and future obligations, including minimum expenditure requirements. In some cases there could be adverse consequences of breach of these obligations, ranging from penalties to, in extreme cases, suspension or termination of the licenses or related contracts.

 

The level of any royalties or taxes payable to the Peruvian government or any other governmental authority in respect of the production of precious or base metals or minerals may be varied at any time as a result of changing legislation.

 

***There is uncertainty as to the termination and renewal of our mining concessions.***

 

Under the laws of Peru, mineral resources belong to the state and government concessions are required to explore for or exploit mineral reserves. In Peru, our mineral rights derive from concessions from the Peruvian Ministry of Energy and Mines for exploration, exploitation, extraction, transportation and/or production operations. Mining concessions in Peru may be terminated if the requirements of the        concessionaire are not satisfied.

 

In order to maintain our mining concessions in good standing in Peru, we are obligated to pay annual fees and to reach minimum production levels after the first six years after the concession title has been granted. If said minimum production is not reached, the holder of the concession would have to pay a US$6.00 penalty per hectare per year. It is possible to avoid payment of the penalty if evidence is        provided to the mining authorities that an amount equivalent to not less than ten times the applicable penalty has been invested. Therefore, if it is proven that an investment of US$60.00 per hectare per year has been made in the concession, there will be no obligation to pay the penalty (US$200.00 as of the twelfth year).

 

Following the same principle established in connection with the validity fee, evidence of compliance with the requested minimum production or investment or, in its defect, payment of the corresponding penalty can only be missed for one year. Non-compliance with any of these possibilities for two consecutive years, results in the cancellation of the mining concession.

 

Any termination or unfavorable modification of the terms of one or more of our concessions, or failure to obtain renewals of such concessions subject to renewal or extensions, could have a material adverse effect on our financial condition and prospects.

6

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***Drilling and Exploration Program and Banking Feasibility Study (BFS).***

 

As with any significant undertaking or effort, the completion of a drilling and exploration program and BFS involves various uncertainties, including availability of materials and labor, labor relations issues, inclement weather, unforeseen engineering, environmental or geological issues, and unanticipated difficulties in obtaining any of the requisite licenses or permits, any of which could give rise to        delays or cost overruns or cause the results of the drilling and exploration program and BFS to be less than expected levels. In addition, during perforation and construction of the development tunnels, the contractors could encounter unexpected sub-surface conditions or other difficulties, which could delay or even prevent us from generating or receiving revenues.

 

***Development projects.***

 

The development of new mining operations, which generally result from identifying potentially economically recoverable volumes of minerals or metals, have no operating history upon which to base estimates of future cash operating costs. For such development projects, estimates of proven and probable reserves and cash operating costs are, to a large extent, based upon the interpretation of geological data        obtained from drill holes and other sampling techniques and feasibility studies which derive estimates of cash operating costs based upon anticipated tonnage and grades of ore to be mined and processed, the configuration of the ore body, expected recovery rates, comparable facility and equipment operating costs, anticipated climatic conditions and other factors. As a result, it is possible that actual cash operating costs and economic returns may differ from those estimated.

 

***Peruvian economic and political conditions may have an adverse impact on our business.***

 

As of the date of this report, our operations are conducted solely in Peru. Accordingly, our business, financial condition or results of operations could be affected by changes in economic or other policies of the Peruvian government or other political, regulatory or economic developments in Peru. During the past several decades, Peru has had a history of political instability that has included military        coups and a succession of regimes with differing policies and programs. Past governments have frequently intervened in the nation’s economy and social structure. Among other actions, past governments have imposed controls on prices, exchange rates and local and foreign investment as well as limitations on imports, have restricted the ability of companies to dismiss employees, have expropriated private sector assets (including mining companies) and have prohibited the remittance of        profits to foreign investors.

 

On April 9, 2006, Peruvian citizens participated in the election for president, congress and representatives to the Andean Parliament, to be appointed for the five-year period commencing July 28, 2006. 24 political parties participated in this election process. As none of the presidential candidates received more than 50 percent of the votes, on June 4, 2006 a run-off election between the top two vote        getters was held. On June 16, 2006, the National Office of Electoral Processes proclaimed Mr. Alan Garcia president-elect, thereby bringing the electoral process to an end. Mr. Garcia assumed office on July 28, 2006. Mr. Garcia, a member of the APRA party, was president of Peru from 1985 to 1990. At the inauguration an appeal was made to the most representative companies of the mining industry for a voluntary contribution for regional development, as long as metal and mineral prices        remain buoyant.

 

There is a risk of terrorism in Peru relating to Sendero Luminoso and the Movimiento Revolucionario Tupac Amaru, which were particularly active in the 1980s and early 1990s. We cannot guarantee that acts by these or other terrorist organizations will not adversely affect our operations in the future.

 

Because, as of the date of this report, we operate solely in Peru, we cannot provide any assurance that political developments in Peru will not have a material adverse effect on market conditions, prices of our securities, our ability to obtain financing, and our results of operations and financial condition.

 

***Legal system in Peru.***

 

Peru may have a less developed legal system than more established economies which could result in risks such as (i) effective legal redress in the courts of such jurisdictions, whether in respect of a breach of law or regulation, or in an ownership dispute, being more difficult to obtain; (ii) a higher degree of discretion on the part of governmental authorities; (iii) the lack of judicial or        administrative guidance on interpreting applicable rules and regulations; (iv) inconsistencies or conflicts between and within various laws, regulations, decrees, orders and resolutions; or (v) relative inexperience of the judiciary and courts in such matters. Peruvian business people, government officials and agencies and the judicial system’s commitment to abide by legal requirements and negotiated agreements may be more uncertain, creating particular concerns        with respect to the licenses and agreements for business.

7

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***Native land claims might affect our title to the Peru Properties and our business plan may fail.***

 

We are unaware of any outstanding native land claims on the Peru Properties. However, it is possible that a native land claim could be made in the future. Should we encounter a situation where a native person or group claims an interest in our claims, we may be able to provide compensation to the affected party in order to continue with our exploration work, or if such an option is not available, we may        have to relinquish our interest in these claims. In either case, the costs and/or losses could be greater than our financial capacity and our business would fail. Notwithstanding the foregoing, we currently have a ten year term agreement with the Peasant Community of Huanza, which is the registered titleholder of the land in which our Peru Properties are located, for the use of their land to conduct mining exploration activities. This agreement is in the process of being recorded with        the public registry in order to have enforceability against the State and third parties.

 

***Natural hazards may have an adverse impact on our business.***

 

Fires, earthquakes, floods, volcanic eruptions or other similar catastrophic events could cause personal injury, loss of life, damage or destruction to the project or suspension of operations. Although we may maintain insurance to protect ourselves against certain risks, the proceeds of such insurance may not be adequate to cover reduced revenues, increased expenses or other liabilities arising from the        occurrence of any of the events described above. Moreover, there can be no assurance that insurance coverage will be available in the future at commercially reasonable rates or that the amounts for which we will be insured will cover all losses.

**Risks Relating to Our Common Stock**

***Our common stock has a limited trading history and has experienced price volatility.***

Our common stock trades on the OTC Bulletin Board. The volume of trading in our common stock varies greatly and may often be light, resulting in what is known as a "thinly-traded" stock. Until a larger secondary market for our common stock develops, the price of our common stock may fluctuate substantially. The price of our common stock may also be impacted by any of the following, some of which may have        little or no relation to our company or industry:

|  | **•** | the breadth of our stockholder base and extent to which securities professionals follow our common stock;                       |
|--|------------|---------------------------------------------------------------------------------------------------------------------------------|
|  | **•** | investor perception of our Company and the mining industry, including industry trends;                                          |
|  | **•** | domestic and international economic and capital market conditions, including fluctuations in commodity prices;                  |
|  | **•** | responses to quarter-to-quarter variations in our results of operations;                                                        |
|  | **•** | announcements of significant acquisitions, strategic alliances, joint ventures or capital commitments by us or our competitors; |
|  | **•** | additions or departures of key personnel;                                                                                       |
|  | **•** | sales or purchases of our common stock by large stockholders or our insiders;                                                   |
|  | **•** | accounting pronouncements or changes in accounting rules that affect our financial reporting; and                               |
|  | **•** | changes in legal and regulatory compliance unrelated to our performance.                                                        |

In addition, the stock market in general and the market for mineral exploration companies in particular have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating results or asset values of those companies. These broad market and industry factors may seriously impact the market price and trading volume of our common shares regardless of our actual operating performance.

8

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***We have not paid cash dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future.***

We do not anticipate paying cash dividends on our common stock in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors that our board of directors considers relevant. Accordingly, investors        may only see a return on their investment if the value of our securities appreciates.

***A decline in the price of our common stock could affect our ability to raise further working capital and adversely impact our operations.***

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because our operations have been primarily financed through the sale of equity securities, a decline in the price of our common stock could be especially detrimental to our liquidity and our continued operations. Any reduction in our ability        to raise equity capital in the future would force us to reallocate funds from other planned uses and would have a significant negative effect on our business plans and operations, including our ability to explore and develop new properties and continue our exploration and development of our current property interests. If our stock price declines, we may not be able to raise additional capital or generate funds from operations sufficient to meet our obligations.

***Our stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission's penny stock regulations which may limit a stockholder's ability to buy and sell our stock.***

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on        broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk        disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid        and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable        investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common        stock.

***The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a stockholder's ability to buy and sell our stock.***

In addition to the "penny stock" rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain        information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the        market for our shares.

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| **ITEM 2.** | **DESCRIPTION OF PROPERTY.** |
|-------------|------------------------------|

**Corporate Headquarters, Vancouver, British Columbia**

Our corporate headquarters are located at 1199 West Pender Street, Suite 408, Vancouver, British Columbia, Canada V6E 2R1. Our current premises are adequate for our existing operations.

**Real Estate Investments**

We do not currently maintain any investments in real estate, real estate mortgages or securities of persons primarily engaged in real estate activities, nor do we expect to do so in the foreseeable future.

**GOLDEN BEAR Claim**

On April 24, 2006, we purchased the GOLDEN BEAR Claim from Nicholson and Associates Natural Resources Development Corp. of Vancouver, British Columbia for $7,500, inclusive of the assessment costs, which sum consisted of filing fees of $160, geological report costs of $3,000, and the property purchase payment of $4,340.

 

In order to maintain the GOLDEN BEAR claim in good standing, we were required to make minimal expenditures on the claims or pay renewal fees to the B.C. Ministry of Energy and Mines. Pursuant to 35(1) of the Mineral Tenure Act, a mineral or placer claim forfeits automatically when exploration and development work or payment instead of work has not been registered by the end of the expiry date of the        claim. On December 31, 2007, the Company allowed the GOLDEN BEAR claim to lapse.

 

We did not earn any revenues from the GOLDEN BEAR claim.

 

**Peru Properties**

To date, the Company had not completed a technical report on the Peru Properties.  The Company has engaged an engineer to assist in the technical review of the Peru Properties and produce a report in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects.

 

***Acquisition, Location and Description***

On December 5, 2007, we entered into the Master Purchase Agreement with Black Tusk Peru, a Peru corporation and a newly-formed subsidiary of the Company, Leonard Raymond De Melt, and Marlene Ore Lamilla, pursuant to which we agreed to issue an aggregate of 10,000,000 common shares, par value $0.001 per share, of the Company to Ms. Lamilla and her designees in consideration for the transfer by        Ms. Lamilla to Black Tusk Peru of the Peru Properties. As additional consideration for the transfer of the Peru Properties, Black Tusk Peru agreed to grant to Marlene Ore Lamilla (or her designee) a 1% royalty on the net smelter returns upon commercial production on the Peru Properties.

 

Concurrently with the execution of the Master Purchase Agreement, Marlene Ore Lamilla and Black Tusk Peru entered into the Peru Transfer Agreement, to govern the transfer and registration of the Peru Properties under Peruvian law.

 

On the Closing Date, we consummated the transactions contemplated by the Master Purchase Agreement and the Peru Transfer Agreement. Our consummation of the Master Purchase Agreement and the Peru Transfer Agreement was contingent upon, among other things, the formalization of the Peru Transfer Agreement into a public deed before a Peruvian notary public, recordation of the Peru Transfer Agreement with the        appropriate Peruvian governmental entity and registration of the Peru Properties in the name of “Black Tusk Minerals Peru SAC” with the appropriate Peruvian registries. As of the Closing Date, all of the Peru Properties had been registered with the appropriate Peruvian registries, except for the properties designated “Altococha Mine 2” and “Altococha Mine 10”. We hope to complete the registration of these properties as soon as        possible.

 

The Peru Properties occupy 77 square kilometers of mining concessions in the Republic of Peru. The concessions are located approximately 80 kilometers northeast of the capital, Lima, in the long hydrothermal alteration trend known as the Central Polymetallic Belt. This area is situated in the rugged Western Andean range at an average elevation of 4,200 meters, an area with a long history of        successful production.

 

10

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The Peru Properties consist of the following mining concessions and pediments located in the District of Huanza, Province of Huarochiri, Department of Lima, Peru: 

 

| **Code**    | **Name**          | **Hectares** | **Status** |
|-------------|-------------------|--------------|------------|
| 01-01324-07 | ALTOCOCHA MINE 1  | 29.93        | Concession |
| 01-01327-07 | ALTOCOCHA MINE 4  | 605.00       | Concession |
| 01-01598-07 | ALTOCOCHA MINE 7  | 300.00       | Concession |
| 01-01597-07 | ALTOCOCHA MINE 8  | 979.73       | Concession |
| 01-01664-07 | ALTOCOCHA MINE 9  | 1000.00      | Concession |
| 01-04753-06 | CORVINA           | 500.00       | Concession |
| 01-04755-06 | DELFIN            | 200.00       | Concession |
| 01-04754-06 | JOSH 1            | 600.00       | Concession |
| 01-01292-07 | ALTOCOCHA MINE    | 1000.00      | Pediment   |
| 01-01325-07 | ALTOCOCHA MINE 2  | 196.77       | Pediment   |
| 01-01326-07 | ALTOCOCHA MINE 3  | 374.41       | Concession |
| 01-01328-07 | ALTOCOCHA MINE 5  | 126.92       | Concession |
| 01-01665-07 | ALTOCOCHA MINE 10 | 984.67       | Pediment   |
| 01-01666-07 | ALTOCOCHA MINE 11 | 500.00       | Pediment   |
| 01-01667-07 | ALTOCOCHA MINE 12 | 300.00       | Pediment   |

 

As at May 31, 2008, the properties designated “Altococha Mine 2” and “Altococha Mine 10” had not been formally registered in the appropriate Peruvian registries in the name of Black Tusk Peru. The Company hopes to complete the registration of these properties as soon as possible.

 

***Access, Climate, Local Resources, Infrastructure and Physiography***

 

The elevation of the mine gate is about 4,100 meters above sea level and is accessible by paved and then gravel road which branches off from the Pan American Highway. Total travel time from Lima is approximately five hours.

 

The climate in the project area is typical of the Peruvian Andes with both wet and dry seasons. The wet season is from December to March, during which limited periods of electrical storm activity can develop with hail, rain and occasionally snow above 5,000 meters. Individual rainfall events can be severe, with over an inch falling in an hour. Dense fog is common during the rainy season and temperatures        rarely reach above 15°C. The dry season is from April to November, during which the coldest temperatures can fall below 0°C and highest temperatures may exceed 25°C. Rainfall is very rare in the dry season.

 

The Peru Properties are located in an area of high altitude – the mine gate is at 4,100 meters. The mountain slopes are steep to occasionally vertical where local topography is defined by fault planes. Valley floors and gently dipping terrain below 4,500 meters is covered with short grasses and small bushes near drainages and the upper terrain is covered with barren rock. Subsistence farming is        variably developed in the valleys and alpacas, llamas and goats are herded at higher elevations.

 

The town of San Mateo, with approximately 4,500 inhabitants, is the only population center in the immediate vicinity of the Property and is located along the Central Highway approximately two hours from Lima.

 

***Operational History***

 

The area east of Lima is well known for its numerous gold and base metal deposits and mining in the area dates back to the early colonial days, when the Spaniards mined the small polymetallic veins in the area. Commercial production from the Nueva Condor mine, which the Altochocha properties surround, did not commence until 1956. Based on published information, it is reported that from 1956 to 1991,        Compania Minera Huampar S.A., produced about 25,000 ounces of gold and about 15 million ounces of silver. 2.5 million tons averaging

 

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1.6 g/t Au, 5.4 oz/ton Ag, 3.8% Pb and 5.0% Zn was reported to have been milled. The mine, however, was shut down in 1991 due to a terrorist event which destroyed a major power plant, hence stopping part of the power supply to the city of Lima and also to the Altococha mine. Black Tusk has assembled a highly experienced management and consulting team that possesses the necessary skills and in-country experience to realize the full potential of these        properties. 

***Present Condition***

 

As of May 31, 2008, the Company has not completed a technical report on the Peru Properties.  The Company has engaged an engineer to assist in the technical review of the Peru Properties and produce a report in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects. Otherwise, the Company has neither improved the present condition of, nor undertaken any work on, the        Peru Properties aside from road construction.

 

The total cost for the Peru Properties as of May 31, 2008 has been $1,330,000, which represents the acquisition cost only (see Note 4 to the “Financial Statements” section of this Form 10-KSB for additional information regarding mineral property costs). The Company has made no improvements on the Peru Properties and they contain no physical plant, equipment, or other structures.

 

The Company’s anticipates using diesel generators as the exclusive power source for the Peru Properties.

 

As of May 31, 2008, the Company is without knowledge of any environmental issues specific to the Peru Properties. The Company intends to undertake an extensive environmental due diligence program on the entire site.

 

***Geological Setting and Deposit Types***

As of May 31, 2008, the Company has not completed a technical report on the Peru Properties.  Therefore, there are no mineral resources or mineral reserves estimated for the property in accordance with National Instrument 43-101. As of May 31, 2008, we have performed very limited exploration and sampling of the Peru Properties. The Company has engaged an engineer to assist in the technical review of the        Peru Properties and produce a report in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects.

***Recommended Program***

As of May 31, 2008, the Company has not completed a technical report on the Peru Properties.  The Company has engaged an engineer to assist in the technical review of the Peru Properties and produce a report in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects.

 

***Capital Expenditures***

 

As of May 31, 2008, the Company is in the exploration phase of its planned operations for the Peru Properties. Consequently, we do not anticipate making any capital expenditures for the fiscal year ending May 31, 2009. The only expenses we anticipate accruing prior to May 31, 2009 are those relating to operations, exploration, and technical review.

 

| **ITEM 3.** | **LEGAL PROCEEDINGS.** |
|-------------|------------------------|

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

| **ITEM 4.** | **SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.** |
|-------------|----------------------------------------------------------|

There were no matters submitted to a vote of our security holders either through solicitation of proxies or otherwise in the fourth quarter of the fiscal year ended May 31, 2008.

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| **ITEM 5.** | **MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND**

****SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.**** |
|-------------|------------------------------------------------------------------------------------------------------------------------------|

**Market Information**

Our common stock is quoted on the Over The Counter Bulletin Board (“OTCBB”), which is sponsored by the Financial Industry Regulatory Authority (“FINRA”). The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network, which provides information on current “bids” and “asks” as well as volume information.        The OTCBB is not considered a “national exchange”. Our symbol is “BKTK”.

Our common stock began trading on the OTCBB on February 1, 2008. Accordingly, there is only a very limited trading history for our common stock. Prior to the shares of our common stock being quoted on OTCBB, the sales price to the public was fixed at $0.30 per share. Further, the market for shares in our common stock is limited because only a small number of our outstanding shares are available for        trading in the public market.

The high and low bid quotations of our common stock on the OTCBB as reported by FINRA were as follows:

| **FINRA OTC Bulletin Board(1)****(stock price data not available prior to March 14, 2008)** |
|---------------------------------------------------------------------------------------------|
| **Quarter Ended**                                                                           | **High** | **Low** |
| May 31, 2008                                                                                | $0.55 | $0.20 |

|   | (1) | Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Holders**

Our common shares are issued in registered form. Pacific Corporate Trust Company, 510 Burrard Street, 2nd Floor, Vancouver, British Columbia, Canada V6C 3B9, (604) 689-9853 (phone), (604) 689-8144 (fax) is the registrar and transfer agent for our common shares. On August 22, 2008, the shareholders' list of our common shares showed 77 registered shareholders and 22,918,576 shares        outstanding.

**Dividend Policy**

We have not paid any cash dividends on our common stock and we have no intention of paying any dividends on our shares of common stock in the near future. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.

**Securities Authorized for Issuance Under Equity Compensation Plans**

We do not currently have any securities authorized for issuance under equity compensation plans.

**Recent Sales of Unregistered Securities**

During the year ended May 31, 2008, we have offered and sold the following securities in unregistered transactions pursuant to exemptions under the Securities Act of 1933, as amended.

|   | **•** | On September 13, 2007, the Company completed an offer and sale of 628,076 post forward stock-split common shares of the Company at a price of $0.15 per common share for net proceeds of $91,212 net of share issuance costs of $3,000. The offering of common shares was conducted by the Company in a non-brokered private placement to non-U.S. persons outside                        the United States pursuant to an exemption from registration available under Rule 903 of Regulation S of the Securities Act of 1933, as amended; |
|--------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | **•** | On February 8, 2008, the Company issued 106,500 common shares at a price of $0.15 per common share for proceeds of $15,975. The offering of common shares was conducted by the Company in a non-brokered private placement to non-U.S. persons outside the United States pursuant to an exemption from registration available under Rule 903 of Regulation S of the                        Securities Act of 1933, as amended; and |
|--------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | On April 24, 2008, the Company issued 10,000,000 common shares at a fair value of $0.13 per common share for the acquisition of the Peru Properties. The 10,000,000 common shares were issued to non-U.S. persons outside the United States pursuant to an exemption from registration available under Rule 903 of Regulation S of the Securities Act of 1933, as                        amended; and |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | Subsequent to our fiscal year ending on May 31, 2008, the Company issued 512,000 common shares at a price of $0.25 per share for aggregate gross proceeds of $128,000. The offering of common shares was conducted by the Company in a non-brokered private placement to non-U.S. persons outside the United States pursuant to an exemption from registration                        available under Rule 903 of Regulation S of the Securities Act of 1933, as amended. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Purchases of Equity Securities by the Issuer and Affiliated Purchasers**

During the period covered by this annual report, neither us nor any of our affiliates repurchased common shares of the Company registered under section 12 of the Exchange Act of 1934, as amended.

| **ITEM 6.** | **MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.** |
|-------------|----------------------------------------------------------------|

**Selected Financial Data**

The selected financial information presented below as of and for the periods indicated is derived from our financial statements contained elsewhere in this report and should be read in conjunction with those financial statements. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in        the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" found elsewhere in this report.

| **INCOME STATEMENT DATA**                                                | **Accumulated from August 8, 2005 (Date of Inception) to May 31, 2008** | **Year Ended May 31, 2008** | **Year Ended May 31, 2007** |
|--------------------------------------------------------------------------|-------------------------------------------------------------------------|-----------------------------|-----------------------------|
| Revenue                                                                  | $NIL                                                                    | $NIL                        | $NIL                        |
| Operating Expenses                                                       | $1,742,715                                                              | $1,670,861                  | $47,215                     |
| Net Income (Loss)                                                        | $(1,742,715)                                                            | $(1,670,861)                | $(47,215)                   |
| Net Loss Per Share                                                       |                                                                    | $.09                        | —                     |
| Weighted Average Number of Common Shares Outstanding (basic and diluted) |                                                                    | 18,503,000                  | 17,672,000                  |

 

| **BALANCE SHEET DATA**               | **As at May 31, 2008** | **As at May 31, 2007** |
|--------------------------------------|------------------------|------------------------|
| Working Capital (Deficiency)         | $(103,778)             | $(2,104)               |
| Total Assets                         | $295                   | $4,000                 |
| Accumulated Deficits                 | $(1,742,715)           | $(71,854)              |
| Shareholders’ Equity (Deficit) | $(103,778)             | $(2,104)               |

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Historical results of operations for Black Tusk Minerals Inc. may differ materially from future results.

This discussion and analysis should be read in conjunction with the accompanying financial statements and related notes. The discussion and analysis of the financial condition and results of operations are based upon the financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity        with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis the Company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that        the Company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but the Company does not believe such differences will materially affect our financial position or results of operations. Critical accounting policies, the policies the Company believes are most important to the presentation of its financial statements and require the most difficult, subjective and complex judgments, are        outlined below in “Critical Accounting Policies.”

**Explanatory Note on Financial Statements**

The audited financial statements included in this report have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission.

**Plan of Operation**

***Golden Bear Claim***

 

On April 24, 2006, we purchased the GOLDEN BEAR Claim from Nicholson and Associates Natural Resources Development Corp. of Vancouver, British Columbia for $7,500, inclusive of the assessment costs, which sum consisted of filing fees of $160, geological report costs of $3,000, and the property purchase payment of $4,340.

 

In order to maintain the GOLDEN BEAR claim in good standing, we were required to make minimal expenditures on the claims or pay renewal fees to the B.C. Ministry of Energy and Mines. Pursuant to 35(1) of the Mineral Tenure Act, a mineral or placer claim forfeits automatically when exploration and development work or payment instead of work has not been registered by the end of the expiry date of the        claim. On December 31, 2007, the Company allowed the GOLDEN BEAR claim to lapse.

 

We did not earn any revenues from the GOLDEN BEAR claim.

 

***Peru Properties***

 

The Company’s plans for the next twelve months are to focus on the exploration of the Peru Properties and estimates that cash requirements of approximately $350,000 will be required for exploration and administration costs and to fund working capital. We do not have any commitments to fund these costs. Therefore, we need to raise an additional $350,000 in debt or equity financing in the next twelve        months. We believe that such funds, if raised, will be sufficient to meet our liquidity requirements through May 31, 2009. However, we do not have any commitments to fund such costs during the next twelve months. Subsequent to May 31, 2008, we obtained proceeds in the amount of $128,000 through a private placement of our common shares.

 

We anticipate that we will incur the following expenses over the next 12 months as of May 31, 2008:

  

|   | (1) | $200,000 for operating expenses, including general, legal, accounting and administrative expenses associated with our reporting obligations under the Securities Exchange Act of 1934, and general working capital expenditures; and |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | (2) | $150,000 for expenses related to the technical review and exploration of the Peru Properties. |
|--------|-----|-----------------------------------------------------------------------------------------------|

 

Failure to raise needed financing could result in our having to discontinue our mining exploration and development business.

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**Limited Operating History; Need for Additional Capital**

 

In the notes to the Company’s audited financial statements as of May 31, 2008, included elsewhere in this Form 10-KSB, the Company’s auditors included an explanatory paragraph stating that, because the Company had a working capital deficiency of $103,778 as of May 31, 2008, and had incurred accumulated losses of $1,742,715 for the period from August 8, 2005 (inception) to        May 31, 2008, there was substantial doubt about its ability to continue as a going concern.

 

There is limited historical financial information about the Company upon which to base an evaluation of its performance. The Company is a development stage enterprise and has not generated any revenues from operations. The Company cannot guarantee it will be successful in its business operations. The Company’s business is subject to risks inherent in the establishment of a new mineral exploration        company, including limited capital resources, unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates.  To become profitable and competitive, the Company will implement its plan of operation as detailed above.

 

The Company will be required to raise funds in addition to the June 17, 2008 equity financing described above to complete a technical review of the Peru Properties, phase I of a recommended exploration program on the Peru Properties and for general working capital purposes. Such financing activities could include issuing debt or equity securities in the Company and could result in a dilution of the        Company’s existing share capital. The Company can give no assurance that future financing will be available to it on acceptable terms or at all. If financing is not available on satisfactory terms, the Company may be unable to continue, develop or expand its operations.

 

**Results of Operations**

We did not earn any revenues from May 31, 2007 to May 31, 2008. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such resources are        discovered, that we will enter into commercial production of our mineral properties.  

 

We incurred operating expenses in the amount of $1,670,861 for the period from May 31, 2007 to May 31, 2008. These operating expenses included: (a) professional fees in connection with our corporate organization of $141,219; (b) donated office rent of $3,000; (c) donated management services of $6,000; (d) impairment of mineral property costs of $1,422,577; and (e) general and administrative costs of        $98,065.

 

We incurred a loss in the amount of $1,670,861 for the period from May 31, 2007 to May 31, 2008. Our loss was attributable to organizational costs, professional fees, administrative expenses and property impairment costs.

**Liquidity and Capital Resources**

There is limited financial information about the Company upon which to base an evaluation of our performance. We are an exploration stage company and have not generated any revenues from operations.

As at May 31, 2008, we had cash of $214, a working capital deficit of $103,778 and an accumulated deficit of $1,742,715.

Our continued existence and plans for future growth depend on our ability to obtain the capital necessary to operate by the sale of equity shares. We will need to raise additional capital to fund normal operating costs and exploration efforts. We anticipate that we will need $350,000 to fund our capital requirements through May 31, 2009. We do not have any commitments to fund these costs. Therefore, we        need to raise an additional $350,000 in debt or equity financing in the next twelve months. We believe that such funds, if raised, will be sufficient to meet our liquidity requirements through May 31, 2009. However, we do not have any commitments to fund such costs. If we are not able to generate sufficient revenues and cash flows or obtain additional or alternative funding, we will be unable to continue as a going concern. Our recurring losses and negative cash flow from operations        raise substantial doubt about our ability to continue as a going concern. Subsequent to May 31, 2008, we obtained proceeds in the amount of $128,000 through a private placement of our common shares.

16

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**Off-Balance Sheet Arrangements**

We have no off-balance sheet transactions.

**Critical Accounting Policies**

***Use of Estimates***

The preparation of consolidated financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and        assumptions related to impairment of its mineral properties, valuation of donated capital and deferred income tax asset valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from        other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

***Basic and Diluted Net Income (Loss) Per Share***

The Company computes net income (loss) per share in accordance with SFAS No. 128, "*Earnings per Share*". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of        shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect        is anti dilutive.

 

***Comprehensive Loss***

SFAS No. 130,*“Reporting Comprehensive Income,”*establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at May 31, 2008 and 2007, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial        statements.  The Company's Peruvian subsidiary uses the US dollar for its transactions and accounts for its operations in US dollars, which does not give rise to comprehensive income or loss.

***Cash and Cash Equivalents***

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

***Mineral Property Costs***

The Company has been in the exploration stage since its inception on August 8, 2005 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mineral properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred using the guidance in EITF 04-02,        “*Whether Mineral Rights Are Tangible or Intangible Assets*”. The Company assesses the carrying costs for impairment under SFAS 144, *“Accounting for Impairment or Disposal of Long Lived Assets”* at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be        amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

***Long-Lived Assets***

In accordance with SFAS No. 144, *“Accounting for the Impairment or Disposal of Long-Lived Assets”,* the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in        the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally

17

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expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.

Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

***Financial Instruments***

The fair-value of financial instruments, which include cash, accounts payable, accrued liabilities, and due to related parties, were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. Foreign currency transactions are primarily undertaken in Canadian dollars. The financial risk is the risk to the Company’s operations that arise        from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

***Income Taxes***

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109 “*Accounting for Income Taxes*” as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been        recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

***Foreign Currency Translation***

The Company’s functional and reporting currency is the United States dollar. The Company's Peruvian subsidiary uses the US dollar for its transactions and accounts for its operations in US dollars. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 “*Foreign Currency Translation*”, using the exchange rate prevailing        at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

**Recent Accounting Pronouncements**

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “*Accounting for Financial Guarantee Insurance Contracts – An interpretation of FASB Statement No. 60*”. SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is evidence that credit        deterioration has occurred in an insured financial obligation. It also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosures about financial guarantee insurance contracts. It is effective for financial statements issued for fiscal years beginning after December 15, 2008, except for some disclosures about the insurance        enterprise’s risk-management activities. SFAS 163 requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period beginning after issuance. Except for those disclosures, earlier application is not permitted. The adoption of this statement is not expected to have a material effect on the Company’s consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, “*The Hierarchy of Generally Accepted Accounting Principles*”. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally        accepted accounting principles in the United States. It is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The adoption of this statement is not expected to have a material effect on the Company’s consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “*Disclosures about Derivative Instruments and Hedging Activities – an amendment to FASB Statement No. 133*”. SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand        their effects on an

18

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entity's financial position, financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial        position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged. The Company is currently evaluating the impact of SFAS No. 161 on its financial statements, and the adoption of this statement is not expected to have a material effect on the Company’s consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, “*Non-controlling Interests in Consolidated Financial Statements Liabilities –an Amendment of ARB No. 51*”. This statement amends ARB 51 to establish accounting and reporting standards for the Non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement        is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's consolidated financial statements

In February 2007, the FASB issued SFAS No. 159,*“The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”.*This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only        to entities that elect the fair value option. However, the amendment to SFAS No. 115,*“Accounting for Certain Investments in Debt and Equity Securities*”, applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on        or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157,*“Fair Value Measurements”.*The adoption of this statement is not expected to have a material effect on the Company's consolidated financial statements.

**Going concern**

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The        continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at May 31, 2008, the Company has a working capital deficiency of $103,778 and has accumulated losses of $1,742,715 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going        concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

19

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| **ITEM 7.** | **FINANCIAL STATEMENTS.** |
|-------------|---------------------------|

Our consolidated audited financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

The following consolidated audited financial statements are filed as part of this annual report:

Independent Auditor's Report, dated August 29, 2008of Manning Elliott LLP

Audited Consolidated Balance Sheets as at May 31, 2008 and May 31, 2007

Audited Consolidated Statements of Operations for the years ended May 31, 2008 and 2007

Audited Consolidated Statements of Cash Flows for the years ended May 31, 2008 and 2007

Audited Consolidated Statement of Stockholders’ Equity (Deficit) for the period from August 8, 2005 to May 31, 2008

Notes to the Consolidated Financial Statements

 

20

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To the Directors and Stockholders of

Black Tusk Minerals Inc. (An Exploration Stage Company)                 We have audited the accompanying consolidated balance sheets of Black Tusk Minerals Inc. (An Exploration Stage Company) as of May 31, 2008 and 2007 and the related consolidated statements of operations, cash flows and stockholders’ equity (deficit) for the years ended May 31, 2008 and 2007, and accumulated from August 8, 2005 (Date of Inception) to May 31, 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is        to express an opinion on these consolidated financial statements based on our audits.                 We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether 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. The Company is not required to have, nor were we engaged to perform, an audit of its        internal control over financial reporting. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control over financial reporting. Accordingly, we express no such opinion. 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Black Tusk Minerals Inc. (An Exploration Stage Company) as of May 31, 2008 and 2007, and the results of its operations, cash flows and stockholders’ equity (deficit) for the years ended May 31, 2008 and 2007 and accumulated from August 8, 2005 (Date of Inception) to May 31, 2008, in conformity with accounting principles generally accepted in        the United States.                 The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has working capital deficiency and accumulated losses from operations since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. The consolidated financial        statements do not include any adjustments that might result from the outcome of this uncertainty.         

/s/ MANNING ELLIOTT LLP

CHARTERED ACCOUNTANTS

Vancouver, Canada        August 29, 2008

 

21

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Black Tusk Minerals Inc.

(An Exploration Stage Company)

Consolidated Balance Sheets

(Expressed in US dollars)

|  

                                                                                                                            | May 31,

2008

$ | May 31,

2007

$ |
|------------------------------------------------------------------------------------------------------------------------------------------|------------------|------------------|
|                                                                                                                                     |             |             |
| ASSETS                                                                                                                                   |             |             |
|                                                                                                                                     |             |             |
| Current Assets                                                                                                                           |             |             |
|                                                                                                                                     |             |             |
| Cash                                                                                                                                     | 214              | 3,217            |
| Prepaid expenses                                                                                                                         | 81               | 783              |
| Total Assets                                                                                                                             | 295              | 4,000            |
|                                                                                                                                     |             |             |
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                     |             |             |
|                                                                                                                                     |             |             |
| Current Liabilities                                                                                                                      |             |             |
|                                                                                                                                     |             |             |
| Accounts payable                                                                                                                         | 93,292           | 4,604            |
| Accrued liabilities (Note 5)                                                                                                             | 2,781            | 1,500            |
| Due to related parties (Note 3)                                                                                                          | 8,000            | –          |
| Total Liabilities                                                                                                                        | 104,073          | 6,104            |
|                                                                                                                                     |             |             |
| Contingencies (Note 1)                                                                                                                   |                  |                  |
| Subsequent Events (Note 8)                                                                                                               |                  |                  |
|                                                                                                                                          |                  |                  |
| Stockholders’ Deficit                                                                                                              |             |             |
|                                                                                                                                          |                  |                  |
| Common Stock, 100,000,000 shares authorized, $0.001 par value

22,406,576 shares issued and outstanding (2007 – 17,672,000 shares) | 22,407           | 17,672           |
|                                                                                                                                          |                  |                  |
| Common Stock Subscribed (Note 8(a))                                                                                                      | 125,750          | –          |
|                                                                                                                                     |             |             |
| Additional Paid-in Capital                                                                                                               | 1,466,030        | 36,578           |
|                                                                                                                                     |             |             |
| Stock Subscriptions Receivable (Note 6)                                                                                                  | –          | (250)            |
|                                                                                                                                     |             |             |
| Donated Capital (Note 3)                                                                                                                 | 24,750           | 15,750           |
|                                                                                                                                     |             |             |
| Deficit Accumulated During the Exploration Stage                                                                                         | (1,742,715)      | (71,854)         |
| Total Stockholders’ Equity (Deficit)                                                                                               | (103,778)        | (2,104)          |
| Total Liabilities and Stockholders’ Equity (Deficit)                                                                               | 295              | 4,000            |

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

22

----

(An Exploration Stage Company)

Consolidated Statements of Operations

(Expressed in US dollars)

|                                          | Accumulated

From

August 8, 2005 (Date of Inception) | For the Year Ended | For the Year

Ended |
|-----------------------------------------------|-------------------------------------------------------|--------------------|---------------------|
|                                          | to May 31,                                            | May 31,            | May 31,             |
|                                          | 2008                                                  | 2008               | 2007                |
|                                          | $                                                     | $                  | $                   |
|                                          |                                                  |               |                |
|                                          |                                                  |               |                |
| Revenue                                       | –                                               | –            | –             |
|                                          |                                                  |               |                |
| Expenses                                      |                                                  |               |                |
|                                          |                                                  |               |                |
| Donated rent (Note 3)                         | 8,250                                                 | 3,000              | 3,000               |
| Donated services (Note 3)                     | 16,500                                                | 6,000              | 6,000               |
| General and administrative                    | 125,693                                               | 98,065             | 18,711              |
| Impairment of mineral property costs (Note 4) | 1,430,250                                             | 1,422,577          | 173                 |
| Professional fees                             | 162,022                                               | 141,219            | 19,331              |
| Total Expenses                                | 1,742,715                                             | 1,670,861          | 47,215              |
| Net Loss                                      | (1,742,715)                                           | (1,670,861)        | (47,215)            |
|                                          |                                                  |               |                |
| Net Loss Per Share – Basic and Diluted  |                                                  | (0.09)             | –             |
|                                          |                                                  |               |                |
| Weighted Average Shares Outstanding           |                                                  | 18,503,000         | 17,672,000          |

 

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

23

----

|                                         | Accumulated

From August 8, 2005 (Date of Inception)

to May 31,

2008 | For the Year

Ended

May 31,

2008 | For the Year

Ended

May 31,

2007 |
|----------------------------------------------|------------------------------------------------------------------------|------------------------------------|------------------------------------|
|                                         | $                                                                      | $                                  | $                                  |
| Operating Activities                         |                                                                   |                               |                               |
|                                         |                                                                   |                               |                               |
| Net loss                                     | (1,742,715)                                                            | (1,670,861)                        | (47,215)                           |
|                                         |                                                                   |                               |                               |
| Adjustments to reconcile net loss to cash:   |                                                                   |                               |                               |
|                                         |                                                                   |                               |                               |
| Impairment of mineral property               | 1,430,250                                                              | 1,422,577                          | 173                                |
| Donated services and expenses                | 24,750                                                                 | 9,000                              | 9,000                              |
| Common stock issued for services             | 4,000                                                                  | –                            | 4,000                              |
|                                         |                                                                   |                               |                               |
| Changes in operating assets and liabilities: |                                                                   |                               |                               |
|                                         |                                                                   |                               |                               |
| Prepaid expenses                             | (81)                                                                   | 702                                | (783)                              |
| Accounts payable and accrued liabilities     | 96,073                                                                 | 89,969                             | 5,781                              |
| Due to related parties                       | 5,000                                                                  | 5,000                              | –                            |
| Net Cash Used in Operating Activities        | (182,723)                                                              | (143,613)                          | (29,044)                           |
|                                         |                                                                   |                               |                               |
| Investing Activities                         |                                                                   |                               |                               |
|                                         |                                                                   |                               |                               |
| Mineral property acquisition costs           | (100,250)                                                              | (92,577)                           | (173)                              |
| Net Cash Used in Investing Activities        | (100,250)                                                              | (92,577)                           | (173)                              |
|                                         |                                                                   |                               |                               |
| Financing Activities                         |                                                                   |                               |                               |
|                                         |                                                                   |                               |                               |
| Proceeds from issuance of common stock       | 160,437                                                                | 110,437                            | –                            |
| Common stock subscribed                      | 125,750                                                                | 125,750                            | –                            |
| Share issuance costs                         | (3,000)                                                                | (3,000)                            | –                            |
| Net Cash Provided by Financing Activities    | 283,187                                                                | 233,187                            | –                            |
|                                         |                                                                   |                               |                               |
| Increase (Decrease) In Cash                  | 214                                                                    | (3,003)                            | (29,217)                           |
| Cash - Beginning of Period                   | –                                                                | 3,217                              | 32,434                             |
| Cash - End of Period                         | 214                                                                    | 214                                | 3,217                              |
|                                         |                                                                   |                               |                               |
| Supplemental Disclosures                     |                                                                   |                               |                               |
| Interest paid                                |                                                                   | –                            | –                            |
| Income tax paid                              |                                                                   | –                            | –                            |
| Non-cash Investing Activities                |                                                                   |                               |                               |
| Common shares issued for mineral property    |                                                                   | 1,330,000                          | –                            |

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

24

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|                                                                                                 | Shares      | Amount  | Additional Paid-in

Capital | Stock Subscriptions

Receivable | Common Stock

Subscribed | Donated

Capital | Deficit

Accumulated

During the

Exploration

Stage | Total       |
|------------------------------------------------------------------------------------------------------|-------------|---------|-----------------------------|---------------------------------|--------------------------|------------------|------------------------------------------------------|-------------|
|                                                                                                 | #           | $       | $                           | $                               | $                        | $                | $                                                    | $           |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| Balance – August 8, 2005 (Date of Inception)                                                   | –     | – | –                     | –                         | –                  | –          | –                                              | –     |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| August 8, 2005 – common shares issued for cash at $0.0005 per share                            | 9,500,000   | 9,500   | (4,750)                     | –                         | –                  | –          | –                                              | 4,750       |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| March 24, 2006 – common shares issued for cash at $0.005 per share                             | 7,300,000   | 7,300   | 29,200                      | –                         | –                  | –          | –                                              | 36,500      |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| May 31, 2006 – common shares issued for cash at $0.125 per share                               | 72,000      | 72      | 8,928                       | (250)                           | –                  | –          | –                                              | 8,750       |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| Donated rent and services                                                                            | –     | – | –                     | –                         | –                  | 6,750            | –                                              | 6,750       |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| Net loss for the period                                                                              | –     | – | –                     | –                         | –                  | –          | (24,639)                                             | (24,639)    |
| Balance – May 31, 2006                                                                         | 16,872,000  | 16,872  | 33,378                      | (250)                           | –                  | 6,750            | (24,639)                                             | 32,111      |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| August 31, 2006 – common shares issued for services at $0.005 per share                        | 800,000     | 800     | 3,200                       | –                         | –                  | –          | –                                              | 4,000       |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| Donated rent and services                                                                            | –     | – | –                     | –                         | –                  | 9,000            | –                                              | 9,000       |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| Net loss for the year                                                                                | –     | – | –                     | –                         | –                  | –          | (47,215)                                             | (47,215)    |
| Balance – May 31, 2007                                                                         | 17,672,000  | 17,672  | 36,578                      | (250)                           | –                  | 15,750           | (71,854)                                             | (2,104)     |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| September 1, 2007 - common shares issued for cash at $0.15 per share                                 | 628,076     | 628     | 93,584                      | –                         | –                  | –          | –                                              | 94,212      |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| Share issuance costs                                                                                 | –     | – | (3,000)                     | –                         | –                  | –          | –                                              | (3,000)     |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| February 8, 2008- common shares issued for cash at $0.15 per share                                   | 106,500     | 107     | 15,868                      | –                         | –                  | –          | –                                              | 15,975      |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| April 24, 2008 – common shares issued for mineral property at a fair value of $0.133 per share | 10,000,000  | 10,000  | 1,320,000                   | –                         | –                  | –          | –                                              | 1,330,000   |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| April 24, 2008 – common shares returned for cancellation (Note 3)                              | (6,000,000) | (6,000) | 3,000                       | –                         | –                  | –          | –                                              | (3,000)     |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| Subscriptions received                                                                               | –     | – | –                     | 250                             | –                  | –          | –                                              | 250         |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| Common stock subscribed                                                                              | –     | – | –                     | –                         | 125,750                  | –          | –                                              | 125,750     |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| Donated rent and services                                                                            | –     | – | –                     | –                         | –                  | 9,000            | –                                              | 9,000       |
|                                                                                                 |        |    |                        |                            |                     |             |                                                 |        |
| Net loss for the year                                                                                | –     | – | –                     | –                         | –                  | –          | (1,670,861)                                          | (1,670,861) |
| Balance – May 31, 2008                                                                         | 22,406,576  | 22,407  | 1,466,030                   | –                         | 125,750                  | 24,750           | (1,742,715)                                          | (103,778)   |

 

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

25

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| ***1.*** | ***Nature of Business and Continuance of Operations*** |
|----------|--------------------------------------------------------|

Black Tusk Minerals Inc. (the “Company”) was incorporated in the State of Nevada on August 8, 2005. Effective September 21, 2007, the Company incorporated a wholly-owned Peruvian subsidiary, Black Tusk Minerals Peru SAC. The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No.7 “*Accounting and        Reporting for Development Stage Enterprises*”. The Company’s principal business is the acquisition and exploration of mineral properties. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable.

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The        continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at May 31, 2008, the Company has a working capital deficiency of $103,778 and has accumulated losses of $1,742,715 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going        concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company’s plans for the next twelve months are to focus on the exploration of its mineral properties in Peru and estimates that cash requirements of approximately $350,000 will be required for exploration and administration costs and to fund working capital. There can be no assurance that the Company will be able to raise sufficient funds to pay the expected expenses for the next twelve        months.

| ***2.*** | ***Summary of Significant Accounting Policies*** |
|----------|--------------------------------------------------|

|   | a) | Basis of Presentation |
|--------|----|-----------------------|

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. These consolidated financial statements include the accounts of the Company and its wholly-owned Peruvian subsidiary, Black Tusk Minerals Peru SAC. All inter-company accounts and transactions have been        eliminated. The Company’s fiscal year-end is May 31.

|   | b) | Use of Estimates |
|--------|----|------------------|

The preparation of consolidated financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates        estimates and assumptions related to impairment of its mineral properties, valuation of donated capital and deferred income tax asset valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily        apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

|   | c) | Basic and Diluted Net Income (Loss) Per Share |
|--------|----|-----------------------------------------------|

The Company computes net income (loss) per share in accordance with SFAS No. 128, "*Earnings per Share*". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the        weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive        potential shares if their effect is anti dilutive.

26

----

|   | d) | Comprehensive Loss |
|--------|----|--------------------|

SFAS No. 130,*“Reporting Comprehensive Income,”*establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at May 31, 2008 and 2007, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss        in the financial statements.  The Company's Peruvian subsidiary uses the US dollar for its transactions and accounts for its operations in US dollars, which does not give rise to comprehensive income or loss.

|   | e) | Cash and Cash Equivalents |
|--------|----|---------------------------|

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

|   | f) | Mineral Property Costs |
|--------|----|------------------------|

The Company has been in the exploration stage since its inception on August 8, 2005 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mineral properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred using the        guidance in EITF 04-02, “*Whether Mineral Rights Are Tangible or Intangible Assets*”. The Company assesses the carrying costs for impairment under SFAS 144,*“Accounting for Impairment or Disposal of Long Lived Assets”*at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and        probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

|   | g) | Long-Lived Assets |
|--------|----|-------------------|

In accordance with SFAS No. 144,*“Accounting for the Impairment or Disposal of Long-Lived Assets”,*the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include,        but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely        than not be sold or disposed significantly before the end of its estimated useful life.

Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair        value.

|   | h) | Financial Instruments |
|--------|----|-----------------------|

The fair-value of financial instruments, which include cash, accounts payable, accrued liabilities, and due to related parties, were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. Foreign currency transactions are primarily undertaken in Canadian dollars. The financial risk is the risk to the Company’s        operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

|   | i) | Income Taxes |
|--------|----|--------------|

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109 “*Accounting for Income Taxes*” as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried        forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

27

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(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

|   | j) | Foreign Currency Translation |
|--------|----|------------------------------|

The Company’s functional and reporting currency is the United States dollar. The Company's Peruvian subsidiary uses the US dollar for its transactions and accounts for its operations in US dollars. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 “*Foreign Currency        Translation*”, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

|   | k) | Recently Issued Accounting Pronouncements |
|--------|----|-------------------------------------------|

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “*Accounting for Financial Guarantee Insurance Contracts – An interpretation of FASB Statement No. 60*”. SFAS 163 requires that an insurance enterprise recognize a claim liability prior to an event of default when there is        evidence that credit deterioration has occurred in an insured financial obligation. It also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities, and requires expanded disclosures about financial guarantee insurance contracts. It is effective for financial statements issued for fiscal years beginning after December 15, 2008, except for some disclosures        about the insurance enterprise’s risk-management activities. SFAS 163 requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period beginning after issuance. Except for those disclosures, earlier application is not permitted. The adoption of this statement is not expected to have a material effect on the Company’s consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, “*The Hierarchy of Generally Accepted Accounting Principles*”. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity        with generally accepted accounting principles in the United States. It is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The adoption of this statement is not expected to have a material effect on the Company’s consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “*Disclosures about Derivative Instruments and Hedging Activities – an amendment to FASB Statement No. 133*”. SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to        better understand their effects on an entity's financial position, financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash        flows. It is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged. The adoption of this statement is not expected to have a material effect on the Company’s consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, “*Non-controlling Interests in Consolidated Financial Statements Liabilities –an Amendment of ARB No. 51*”. This statement amends ARB 51 to establish accounting and reporting standards for the Non-controlling interest in a subsidiary and for the deconsolidation of a        subsidiary. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's consolidated financial statements

In February 2007, the FASB issued SFAS No. 159,*“The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”.*This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of        SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115,*“Accounting for Certain Investments in Debt and Equity Securities*”, applies to all

28

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(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157,*“Fair Value Measurements”.*The adoption of this statement is not expected to have a material effect on the Company's consolidated financial statements.

| ***3.*** | ***Related Party Transactions*** |
|----------|----------------------------------|

|   | a) | During the year ended May 31, 2008, the Company recognized a total of $6,000 (2007 - $6,000) for donated services at $500 per month, and $3,000 (2007 - $3,000) for donated rent at $250 per month provided by the President of the Company. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | At May 31, 2008, the Company is indebted to a shareholder of the Company for a cash advance of $5,000 (2007 - $nil). This amount is unsecured, non-interest bearing and due on demand. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | At May 31, 2008, the Company is indebted to a director of the Company for $1,625 (2007 - $nil), representing consideration for returning 3,250,000 shares of common stock to the Company for cancellation. This amount is unsecured, non-interest bearing and due on demand. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | At May 31, 2008, the Company is indebted to the former president of the Company for $1,375 (2007 - $nil), representing consideration for returning 2,750,000 shares of common stock to the Company for cancellation. This amount is unsecured, non-interest bearing and due on demand. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ***4.*** | ***Mineral Properties*** |
|----------|--------------------------|

|   | a) | On August 13, 2007, the Company entered into a term sheet with two individuals detailing the principal terms of the Company’s acquisition of 15 mining concessions and pediments covering approximately 8,000 hectares located in the District of Huanza, Province of Huarochiri, Peru. These concessions are subject to a 1% net smelter royalty granted                        to those individuals. As a result, the Company formed a Peruvian subsidiary to acquire the concessions. On December 5, 2007, the Company entered into a Master Purchase Agreement pursuant to which the Company issued an aggregate of 10,000,000 common shares of the Company to the individuals for the transfer of the properties to the Company’s subsidiary. On April 24, 2008, the Company issued the 10,000,000 common shares at a fair value of $1,330,000. The Company paid                        $50,000 for the right to use adjacent property for mineral exploration purposes and have spent $41,860 on road building. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

For the year ended May 31, 2008 the Company recognized an impairment loss of $1,421,860 (2007- $nil), as it had not yet been determined whether there are proven or probable reserves on the property.

|   | b) | On December 19, 2005 the Company acquired a 100% interest in a mineral claim located in British Columbia, Canada, in consideration for $7,500. Advance royalties of $25,000 are payable annually commencing 36 months from execution of the agreement. The claim is registered in the name of the President of the Company, who has executed a trust agreement                        whereby the President agreed to hold the claim in trust on behalf of the Company. The cost of the mineral property was initially capitalized. On May 15, 2006, the Company forfeited ownership of the mineral claim and subsequently replaced the mineral claim with the staking of a new claim on August 24, 2006 under the same terms of the agreement. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

For the year ended May 31, 2008 the Company recognized an impairment loss of $717 (2007- $173), as it had not yet been determined whether the new claim had proven or probable reserves on the property.

On December 31, 2007, the Golden Bear mineral claim located in British Columbia, Canada expired and the Company did not renew the rights to the claim.

| ***5.*** | ***Accrued liabilities*** |
|----------|---------------------------|

At May 31, 2008, accrued liabilities of $2,781 (May 31, 2007 - $1,500) consists of amounts owing for professional fees.

| ***6.*** | ***Common Stock*** |
|----------|--------------------|

|   | a) | The Company entered into a Contribution Agreement with the former President of the Company pursuant to which the President of the Company returned 2,750,000 shares of common stock for cancellation for consideration of $1,375. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

29

----

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

|   | b) | The Company entered into a Contribution Agreement with a director of the Company pursuant to which the director of the Company returned 3,250,000 shares of common stock for cancellation for consideration of $1,625. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | On April 24, 2008, the Company issued 10,000,000 shares of common stock at a fair value of $0.13 per common share for the acquisition of mining concessions in Peru. Refer to Note 4(a). |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | During the year ended May 31, 2008, the Company received $125,750 for the subscription of 503,000 shares of common stock at $0.25 per share. These shares were issued on June 17, 2008. Refer to Note 8. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e) | On February 8, 2008, the Company issued 106,500 shares of common stock at a price of $0.15 per common share for proceeds of $15,975. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------|

|   | f) | On September 13, 2007, the Company completed an offer and sale of 628,076 shares of common stock at a price of $0.15 per common share for net proceeds of $91,212 net of share issuance costs of $3,000. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | g) | On September 11, 2007, the Company increased its authorized capital from 100,000,000 common shares to 200,000,000 common shares, and effected a 2:1 forward stock-split of its issued and outstanding common stock. The issued and outstanding share capital increased from 8,836,000 shares of common stock to 17,672,000 shares of common stock. All per share                        amounts have been retroactively restated to reflect the forward stock-split |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | h) | On August 23, 2007, the Company received $250 for stock subscriptions receivable from a prior period. |
|--------|----|-------------------------------------------------------------------------------------------------------|

|   | i) | On August 31, 2006, the Company issued 800,000 shares of common stock to a company controlled by management for consulting services valued at $4,000. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| ***7.*** | ***Income Taxes*** |
|----------|--------------------|

The Company accounts for income taxes under SFAS No. 109, "*Accounting for Income Taxes*." Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Income tax expense differs from the        amount that would result from applying the U.S federal and state income tax rates to earnings before income taxes. The Company has a net operating loss carryforward of approximately $1,718,000 available to offset taxable income in future years which expires beginning in fiscal 2026. Pursuant to SFAS 109, the potential benefit of the net operating loss carryforward has not been recognized in the financial statements since the Company cannot be assured that it is more likely than not that        such benefit will be utilized in future years.

The Company is subject to United States federal and state income taxes at an approximate rate of 35%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

|                                                  |   | May 31,                        2008                        $ |   | May 31,                        2007                        $ |
|-------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------------------|
| Net loss before income taxes per financial statements |   | 1,670,861                                                    |   | 47,215                                                       |
| Income tax rate                                       |   | 35%                                                          |   | 35%                                                          |
| Income tax recovery                                   |   | (584,801)                                                    |   | (16,525)                                                     |
| Permanent differences                                 |   | 3,150                                                        |   | 3,150                                                        |
| Temporary differences                                 |   | –                                                      |   | –                                                      |

30

----

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

 

 

 

| Valuation allowance change |   | 581,651 |   | 13,375  |
|----------------------------|--------|---------|--------|---------|
| Provision for income taxes |   | – |   | – |

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of deferred income tax assets and        liabilities at May 31, 2008 and 2007 are as follows:

 

|                            |   | May 31,                        2007                        $ |   | May 31,                        2006                        $ |
|---------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------------------|
| Net operating loss carryforward |   | 601,000                                                      |   | 19,635                                                       |
| Valuation allowance             |   | (601,000)                                                    |   | (19,635)                                                     |
| Net deferred income tax asset   |   | –                                                      |   | –                                                      |

 

The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management's judgment about the realizability of deferred income tax assets, the impact of the change on        the valuation allowance is generally reflected in current income.

| ***8.*** | ***Subsequent Events*** |
|----------|-------------------------|

|   | a) | On June 17, 2008, the Company issued 512,000 shares of common stock at $0.25 per common share for proceeds of $128,000, of which $125,750 was included in common stock subscribed at May 31, 2008. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | On June 26, 2008, the Company received a cash loan of $4,000 secured by a promissory note, bearing interest at 8% per annum. The note is unsecured and is due on August 26, 2008. The due date may be extended by 30 days by the payment of a renewal fee of $800. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

31

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| **ITEM 8.** | **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING**

****AND FINANCIAL DISCLOSURE.**** |
|-------------|----------------------------------------------------------------------------------------------------|

None.

| **ITEM 8A(T).** | **CONTROLS AND PROCEDURES.** |
|-----------------|------------------------------|

**Disclosure Control and Procedure**

At the end of the period covered by this report on Form 10-KSB for the year ended May 31, 2008, an evaluation was carried out under the supervision of and with the participation of the Company's management, including the President, who is the principal executive officer, and Treasurer, who is the principal financial and accounting officer, of the effectiveness of the design and operations of the        Company's disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) under the Exchange Act).  Based on that evaluation the President and the Treasurer have concluded that the Company's disclosure controls and procedures were adequately designed and effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded,        processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our President and Treasurer, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

**Management’s Report on Internal Control Over Financial Reporting**

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements        for external purposes in accordance with generally accepted accounting principles.

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

Management conducted an evaluation of the design and operation of the Company’s internal control over financial reporting as of May 31, 2008 based on the criteria in a framework developed by the Company’s management pursuant to and in compliance with the principles and framework of the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the        documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation.  Based on this evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of May 31, 2008 and no material weaknesses were discovered. 

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 permit the Company to provide only        management’s report in this annual report.

**Changes in Internal Control Over Financial Reporting**

There were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) or 15(d)-15(f)) that occurred during the Company’s the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

| **ITEM 8B.** | **OTHER INFORMATION.** |
|--------------|------------------------|

None.

32

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**PART III**

| **ITEM 9.** | **DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.** |
|-------------|--------------------------------------------------------------------------------------------------------------------------------------------|

**Directors and Executive Officers and Significant Employees**

All directors of the Company hold office until the next annual meeting of the stockholders or until their successors have been elected and qualified. The officers of the Company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors, executive officers and significant employees, their ages (as of May 31, 2008), positions held, and date        first elected/appointed, are as follows:

| **Name**     | **Position**                   | **Age** | **Date First Elected/Appointed** |
|--------------|--------------------------------|---------|----------------------------------|
| Gavin Roy    | President and Director         | 42      | August 9, 2007                   |
| Kurt Bordian | Secretary, Treasurer, Director | 40      | August 8, 2005                   |

***Gavin Roy***

Gavin Roy was elected Vice President of the Company on August 9, 2007, resigned as Vice President on April 24, 2008 and was appointed as Director and President effective April 24, 2008. Mr. Roy is currently the principal of Magellan Management Company, a venture capital firm in Vancouver, British Columbia. Prior to forming Magellan Management in 2005, Mr. Roy’s principal occupation        during the past five years has been as an investment advisor with Canaccord Capital Corporation, Octagon Capital Corporation and Global Securities Corporation. Mr. Roy has been a registrant in Canada with the British Columbia, Alberta, Saskatchewan and Ontario securities commissions. Mr. Roy is a director of the following U.S. reporting issuers: Chilco River Holdings, Inc. and Plaza Resources Inc.

***Kurt Bordian***

Kurt Bordian has been the Secretary, Treasurer and a Director of the Company since its inception on August 8, 2005. Mr. Bordian is a designated certified general accountant in Canada and holds a bachelor of commerce (honors) degree from the University of Manitoba. Mr. Bordian worked chiefly in the mineral exploration and oil and gas industries over the past 10 years and currently serves as an        officer and/or director of the following companies: Calypso Acquisition Corp. (Corporate Secretary), Canyon Copper Corp. (CFO), Calypso Acquisition Corp. (Director), ESO Uranium Corp. (CFO and Corporate Secretary), Palo Duro Energy Inc. (Corporate Secretary and Director), Magnate Ventures Inc. (President, CEO and Director), Gold Point Energy Corp. (CFO), Thor Explorations Ltd. (Director), Cap-link Ventures Ltd. (Director) and Waymar Resources Ltd. (Director).

**Significant Employees**

There are no significant employees besides Gavin Roy and Kurt Bordian.

**Family Relationships**

There are no family relationships among our board of directors or officers.

**Involvement in Certain Legal Proceedings**

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

33

----

|   | 1.          | any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; |
|--------|----------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.          | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences); |
|--------|----------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.          | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or |
|--------|----------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.          | being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. |
|--------|----------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Conflicts of Interest**

To our knowledge, and other than as disclosed in this report, there are no known existing or potential conflicts of interest among us, our promoters, directors and officers, or other members of management, or of any proposed director, officer or other member of management as a result of their outside business interests except that certain of the directors and officers serve as directors and officers of        other companies, and therefore it is possible that a conflict may arise between their duties to us and their duties as a director or officer of such other companies.

**Section 16(a) Beneficial Ownership Reporting Compliance**

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's officers, directors, and persons who beneficially own more than 10% of the Company's common stock (“10% Stockholders”), to file reports of ownership and changes in ownership with the Securities and Exchange Commission (“SEC”). Such officers, directors and 10% Stockholders are also required by        SEC rules to furnish us with copies of all Section 16(a) forms that they file.

Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended May 31, 2008, all filing requirements applicable to its officers, directors and greater than 10% percent beneficial owners were complied with, except for the following:

| **NAME AND NATURE OF AFFILIATION**                        | **LATE REPORTS**           | **REPORTS NOT FILED** |
|-----------------------------------------------------------|----------------------------|-----------------------|
| Gavin Roy – President and Director                  | 1 (one Form 4)             | 0                     |
| Kurt Bordian – Secretary, Treasurer, and Director   | 1 (one Form 4)             | 0                     |
| Peter Watson – Former President and Former Director | 2 (one Form 3, one Form 4) | 0                     |

**Code of Ethics**

The Company is aware of its corporate governance responsibilities and seeks to operate to the highest ethical standards. However, the Company has not adopted a code of ethics because of its limited size. The Company only has two employees, who also serve as the only two officers and directors, and therefore has not found it necessary to adopt a code of ethics.

**Corporate Governance**

As of August 12, 2008, we did not effect any material changes to the procedures by which our shareholders may recommend nominees to our board of directors. Our board of directors does not have a policy with regards to the consideration of any director candidates recommended by our shareholders. Our board of directors has determined that it is in the best position to evaluate the Company's requirements as        well as the qualifications of each candidate when the board considers a nominee for a position on our board of directors. If shareholders wish to recommend candidates directly to our board, they may do so by sending communications to the President of the Company at the address on the cover of this annual report.

34

----

We do not have a standing audit committee at the present time. To our knowledge, and other than as disclosed in this report, there are no known existing or potential conflicts of interest among us, our promoters, directors and officers, or other members of management, or of any proposed director, officer or other member of management as a result of their outside business interests except that certain of        the directors and officers serve as directors and officers of other companies, and therefore it is possible that a conflict may arise between their duties to us and their duties as a director or officer of such other companies.

We believe that the members of our board of directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of the Company does not believe that it is necessary to have an audit committee because we believe that the functions of an audit committee can be adequately performed by the board of        directors as it currently exists. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any significant revenues from operations to date.

| **ITEM 10.** | **EXECUTIVE COMPENSATION.** |
|--------------|-----------------------------|

A summary of cash and other compensation paid to our Principal Executive Officer and other executives for the fiscal year ended May 31, 2008 is as follows:

| **Name and Principal Position**

**(a)**                      | **Year**

**(b)** | **Salary ($)**

**(c)** | **Bonus ($)**

**(d)** | **Stock Awards ($)**

**(e)** | **Option Awards ($)**

**(f)** | **Non-Equity Incentive Plan Compensation ($)**

**(g)** | **Nonqualified Deferred Compensation Earnings ($)**

**(h)** | **All Other Compensation ($)**

**(i)** | **Total ($)**

**(j)** |
|---------------------------------------------------------------|-------------------|-------------------------|------------------------|-------------------------------|--------------------------------|---------------------------------------------------------|--------------------------------------------------------------|-----------------------------------------|------------------------|
| **Gavin Roy**, President and Director (former Vice President) | May 31, 2008      | NIL                     | NIL                    | NIL                           | NIL                            | NIL                                                     | NIL                                                          | (1)                                     | (1)                    |
| May 31, 2007                                                  | NIL               | NIL                     | NIL                    | NIL                           | NIL                            | NIL                                                     | (1)                                                          | (1)                                     |
| **Kurt Bordian**, Secretary, Treasurer and Director           | May 31, 2008      | NIL                     | NIL                    | NIL                           | NIL                            | NIL                                                     | NIL                                                          | NIL                                     | NIL                    |
| May 31, 2007                                                  | NIL               | NIL                     | NIL                    | NIL                           | NIL                            | NIL                                                     | NIL                                                          | NIL                                     |
| **Peter Watson**, Former Director and Former President        | May 31, 2008      | NIL                     | NIL                    | NIL                           | NIL                            | NIL                                                     | NIL                                                          | NIL                                     | NIL                    |
| May 31, 2007                                                  | NIL               | NIL                     | NIL                    | NIL                           | NIL                            | NIL                                                     | NIL                                                          | NIL                                     |

 

| (1) | Magellan Management Company, of which Mr. Roy is a principal, has provided administrative and consulting services to the Company. In 2006, Magellan Management received $16,000 in consideration for providing such administrative and consulting services. On August 31, 2006, Magellan Management Company acquired 400,000 shares of the Company’s                        common stock at $0.001 per share for consulting services for one year ending August 31, 2007. On September 12, 2007, the Company increased its authorized capital from 100,000,000 common shares to 200,000,000 common shares and effected a 2-for-1 forward stock split of its issued and outstanding shares of common stock, thus increasing Magellan’s consulting payment to 800,000 shares. Gavin Roy was elected Vice President of the Company on August 9, 2007 and resigned as                        Vice President on April 24, 2008. Gavin Roy was appointed President and Director of the Company effective April 24, 2008. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

35

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**Narrative Disclosure to Summary Compensation Table**

We do not pay to our directors or officers any salary or ongoing consulting fees. We anticipate that compensation may be paid to an officer in the event that we decide to proceed with advanced exploration programs on the Peru Properties. Please reference the executive compensation table and accompanying footnote above for all information concerning executive and director compensation.

**Other Compensation Information**

The Company does not maintain any long-term compensation plans, and did not maintain such plans at any time during our two most recently completed fiscal years ended May 31, 2008. As such, there were no long-term compensation plan awards or payouts to any of the named executive officers of the Company during our two most recently completed fiscal years ended May 31, 2007 and 2008.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers.

**Outstanding Equity Awards at Fiscal Year-End**

We have not distributed any options to purchase common stock of the Company. Therefore, we have no outstanding equity awards as of May 31, 2008.

**Retirement, Resignation or Termination Plans**

We sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our Company or as a result of a change in the responsibilities of an executive following a change in control of our Company.

**Compensation of Directors**

We do not pay to our directors any compensation for serving on our board of directors.

**Employment Contracts and Termination of Employment and Change-In-Control Arrangements**

None.

| **ITEM 11.** | **SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.** |
|--------------|-----------------------------------------------------------------------------------------------------|

The following table sets forth certain information regarding the beneficial ownership of shares of our common stock as of August 22, 2008 by:

|   | **•** | each person who is known by us to beneficially own more than 5% of our issued and outstanding shares of common stock; |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------|

|   | **•** | our named executive officers; |
|--------|------------|-------------------------------|

|   | **•** | our directors; and |
|--------|------------|--------------------|

|   | **•** | all of our executive officers and directors as a group. |
|--------|------------|---------------------------------------------------------|

36

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| **(1) Title of Class**                     | **(2) Name and Address of Beneficial Owner** | **(3) Amount and Nature of Beneficial Owner** | **(4) Percent of Class*** |
|--------------------------------------------|----------------------------------------------|-----------------------------------------------|---------------------------|
| **Directors and Named Executive Officers** |

| Common Stock                                  | Gavin Roy

7425 Arbutus Street

Vancouver, BC V6P 5T2                   | 4,105,000 shares directly and indirectly owned by the President (1,155,000 indirectly owned as principal of Magellan Management Company and 2,950,000 directly owned) | 17.9% |
|-----------------------------------------------|-------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|
| Common Stock                                  | Kurt Bordian

217 Fifth Avenue

New Westminster, BC V3L 1R5             | 520,000 shares directly owned by the Treasurer/Secretary/Director                                                                                                     | 2.3%  |
| **Directors and Named Executives as a Group** |                                                                    | 4,625,000 shares directly and indirectly owned                                                                                                                        | 20.2% |
| **5% Shareholders**                           |
| Common Stock                                  | Cede & Co.

PO Box 222

Bowling Green Station

New York, NY 10274   | 1,201,000 shares directly owned                                                                                                                                       | 5.2%  |
| Common Stock                                  | Matthew Fahey

650 – 1500 W. Georgia St.

Vancouver, BC V6G 3A9   | 1,700,000 shares directly owned                                                                                                                                       | 7.4%  |
| Common Stock                                  | Robin Lyman

1322 Devonshire St.

Vancouver, BC V6H 2G4                 | 1,700,000 shares directly owned                                                                                                                                       | 7.4%  |
| Common Stock                                  | Magellan Management Co.

7425 Arbutus Street

Vancouver, BC V6P 5T2     | 1,155,000 shares directly owned                                                                                                                                       | 5%    |
| Common Stock                                  | Leonard Raymond de Melt

810 Malecon Cisneros Miraflores

Lima 18, Peru | 1,580,000 shares directly owned                                                                                                                                       | 6.9%  |
| Common Stock                                  | Stacy de Melt                                                           | 2,200,000 shares directly owned                                                                                                                                       | 9.6%  |

* Percentages are calculated on a partially diluted basis based on 22,918,576shares issued and outstanding on August 22, 2008 and shares acquirable by the holder within the next 60 days.

We have no knowledge of any other arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of the Company.

We are not, to the best of our knowledge, directly or indirectly owned or controlled by another corporation or foreign government.

| **ITEM 12.** | **CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.** |
|--------------|--------------------------------------------------------------------------------|

Except for the transactions described below, none of our directors, executive officers or more-than-five-percent shareholders, nor any associate, affiliate, or family member of the foregoing, have any interest, direct or indirect, in any transaction or in any proposed transactions, since the start of the fiscal year ending May 31, 2008, which has materially affected or will materially affect        us. 

37

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|        | **•** | During the year ended May 31, 2008, the Company recognized a total of $6,000 for donated services at $500 per month, and $3,000 for donated rent at $250 per month, provided by Gavin Roy;                                  |
|--------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | **•** | On April 24, 2008, Kurt Bordian and the Company entered into a Contribution Agreement pursuant to which Mr. Bordian contributed 3,250,000 common shares to the Company in return for payment by the Company of $1,625; |

|   | **•** | On April 24, 2008, Peter Watson and the Company entered into a Contribution Agreement pursuant to which Mr. Watson contributed 2,750,000 common shares to the Company in return for a payment by the Company of $1,375; |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | On April 24, 2008, Peter Watson and Gavin Roy entered into a Share Transfer Agreement pursuant to which Mr. Watson transferred 950,000 common shares to Mr. Roy in consideration for the payment by Mr. Roy of $425; |
|--------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **•** | On September 13, 2007, the Company completed the offer and sale of 628,076 common shares at a price of $0.15 per share in a non-brokered private placement to non-U.S. persons outside the United States under an exemption from registration available under Rule 903 of Regulation S of the Securities Act, pursuant to which Mr. Bordian purchased 20,000                        common shares. |
|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

Other than as set forth above, none of Peter Watson, Kurt Bordian or Gavin Roy has entered into any agreement with the Company in which any of them is to receive from the Company or provide to the Company anything of value.

 

**Director Independence**

We currently act with two directors: Gavin Roy and Kurt Bordian. We have determined that neither Mr. Roy nor Mr. Bordian is an independent director as defined by Nasdaq Marketplace Rule 4200(a)(15) due to the fact that they are current executive officers.

38

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| **(3)** | **(i) Articles of Incorporation and (ii) Bylaws** |
|---------|---------------------------------------------------|

| 3.1 | Articles of Incorporation (incorporated by reference from our SB-2 filed on September 28, 2006) |
|-----|-------------------------------------------------------------------------------------------------|

| 3.2 | Certificate of Change (incorporated by reference from our Current Report on Form 8-K filed on September 11, 2007) |
|-----|-------------------------------------------------------------------------------------------------------------------|

| 3.2 | Bylaws (incorporated by reference from our SB-2 filed on September 28, 2006) |
|-----|------------------------------------------------------------------------------|

| **(10)** | **Material Contracts** |
|----------|------------------------|

| 10.1 | Property Acquisition Agreement, dated August 24, 2006, between Black Tusk Minerals Inc. and George E. Nicholson Limited (incorporated by reference from our SB-2 filed on September 28, 2006) |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Term Sheet, dated August 13, 2007, among Black Tusk Minerals Inc., Leonard Raymond De Melt and Marlene Ore Lamilla (incorporated by reference from our Current Report on Form 8-K filed on August 14, 2007) |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3 | Master Purchase Agreement, dated December 5, 2007, among Black Tusk Minerals Inc., Black Tusk Minerals Peru SAC, Leonard Raymond De Melt and Marlene Ore Lamilla (incorporated by reference from our Current Report on Form 8-K filed on December 7, 2007) |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4     | Mining Concessions and Claims Transfer Agreement, dated December 5, 2007, between Black Tusk Minerals Peru SAC and Marlene Ore Lamilla (English Translation) (incorporated by reference from our Current Report on Form 8-K filed on April 28, 2008) |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **(23)** | **Consents**                                                                                                                                                                                                                                         |
| 23.1     | Consent of Manning Elliott LP                                                                                                                                                                                                                        |

| **(31)** | **Rule 13a-14(a)/15d-14(a) Certifications** |
|----------|---------------------------------------------|

| 31.1 | Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Gavin Roy |
|------|---------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Kurt Bordian |
|------|---------------------------------------------------------------------------------------------------------------------------------------------|

| **(32)** | **Section 1350 Certifications** |
|----------|---------------------------------|

| 32.1 | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Gavin Roy |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Certification of Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Kurt Bordian |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**ITEM 14.**    **PRINCIPAL ACCOUNTANT FEES AND SERVICES.**

**Audit Fees**

The aggregate fees billed by the Company's auditors for professional services rendered in connection with the audit of the Company's annual consolidated financial statements for fiscal years 2008 and 2007 and reviews of the consolidated financial statements included in the Company's Forms 10-KSB for fiscal years 2008 and 2007 were $15,432 and $7,572, respectively.

**Audit-Related Fees**

The aggregate fees billed by the Company's auditors for any additional fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements and are not reported under "Audit Fees" above for fiscal years 2008 and 2007 were $NIL and $NIL,  respectively.

**Tax Fees**

The aggregate fees billed by the Company's auditors for professional services for tax compliance, tax advice, and tax planning for fiscal 2008 and 2007 were $NIL and $NIL,respectively.

**All Other Fees**

The aggregate fees billed by the Company's auditors for all other non-audit services rendered to the Company, such as attending meetings and other miscellaneous financial consulting, for fiscal 2008 and 2007 were $NIL and $NIL,respectively.

 

40

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

|   | **BLACK TUSK MINERALS INC.** |
|--------|------------------------------|

 

 

|  

August 29, 2008 | By  /s/ Gavin Roy                         

       Gavin Roy

        President and Director |
|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

| **Signature** |             | **Title** |                                         | **Date** |
|---------------|------------------|-----------|----------------------------------------------|----------|
|          |             |      |                                         |     |
|          | /s/ Gavin Roy    |      | President, and Director                      |     | August 29, 2008 |
|          | Gavin Roy        |      | (Principal Executive Officer)                |     |   |
|          |             |      |                                         |     |   |
|          | /s/ Kurt Bordian |      | Secretary, Treasurer, and Director           |     | August 29, 2008 |
|          | Kurt Bordian     |      | (Principal Financial and Accounting Officer) |     |   |
|          |             |      |                                         |     |   |
|          |             |      |                                         |     |   |
|          |             |      |                                         |     |   |

41

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